The Waning EUA: Why CO Now Needs E+
Jan 25, 2010 | 9:40 am
#1
Original Poster
Join Date: Oct 2004
Location: Clinging to the edifices of a decadent past from the biggest city in America nobody really cares about.
Programs: (ಠ_ಠ)
Posts: 9,077
The Waning EUA: Why CO Now Needs E+
With CO now actively marketing various mechanisms to sell or upgrade FC seats to all customers they're doing two things:
The obvious fallout for elites - and greater implication for CO - is if EUA rates drop materially will customers begin to book away, and in turn will this undermine the revenue gains made through monitizing the upgrade process.
Assuming CO does not choose to alter this philosophy (and for the record, I think this move is correct: F seats to those who're willing to pay for it before those who are not), I think it would behoove them to implement a UA style E+ across the mainline fleet. Here's why:
Your thoughts?
1. Increasing revenue
2. Decreasing the EUA success rate for elites
While there's plenty of speculation and arguments to be had on the merits and details of this, the fact remains that CO is actively engaged in this. Additionally, CO will also need every last drop of revenue they can squeeze if they want to meet their goal of being profitable year round.2. Decreasing the EUA success rate for elites
The obvious fallout for elites - and greater implication for CO - is if EUA rates drop materially will customers begin to book away, and in turn will this undermine the revenue gains made through monitizing the upgrade process.
Assuming CO does not choose to alter this philosophy (and for the record, I think this move is correct: F seats to those who're willing to pay for it before those who are not), I think it would behoove them to implement a UA style E+ across the mainline fleet. Here's why:
E+ will serve to drive additional revenue. A sub-set of customers are currently willing to pay more close to departure for a F seat. Creation of an E+ zone allows CO to market more upgraded seats at a lower pricepoint than F.
Engenders loyalty among all elites. The OnePass elite program suffers from the same issue as Starwood: the immediate elite benefits are top-heavy and there's no consolation prize. You either get the upgrade and life is good...or you don't. There's no in-between. Offering E+ allows a far greater portion of elites, if not *all* of them, to have a decent Y experience should their upgrade fail to clear and provides with a tangible token of appreciation for their loyalty.
Revenue management can help mitigate the loss of seats. The immediate downside to E+ is the removal of row(s) of Y/F. No way to sneak around it and that in turn means less seats to sell or upgrade into. However it's important to remember E+ can only lose money with a 100% LF, but can generate increased yields on *all* flights. Moreover revenue management should be able to take the seat cut out of W/E/S/T/N/L seats, not Y/B/M.
Stronger partner marketing. CO's done well in working with Chase to offer customers creative alternatives to avoid the more egregious changes rolled out by the industry (e.g. bag fees) and the creation of E+ will allow for stronger tie in with partners (such as Chase/UA's Visa card with E+ ($275)).
Harmonizes the CO product with UA. In a good way, that is! With the two airlines working to deepen their partnerships, CO adding E+ would allow for a more seamless travel experiences between the two airlines as well as the cross-selling and marketing throughout the entire combined network. (e.g. on all CO and UA flights worldwide you'll find E+, etc.)
Bottom line: the EUA, as we knew it, is being fundamentally changed to better reward those who're willing to pay the airline more with the net result being incremental revenue and falling average upgrade across the system. However if CO continues on this course, they'll have to address the increasing occurrences of once upgraded elites in Y and I'm suggesting the implementation of E+ will be a win: the potential to drive incremental revenue and the consistent delivery of an elite benefit (plus all the stuff listed above.)Engenders loyalty among all elites. The OnePass elite program suffers from the same issue as Starwood: the immediate elite benefits are top-heavy and there's no consolation prize. You either get the upgrade and life is good...or you don't. There's no in-between. Offering E+ allows a far greater portion of elites, if not *all* of them, to have a decent Y experience should their upgrade fail to clear and provides with a tangible token of appreciation for their loyalty.
Revenue management can help mitigate the loss of seats. The immediate downside to E+ is the removal of row(s) of Y/F. No way to sneak around it and that in turn means less seats to sell or upgrade into. However it's important to remember E+ can only lose money with a 100% LF, but can generate increased yields on *all* flights. Moreover revenue management should be able to take the seat cut out of W/E/S/T/N/L seats, not Y/B/M.
Stronger partner marketing. CO's done well in working with Chase to offer customers creative alternatives to avoid the more egregious changes rolled out by the industry (e.g. bag fees) and the creation of E+ will allow for stronger tie in with partners (such as Chase/UA's Visa card with E+ ($275)).
Harmonizes the CO product with UA. In a good way, that is! With the two airlines working to deepen their partnerships, CO adding E+ would allow for a more seamless travel experiences between the two airlines as well as the cross-selling and marketing throughout the entire combined network. (e.g. on all CO and UA flights worldwide you'll find E+, etc.)
Your thoughts?
Last edited by J.Edward; Jan 25, 2010 at 7:34 pm Reason: Spelling
Jan 25, 2010 | 9:47 am
#2
Suspended
Join Date: Jun 2005
Programs: Continental Gold Elite, United Premier Executive
Posts: 6,766
I would proffer these countervailing considerations (will epxand upon them later):
1. E+ dilutes the distinction between Economy and domestic First.
2. On international flying, CO and UA benefit from maintaining varied product offerings so long as the most important product -- the international Business Class cabin -- is virtually identical between them.
1. E+ dilutes the distinction between Economy and domestic First.
2. On international flying, CO and UA benefit from maintaining varied product offerings so long as the most important product -- the international Business Class cabin -- is virtually identical between them.
Jan 25, 2010 | 10:19 am
#3
Join Date: Apr 2006
Location: CO hublette
Programs: UA AU MM,HH Diamond,Hyatt Globalist , Marriott Gold
Posts: 2,316
J.Edward, I think you are right. If my upgrade percent drops and I can start booking UA into E+, my money is probably going to go to UA.
Jan 25, 2010 | 10:23 am
#4
Join Date: Jan 2004
Location: NJ, USA
Posts: 2,850
just bought E+ for 2 flights, I want that extra leg room and won't chance a flight of more than 3 hrs in economy
But Continental is still my first choice if I can get upgrade w miles
But Continental is still my first choice if I can get upgrade w miles
Jan 25, 2010 | 11:13 am
#5
Join Date: Jul 2002
Location: Virginia, USA
Posts: 4,710
I think we'll be seeing some double dipping by CO elites in the near future--booking UA for E+ and collecting CO OnePass miles for the flight.
Jan 25, 2010 | 11:16 am
#6
Join Date: May 2006
Location: PHL/EWR
Programs: UA, AA
Posts: 1,821
I got a taste of E+ and I'm now actively booking UA over CO when I can and paying the upcharge fee. Looking forward to the implementation of reciprocity.
Jan 25, 2010 | 11:48 am
#7
Join Date: Mar 1999
Location: Nashville
Programs: United 1K
Posts: 2,265
Have to say CO coach seats are terrible compared to other carriers.
Jan 25, 2010 | 11:50 am
#8
Join Date: Jan 2008
Location: SFO and SSA
Posts: 92
I'm also finding E+ on United much more enticing now that I rarely get upgrades on CO.
Jan 25, 2010 | 11:54 am
#9
Join Date: Nov 2006
Location: GRR
Programs: UA - 1K, DL - Plat
Posts: 149
Totally agree.
As a plat I'm about 50% EUA for the year, yet on DL/NW as a plat I'm 100% EUA.
If CO doesn't do something, I have a feeling I'll be looking at changing my primary program to DL.
As a plat I'm about 50% EUA for the year, yet on DL/NW as a plat I'm 100% EUA.
If CO doesn't do something, I have a feeling I'll be looking at changing my primary program to DL.
Jan 25, 2010 | 12:04 pm
#10
Suspended
Join Date: Nov 1999
Posts: 24,150
I dont blame CO they Must do whats best for their continued existence and that means getting $$$ however they can (true they cant afford to lose the ElCheapos either). While I Must do whats best in order to stay out of their horrible no-leg room coach seats
Jan 25, 2010 | 12:09 pm
#11
Join Date: Sep 2005
Location: JZRO
Posts: 9,175
I would gladly pay extra for E+ on CO, rather than having to wait to see if I do or do not get an upgrade. Of course that was when I was elite. I'm falling to Bronze Elite in a few weeks, but that's all the more reason to pay for E+.
One concern: would employers prohibit E+ bookings?
One concern: would employers prohibit E+ bookings?
Jan 25, 2010 | 12:15 pm
#12
FlyerTalk Evangelist
Join Date: Feb 2006
Location: A festering pit; a pustule of a fistula set athwart the miasmic swamps of the armpit of the Gulf of Mexico - a Godforsaken wart upon a dark crevasse of the World. (IAH)
Programs: UA Lifetime Gold, BA Silver, Marriott Lifetime Plat, Hilton Gold, Accor Gold
Posts: 31,403
It's not a question of losing el-cheapos, it's a question of maximizing revenue from them. The el-cheapos will always book based on one factor, and one alone: price. Charging them an upsell to F is just one way to get a bit more $$$ from them (like DirecTV, and probably BOB food, which I suspect is coming soon to the Y cabin). I'm surprised they haven't found a way yet to charge for activation of in-seat power.
The problem (to me), is that CO appears to have chosen to generate revenue from the mass of its traveling populace, at the expense of its loyal elite flyers. It's nice that they can glean some additional revenue from their cheap-ticket flyers. However, those flyers are necessarily fickle, and preferring them over flyers who have demonstrated ongoing loyalty is short-sighted, in my view. US selling upgrades out from underneath its elites didn't go over so well with its elites. For that (and numerous other reasons), US experienced a mass-exodus of its elites.
If faced with another SARS or international incident impacting travelers (with a concomitant drop-off in low-fare, leisure flyers), CO will be in an exceedingly poor position to weather the storm if it has, in the interim, managed to drive away a significant population of its elites.
The problem (to me), is that CO appears to have chosen to generate revenue from the mass of its traveling populace, at the expense of its loyal elite flyers. It's nice that they can glean some additional revenue from their cheap-ticket flyers. However, those flyers are necessarily fickle, and preferring them over flyers who have demonstrated ongoing loyalty is short-sighted, in my view. US selling upgrades out from underneath its elites didn't go over so well with its elites. For that (and numerous other reasons), US experienced a mass-exodus of its elites.
If faced with another SARS or international incident impacting travelers (with a concomitant drop-off in low-fare, leisure flyers), CO will be in an exceedingly poor position to weather the storm if it has, in the interim, managed to drive away a significant population of its elites.
Jan 25, 2010 | 12:28 pm
#13
Join Date: Jan 2005
Location: NJ
Programs: World of Hyatt Globalist, Marriott Premier Platinum
Posts: 467
Just booked a UA flight as a CO Platinum, I am really tired of the EUA slot machine game with CO changing the odds anyway it wanted.
Jan 25, 2010 | 1:03 pm
#14
Join Date: May 2009
Location: PHL
Posts: 2,842
I didnt wait to find out Im stuck in a non-Exit Row Y seat. So far all 4 trips thru 2/10 are not on CO. I will use CO if its a UA code share for some Intl trips, once a UA Elite can get the better seats.
I dont blame CO they Must do whats best for their continued existence and that means getting $$$ however they can (true they cant afford to lose the ElCheapos either). While I Must do whats best in order to stay out of their horrible no-leg room coach seats
I dont blame CO they Must do whats best for their continued existence and that means getting $$$ however they can (true they cant afford to lose the ElCheapos either). While I Must do whats best in order to stay out of their horrible no-leg room coach seats
The big question is how much is CO making by selling more buy-ups vs. how many paxs may move to other carriers because of the devalued EUA. If CO makes $x from buy ups and loses $y because paxs begin to see more value in other programs and switch to UA, DL, or AA; x better be more than y.
I know it is not that simple, but it has to be taken into consideration.
Jan 25, 2010 | 1:22 pm
#15
Join Date: Dec 2004
Location: NYC
Programs: CO Plat, Starwood Plat, Hyatt Plat, Hilton Diamond, CO Pres. Plus, Hertz #1 Gold
Posts: 1,223
Likely, CO's thinking is that they've now given us SWU's, although not at the same number as UA, the MM program and some other items to keep people flying CO after reaching whatever Elite level was wanted, therefore coach seating, which has been a bane of existence for all of us for years, won't be changed anytime soon. I remember when we were told at the first DO's that CO was looking into changing Y seating to the rocking shell seats, or something else more comfortable; but by DO III, that line was over, despite the groans. Remember how long it took CO to step up to lie-flat seating in BF? They could no longer use the "We're waiting for the 787 to arrive" excuse after doing so through about 3 or 4 delays of that plane.
Personally, I really liked my time in E+ on the UA flights I've had. I'd really like to see it at CO. Failing that, comfy shell seating all around would work for me. I don't know the cost/weight/load factor of one vs. the other, but E+ was a very, very positive enhancement to me. And I paid for it.
Personally, I really liked my time in E+ on the UA flights I've had. I'd really like to see it at CO. Failing that, comfy shell seating all around would work for me. I don't know the cost/weight/load factor of one vs. the other, but E+ was a very, very positive enhancement to me. And I paid for it.