Old Mar 26, 17, 7:01 am
  #219  
cerealmarketer
 
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
Posts: 4,451
Originally Posted by spin88 View Post
There are few consumer products where someone spends $10-20-30-50+K/year on multiple purchases and has multiple options on each purchase. Closest I can think of is Groceries. But it is not in any way of the same magnitude. In addition, Mileage programs have one other feature making the situation different, benefits go to the flyer, who is usually the person selecting the purchase, but often the person paying is their employer/company.

If United always offered the best combo of price, fight time, and product, then they would not need a mileage program. But, other than out of two fortress hubs (IAH and EWR) at any one time most people have multiple options. Before the advent of AA's program, people would buy each leg on whatever airlines, the idea behind AA's program was that by rewarding loyalty, people would still fly AA even when it was not absolutely the best combo of price/schedule/product. As a result AA would get more business, and particularly from business travelers who were not flying on "excursion" fares (as they were called back then).

To the extent that United cuts back its "benefits" well then with each purchase it gets easier to stray. Going somewhere, well Delta has a nicer aircraft and a slightly better time, discount F, so I buy. Oh well better experience, so I buy again and then I figure "oh, and they give upgrades, and if I get to DM I get lounge access. Well since United does not give upgrades, well then perhaps I ought to switch my travel to Delta and get those benefits....



The modeling is not difficult, but you would have to want to do it. Pick a random sample of elites current/former and ask them what their travel patterns are, and who they are flying, and what they think of each airline. If they answer you are flying them less, ask a series of detailed questions as to why.

I in fact got one of these detailed surveys (and got paid to take it) from Starwood the other day. I'm lifetime PLT, and my stays dropped last year, clearly they wanted to know why. It was well designed to look at (a) if they had actually lost business, (b) to whom, and (c) why.

Then you compare the former, and currents and determine how much they dropped in spending and why, and compare it to the new elites you got (and sample them too...).

Under Jeff United did not want to ask these type of questions, as they did not feel they needed to, they just KNEW that no-one would leave as they had to fly United.



The idea that there are lots of people paying high fares that just pick random airlines is contrary to everything the airlines have said for years. I posted the quotes above, all of the big US carriers have said that a massive part of their revenue comes from a relatively small number of frequent travelers. https://www.flyertalk.com/forum/28051886-post73.html

And while their are some companies that via corporate deals make picking another airline impossible, most don't. And my experience as a lawyer, with lots of domestic travel for many years, is that I nearly never run into someone who is not tied into a particular airline program. Some fly two airlines, but I can count on my hands the number who were truly agnostic.
Delta is happy to push paid first class even harder at the expense of elite benefits. And their product advantage is a slim as it's been the last 5 years. I view product as reliability, onboard, and lounge. All significantly improved at UA now.

Page 37

http://s1.q4cdn.com/231238688/files/...entation_F.pdf

First paid load: 57% vs 45% in 2013, target 70% in 2018
Comfort plus paid load: 36%, target 50% in 2018

Complimentary upgrades are a joke on both airlines for their heaviest fliers unless you're nonhub. Even then tends to be mostly short haul. DL just gave a big finger to BOS and WAS based elites, eliminating comp upgrades on the transcons.

As regard to extra legroom seats, UA is the clear winner here for top elites. No games of being 'upgraded' to extra legroom, much bigger footprint, so less likely to be in a middle, and free full run of the menu, not a pre-selected 'snack.'

Also, keep in mind the GS program.

Delta doesn't super-serve that subset of fliers the way UA does. The networks are different, and perhaps Delta felt it was concentrating too much risk into one small group of flyers.

GS + 1K coexisting was fine when UA was mostly trunk routes and limited domestic coverage.

Add in the CO network and not raising the $$ threshold much, it seems the curve to get into GS is easer than it was before the networks combined. As in, a lot easier to do all your spend on UA than in the past.

Was a better answer demoting more GS, increasing 1K requirements, and preserving some more long haul upgrade inventory?

Another question to ask is whether the Airbus fleet should become should become 12 - 16 seats in F with a reduced E+ cabin now that more of F is monetized.

Last edited by cerealmarketer; Mar 26, 17 at 7:07 am
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