United CFO Rainey Implies Certain Elites were "Over Entitled".
May 19, 2012, 7:21 pm
#211
Join Date: Sep 2011
Location: SEA
Programs: AS MVP Gold75K
Posts: 850
Sure.
I'll give you an example. In 2011 I had no status with PMCO. Yet I flew with them on 16 segments (not enough for OP Silver), and yet only registered 7,088 miles.
All my miles were EWR-YQB exclusvely.
On some of those trips, I was forced to buy the full-fare Y on this short trip.
How much does that cost? $1,799! That's $2/mile in an ERJ-145.
At that cost, EWR-HKG would have cost me $32,000. And on my flight I had one glass of soda 80% filled with ice, no food, no IFE, nuthin'.
Now that's a "high-value" flyer, in other words, one who pays a lot for very little in return...
And what makes me especially valuable is that I didn't qualify for any bottom-line-depleting elite perks...
I'll give you an example. In 2011 I had no status with PMCO. Yet I flew with them on 16 segments (not enough for OP Silver), and yet only registered 7,088 miles.
All my miles were EWR-YQB exclusvely.
On some of those trips, I was forced to buy the full-fare Y on this short trip.
How much does that cost? $1,799! That's $2/mile in an ERJ-145.
At that cost, EWR-HKG would have cost me $32,000. And on my flight I had one glass of soda 80% filled with ice, no food, no IFE, nuthin'.
Now that's a "high-value" flyer, in other words, one who pays a lot for very little in return...
And what makes me especially valuable is that I didn't qualify for any bottom-line-depleting elite perks...
8 roundtrips x $1799 = $14,392
Yours is an extreme example, and a hypothetical one at that. You paid full fare for only some of those trips, not for all of them, so your spend would be considerably less than $14k.
May 19, 2012, 7:21 pm
#212
A FlyerTalk Posting Legend
Join Date: Jun 2005
Posts: 57,613
I am 1K, not the cheap way, and feel like my business should be valued by United. But, for 'a financial guy, not an airline guy' like Rainey, here is what he sees:
- As a 1K, I receive free domestic upgrades. A financial guy like Rainey looks at this and says: even if I sell that seat for $79, look at the bottom line impact this will have across my entire fleet and all the flights we have! A High Value Flyer will buy this F seat for some amount of money which drops straight to the bottom line. An Elite just feels like they are entitled to it...
- As a 1K, I receive a generous baggage allowance. A financial guy looks at this and says: Look at all those bags traveling for free. How do we monetize more bags and increase our ancillary fees? A High Value Flyer pays $200 additional to check their family's bags on their infrequent trips. An elite just feels like they are entitled to it.
- I have a priority check in line and priority security available to me. A High Value Flyer will pay extra per trip for Premium Access. An Elite? Entitled to it.
- I am allowed to select an Economy Plus seat when I book a flight. A financial guy looks at this and says: With my new dynamic pricing software, I should be able to extract a significant amount of additional revenue out of E+. A High Value Flyer is the one who spends $50 or $150 to buy an E+ seat. An Elite just feels like they are entitled to it.
I could go on and on, but I think you get my point.
I am an Elite. My Elite status in many cases prevents United from monetizing the things that they have unbudled and are now selling a la carte. I am not a High Value Flyer, rather, I am 'over-entitled, if you will'.
With their capacity reductions and industry consolidation, perhaps the new UA leadership is right and this 'new normal' is the best way to focus on 'creating economic value'.
Time will tell.
Lark
May 19, 2012, 7:27 pm
#213
Join Date: Aug 2005
Location: HPN
Programs: not anymore! I'm FREE!
Posts: 3,459
So, while the CFO's comments are insulting, he's really just telling it like it is.
The question for us over-entitled elites is not so much which airline to switch to, but whether to stop playing the loyalty game at all. If airlines don't hold up their side of the bargain, why should we?
May 19, 2012, 7:28 pm
#214
Join Date: Dec 2007
Location: Las Vegas
Programs: DL Platinum, AA Lifetime Gold, Hilton Diamond, Marriott Platinum, Radisson Premium
Posts: 6,638
Again, assuming we take everything they say at face value, what then-is the reason to become a 1K?
I also get what Lark is saying, and he says he pays a lot for 1K, and that's fine. But I hope you still realize that your E fare from SFO-DFW can be trumped by a TOD or a kettle burning a few CC miles.
If one buys E or H fares regularly because it's all that's available on the route, I'd say they are pretty high value customers. I admittedly don't have an MBA, but a connecting kettle that decides to use a few miles, upgrade, will get the seat, and the guy who paid $700 sits in Y.
I can understand fare class prioritization, and it's great other than Y/B within status level AA has elected not to do that....The old UA did fare class prioritization. The new UA considers an instrument or miles to be more valuable than a high fare (Y/B/M excluded of course).
Well they did promise to be "honest and upfront" with us....
I also get what Lark is saying, and he says he pays a lot for 1K, and that's fine. But I hope you still realize that your E fare from SFO-DFW can be trumped by a TOD or a kettle burning a few CC miles.
If one buys E or H fares regularly because it's all that's available on the route, I'd say they are pretty high value customers. I admittedly don't have an MBA, but a connecting kettle that decides to use a few miles, upgrade, will get the seat, and the guy who paid $700 sits in Y.
I can understand fare class prioritization, and it's great other than Y/B within status level AA has elected not to do that....The old UA did fare class prioritization. The new UA considers an instrument or miles to be more valuable than a high fare (Y/B/M excluded of course).
Well they did promise to be "honest and upfront" with us....
Last edited by iluv2fly; May 19, 2012 at 7:37 pm Reason: merge
May 19, 2012, 7:31 pm
#215
Join Date: Nov 2010
Programs: 1K on UA, Platinum on CO
Posts: 336
Amazing - that is all I can say - I guess in the end either CO will be right or it will be bankrupt - We'll see if an airline can really survive without rewarding repeat buying - it certainly makes their CC policies make more sense - they want one or two time flyers NOT high volume.
What I wonder is how much capacity can an airline cut and still be big - e.g. will COdbaUA end up as the same size as CO in a few years?
What I wonder is how much capacity can an airline cut and still be big - e.g. will COdbaUA end up as the same size as CO in a few years?
May 19, 2012, 7:37 pm
#216
Join Date: Jun 2011
Posts: 272
Your elite benefits may be devalued but you can be sure that is not the case for sr mgt.
They will, and have, displaced customers out of first in order to utilize THEIR benefits.
Now folks might understand why United employees are so disheartened.
We've been choking on this mgt style for close to 10yrs!
Employees, customers, it's all the same to them.
Yeah, I know, I can always leave.
Well, so it seems, so can you.
They will, and have, displaced customers out of first in order to utilize THEIR benefits.
Now folks might understand why United employees are so disheartened.
We've been choking on this mgt style for close to 10yrs!
Employees, customers, it's all the same to them.
Yeah, I know, I can always leave.
Well, so it seems, so can you.
May 19, 2012, 7:40 pm
#217
Join Date: Mar 2012
Location: Chicago, IL
Programs: AAdvantage, MileagePlus(ick)
Posts: 296
Your description just nailed me and my relationship with Delta Skymiles.
I think you all get that United 1K's and GS's are being hosed.
I am surprised that United mid-tiers are not equally upset. Only a 50% bonus on redeemable miles for United 50k flyers, and 75% bonus for 75k flyers. It's still 100% for the equivalent at Delta or American.
Why waste time hoping United will change? Just choose between American and Delta, and be done with it!
I think you all get that United 1K's and GS's are being hosed.
I am surprised that United mid-tiers are not equally upset. Only a 50% bonus on redeemable miles for United 50k flyers, and 75% bonus for 75k flyers. It's still 100% for the equivalent at Delta or American.
Why waste time hoping United will change? Just choose between American and Delta, and be done with it!
I'm not even elite anymore. I had a trial Silver run from my company.....and 6 yrs of GM under my belt. A YOU CAN BET I'M PISSED.
How am I supposed to even aspire to Elite status when it's being downright vilified by the company itself?
What hurts the most is they're going to do serious damage to this airline, and it's my hometown Chicago's flagship carrier.
I'm so freakin' sick of these outsiders coming in and trashing my Windy City.
They've shrunk the candy making industry, they erased Marshall Fields, and now these Texas meatheads are trashing my home's once-proud airline.
Last edited by iluv2fly; May 19, 2012 at 7:44 pm Reason: language
May 19, 2012, 7:44 pm
#218
Join Date: Sep 2011
Location: SEA
Programs: AS MVP Gold75K
Posts: 850
San Francisco flyers do have limited options but there are still options. Fly Virgin America and make them grow; fly American & Alaska. Hope that enough follow suit to put a sizable dent in UA SFO Operations and make them shrink.
Lot's of times I have to connect anyhow to go most places out of San Francisco on United. So it doesn't matter to me if the connection is in DEN/LAX/IAH/IAD or DFW/ORD/JFK.
Lot's of times I have to connect anyhow to go most places out of San Francisco on United. So it doesn't matter to me if the connection is in DEN/LAX/IAH/IAD or DFW/ORD/JFK.
I connected to get to SYD, CDG, MCO, MSY, AUS, YUL, CLE, PHL, BOS, HKG, TUS, DFW, IAH, JFK, and ATL, for example, even though UA had nonstop flights to all of these cities.
AA/AS could be a reasonable alternative.
May 19, 2012, 7:48 pm
#219
Join Date: Sep 2010
Location: San Francisco Bay Area
Posts: 5,825
Rainey, a 'financial guy, not an airline guy' says: Earn it every time you fly by paying me money.
May 19, 2012, 7:48 pm
#220
A FlyerTalk Posting Legend
Join Date: Jun 2005
Posts: 57,613
This is the strange thing about their direction. They seem to want to move to a strictly transactional relationship with the customer. That's ok I guess but then they have to win the business over and over again on each transaction. That means either cheapest or best service at same price. For the most part UA isn't a winner in a lot of places using such transactional metrics - particularly international. You can often buy cheaper tickets for pretty much equivalent service or spend the same (sometimes less) and fly international carriers well known to beat UA service by a lot. It was the FF program that leveled the playing field for UA. If they want to go transactional they have a lot of work ahead of them to produce a consistently winning product.
May 19, 2012, 7:51 pm
#222
Join Date: Dec 2007
Location: Las Vegas
Programs: DL Platinum, AA Lifetime Gold, Hilton Diamond, Marriott Platinum, Radisson Premium
Posts: 6,638
Friend and I were planning a trip to London in January....and we were going to book today on the direct SFO-LHR flight on a W fare.
Gee, if I book on AA, I can book the lowest fare, and upgrade to boot. No direct flight but hey, if you save hundreds of dollars AND earn more EQM it's a win-win.
UA would have gotten $2K from me for that fare. Now, I'm reconsidering. Since I'm over entitled, I don't want to upset them by being a customer.
Gee, if I book on AA, I can book the lowest fare, and upgrade to boot. No direct flight but hey, if you save hundreds of dollars AND earn more EQM it's a win-win.
UA would have gotten $2K from me for that fare. Now, I'm reconsidering. Since I'm over entitled, I don't want to upset them by being a customer.
May 19, 2012, 7:52 pm
#223
Join Date: Jan 2004
Location: Rehoboth Beach, DE
Programs: AA ExPlat; Marriott Plat: Hilton Gold
Posts: 831
What I don't understand is how they gave us certain benefits and then in my opinion changed them without explaining the rules to us? UAInsider has done her best but everything is so convoluted now with NO transparency. I first thought that the lack of transparency was a glitch in the system; now I know that it is not.
So I worked to become 1K this year NOT understanding that they would be changing the rules since I was already 'over-entitled.'
So I worked to become 1K this year NOT understanding that they would be changing the rules since I was already 'over-entitled.'
May 19, 2012, 8:00 pm
#224
Join Date: Dec 2007
Location: Las Vegas
Programs: DL Platinum, AA Lifetime Gold, Hilton Diamond, Marriott Platinum, Radisson Premium
Posts: 6,638
It's insulting but reading the various forums he is right IMO. Not just for UA but for all airlines and hotel brands I read on this site.
Elite benefits seem to be getting diminished by airlines and hotels all the time. Flights are full and airlines still can't make money it seems.
Flying is becoming more and more mass transit by the day. I am an elite on two different airlines and I rarely if ever get worked up anymore. What's the point? I have to travel and being based in PDX I am limited on who to fly. AS has me by the proverbial balls and I ain't going to WN.
Also for all those switching to AA will be interesting to see what happens to their Explat benefits when they leave bankruptcy or get bought out by US Airways. Giving a 1st class seat to an Explat who bought the cheapest ticket possible 6 months out 7 days prior to departure doesn't seem sustainable to me in the long run. This is how our DFW based sales reps work the system.
Elite benefits seem to be getting diminished by airlines and hotels all the time. Flights are full and airlines still can't make money it seems.
Flying is becoming more and more mass transit by the day. I am an elite on two different airlines and I rarely if ever get worked up anymore. What's the point? I have to travel and being based in PDX I am limited on who to fly. AS has me by the proverbial balls and I ain't going to WN.
Also for all those switching to AA will be interesting to see what happens to their Explat benefits when they leave bankruptcy or get bought out by US Airways. Giving a 1st class seat to an Explat who bought the cheapest ticket possible 6 months out 7 days prior to departure doesn't seem sustainable to me in the long run. This is how our DFW based sales reps work the system.
I'm not exactly sure what's so bad about the US Airways program. They upgrade their top tier elites as soon as one week before departure. They are now serving better food in first class than COdbaUA (read their forum, people are quite impressed). They've improved on a # of metrics.
AA has always given priority to people who book early-even at the gate. That was a benefit that I took for granted.
If they combined US Airways and AAdvantage, I'm not sure what would be so bad about it. US Airways has generous upgrade windows and UDU, and AA has the food and at least 16 seats in all mainline A/C. None of the new A/C AA is buying is going to have less than 16 seats from what I've heard, not even the 319 or 320s.
To be honest, if UA sets the new standard, there's really no point to mileage running anymore. Just fly where you want, spend less, and wait for the TOD offer.
May 19, 2012, 8:02 pm
#225
Join Date: Sep 2010
Location: San Francisco Bay Area
Posts: 5,825
In the job market, today's employee must understand that loyalty to their company means little to nothing. You must act as a free agent, and you must always protect and look out for your own best interests.
It has become the same thing in the airline loyalty game...
Probably $.17 - $.20 / EQM, maybe a little more.