Originally Posted by
402Fanatic
In a perfect world I'd like to think that people will pay for E+ but I doubt they really do. Even if they do, it's not that much of a fare premium. Just randomly looking at SEA-IAD in 2 weeks on UA puts you at $899 round trip. For E+ they only want $49 more each way. There is no way they are making more money by having E+ instead of putting in an extra 2-3 rows.
It's not an extra 2-3 rows. On the Airbii, it's 1 row.
6 seats lost, even at today's 85% load factors, are seats that likely would not have been filled anyway. You need like a 95% load factor before you start infringing on any of those 6 lost seats. And then when you do, the assumption is revenue management made sure the lost revenue was of the lower fare buckets.
So, assume 10% of the time, you're running at a >95% load and will have a loss of revenue due to E+. Somewhere between 1 and 6 seats on the Airbus. For the sake of argument, let's call it 3 seats lost 10% of the time. SEA-IAD is $100 each way on an L fare, making it $300 lost for every 10 flights, or $30 a flight in lost revenue.
Obviously we don't know the distribution, but even if 10% is off, and it's more like 20%, that's still only $60 a flight.
All it would take is one or two E+ upsells per flight to recoup that lost revenue. And we're not even taking into account the saved weight from the missing seats, lost pax and other pax handling costs.
Remember the E+ buyup offer is not marketed towards the road warrior (who already has status). Though US/OAL Elites have acknowledged buying it.
I've seen mostly leisure travellers buy-up to E+. UA's method of protecting E+ until the last minute encourages it. Many non-status passengers end up without pre-assigned seats. That in turn makes them more receptive to an E+ upgrade offer. I've seen it time and time again -- not just at the kiosk, but also at the gate. I even flew next to some kid on SFO-LAX, "It was only $25, this is much nicer." It's an impulse buy for a nominal amount. As frequent flyers, we don't see it. We're thinking $50 x 50 segments a year = $2,500, who's gonna pay that. But to the person who takes 1 trip a year, paid $500 for his ticket, what's an extra $100 for a better seat on the once-a-year trip to see granny?
On top of that, you have the loyalty factor (this very thread for example). How many people stick with UA, or pay more to fly UA, simply because of E+? That's difficult to quantify, but there's revenue there which is attributable to E+.
So I have a hard time believing that E+ does not make them money. UA says it makes them money, and perhaps when it was first rolled out it didn't, but now with all the upsells, annual subscriptions, etc., I can't see how they're not at least covering their costs.