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United CFO Rainey Implies Certain Elites were "Over Entitled".

United CFO Rainey Implies Certain Elites were "Over Entitled".

Old Jun 12, 2012, 8:35 pm
  #1336  
 
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Originally Posted by sxf24
Actually, the fabulous route network is what generates the revenue premium for any airline...
I think that's likely only the case for business travelers. Others are happy to fly cheap. I would fly VX to SFO from IAD all the time if I wasn't traveling for business. Unfortunately UA is alienating its top tier elites making the trade off of flying comfortably on another airline (say with wi-fi and great IFE and FAs) a lot less stark.

IMHO this is a bean counter driven strategy. Short sighted and the long term cost to the brand will be huge.

AA has a great route network and if it can leverage the UA elites to move into IAD, LAX, SFO hubs (all at a lower cost structure as it comes out of bankruptcy!) UA is going to be hurtin'
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Old Jun 12, 2012, 8:37 pm
  #1337  
 
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Originally Posted by sxf24
Actually, the fabulous route network is what generates the revenue premium for any airline...
No, no... you pay the revenue premium because of the gratitude, which you undoubtedly and consistently receive, unless--of course--you are overentitled.

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Old Jun 12, 2012, 8:58 pm
  #1338  
 
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Originally Posted by DCEsquire
Unfortunately UA is alienating its top tier elites making the trade off of flying comfortably on another airline (say with wi-fi and great IFE and FAs) a lot less stark.

IMHO this is a bean counter driven strategy. Short sighted and the long term cost to the brand will be huge.

AA has a great route network and if it can leverage the UA elites to move into IAD, LAX, SFO hubs...
COdbaUA's starvation of LAX, if it lasts much longer, will drive me to abandon my 800k+ lifetime miles with UA for my 200k+ with Delta and/or start from nearly-scratch (<100k) with AA.

Other than my history with United, I'm not sure why I would pay nearly $1k/wkly for my U/V/M/B/Y flights connecting through DEN and ORD to destinations around the country, or why I should believe that LAX is in COdbaUA's plans for the future.
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Old Jun 12, 2012, 9:26 pm
  #1339  
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Originally Posted by DCEsquire
I think that's likely only the case for business travelers. Others are happy to fly cheap. I would fly VX to SFO from IAD all the time if I wasn't traveling for business. Unfortunately UA is alienating its top tier elites making the trade off of flying comfortably on another airline (say with wi-fi and great IFE and FAs) a lot less stark.

IMHO this is a bean counter driven strategy. Short sighted and the long term cost to the brand will be huge.

AA has a great route network and if it can leverage the UA elites to move into IAD, LAX, SFO hubs (all at a lower cost structure as it comes out of bankruptcy!) UA is going to be hurtin'
Business travelers are what drive revenue.

I find it laughable that everyone likes to attack the "bean counters.". Usually it is because your advocating a business strategy that doesn't make sense and that is the only justification you can think of. Th airline business does not work if you chase what's sexy or interesting. This is a business about cash. You not only have bring enough in every day to pay the bills, you have to keep your investors happy because without new, cheap sources of capital the airline will fail.
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Old Jun 12, 2012, 9:34 pm
  #1340  
 
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Originally Posted by sxf24
Business travelers are what drive revenue.

I find it laughable that everyone likes to attack the "bean counters.". Usually it is because your advocating a business strategy that doesn't make sense and that is the only justification you can think of. Th airline business does not work if you chase what's sexy or interesting. This is a business about cash. You not only have bring enough in every day to pay the bills, you have to keep your investors happy because without new, cheap sources of capital the airline will fail.
And to go the long way around and come back close to original topic....

It was Rainey himself who highlighted the distinction: "I'm a finance guy, not an airline guy."

Which the audience at the conference probably appreciated more than the citizens of FT do...
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Old Jun 12, 2012, 9:35 pm
  #1341  
 
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Originally Posted by sxf24
Actually, the fabulous route network is what generates the revenue premium for any airline...
Not sure I understand why you think this. If you simply mean that if an airline flies to a lot of places with sensible connections that it becomes more likely that people will book them to fly someplace then sure they become a candidate for being used for a lot of trips - but not necessarily at a premium. A traveler booking a particular trip (absent a loyalty program or other non-transactional hook to the airline) is really looking at that trip and what the rest of the route network looks like isn't terribly relevant to that booking. I would agree that a great route network coupled to a loyalty hook will generate a premium - lots of places where UA is a valid routing choice plus a reason to book UA even in the face of competition for that particular trip. But absent some non-transactional component to the purchase decision the vast part of the route network not relevant to that particular trip doesn't add any value. This is why I think UA is missing the boat if they go too far in gutting loyalty - with a great route network they are a candidate for a lot of trips and if they have a non-transactional hook into the customer then that customer becomes likely to choose them even at a premium. But it takes both the route structure and the hook to make the premium purchase make sense.
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Old Jun 12, 2012, 9:41 pm
  #1342  
 
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Originally Posted by sxf24
Business travelers are what drive revenue.

I find it laughable that everyone likes to attack the "bean counters.". Usually it is because your advocating a business strategy that doesn't make sense and that is the only justification you can think of. Th airline business does not work if you chase what's sexy or interesting. This is a business about cash. You not only have bring enough in every day to pay the bills, you have to keep your investors happy because without new, cheap sources of capital the airline will fail.
And without loyal customers who pay (or a business model that looks past day-to-day cashflow) you won't find your investors happy to provide cheap sources of capital.

Then again, in a nod to Mr. Rainey, I don't suppose you want customers (or investors) who are "over-entitled"...

Last edited by wildblueyonder; Jun 12, 2012 at 9:52 pm
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Old Jun 12, 2012, 10:08 pm
  #1343  
 
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The most successful businesses in every category mix financial skill and a certain "je ne sais quoi" that transcends bean counting(Apple and Ikea are examples). United's current administration may have great business sense (not necessarily my belief) but they most certainly lack the ability to create a sense of mystique that I feel is crucial in building loyalty to the brand. PMUA had the intangibles down pat; I only wish we had a visionary leader at the airline now who could combine that with sound economics.
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Old Jun 12, 2012, 10:10 pm
  #1344  
 
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Originally Posted by pdx1M
Not sure I understand why you think this. If you simply mean that if an airline flies to a lot of places with sensible connections that it becomes more likely that people will book them to fly someplace then sure they become a candidate for being used for a lot of trips - but not necessarily at a premium. ...
^^^

From Denver if I choose United, I have to connect everywhere I need to fly internationally. Yes, United might have a "fabulous route network" but there are competitors flying to the same destinations with the same one stop. In fact the competitors I choose have twin aisle aircraft compared to single aisle on United. I repeat, the only redeeming factor for flying United and paying a premium over other carriers was the 1K program. With the loss of that, why would I shell out more?

These days I have found that the regular line moves faster than the Premium TSA lanes in Denver. So the last reason for maintaining elite status is also gone.

I am waiting for them to move M+ to MileagePeso (or MilePeso) like Delta did with SkyPesos. If you think that is not going to happen, you are dreaming.
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Old Jun 12, 2012, 10:36 pm
  #1345  
 
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Originally Posted by sxf24
Business travelers are what drive revenue.

I find it laughable that everyone likes to attack the "bean counters.". Usually it is because your advocating a business strategy that doesn't make sense and that is the only justification you can think of.fail.
It's funny...because you are contradicting yourself.. You first said that" Actually, the fabulous route network is what generates the revenue premium for any airline..."

So is it the route or the type of pax. You can't have it both ways.


I've been in too many organizations where there are lots of MBAs with Excell. They are the wiz. Let's do this on a pivot table. You just need everyone to bill 5000 hr a year or turn your rate up to this. The same folks at UA are saying lets charge more and give less. The problem is that the bean counters are first level idiots when it comes to understanding human behavior. Charge someone more for less and they go away.

Lots of smart people teach. There is a reason why you don't find them in business.

One of us will be right. For the sake of all of us who fly UA, I hope it's me.

Last edited by DCEsquire; Jun 12, 2012 at 10:42 pm
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Old Jun 12, 2012, 10:36 pm
  #1346  
 
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Originally Posted by LarkSFO
It was Rainey himself who highlighted the distinction: "I'm a finance guy, not an airline guy."
That could be said for much of sr mgt across the industry.
Not a whole lot of "airline guys" anymore. Mostly just "business guys".
They touch and go and move on, collecting their bonuses on the way out.

At United, I'm on my 6th or 7th CEO.
And I'm not an old guy!
I'd like to work for an "airline guy" someday.
Sadly, it appears those people are rare or no longer exist.

We would rally behind a real leader, someone with a long term vision, who sticks around to make it happen.
It would be great to have a CEO come in and say, "Enough of this chit! We're gonna become the 800lb gorilla again and kick some arse!"

Yes, it would be nice.
However, it's highly unlikely I'll ever see it.
Particularly in an industry that seems to attract "business guys" that can make a quick buck and move on.
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Old Jun 12, 2012, 10:58 pm
  #1347  
 
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Originally Posted by ualp
Particularly in an industry that seems to attract "business guys" that can make a quick buck and move on.
Sad but true. By some stroke of luck they are going to make their numbers and will be hailed as geniuses. When they move on to the next business they will fail miserably as their luck ran out.
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Old Jun 12, 2012, 10:59 pm
  #1348  
 
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Originally Posted by pdx1M
will generate a premium
why do you think they need to generate a premium?

What if they can be profitable charging the same as or less than the competition?

Under this scenario, loyalty / loyal fliers become less important...

Originally Posted by TravellingMan
If you think that is not going to happen, you are dreaming.
Wake me up when it's over...

Originally Posted by ualp
Particularly in an industry that seems to attract "business guys" that can make a quick buck and move on.
I am afraid this is not isolated to the airline industry...

Last edited by LarkSFO; Jun 12, 2012 at 11:05 pm
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Old Jun 12, 2012, 11:05 pm
  #1349  
 
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Originally Posted by LarkSFO
Under this scenario, loyalty / loyal fliers become less important...

Wake me up when it's over...
As mentioned in previous posts, the stickiness of the product is due to the loyalty program. I will admit it took me 2 years to wean myself away from booking flights on Delta after multiple devaluation of their program. I reckon it is going to take me another 2 years to wean myself away from defaulting to United as my choice.

Will wake you up once the MileagePeso program is unveiled
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Old Jun 12, 2012, 11:11 pm
  #1350  
 
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Originally Posted by TravellingMan
As mentioned in previous posts, the stickiness of the product is due to the loyalty program. I will admit it took me 2 years to wean myself away from booking flights on Delta after multiple devaluation of their program. I reckon it is going to take me another 2 years to wean myself away from defaulting to United as my choice.

Will wake you up once the MileagePeso program is unveiled
I think the term 'peso' is trademarked and fully associated to DL...

How about the MileageDong? (no offense to Vietnam, of course...)

(Of course, I am just trying to be funny... I find MP miles to be incredibly valuable. Just booked my second R/T for my whole family in saver Y. Peak of summer, and there are still saver options for our desired cross country trip... Oh, and to a destination that UA's exceptional route network serves with multiple options... We're not flying on the 787 though.)
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