United CFO Rainey Implies Certain Elites were "Over Entitled".
May 22, 2012, 7:45 am
#856
Join Date: Jun 2005
Posts: 4,645
Really appreciate your message, but questioning if GPU and RPU are really an opportunity cost. If we had no GPU and RPU, would those seats end up being filled with flyers paying full retail? If so, do you think UA would be giving them away? I thought the whole point of capacity controls is to protect from that scenario. They don't release those seats until they are confident they can't sell them anyway. And, from the 1K, they've extracted a higher fare than for most others on the plane who didn't intend to upgrade (i.e. W vs cheapest). Aren't they optimizing marginal revenue this way?
May 22, 2012, 7:53 am
#857
Join Date: Feb 2008
Location: ORD
Programs: Newly minted AA EXP Plat., disatisfied UA 1K, Marriott Silver & Hilton Gold
Posts: 704
I doubt Rainey is smart enough to figure out how to optimize all the lowest dollar kettle flyers when he runs off all the over-entitled elites. Geez, why didn't Continental take over Spirit or one of those airlines? Would have been a much better fit for this management team. This new airline is just too big and complicated for them. We need a new management team stat!
May 22, 2012, 7:54 am
#858
Join Date: Nov 2008
Location: DFW
Programs: UA peon (+decades 1K), AA Exec Plt
Posts: 1,117
Rainey and Jeff S say they are striving to stop air travel from being treated as a commodity. They misuse this term, but saying sold as cheaply is not PC. What they don't seem to understand is that if you want to sell bulk wheat at croissant prices, you need to learn how to make croissants from wheat and not just raise your prices to that level.
May 22, 2012, 7:57 am
#859
Join Date: Oct 2007
Location: Dubai / NYC
Programs: EK-IO, UA-1K2MM, ETIHAD-GOLD, SPG-PLAT LIFETIME, JUMEIRAH SERIUS GOLD
Posts: 5,220
Add to your excellent analysis the fact that once you get past the check-in / reverse cash machine, the gate agents usually fill the plane anyway. So a standby passenger will take an unsold premium seart next to someone who paid for it, angering the purchaser because he or she was riped off.
Continental is trying to monetize free stuff upon check-in. Upgrades they promised for free, reserved seats they promised for free, charges for bags that if brought to the plane and don't fit as carry-ons are checked for free, who knows what next. If you use one of the airport kiosk check-ins it may offer to sell you premium air for your flight....
Continental is trying to monetize free stuff upon check-in. Upgrades they promised for free, reserved seats they promised for free, charges for bags that if brought to the plane and don't fit as carry-ons are checked for free, who knows what next. If you use one of the airport kiosk check-ins it may offer to sell you premium air for your flight....
Last edited by chinatraderjmr; May 22, 2012 at 8:48 am
May 22, 2012, 7:59 am
#860
Original Poster
Join Date: May 2012
Location: Westchester NY
Programs: UA GS 4+ MM
Posts: 373
Really appreciate your message, but questioning if GPU and RPU are really an opportunity cost. If we had no GPU and RPU, would those seats end up being filled with flyers paying full retail? If so, do you think UA would be giving them away? I thought the whole point of capacity controls is to protect from that scenario. They don't release those seats until they are confident they can't sell them anyway. And, from the 1K, they've extracted a higher fare than for most others on the plane who didn't intend to upgrade (i.e. W vs cheapest). Aren't they optimizing marginal revenue this way?
May 22, 2012, 8:18 am
#861
Join Date: Feb 2005
Posts: 251
Using your hotel example, what Continental management is doing is like telling you that as a hotel VIP guest you are entitled to free, premium air in your hotel room - telling you this to get you to reserve with them in the first place. But when you actually get to the hotel they tell you that the premium air they promied you may run out before you get to your room, so you can buy cans of it for a couple of hundred bucks to ensure you get it as promised. Then, if you didn't buy it and it ran out because they sold it to non VIP / one-time guests they tell you that even though they promised you air for free you now have to pay for it in the future if you really want it for sure. Then they give away a couple of cans to one VIP guest just to support the perception that it is still free sometimes.
May 22, 2012, 8:25 am
#862
FlyerTalk Evangelist
Join Date: Mar 2002
Location: SPI
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Posts: 18,147
May 22, 2012, 8:31 am
#863
Used to be MJ-bos
Join Date: Jun 2002
Location: San Diego, California USA
Programs: AA ExecPlat, COdbaUA 1P & 2MM, HH Diamond, Marriott Gold, SPG Gold, IHG Gold, Avis 1st
Posts: 228
May 22, 2012, 8:32 am
#864
Join Date: Nov 2005
Location: SFO and OAK
Programs: FAF, Hyatt <>, SPG PLT
Posts: 2,240
One more thought: there have been a number of posts about UA's ability, or lack thereof, in IT. Clearly, there have been a ton of unforced errrors since March 3rd and I don't pretend to be an expert on Shares. But don't think for a minute that UA isn't great at data mining. They know a ton about every single person who enters a frequent flyer number, which is why the entitlement remark is so meaningful. They have the data......they just don't know how you will behave without the perks.
Many years ago I had the opportunity to tour the ops center in Houston with Gordon and Larry. At that time, they knew the profitability of every single flight CO was flying, in real time, which allowed them the ability to prioritize IRROPs, scheduling, etc. With the passage of time, I am certain UA knows every UA/CO fare you have purchased since 1980: where you like to go, with whom, with what credit card, your bag counts, how many times you call reservations (and how long), your use of the Club, etc. My point is that individualized offers (which may be inversely related to loyalty) are the wave of the future, as much as we may hate them. I just hope that excludes upgrades and actual airfares. Asking UA not to use the treasure trove of info to get each person to spend more is useless. Harrahs, Google, FB and others won't stop. Letter writing, 1K voice and other communications is near useless. Only your feet may get results, although I bet you will be tempted back with special individualized bonus offers.
Many years ago I had the opportunity to tour the ops center in Houston with Gordon and Larry. At that time, they knew the profitability of every single flight CO was flying, in real time, which allowed them the ability to prioritize IRROPs, scheduling, etc. With the passage of time, I am certain UA knows every UA/CO fare you have purchased since 1980: where you like to go, with whom, with what credit card, your bag counts, how many times you call reservations (and how long), your use of the Club, etc. My point is that individualized offers (which may be inversely related to loyalty) are the wave of the future, as much as we may hate them. I just hope that excludes upgrades and actual airfares. Asking UA not to use the treasure trove of info to get each person to spend more is useless. Harrahs, Google, FB and others won't stop. Letter writing, 1K voice and other communications is near useless. Only your feet may get results, although I bet you will be tempted back with special individualized bonus offers.
May 22, 2012, 8:49 am
#865
Join Date: Oct 2007
Location: Dubai / NYC
Programs: EK-IO, UA-1K2MM, ETIHAD-GOLD, SPG-PLAT LIFETIME, JUMEIRAH SERIUS GOLD
Posts: 5,220
Funny, but that's not the equivalent.
Using your hotel example, what Continental management is doing is like telling you that as a hotel VIP guest you are entitled to free, premium air in your hotel room - telling you this to get you to reserve with them in the first place. But when you actually get to the hotel they tell you that the premium air they promied you may run out before you get to your room, so you can buy cans of it for a couple of hundred bucks to ensure you get it as promised. Then, if you didn't buy it and it ran out because they sold it to non VIP / one-time guests they tell you that even though they promised you air for free you now have to pay for it in the future if you really want it for sure. Then they give away a couple of cans to one VIP guest just to support the perception that it is still free sometimes.
Using your hotel example, what Continental management is doing is like telling you that as a hotel VIP guest you are entitled to free, premium air in your hotel room - telling you this to get you to reserve with them in the first place. But when you actually get to the hotel they tell you that the premium air they promied you may run out before you get to your room, so you can buy cans of it for a couple of hundred bucks to ensure you get it as promised. Then, if you didn't buy it and it ran out because they sold it to non VIP / one-time guests they tell you that even though they promised you air for free you now have to pay for it in the future if you really want it for sure. Then they give away a couple of cans to one VIP guest just to support the perception that it is still free sometimes.
Ahhhhh. YES, you do have a point there (and FYI, I bought the air.....it tastes like...............AIR
May 22, 2012, 8:55 am
#866
Join Date: Apr 2008
Posts: 2,358
I think it is the time to show the power of joint customers-shareholders.
For those of you who can cast a vote in the next annual shareholder meeting, I recommend you to vote against 07 for #1 and Against for #3.
Also - I urge you to write to the Board of Directors and move the Board to fire this "over-entitled" CFO.
You apparently did not see my earlier post in connection with the composition of the Board of Directors of UCH, Inc, d.b.a., United Airlines.
If one were to write to the Board to complain about the mess created by Smisek et al, the writer would, at the same time, be writing directly to Smisek. This is because Smisek is part of the Board of Directors.
Isn't that cozy? The CEO is also on the very Board that elected him to be CEO. Should we wonder how Smisek cast his vote and for whom?
United Airlines was doing just fine until the arrival of Smisek and his crew that, among other things, cares nothing about customer loyalty and/or written "lifetime" promises made to UA customers.
Considering the arrogant contents of the speech made by Rainey, it is clear that the United we all knew for years, experienced a sudden death when it merged with Continental airlines, a supposed "equal" as claimed during merger hearings.
Equal, my eye! It was a take over, not a merger of equals (which was another false statement made to customers and shareholders prior to the close of the merger).
Smisek can tap dance all he wants about changes he made to UA that he says we will like. Smisek is no dummy, but he is not a realistic person, based on the mess he and his crew has made to the combined UA.
The chips will eventually fall where they may. Unfortunately, the chips will fall on a soon to come bankruptcy due to Smisek and his crew chasing away loyal customers.
Last edited by FlyinHawaiian; May 22, 2012 at 9:16 am
May 22, 2012, 9:04 am
#867
Join Date: Oct 2009
Location: Chicago, IL
Programs: UA 1K MM, HHonors Diamond,PC, Marriott Rewards Gold
Posts: 1,117
With all of the changes recently, I am convinced that the new United has completely lost touch with the over-entitled elite business traveler.
As I see it, the frequent business traveler has a number of specific needs:
1. Compliance with corporate travel policies
2. Reduce or eliminate as much down time pre- and post-flight
3. Maximize productivity during flight
4. Minimize the disruption of business activities during irregular operations
5. Manage the physical impact of flying
There are many benefits that United provides or provided that were designed to meet those needs. A great example of this is Economy Plus. To me, the greatest advantage of E+ is the ability to work on a laptop even when the person in front of me decides to recline. In E-, this is impossible. For a four hour flight, that is the difference between four hours of productivity and four hours wasted. For this reason, I'm glad United kept E+.
Many of the changes to United work great for infrequent travelers, but they raise havoc for the business traveler. For example, let's look at the new ability to price specific seats in a seat layout. This is a nice way of upselling seats, but what happens when you have irregular operations? Or if you need to change your flight because a business meeting was cancelled?
Speaking of irrops, one of the fantastic benefits of 1K in particular is the way that the agents had the flexibility to handle challenges, especially given the weather conditions that often plagued Chicago. As a 1K, I flew with confidence that even if something were to happen, someone would take care of me and make sure that I got to my destination as smoothly as possible. A less flexible reservation system means that irrops now have a greater impact on my ability to do business. I no longer have the confidence that United will do what is necessary to get me to where I need to be. If I have a three day trip, and now I will be a day late, that has massive impact to my business meetings etc.
For upgrades to first class, this is more than just a perk. Advantages of upgrades are a) increased productivity during the flight; and b) managing the physical impact of flying. For the frequent business traveler, these are very meaningful, much moreso than for the infrequent traveler. Likewise, if practically everyone can use the priority lanes in the airport for check-in and security, then that makes pre-flight downtime longer, since priority becomes less meaningful, and once again cuts into productive work time.
Downtime at an airport and on a plane means that I have to make up the work during my personal time. Multiple that by five or more flights a month, and you have seriously cut into time with family, time with friends, work/life balance, etc., some of which are already impacted by nights spent away from home.
Thus far, virtually all changes have been designed to maximize revenues from infrequent travelers while building replicable systems and processes. And I'm certain that they will win all kinds of consumer awards for their efforts. But in doing so, I believe United underestimates how much they are alienating their business flyer base.
As I see it, the frequent business traveler has a number of specific needs:
1. Compliance with corporate travel policies
2. Reduce or eliminate as much down time pre- and post-flight
3. Maximize productivity during flight
4. Minimize the disruption of business activities during irregular operations
5. Manage the physical impact of flying
There are many benefits that United provides or provided that were designed to meet those needs. A great example of this is Economy Plus. To me, the greatest advantage of E+ is the ability to work on a laptop even when the person in front of me decides to recline. In E-, this is impossible. For a four hour flight, that is the difference between four hours of productivity and four hours wasted. For this reason, I'm glad United kept E+.
Many of the changes to United work great for infrequent travelers, but they raise havoc for the business traveler. For example, let's look at the new ability to price specific seats in a seat layout. This is a nice way of upselling seats, but what happens when you have irregular operations? Or if you need to change your flight because a business meeting was cancelled?
Speaking of irrops, one of the fantastic benefits of 1K in particular is the way that the agents had the flexibility to handle challenges, especially given the weather conditions that often plagued Chicago. As a 1K, I flew with confidence that even if something were to happen, someone would take care of me and make sure that I got to my destination as smoothly as possible. A less flexible reservation system means that irrops now have a greater impact on my ability to do business. I no longer have the confidence that United will do what is necessary to get me to where I need to be. If I have a three day trip, and now I will be a day late, that has massive impact to my business meetings etc.
For upgrades to first class, this is more than just a perk. Advantages of upgrades are a) increased productivity during the flight; and b) managing the physical impact of flying. For the frequent business traveler, these are very meaningful, much moreso than for the infrequent traveler. Likewise, if practically everyone can use the priority lanes in the airport for check-in and security, then that makes pre-flight downtime longer, since priority becomes less meaningful, and once again cuts into productive work time.
Downtime at an airport and on a plane means that I have to make up the work during my personal time. Multiple that by five or more flights a month, and you have seriously cut into time with family, time with friends, work/life balance, etc., some of which are already impacted by nights spent away from home.
Thus far, virtually all changes have been designed to maximize revenues from infrequent travelers while building replicable systems and processes. And I'm certain that they will win all kinds of consumer awards for their efforts. But in doing so, I believe United underestimates how much they are alienating their business flyer base.
I feel as I read this, that my mind was being read aloud. Nicely defined business traveler!^
May 22, 2012, 9:14 am
#868
Join Date: Apr 2010
Location: Pikes Peak COS
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In the meantime, I'm four for four in my last 4 flights getting CPU's, and while UA (actually UAX) messed me up by not loading my luggage on my DEN-COS flight yesterday although I could see it there next to the plane when I boarded (they did this to the whole flight to get a minor league baseball teams luggage loaded instead), the new luggage tracking system they use in DEN and COS is outstanding...wheresmyluggage.com
I'm one of those 1K's who isn't gaming the system, but I do only travel domestically, hit about 130-150 segments per year and annual spend is about $14-17k before gov't taxes. I'm going to stick with UA for now and let the chips fall where they may. I'll say again, I don't believe the grass is greener at AA, it's just different grass. Time will tell.
I'm one of those 1K's who isn't gaming the system, but I do only travel domestically, hit about 130-150 segments per year and annual spend is about $14-17k before gov't taxes. I'm going to stick with UA for now and let the chips fall where they may. I'll say again, I don't believe the grass is greener at AA, it's just different grass. Time will tell.
Last edited by iluv2fly; May 22, 2012 at 5:20 pm Reason: off-topic
May 22, 2012, 9:28 am
#869
Join Date: Sep 2009
Programs: UA GS>1K>Nothing; DL DM 2MM; AS 75K>Nothing>MVP
Posts: 9,341
But don't think for a minute that UA isn't great at data mining. They know a ton about every single person who enters a frequent flyer number, which is why the entitlement remark is so meaningful. They have the data......they just don't know how you will behave without the perks.
With the passage of time, I am certain UA knows every UA/CO fare you have purchased since 1980: where you like to go, with whom, with what credit card, your bag counts, how many times you call reservations (and how long), your use of the Club, etc. My point is that individualized offers (which may be inversely related to loyalty) are the wave of the future, as much as we may hate them. I just hope that excludes upgrades and actual airfares. Asking UA not to use the treasure trove of info to get each person to spend more is useless. Harrahs, Google, FB and others won't stop. Letter writing, 1K voice and other communications is near useless. Only your feet may get results, although I bet you will be tempted back with special individualized bonus offers.
With the passage of time, I am certain UA knows every UA/CO fare you have purchased since 1980: where you like to go, with whom, with what credit card, your bag counts, how many times you call reservations (and how long), your use of the Club, etc. My point is that individualized offers (which may be inversely related to loyalty) are the wave of the future, as much as we may hate them. I just hope that excludes upgrades and actual airfares. Asking UA not to use the treasure trove of info to get each person to spend more is useless. Harrahs, Google, FB and others won't stop. Letter writing, 1K voice and other communications is near useless. Only your feet may get results, although I bet you will be tempted back with special individualized bonus offers.
1) Customers are going to get really pissed off if identical tickets are being offered at the same time at different rate.s
2) Customers will use anonymous buying services to get quotes.
3) Customers will game the system.
4) Customer behavior will change over time.
5) The carriers don't yet have a way to measure long term behaviour.
6) Competitors will cherry pick the customers who are getting ripped off.
The problem is that the carriers absolutely know how to maximize revenue on any give flight, but they have no idea how to maximize revenue per customer over a longer period of time, and what's worse is that they think that what they know is the entire universe of knowledge for their strategic planning purposes. Because they can't exactly quantify how to maximize revenue per customer, they think it's unimportant.
As I said in an earlier post, I don't think these guys are the sharpest tools in the shed.
I own a company that manages loyalty programs for over 300 businesses. The trick is not to rip people off for what they are already buying but to induce them to buy things they are not currently buying. These guys really don't have a clue.
May 22, 2012, 9:28 am
#870
Join Date: Mar 2012
Programs: MP 1K, SPG Plat, Marriott Plat
Posts: 30
Fair point, but all I know is they have the data. They know the depth of the upgrade lists for GPU-heavy flights. Frankly, of the last 10 international flights I have taken the last year, every single one had a waitlist for an upgrade at the gate. Can they get at least a $1,000 for the gate upgrade instead of the GPU? I'm sure. So your GPU's are worth at least that much. As to how many people buy W when they would buy lower, I just don't know (but UA might). Remember, they took out a ton of seats with lie-flat, so there is a lot less space to fill. They want a reverse auction model (i.e. high price first, low price at the gate). GPUs/RPUs/CPUs don't mix well with that model.
The GUP is an instrument that I have EARNED by purchasing travel on UA to the tune of 100k+ miles per year. If UA didn't provide inducements such as GPU/RPU/CPU then I would spend my money elsewhere. Either I would find a provider who provided the services and amenities that were attractive enough to earn my business or I would go with the lowest cost provider for each trip. So the GPU does provided economic benefit to UA by attracting frequent flyers like me to repeatedly purchase their service in lieu of other providers.
I wouldn't be so confident on selling $1000 gate upgrades. The Kettles aren't likely to fork over a grand for a one way upgrade because they already pinched penny's and bought the lowest possible Kayak fare, probably have a couple of Subway's stashed in their carry-on and have the remainder of their discretionary cash earmarked for their destination. Business travelers? My company insists that I fly economy and would have a freaking coronary if I turned in $1000 incidental expense and I don't personally know any other travelers who's company would okay that expense (if the company would allow it they would book C to begin with). I can't justify dropping that kind of cash out of my own pocket because the cost/benefit just doesn't add up for me personally. So who is it that is going to buy up at that price? Now if you re-prices at a couple of hundred bucks then it becomes a completely different decision. However those of us who purchased the W fare have already forked over several hundred extra for the opportunity to use the GPU.
If GPUs are costing UA too much then they should amend the program and eliminate that benefit. Then those of use who value that benefit could decide if losing it is enough of a downgrade to search for another provider. I would appreciate the honesty in that move relative to selling the upgrade out from under me for less than the difference that I paid on a W fare.