With CO now actively marketing various mechanisms to sell or upgrade FC seats to all customers they're doing two things:
1. Increasing revenue
2. Decreasing the EUA success rate for elites
While there's plenty of speculation and arguments to be had on the merits and details of this, the fact remains that CO is actively engaged in this. Additionally, CO will also need every last drop of revenue they can squeeze if they want to meet their goal of being profitable year round.
The obvious fallout for elites - and greater implication for CO - is if EUA rates drop materially will customers begin to book away, and in turn will this undermine the revenue gains made through monitizing the upgrade process.
Assuming CO does not choose to alter this philosophy (and for the record, I think this move is correct: F seats to those who're willing to pay for it before those who are not), I think it would behoove them to implement a UA style E+ across the mainline fleet. Here's why:
E+ will serve to drive additional revenue. A sub-set of customers are
currently willing to pay more close to departure for a F seat. Creation of an E+ zone allows CO to market more upgraded seats at a lower pricepoint than F.
Engenders loyalty among all elites. The OnePass elite program suffers from the same issue as Starwood: the immediate elite benefits are top-heavy and there's no consolation prize. You either get the upgrade and life is good...or you don't. There's no in-between. Offering E+ allows a far greater portion of elites, if not *all* of them, to have a decent Y experience should their upgrade fail to clear and provides with a tangible token of appreciation for their loyalty.
Revenue management can help mitigate the loss of seats. The immediate downside to E+ is the removal of row(s) of Y/F. No way to sneak around it and that in turn means less seats to sell or upgrade into. However it's important to remember
E+ can only lose money with a 100% LF, but can generate increased yields on *all* flights. Moreover revenue management should be able to take the seat cut out of W/E/S/T/N/L seats, not Y/B/M.
Stronger partner marketing. CO's done well in working with Chase to offer customers creative alternatives to avoid the more egregious changes rolled out by the industry (e.g. bag fees) and the creation of E+ will allow for stronger tie in with partners (such as
Chase/UA's Visa card with E+ ($275)).
Harmonizes the CO product with UA. In a good way, that is! With the two airlines working to deepen their partnerships, CO adding E+ would allow for a more seamless travel experiences between the two airlines as well as the cross-selling and marketing throughout the entire combined network. (e.g. on all CO and UA flights worldwide you'll find E+, etc.)
Bottom line: the EUA, as we knew it, is being fundamentally changed to better reward those who're willing to pay the airline more with the net result being incremental revenue and falling average upgrade across the system. However if CO continues on this course, they'll have to address the increasing occurrences of once upgraded elites in Y and I'm suggesting the implementation of E+ will be a win: the potential to drive incremental revenue and the consistent delivery of an elite benefit (plus all the stuff listed above.)
Your thoughts?