Originally Posted by BearX220
(Post 20919764)
Depends, of course. Retention investment ought to be tied to individual customer spend and projected lifetime value. But the irony here lies with how little retention can cost. Blankets and Cokes in a cold gate area during a late-night delay. Slipping you a better seat assignment if it opens up. Executing little things right, like PDBs. On up to better irrops response (for higher value customers at least) and better GPU/RPU utility.
UA seems to believe none of these kinds of things matter. They also seem willing to trade high-value customers for low-spend, zero-loyalty ones, which is incomprehensible to me as it means lower PRASM even when load factors stay constant. |
Originally Posted by UA-NYC
(Post 20919114)
Tons of competition on the route - UA is aggressively downgauging their capacity. And their LGA experience is worse than AA or DL. Probably the only route I fly where I still see empty seats.
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Originally Posted by UA-NYC
(Post 20919114)
Tons of competition on the route - UA is aggressively downgauging their capacity. And their LGA experience is worse than AA or DL. Probably the only route I fly where I still see empty seats.
Now, in the new normal, the only things that keep me flying UA are: -to burn miles -to sit in Economy Plus -to board in the Group 2 herd - which lacking decent status (having recently put all my eggs in the UA basket) on other airlines means boarding last. -I still have some pangs of "loyalty" and a certain familiarity even with the new CO dba UA. But, now, in the new normal, I am more willing to agree with mitchmu: 1. Never pay a fare premium to be loyal to a specific airline again, and 2. Never choose a less desirable routing to be loyal to a specific airline again, and 3. Never fly more than I have to (or want to) for the sake of achieving status Reality sets in. In many respects, the new normal means that the fun-filled days of playing the frequent flyer game are over. Flying is just transportation. The glory days of the 50s & 60s were replaced by deregulation. That helped bring on the world of the Frequent Flyer Program - and everything that Randy Peterson recognized made popular. The financial realities of today mean that flying is just transportation. The new normal is becoming status based on spending - not on how many miles sitting on planes earns. Planes are the inter city bus of today. As more and more people get used to flying low cost carriers, the majors are becoming LCCs - at least in service & amenities. Status - and sitting up front - are going to be for flyers who spend big bucks - not us "over entitled elites". Period. |
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
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Originally Posted by DCBob
(Post 20935511)
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
David |
Originally Posted by UA-NYC
(Post 20919114)
Probably the only route I fly where I still see empty seats.
Originally Posted by DCBob
(Post 20935511)
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
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I guess it all comes down to how management will justify the financial performance of the comapny to the shareholders. As long as the shareholders are satisfied with the management story, the customers are secondary.
I think many of us still hope for the good old days of flying - we fly so much because we like to and we still want it to be somewhat special. Airline management nowadays is probably more about number crunching and contract management than anything else. |
Originally Posted by fly18725
(Post 20918726)
How much should an airline spend to retain a domestic customer?
Originally Posted by DCBob
(Post 20935511)
And never do a true "mileage run" - a trip with no benefits or purpose other than to achieve a higher level of FF status. That's becoming sillier and sillier every day, at least IMHO.
Today I was asked what airline I often fly to/from the US, a question I get a fair bit. My response was the same as it's been for the last year: I fly UA but unless you're a savvy flier I'd recommend staying far away from them. Why do i say this? Because UA feels it's over-entitled to kayakers. :D |
Originally Posted by mitchmu
(Post 20903645)
The entire stock market is at an all-time high. To some extent, UA has risen with the tide that has caused most stocks to rise. We need to look at UA stock performance relative both to the broader market and to it's competitors. Looking merely at the gain in UA stock price against its own price when the economy was worse doesn't tell us anything.
It also appears to be the case that they have made many decisions to increase short term profitability at the potential expense of long term value. On August 1, 2012, UAL was trading at 18.17. Last Friday, it closed at 32.67, for a gain in the period of 79%. Using the same dates, DAL increased 98%; LCC (US Airways) increased 56%; AAMRQ increased 892% (but, since they are in bankruptcy, you can pretty much ignore that one); and LUV (Southwest) increased 51%. Objectively, United stock is doing very well. You may not like it, but that is the fact. Short term profitability emphasized? Hello! That's what virtually every company out there is doing. That's how the game is played.
Originally Posted by mitchmu
(Post 20904903)
Investors are seeing the increase in margins and drinking the cool-aid. What they're missing are the long term strategic implications of the short-sighted strategy to make UA more like RyanAir.
I agree with you from a customer standpoint, but you're not going to find anyone telling Smisek he is screwing up when he is showing results like this. Just not going to happen no matter how much you want it to.
Originally Posted by dgcpaphd
(Post 20913793)
Generally, the market value of a stock is influenced by psychological factors rather than financial income or losses of a corporation. This phenomenon likely explains why UA's stock is doing well, at the present time (and in the short run).
In the long run, despite the favorable price increase of the stock, eventually the enormous recent losses will be center most and the misleading statements often made by UA management will reach investors. When the losses and the misleading statements finally connect, the market price of the stock will drop if the losses continue (and they have and they will). It is easy to confirm (via SEC reports), that UA has experienced enormous losses since the announcement of the demotions to programs and to services. It is also easy to confirm that UA experienced a large exodus of former customers, as evidenced by a drop in ticket sales and acknowledged, publicly, by Smisek. The above two events are not reflected in the stock price. Smisek calls frequent news conferences and is often interviewed by various industry analysts concerning UA's performance. Smisek makes statements during those events that divert the listeners away from facts. He talks about his new shiny airplane and states that passengers that left UA will return, solely to fly on the Dreamliner. He also makes other claims but never focuses on the huge losses racked up by UA since his tenure began. Apparently, Smisek has a charm that some people like and which stops listeners from checking facts against what he says. One example of Smisek’s “charm” can be found in last week’s Chicago Tribune article http://www.chicagotribune.com/busine...,4326536.story After reading the article, I am surprised that no one challenged Smisek when he stated to the group “Mergers are tough, but we’re doing well.” Clearly, considering that UA lost more than one and one-half BILLION dollars (just since the announcement of the demotions to programs and services), Smisek's statement is false.UA is not doing well. The rest of Smisek's speech is filled with diversionary remarks that deflect away from the poor operational and financial results of UA over the past year and one-half. When the false statements finally collide with UA's reported losses, the chickens will eventually come home to roost at UA and the stock will decline. - (BTW, I read the leaves the same way. The point I am making is that the market is reading them differently.) |
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