Since Jeff took over, each 1Q has been bad, and I'm viewing this as more evidence that United is losing yet more high value passengers at year end. We now have 5 years of quarters (2012-2016) and I don't see anything in common macro wise to suggest under-performance, other than the loss of high value traffic giving up on United at year end.
The losses at this point are staggering.
In 2011 United had $7187M in passenger revenue, and PRASM of 11.94 c/mi; Delta had $6575M in passenger revenue, and PRASM of 11.69 c/mi.
This quarter, UA had $6970M in passenger revenue, and PRASM of 12.00 c/mi, and Delta had $7762M in passenger revenue, and PRASM of 13.35 c/mi.
The cumulative change is that United's passenger revenue has actually fallen by (3.1%) and Delta's has increased by 18%, in PRASM United's rose by .5%, Delta's was up 14.2%.
So Delta both attracted more traffic, and got them to pay more, than United did over the last 5 years.
If one assumes that United had matched Delta in PRASM growth over the last 5 years, United would have another $954.9M in revenue this quarter! [This is just the change due to PRASM, UA also lost traffic overall.] The cumulative losses are just staggering. United's under performance (vs Delta) cost them $195M of this for this quarters further falling behind.
United, with what was by far the best hubs, and the biggest network c2011 managed to get out run (by a lot) by an airline with substandard hubs, an airline that has had to (at great expensive) try to build out its network. Although a few here has steadfastly said its all network and schedual, I think very substandard product, substandard CS, substandard OT, and what became a not really better mileage program all have caused this massive erosion in revenue. Bottom line, people are not buying (unless its cheaper, by far) what United is selling...
Originally Posted by
EWR764
It's evident, however, that cutting costs will continue to put United at a disadvantage relative to the competition, so I am hopeful we won't see more of the Smisek-era devaluation of the product to mask the fundamental issues that the airline was (is?) simply getting wrong.
+1. United badly needs a turn around plan. When they launched "flyer friendly" I said it was a big mistake to waste that bullet, w/o real improvements it would fall flat, and do more damage than good by not matching the reality on the ground, while chewing up some of the good brand history. People are now cynical, and only a major change in direction, with real improvements, is likely to turn around this sinking ship, before the next fuel/demand shock. I see little sign of this. No revolutionary hard product, ongoing sub-par domestic product (bad seats, no IFE), and an ongoing gap in F/B.
There is simply nothing to get people to try United again, nor if they did, would they be likely to switch more travel to United vs. DAL, AAL, or overseas carriers.