Originally Posted by
porciuscato
That's based on the fallacy, which I see repeated throughout this thread--that people on low fares represent a "loss" for United. The reality is they fill seats that would otherwise be empty. As long as the marginal revenue for that seat exceeds the marginal cost (i.e. the fuel cost for an extra 180lbs, the cost of printing the ticket, serving the extra soft drink, etc.), it makes sense to sell him that seat. And I'm pretty certain United always prices seats above marginal cost.
When this guy takes his $1059 elsewhere, that will be $1059 of incremental revenue that United doesn't have.
Fair, but the other "fallacy" which you neglect to mention, is that just because UA "fills seats that would otherwise be empty" with a low fare, representing good value to that customer as well by the way, doesn't mean that UA must reward those same fliers with out sized benefits/elite status, relative to said "marginal revenue" contribution.
So, I think the fallacy you may be falling for is not recognizing that UA (or any other business) can move pricing along the supply/demand curve as necessary to meet business requirements, but also not necessarily view those customers as valuable. The two are not mutually exclusive.
Furthermore, at the lowest price points, those seats will get filled, so even when "this guy takes his $1059 elsewhere" it will likely not be very hard for UA to fill that seat. They don't have to fill it with a 1K FTer...
Regards