Go Back  FlyerTalk Forums > Miles&Points > Airlines and Mileage Programs > United Airlines | MileagePlus
Reload this Page >

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

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

Old Jun 13, 2012, 10:41 pm
  #1381  
 
Join Date: Sep 2009
Location: iad/dca
Programs: UA Million Mile Gold, Club, AA, Delta, Marriott, Hertz G, A/Club
Posts: 1,106
UAL dead last in customer satisfaction.

http://www.chicagotribune.com/travel...,7734743.story
iquitos is offline  
Old Jun 13, 2012, 10:46 pm
  #1382  
 
Join Date: Apr 2005
Location: DEN
Programs: Free checked in bag on UA & DL. Free icecream at Marriott checkin.
Posts: 2,862
"Carriers that find innovative ways to provide passengers with greater control, save them time, reduce hassles and make the airline experience more enjoyable and comfortable will reap satisfaction benefits."

Well United has "fabulous route network" and "787" so time, hassles, customer satisfaction does not matter.

There are enough threads on missing itinerary and MX delays, so need not say anything more.
TravellingMan is offline  
Old Jun 13, 2012, 10:49 pm
  #1383  
 
Join Date: Apr 2005
Location: DEN
Programs: Free checked in bag on UA & DL. Free icecream at Marriott checkin.
Posts: 2,862
Originally Posted by LarkSFO
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.)
Yes. MP miles are incredibly valuable after the Delta experience. But I am afraid the "enhancers" are out looking for more things to "right size". So it is a matter of time before they take a hatchet to that.
TravellingMan is offline  
Old Jun 14, 2012, 1:18 am
  #1384  
 
Join Date: Apr 2004
Programs: UA 1K 3.01MM Hyatt Globalist (Lifetime) AA ExPlat (real), Lifetime UniClub (not from the 2MM).
Posts: 173
Originally Posted by LarkSFO
Seriously? I think that is nuts... (Even if UA were the Nordstrom's or Apple of airlines.)
LAX to MKE on UA can be $25-$75 more than AirTran for the same City pair (that is 25%). With Airtran, I would be on a non-stop, while UA, I would connect through ORD. What kept me flying UA was knowing that I would be upgraded, protected in the event of iRROPS and earning miles towards status and rewards.

Easily worth the price premium. If United actually provided Apple/Four Seasons/Zingermans levels of service, I would pay much more than 25% to stay on them.
majortom is offline  
Old Jun 14, 2012, 1:46 am
  #1385  
 
Join Date: Apr 2004
Programs: UA 1K 3.01MM Hyatt Globalist (Lifetime) AA ExPlat (real), Lifetime UniClub (not from the 2MM).
Posts: 173
Originally Posted by sxf24
If posters have a problem with the strategy they perceive as short term, perhaps they should say that...
I have said that, as have many others.

I would like to point out that outside of international premium cabin travel, US airlines have failed spectacularly when trying to charge a premium for a higher level of service.
No, they have never delivered a (meaningfully) higher level of service, and so have never been able to charge for it. Their approach has always been to try to charge the premium first and then hope to raise their level of service. That will always fail.

We can all talk about how nice it would be if that were to happen, but the reality is that the airline industry is fundamentally is different from consumer electronics and hotels.
Why is it fundementally different than hotels or restaurants?

While there may be a handful of customers who are willing to pay more for a certain domestic airline experience, you are in the minority.
Again, you say this based on what evidence? No mainline carrier has ever really tried it. Nordstroms, Zingerman's, Apple, Four Seasons, Hyatt, Ritz Carlton have all been successful with that model.

Catering to those customers is an excellent way to kill earnings in the short-term, which does nothing to help the long-term viability of the company.
The world's most valuable company (based on market cap) has based its entire business strategy around that.


I understand the comparison of Four Seasons to Motel 6, but I'm not sure I follow the logic in your analogy.
Simply that COdbaUA wants to charge a price premium for an inferior product.
majortom is offline  
Old Jun 14, 2012, 2:39 am
  #1386  
 
Join Date: Apr 2004
Programs: UA 1K 3.01MM Hyatt Globalist (Lifetime) AA ExPlat (real), Lifetime UniClub (not from the 2MM).
Posts: 173
Originally Posted by sxf24
There is no motivation to concentrate your business and seek discounts or better service if that carrier can not meet the majority of your travel needs.
If there is no loyalty or discount benefit, then each flight is a separate transaction and there is no reason to concentrate one's business at all. While it is true that if one is in a fortress hub (IAH), one's business is likely to end up disproportionately on one carrier, but that is the exception, rather than the rule. ORD, LAX, SFO, and IAD all have enough competitors, such that if there were no loyalty or financial benefits there would be no reason to concentrate one's business.

Because of old United's MP program and the service/rewards I received, I used to fly UA to TLV from ORD and SFO even though it meant flying via FRA, rather than on non-stops on El Al. I flew UA from LAX to BKK via NRT rather than fly non-stop on TH, I flew UA to DEL from ORD connecting via FRA, rather than fly AA on its non-stop.

You seem to be inverting cause and effect. People chose to concentrate their business because of service or financial gains. They may give much of their business to one company not by choice if it has a dominant share of a particular market (if every gas station in one's area is branded Shell, one will buy more gas from Shell than from other stations). In most markets, there are enough options that without loyalty, service or financial benefits, a purely transaction approach would have companies much more than they do because of the former.

If you have the best network, you're likely going to offer the best routing for most flights and destinations.
Let us postulate that United had the best network. From San Francisco, one could get to any airport with only one stop. However, if there was no other benefit to staying on one carrier, it is easy to believe that for every single route there would be a better choice than United. For example: SFO to ATL, DL would be better. For SFO to FRA, LH would be better. SFO to BKK, TH would be better. SFO to LHR, BA would be better. SFO to DFW AA would be better.

In a purely transactional world, it is not clear that the better network wins the bulk of the business, even in fortress hubs.

Which is why all successful airlines have broad networks and offer extensive flights and destinations from major population centers.
Really? Would you not say that Spirit is a successful airline? They do not have a broad network at all. What about Virgin America? How about Jet Blue?

Some of the world's most successful airlines have the worst loyalty programs. They are successful because their network provides a competitive advantage and they offer a competitive product.
I have stated that service, loyalty and/or financial reason drive business. Please show an example of an airline that is more expensive, has worse service than its competitors and has a terrible loyalty program, but is successful because of its network.

While I agree there's an opportunity to obtain a premium by offering better service in international premium cabins, please provide an example of an airline that has successfully commanded a premium for better service domestically.
First, every legacy carrier that competes with Spirit charges a price premium on those routes. If you are comparing legacy carriers, please provide an example of any of them that provide a meaningful differentiation in their service level. From my experience, there has never been one.

If you like, I can tell you all of the times it has failed...
Please do.

(Just to be clear, an all business class airline with no meaningful loyalty program does not inherently provide better service than an airline that offers business class as an option on its mixed class flights, and offers substantial benefits for loyalty.)

Last edited by majortom; Jun 14, 2012 at 2:50 am
majortom is offline  
Old Jun 14, 2012, 7:52 am
  #1387  
Suspended
 
Join Date: Aug 2003
Location: SEA
Posts: 12,485
Originally Posted by DCEsquire
(2) You're just wrong about the comp being under a million. I don't know why you like to keep repeating non-truths when I just shared a link that states exactly the opposite. Why don't you look at the 10-K yourself and get back to me on that.
There is a substantial difference between cash compensation and total compensation that get to the merits of the off-repeated retort that UA executives are over-entitled and overpaid.

Originally Posted by ibuyyoufly
I just have to ask, are you a VP at UA? If yes, I understand your position to defend your decisions.

if not, understand there are other points of view and you don't have the market covered on opinions and facts. There's more than your world that exists out there.
No, I am not employed by UA. [Off-topic remarks deleted by Moderator.]

My position is based on a) market research, and b) YEARS of consumer behavior. I understand your personal opinion and situation may be different.

Last edited by sxf24; Jun 14, 2012 at 9:25 am Reason: Necessary clean-up.
sxf24 is offline  
Old Jun 14, 2012, 7:53 am
  #1388  
 
Join Date: Sep 2010
Location: San Francisco Bay Area
Posts: 5,825
Originally Posted by majortom
LAX to MKE on UA can be $25-$75 more than AirTran for the same City pair (that is 25%). With Airtran, I would be on a non-stop, while UA, I would connect through ORD. What kept me flying UA was knowing that I would be upgraded, protected in the event of iRROPS and earning miles towards status and rewards.

Easily worth the price premium. If United actually provided Apple/Four Seasons/Zingermans levels of service, I would pay much more than 25% to stay on them.
I spoke derogatorily of Airtran in my earlier post, which I really should not have done since I can't recall ever having flown them.

In your example, for business travel at least, I would certainly give Airtran a try. Non-stop? And I miss the potential havoc that ORD can wreak on an itinerary? And it is 25% cheaper? Sounds like Airtran is a great alternative.

Now, if I tried Airtran once or twice, and the whole experience was bad, then I may consider going back to UA or another alternative.

But, non-stop and the opportunity to avoid ORD would make them appear to be a great alternative.
LarkSFO is offline  
Old Jun 14, 2012, 9:22 am
  #1389  
Suspended
 
Join Date: Aug 2003
Location: SEA
Posts: 12,485
Originally Posted by majortom
No, they have never delivered a (meaningfully) higher level of service, and so have never been able to charge for it. Their approach has always been to try to charge the premium first and then hope to raise their level of service. That will always fail.
What about Midwest Express, Legend and the Las Vegas based incarnation of National? Virgin America has also failed to obtain a revenue premium (or parity) by delivering better service.

AA and TWA also failed to generate higher revenue with an improved domestic hard product.

Originally Posted by majortom
Why is it fundementally different than hotels or restaurants?
Consumers see domestic air travel as transportation and purchase decisions are driven by convenience and price. On the other hand, hotels and restaurants are often seen as an experience where you could obtain value by paying more. There are exceptions, of course, which is why airlines sell a small number of first class tickets domestically.

Originally Posted by majortom
Again, you say this based on what evidence? No mainline carrier has ever really tried it. Nordstroms, Zingerman's, Apple, Four Seasons, Hyatt, Ritz Carlton have all been successful with that model.
See examples above.

Originally Posted by majortom
The world's most valuable company (based on market cap) has based its entire business strategy around that.
Apple - and the entire consumer electronics industry - also enjoy gross margins that are exponentially higher than airlines.

Originally Posted by majortom
Simply that COdbaUA wants to charge a price premium for an inferior product.
When they barely/rarely cover their costs, I don't think you can legitimately argue they're charging a price premium.

Originally Posted by majortom
If there is no loyalty or discount benefit, then each flight is a separate transaction and there is no reason to concentrate one's business at all. While it is true that if one is in a fortress hub (IAH), one's business is likely to end up disproportionately on one carrier, but that is the exception, rather than the rule. ORD, LAX, SFO, and IAD all have enough competitors, such that if there were no loyalty or financial benefits there would be no reason to concentrate one's business.
A successful airline would have a cost structure, product and network that makes them attractive for most transactions. In my opinion, this strategy will better serve both the customer and shareholders vis a vis attempting to offset structural/strategic weaknesses with an overly generous loyalty program.

Originally Posted by majortom
In a purely transactional world, it is not clear that the better network wins the bulk of the business, even in fortress hubs.
I disagree because history has proven otherwise.

Originally Posted by majortom
Really? Would you not say that Spirit is a successful airline? They do not have a broad network at all. What about Virgin America? How about Jet Blue?
Spirit has the broadest network out of FLL, which has driven its success. If you look at JetBlue, they offer extensive networks out of JFK and BOS. They happen to be more successful in BOS (from a revenue/yield standpoint) because they are the dominant carrier there (and the improvement in revenue performance was closely correlated with the expansion of the network).

You don't have to be everything to everyone, but you have to dominate the cities that provide the majority of your traffic.

Originally Posted by majortom
I have stated that service, loyalty and/or financial reason drive business. Please show an example of an airline that is more expensive, has worse service than its competitors and has a terrible loyalty program, but is successful because of its network.
I'm not saying that any airline can be successful by providing poor or inferior service, particularly internationally. My point is that a generous loyalty program is not a requirement to be successful.
sxf24 is offline  
Old Jun 14, 2012, 9:40 am
  #1390  
 
Join Date: Dec 2009
Location: New York, NY
Programs: Hyatt GLOB, Marriott Lifetime PLT, UA 1K 1MM.
Posts: 1,733
Originally Posted by majortom
Why is it fundementally different than hotels or restaurants?
i think it's fundamentally different than a lot (but not all) businesses out there because of the perishability of the product. electronics can sit in a warehouse if not sold today. restaurants can turn yesterday's leftovers into today's "special soup." hotel rooms can kind of sit around until a harried business traveler walks in last minute at 11:30P. those products can all perish at differing rates. an airline seat, however, is highly perishable. once it pushes back from the gate, if a seat goes empty, that's it. they lost that revenue forever.

i'm not saying i understand intricacies of large businesses and how something like this would affect how it runs and how it prices, but i can't imagine that it wouldn't.

Originally Posted by sxf24
Consumers see domestic air travel as transportation and purchase decisions are driven by convenience and price. On the other hand, hotels and restaurants are often seen as an experience where you could obtain value by paying more. There are exceptions, of course, which is why airlines sell a small number of first class tickets domestically.
i see pictures of F from the 50's 60's and 70's, stratocruiser F, the constant pampering, the fact that pan am had a buffet and lie flat beds in the 40's, etc.

i look at domestic F now. and sometimes even international C.

it makes me sad.

different eras, technological advancements, there's so much we have now vs then, i get it. but i feel like what's fundamentally changed in the industry over the years is the attitude of the people. technologically they had so much less, yet both the staff and the passengers seem like it was quite the grand experience. now i'm lucky if i don't piss off an FA in BF by asking for some water, heaven forbid i interrupt whatever fascinating conversation all the FA's are holding in the galley.

i never lived in an era where the journey itself was an exciting experience in itself and part of the vacation. instead i grew up with CO in the last decade or so.

actually though i used to fly KE back in the 80's and 90's growing up as a kid and i do remember the FA's back then always did their best to make the travel experience special whether in Y or C. i haven't flown them in a while, i wonder if it's still like that. i really should ditch UA when going to ICN and just fly OZ instead... but i digress.

Originally Posted by sxf24
I'm not saying that any airline can be successful by providing poor or inferior service, particularly internationally. My point is that a generous loyalty program is not a requirement to be successful.
i've never used it so i can't say but i do remember someone telling me that SQ's frequent flyer program sucks but the airline is successful.

Last edited by iluv2fly; Jun 14, 2012 at 10:10 am Reason: merge
bob_the_d is offline  
Old Jun 14, 2012, 10:23 am
  #1391  
 
Join Date: Apr 2004
Programs: UA 1K 3.01MM Hyatt Globalist (Lifetime) AA ExPlat (real), Lifetime UniClub (not from the 2MM).
Posts: 173
Originally Posted by LarkSFO
I spoke derogatorily of Airtran in my earlier post, which I really should not have done since I can't recall ever having flown them.
I have not flown them since their acquisition by Southwest, but they were a reasonable airline.

In your example, for business travel at least, I would certainly give Airtran a try. Non-stop? And I miss the potential havoc that ORD can wreak on an itinerary?
In this case ORD cannot cause any serious problems. My destination is half way between the two airports (ORD and MKE) and I choose to fly to MKE for other factors (shorter lines, less stressed agents, cheaper long term parking - $6 a day vs $18). If I misconnect and I am being picked up, I just have my ride come to ORD instead of MKE, if I have a car at MKE, there is a bus that pretty much always operates and UA uses as a fallback.

And it is 25% cheaper? Sounds like Airtran is a great alternative.
It would be a great alternative, if neither service (upgrades in this case) nor loyalty rewards mattered.
majortom is offline  
Old Jun 14, 2012, 10:26 am
  #1392  
 
Join Date: Nov 2010
Location: ORF
Posts: 1,740
Originally Posted by sxf24
What about Midwest Express, Legend and the Las Vegas based incarnation of National? Virgin America has also failed to obtain a revenue premium (or parity) by delivering better service.
The problem is you are looking at it as an all or nothing proposition which assumes everyone needs to pay more. Creating a premium brand doesn't mean every seat you sell has a revenue premium. CX is a five star airline and often has the cheapest coach tickets to Asia. They also have people paying more to get a significantly better experience. And obviously top tier premium cabins. Same with SQ, EK, and others. By creating a nicer product, your average revenue will increase, and you will still get the cheapest fare fliers. An all premium airline that will always charge more? You are right, it will never work. That isn't what is discussed when talking about brand equity and prestige though. The sum of the parts need to be premium, and the average revenue will follow, whether through FFP, Customer Service, Hard Product, Route network, whatever. The sum matters. Being bad at most will lead to failure. Global carries do indeed need to be all things to all people. They require a overeaching amount of volume, and as much revenue as possible to succeed. Obviously, with regional carriers, it's shown to be the opposite. Specialization is key for grabbing market share for your particular market. UA can't fly on the CO model. They need to fill huge planes all over the globe, and the only way is to have everyone from Joe Schmoe to The Queen of Sheba.

This is one thing the "bean counters" ( I just use that as that seems to be the parlance that is popular) fail at. When the word "bean counter" is used in this instance, it generally looks to lack of strategic vision and poor brand perception due to whats perceived as nickle and dime shortcuts that lead to an inferior product. It is absolutely happening at UA right now due to CO influence, among other things. It was happening before under Tilton as well.

Originally Posted by sxf24
AA and TWA also failed to generate higher revenue with an improved domestic hard product.
Actually false. AA did indeed command revenue premiums, they just don't anymore due to stagnation, and it wasn't because of MRTC, it was because they cater better to high volume business for most of the 2000's. Hopefully they can innovate once more and jump back ahead.
gegarrenton is offline  
Old Jun 14, 2012, 10:37 am
  #1393  
 
Join Date: Nov 2002
Location: SEA/YVR/BLI
Programs: UA "Lifetime" Gold, AS MVPG100K, OW Emerald, HH Lifetime Diamond, IC Plat, Marriott Gold, Hertz Gold
Posts: 9,513
Originally Posted by gegarrenton
Global carries do indeed need to be all things to all people. They require a overeaching amount of volume, and as much revenue as possible to succeed. Obviously, with regional carriers, it's shown to be the opposite. Specialization is key for grabbing market share for your particular market. UA can't fly on the CO model. They need to fill huge planes all over the globe, and the only way is to have everyone from Joe Schmoe to The Queen of Sheba.

This is one thing the "bean counters" ( I just use that as that seems to be the parlance that is popular) fail at. When the word "bean counter" is used in this instance, it generally looks to lack of strategic vision and poor brand perception due to whats perceived as nickle and dime shortcuts that lead to an inferior product. It is absolutely happening at UA right now due to CO influence, among other things. It was happening before under Tilton as well.
Knowing nothing about the airline industry, I've wondered about this myself. I compare it to a successful well-regarded premium niche restaurant (given the regard some have for PMCO) such as Ruth's Chris taking over Denny's. At worst, you simultaneously drive away the big-spending diners and those looking for a cheap and convenient place to eat.

We used to tell folks who asked us "travel experts" that we'd never claim UA was the best airline; we flew UA because both its routings and especially its loyalty program fitted us best and YMMV.

Well, we're no longer giving that piece of advice.
Fredd is offline  
Old Jun 14, 2012, 10:41 am
  #1394  
Suspended
 
Join Date: Aug 2003
Location: SEA
Posts: 12,485
Originally Posted by gegarrenton
The problem is you are looking at it as an all or nothing proposition which assumes everyone needs to pay more. Creating a premium brand doesn't mean every seat you sell has a revenue premium. CX is a five star airline and often has the cheapest coach tickets to Asia. They also have people paying more to get a significantly better experience. And obviously top tier premium cabins. Same with SQ, EK, and others. By creating a nicer product, your average revenue will increase, and you will still get the cheapest fare fliers. An all premium airline that will always charge more? You are right, it will never work. That isn't what is discussed when talking about brand equity and prestige though. The sum of the parts need to be premium, and the average revenue will follow, whether through FFP, Customer Service, Hard Product, Route network, whatever. The sum matters. Being bad at most will lead to failure. Global carries do indeed need to be all things to all people. They require a overeaching amount of volume, and as much revenue as possible to succeed. Obviously, with regional carriers, it's shown to be the opposite. Specialization is key for grabbing market share for your particular market. UA can't fly on the CO model. They need to fill huge planes all over the globe, and the only way is to have everyone from Joe Schmoe to The Queen of Sheba.

This is one thing the "bean counters" ( I just use that as that seems to be the parlance that is popular) fail at. When the word "bean counter" is used in this instance, it generally looks to lack of strategic vision and poor brand perception due to whats perceived as nickle and dime shortcuts that lead to an inferior product. It is absolutely happening at UA right now due to CO influence, among other things. It was happening before under Tilton as well.
You bring up some good points and I fully agree that investing in that chasing premium passengers in certain long-haul markets with a competitive product will drive returns. What I disagree with is the assumption permeating this thread that a generous loyalty program is a critical part of a) attracting premium passengers, b) increasing or retaining premium revenue, or c) supporting a premium brand.

Originally Posted by gegarrenton
Actually false. AA did indeed command revenue premiums, they just don't anymore due to stagnation, and it wasn't because of MRTC, it was because they cater better to high volume business for most of the 2000's. Hopefully they can innovate once more and jump back ahead.
AA held a revenue premium over the industry while it was the largest carrier. It saw no yield benefit from the implementation of MRTC.
sxf24 is offline  
Old Jun 14, 2012, 10:47 am
  #1395  
FlyerTalk Evangelist
 
Join Date: Mar 2002
Location: SPI
Programs: AA Gold, UA LT Plat, Mar LTT
Posts: 18,147
Originally Posted by sxf24
You don't have to be everything to everyone, but you have to dominate the cities that provide the majority of your traffic.
Interesting. I see your point. In fact, it goes a long way towards explaining the previous success that CO management had. Can you help me understand how the "new" CO - which DOESN'T dominate cities like SFO, LAX, IAD, DEN, NRT and the like plans to be successful??
Originally Posted by sxf24
My point is that a generous loyalty program is not a requirement to be successful.
Perhaps not, but IMO, it is quite helpful when the carrier in question doesn't operate out of fortress hubs.

Dave
bseller is offline  

Thread Tools
Search this Thread

Contact Us - Manage Preferences Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

This site is owned, operated, and maintained by MH Sub I, LLC dba Internet Brands. Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Designated trademarks are the property of their respective owners.