Originally Posted by
phlflyer10
So if they can sell a seat for $69 and generate additional revenue on the flight - why wouldn't they do that rather than give it away? If they give the seat away - that generates zero net additional revenue - if they sell it - that generates $$$$. Hmmm - how much does the company you work for give away for free?
Two answers here...
First, many elites will pay extra to fly on united. So if I pay $600 for a close-in ticket on UA when I could have paid $500 on another airline, UA is making incremental $$$$. The reason UA can charge more than the market rate is because of loyal travellers like me who will pay a bit more. Instead, they are selling the upgrade to a general member who probably paid $300. So which is better for UA? $300 + $59 in incremental revenue or my $600? Because i've already started paying $500 on another airline in certain situations.
Second, CO doesn't take into account the total value of the customer. Lots of people fly on mixed fares. They fly in paid business class for work but then decide to buy a cheap fare to go on vacation. Which is more valuable... giving the guy who spends $30k on higher-fare tickets a free upgrade when he goes away for the weekend or making an extra $59 from the once-a-year flyer?
We all agree that UA is in business to make money. It's just that there are different ways to maximize profit...and it seems CO doesn't realize that in hubs with more competition they need to up their loyalty game to maximize profit.