FlyerTalk Forums - View Single Post - Wow - selling the upgrades at the gate so explicitly.
Old Apr 1, 2018, 4:05 pm
  #376  
WineCountryUA
Moderator: United Airlines
 
Join Date: Jun 2007
Location: SFO
Programs: UA Plat 1.995MM, Hyatt Discoverist, Marriott Plat/LT Gold, Hilton Silver, IHG Plat
Posts: 66,854
Originally Posted by PDXalways
Not necessarily. The earning algorithm could be as generous or as restrictive as UA desires. In a most beneficial model to the airline, Premiers might only one upgrade dollar for every $100 spent on airfare. A 1K member who spent exactly $12,000 in a year would only earn $120 in upgrade credits each year. That would barely pay for a one-time upgrade from DEN to the West Coast. On the flip side, if the upgrade dollar earning accrual was one dollar for every $5 spent, the same 1K member would have $2,400 in upgrade credits to apply - a much more generous model for the customer. Both of these examples are extreme and not based in reality, but I use them to illustrate how there could be a sweet spot for UA that allows for cash upgrades to still be sold at the desired volume & yield... along with accompanying opportunities for Premier members to guarantee occasional upgrades by applying their banked upgrade dollar credits at their discretion.

Under this model, domestic CPUs would completely disappear. Everyone pays for an upgrade - either with cash or with the stored value of their banked upgrade dollars. The airline can be as generous or as stingy as they want in how they determine who earns upgrade dollars and at what accrual rate. It has the benefit of potentially being more revenue-positive (transactionally) for UA if they're tight with it - and it offers Premiers the system transparency needed to allow them to self-manage when & how they upgrade domestically.
This generates no new revenue and displace / reduce the present cash upgrade systems. {Although you might try to say it will generate revenue by increasing "loyalty" -- but that is old style thinking and not the direction the airlines are going)

This "system" is just a revised version of e500s, of award miles, of upgrade certs, ... these are the approaches airlines are leaving in the past, see no hope of them creating new versions. At least not until the economy turns and airlines have a need to fill empty seats. For now the airlines are interested in more hard cash revenue and see no particular need to enhance their benefit programs. But one day they may.
WineCountryUA is offline