FlyerTalk Forums - View Single Post - Breaking News: UA and CO strike merger agreement
Old May 1, 2010 | 11:00 am
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Originally Posted by channa
I'm not sure I'd go that far. CO management has historically been uber-conservative in their approach, in some cases, missing the forest for the trees. From a revenue growth perspective, I think that UA management has the better track record.

E+, PS are some product examples where CO defaults to operational efficiencies at the expense of potential revenue gains. And we all know the OnePass program examples. UA management has been very aggressive in trying to drive revenue with not just upsells, but also perks like EliteChoice, bonus SWUs for each 50K after 100K and so on. Items, again, that CO has shied away from.

When CO talks about how having a premium transcon product would throw a wrench into the whole operation, that doesn't exactly give me confidence in their business savvy. Operational savvy perhaps, but not business savvy. Had they approached it from a revenue angle, I'd agree with you (e.g., if they said that EWR can't command the same premium that JFK can, that'd be a much different story). But they didn't. It's almost universally an operational consideration that drives the business decision, which.

Not to say operational concerns aren't important. But they shouldn't be the driving factor as they seem to be at CO.

A balance between the two teams -- UA and CO -- would make sense. UA for its vision and ability to generate revenue, and CO with its ability to optimize and execute.
Excellent, very pithy analysis. Operational considerations should assist in generating revenue, not run the show.

At CO, the reason operational considerations take first priority, though, is because the corporate culture emphasized keeping costs low versus generating revenue.

You can cost to the bone but if the yield remains low or null, it won't do a lot of good. As you write, there are a number of market segments (overseas premium, transcon) where CO's mantra of keeping the product unified and simple (i.e. no sub-fleets) cost them revenue.
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