You'd replace a set of 3 with a set of 2. It would probably be the most expensive component of the aircraft reconfiguration.

Don't forget Ted!

And if my grandmother had wheels she'd be a wagon... :D

I wouldn't argue that E+ may work for United, an airline that flies SFO-JFK on multiple frequencies with 3-class service, SEA-NRT, IAD-KWI, and LAX-SYD. A premium economy class makes quite a lot of sense on longhaul (I tend to think UA's a bit low-rent about how they treat Y in general, but that's a different discussion).

The question is more "is this the kind of thing a regional West Coast airline with a LOT of 2-3 hour flights that compete with WN should invest in, given that it hasn't turned UA into a world-beating airline or particularly helped US keep routes it's ceded to WN in a lot of the markets that are very important to AS"? I tend to think "no". UA and AS are very different airlines. What is lucrative and worthwhile for one may not be for another.

If you haven't done so already, take a look at this thread I started in the UA forum, asking people to describe what effect E+ has (or doesn't have) on their loyalty. So far, 15 (now 17) people have said variations of "it's what keeps me coming back to UA," with only 1 person (now 2 people) to date saying it wasn't important to them.

Also note the claim that E+ generates $100M/year in revenue to UA. Unlesss someone has evidence to the contrary, I'm going to assume this is true.

So let's see here:

• UA says publicly that E+ is profitable and we have a report that it generates $100M/year in revenue
• UA fliers here on FT report by a 15:1 margin that E+ is a huge reason for them to continue flying UA
• B6 says publicly that EML increases revenue
• VX says publicly that Main Cabin Select is a money-maker
• AS can remove just one row of 6 six seats on a 738 and get to E+ or better pitch in rows 6-12
• If AS takes the additional step of replacing 1 set of 3 seats in the back of their 738s with a set of 2, they can drop to 150 pax and 3 FAs/flight

I don't know how much more evidence to provide in favor of a limited test of North of Coach on certain transcon routes. I'd hope this is enough.

Three points here:

First, UA, B6, and VX have all said that their premium economy programs are money-makers. So we're not just going on one example here; we're going on three.

Second, I agree with you in the sense that West Coast N/S flights probably aren't the best application of premium economy. Start with a 738 used primarily on transcon flights. If that works, add a few more 738s to broaden the test, still focused on transcons. If that works, add a few ETOPS 738s to broaden the test to Hawai'i. Maybe AS never extends it beyond the 738s and 739s at all. Maybe it's always a transcon or transcon-and-Hawai'i thing.

Third, the meme that "UA isn't successful, so why copy anything they're doing?" keeps reappearing in this thread in various guises. I don't get it. If you listen to the members in the UA forum, they'll tell you in many cases that E+ is the only thing that keeps them coming back to UA. In other words, it might be that with all its troubles (as 777Brian points out), if it weren't for E+, UA might be gone already.

Revenue management doesn’t work that way. The easy thing is to fill a plane. As I understand it, inventory (buckets) is allocated on a percentage and based on the expected demand of the flight. As a simplified example, on a 100 seat plane, there would be 20 discounted seats. On a 90 seat plane that would be 18. The fact that you simply remove seats you are not using is false. Typically airline load factors would remain the same when seats are added or subtracted. The key is for the plane to produce more revenue in whatever configuration it is in. I still believe that Alaska configurations are producing maximum revenue and an E+ situation would force Alaska’s seats to work too hard for them and they would lose revenue. It could be debated that the First Class seats could be reduced to a Business class seat on the planes that operate the West Coast and AS could produce more revenue by having more seats on the plane. But they have done those studies to my understanding and we have what we have, including 157 seats and a 4th flight attendant.

If United added 6 seats to every mainline plane, got a ticket price that is 20% below their system average and filled only 3 of those added seats they would generate $300M. I’m not really a wiz at math but $300M trumps $100M. See my comments above; add the seats and that 89% load factor they threw down in June stays at 89%. That would be well North of $300M and much closer to $500M annually. Would they lose elites, yes, but they filled 89% of their seats, there obviously were others willing to fly on them that couldn’t.

No one single product is truly “profitable” or “unprofitable.” It is “spin” so that United doesn’t have to explain it to the Wall Street analysts. United believes that E+ is revenue positive (not profitable). If it were profitable, they do it on all of the plane instead of just a couple of rows. It is just a part of the overall revenue picture on board each flight for United – as is first class, bag fees, fees on fees, the flight attendant will smile at you fee, etc. And as we all know, they are still losing money. So either they need to do more E+ or they need to quickly fix what they are doing or they will die, or be bought. I don’t think Continental would keep E+.

Alaska is going to have a better financial year than United. They have more cash in the bank and their credit rating is North of Expected better. Personally, I think Alaska already has copied United on too many things. I want Alaska to keep on giving us great service and I want them to continue to grow to new places. I just wish I could fly them more often, but that is hard to do in Colorado.

I’m not as tall as you but I am not a small person. But on Alaska I can easily open my laptop and work in my space with the trim line seats, enjoy my complimentary adult beverage (in coach – don’t get that in E+) and have enough room to stretch out the feet. I don’t need any more room, but if Alaska wanted to give it to me for free, I wouldn’t reject it. Yes, I still would take Alaska over United’s E+ anytime. Fortunately, I do mostly 2-3 hour flights and many of those hours are on regional equipment. But I have done coast-2-coast on AS and its fine.

OK, I'm not arguing that. In fact, I conceded this quite a while back in the thread.

Funny, though, how the AS posters in this thread who are saying "I don't think this is such a hot idea" don't exactly count as "evidence", eh?

That being said, I would gladly concede NEITHER should be used as "evidence. I would prefer real market research, done by experts. A group of FT posters in the UA forum or the AS forum is NOT a representative sample of AS's market, not by a long shot. All this tells you is UA diehards like E+ and AS loyalists bleed teal and blue.

No, it's more "A premium economy product might work better for an international carrier that has a LOT of long-haul presence where customers take very long flights, but not so good for one that is a regional carrier focused on the West Coast of the US and predominantly flying shorter stages in 737s".

I'll save some electrons and say COS flyer made the rest of my counterargument for me.

^ There we go. Just because UA says E+ generates $100M more for them in revenue on those seats, doesn't mean that's $100M more than what they would make had they not offered E+. It looks like a gauranteed $100M more a year. But really if they worked on selling a couple more seats, they'd have another $100M and more like COS flyer pointed out.

Now on a B6 and VX I would buy that they are earning more revenue by charging more for exit row and bulkhead seats. They didn't have to modify anything to the airplanes to have those seats. So all they need to do is sell one upgrade and they've already received a revenue premium. So I would think that that option is a win-win compared to removing a row for an E+ section.

Three things:
1. The difference with E+ is very noticeable, especially on longer flights. I appreciate it but still maintain that the vast majority of the flying public won't pay for it.

2. I still don't believe it's profitable on a marginal basis.

Just because UA gets $100M in revenue per year from upsells doesn't mean it's profitable. In order to justify it as a good decision that number would have to be compared to the foregone revenue from not being able to sell those 6 extra seats. If the opportunity cost exceeds the marginal revenue then it's a money-loser.

3. The difference in comfort on the length of most of AS' flights does not justify paying for E+ as a consumer.

<<<<<insert dead horse here>>>>

[QUOTE=COS flyer;12036121]

If United added 6 seats to every mainline plane, got a ticket price that is 20% below their system average and filled only 3 of those added seats they would generate $300M. I’m not really a wiz at math but $300M trumps $100M. See my comments above; add the seats and that 89% load factor they threw down in June stays at 89%. That would be well North of $300M and much closer to $500M annually. Would they lose elites, yes, but they filled 89% of their seats, there obviously were others willing to fly on them that couldn’t.

No one single product is truly “profitable” or “unprofitable.” It is “spin” so that United doesn’t have to explain it to the Wall Street analysts. United believes that E+ is revenue positive (not profitable). If it were profitable, they do it on all of the plane instead of just a couple of rows. It is just a part of the overall revenue picture on board each flight for United – as is first class, bag fees, fees on fees, the flight attendant will smile at you fee, etc. And as we all know, they are still losing money. So either they need to do more E+ or they need to quickly fix what they are doing or they will die, or be bought. I don’t think Continental would keep E+.

QUOTE]

First off your comment about if it was profitable it would be on the entire plane is completely inaccurate. That's what AA did with MRTC and it showed that instead of losing approximately 1 row of seats you would lose 2, increasing the amount of revenue you would need to make up. The competitive nature of the airline business prevented AA from gaining a revenue premium from this concept. Plus there is the law of supply and demand, not that many people care about leg room, UA has seemed to find the right supply mix. Outfitting an entire aircraft with an E+ product would result in oversupply and suboptimal financial results (if you increased fares to justify you would reduce demand and LF, keeping fares the same would lower revenue because you lost 12 seats).

Regarding revenue management just because you put 6 additional seats back into a plane doesn’t mean you would automatically fill them. It is a fallacy to assume that an 85% LF would translate into any meaningful estimate on how many additional seats would be filled. While UA could fill some of those seats if they were put back into the plane it would mean sacrificing yield - lowering prices to increase demand and bookings. In fact, since most coach fares paid are below the breakeven per mile cost, removing E+ might actually harm profitability. To your comment about airline load factors remaining the same if we add or subtract seats even if we assume that to be accurate (which revenue managment will tell you is not always the case) 100% of the time it will reduce yeilds. This means that yes more revenue will be generated from those 6 additional seats but less will be made from the other ~120. If UA could sell those additional seats at full Y fares then maybe I would agree with you but they can't. With standard yeilds perhaps the additional seats generate $300M more revenue but the balance of the seats revenue decreases by $200M.

E+ yields $100M in up-sell charges (the last time I looked and this number has been growing) plus some additional revenue premium from its elite fliers (which is signifigantly greater than the up-sell). UA has shown that loyal elites will pay a small fare premium over competitive carriers for E+. Rather than saying if E+ is profitable or not let me say it a different way. Implementing E+ improved UAs revenue mix and has proven to provide more value than the potential for 6 additional revenue seats. UA conducts this analysis and validates E+ to the BOD every year. Trust me if E+ wasn't the revenue tool it was Wall Street Analysts would question it louder.

Not to get too sidetracked, but the UA BOD also allow Tilton to keep running UA into the ground. I wouldn't assume cause they buy off on it that it must mean E+ is a winner....

And Wall Street analysts are just as suspect in the calls and conclusions they make. In the end they are just analysts making money for their clients and the fact that UA stock is dangerously low shows that no amount of E+ is generating enough for them to seem to have any value.

If not throwing their hands up in the air over UA to get rid of E+ is a sign that they think it works, then they sure aren't throwing their hands up in the air and scolding other airlines for not having E+. So it's hard to say that they think it hands down works if they aren't pressuring others to do it. I've yet to read many analyst comments suggesting AS or anyone else put in an E+ product.

If Wall Street analysts have all the answers, why aren't they out there running the biggest and best airline ever in the history of flight? They are just as bad of armchair CEOs sometimes as we all are. We just don't get paid for it :D

Thank you!!! A drowned rat has now joined it.

Yeah, they've done so well the last eighteen months I think we should just let them run everything. :rolleyes:

Correct…history has shown that AA and TWA’s MRTC did not work ‘cuz they didn’t put more revenue on the plane. But that does not say that UA nor Jet Blue nor Virgin are putting more revenue on the planes with their product. You are taking the word of their CEOs. Jet Blue is the only one of that group that financially is in decent shape. Virgin is a disaster and about to become a Republic company and United is well…United.

Incorrect. History has shown when airlines add or subtract seats that their load factor has remained roughly the same. That goes for United, Virgin, Jet Blue, American, TWA and yes-even Alaska, which added seats to 2 fleets. It comes down to maximizing revenue. 6 seats - even if you fill only half of them (as I pointed out) at 20% less revenue than your system average (let me emphasize AVERAGE), you would get $300M more revenue. E+ would have to up sell 12 seats just to equal those 3 seats of added revenue. Sorry, but that’s not realistic on most flights. And at an 89% load factor – United’s June load factor – every flight was essentially full. They easily would have sold more than 3 seats per flight. That really would get it to $500M. I will grant you that on some T-Con flights and definitely international, that E+ is a real selling feature. But from Denver to San Fran, forget about it. Even worse is the Regional Jet from Denver to Albuquerque…really a waste of seats and a loss in revenue. Put 4 more seats in the RJ and reap all of the revenue, not a prorated $49 and 10 upgrades.

Bottom line….Wall Street has plenty to question about United, they don’t even have to get to E+. This thread seems more about really loyal United flyers defending the E+ product on United. The AS flyers have all said, AS is fine and their service is superior. There you have it. AS should do what AS is doing and UA can, well, hopefully not become Air Obama. But hey at least if they do, they will get the business contracts from GM, and Bank of America.