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

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

Old Jun 14, 2012, 10:54 am
  #1396  
 
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Originally Posted by majortom
I have not flown them since their acquisition by Southwest, but they were a reasonable airline.



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.



It would be a great alternative, if neither service (upgrades in this case) nor loyalty rewards mattered.
All excellent points.

Really demonstrates why this is not a 'one size fits all' type of industry.

We all have our influencers / priorities that are important to us, and we all make our individual decisions based upon our unique situation.
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Old Jun 14, 2012, 11:04 am
  #1397  
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Originally Posted by bseller
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??
While domination never hurts, holding the largest market share is generally sufficient to drive corporate share and a yield premium.

Originally Posted by bseller
Perhaps not, but IMO, it is quite helpful when the carrier in question doesn't operate out of fortress hubs.

Dave
There are plenty of carriers that have been financially successful without a generous loyalty program. On the other hand, I can't think of a single airline that has used its loyalty program to obtain or maintain a yield premium.
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Old Jun 14, 2012, 11:15 am
  #1398  
 
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NYT Article: Asia-Pacific Region Is Fertile Ground for Low-Cost Airlines

http://www.nytimes.com/2012/06/14/bu...nt&tntemail1=y

Interesting article... Amazing growth!

"Still, the Asia-Pacific airline sector is growing, especially in the low-cost segment. Budget airlines like Jetstar, Cebu Pacific Air, Tiger Airways and AirAsia now have about one-quarter of the market, according to Ms. Png, the JPMorgan analyst. That compares with 35 percent for no-frills airlines in Europe and 30 percent in North America."


" “Low-cost carriers are stimulating more demand by putting air travel within the reach of people who might not otherwise be able to afford to fly,” Ms. Png said. “It is not a zero-sum game.” "

Last edited by LarkSFO; Jun 14, 2012 at 11:24 am
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Old Jun 14, 2012, 12:03 pm
  #1399  
 
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Originally Posted by sxf24
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.
I, at least, would not claim that UA needs a generous program to be successful. They could absolutely win business with great service or best pricing. There are lots of paths to success. You seem to continue to ignore the fact that on international routes, though, UA does not have (today) top class service - they come up behind a lot of international carriers in that respect. Also, you seem to continue to ignore that on a lot of my domestics routes I can routinely purchase first class more cheaply on other carriers than on UA - for pretty much the same level of service (none of the domestics do much for their first class services domestically - nor should they really have to). The role of a more generous program is in compensating for these competitive weaknesses. Fundamentally, a company can have a business model that is primarily transactional or primarily relationship based. Either works but the parameters of success are different. The point a lot of folks on this thread have been making is not that UA necessarily needs a more generous MP program - it is that they need to pick a business model and then execute to be best at that model. They have not adjusted pricing to compete that way and their international service has seen only minor tweaks thus far to improve it. So it does not appear that they are setting up to win based on a transactional approach. They have also (clearly) adjusted down their loyalty program so it doesn't appear that they are setting up to win based on a relationship model. That is the issue. As an example of a customer will to actually purchase premium tickets UA needs to give me some reason to buy each ticket from them - perhaps you have seen that reason but as the guy wielding my credit card I am not seeing it yet.
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Old Jun 14, 2012, 12:19 pm
  #1400  
 
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Originally Posted by sxf24
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.
I am not actually disagreeing with you there, it's just that it takes a given sum to make the value work, and a FFP can be part of it, but not necessarily required if the other components work well enough.

Originally Posted by sxf24
AA held a revenue premium over the industry while it was the largest carrier. It saw no yield benefit from the implementation of MRTC.
That's what I was saying too.
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Old Jun 14, 2012, 12:25 pm
  #1401  
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Originally Posted by pdx1M
I, at least, would not claim that UA needs a generous program to be successful. They could absolutely win business with great service or best pricing. There are lots of paths to success. You seem to continue to ignore the fact that on international routes, though, UA does not have (today) top class service - they come up behind a lot of international carriers in that respect. Also, you seem to continue to ignore that on a lot of my domestics routes I can routinely purchase first class more cheaply on other carriers than on UA - for pretty much the same level of service (none of the domestics do much for their first class services domestically - nor should they really have to). The role of a more generous program is in compensating for these competitive weaknesses. Fundamentally, a company can have a business model that is primarily transactional or primarily relationship based. Either works but the parameters of success are different. The point a lot of folks on this thread have been making is not that UA necessarily needs a more generous MP program - it is that they need to pick a business model and then execute to be best at that model. They have not adjusted pricing to compete that way and their international service has seen only minor tweaks thus far to improve it. So it does not appear that they are setting up to win based on a transactional approach. They have also (clearly) adjusted down their loyalty program so it doesn't appear that they are setting up to win based on a relationship model. That is the issue. As an example of a customer will to actually purchase premium tickets UA needs to give me some reason to buy each ticket from them - perhaps you have seen that reason but as the guy wielding my credit card I am not seeing it yet.
I disagree that a generous program can or should compensate for competitive weaknesses. There is no financial benefit to trying to build a relationship with customers when you can't compete on the merits of your network and product.

If UA doesn't offer a competitive schedule, price and product, I'm not sure why you would want to have a reason to continue flying them.
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Old Jun 14, 2012, 12:48 pm
  #1402  
 
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Thumbs down Bad comment

If senior leadership is not happy about providing benefits to "over-entitled elites", then they should fire their marketing, loyalty and/or revenue department leadership for poor decision-making and/or implementation. The company established the benefits and thresholds for receiving those benefits -- not the customers. Instead, it would seem, the mentality of senior leadership, or at least this CFO, is to 'fire' the customer.

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BAD COMMENT TO MAKE ABOUT YOUR CUSTOMERS. SHAREHOLDERS AND BOARD OF DIRECTORS, TAKE NOTE, YOU MAY WANT TO KEEP THE PUBLIC COMMENTS OF YOUR SENIOR LEADERSHIP APPROPRIATE. IT IS NEVER APPROPRIATE TO PUBLICLY SPEAK NEGATIVELY ABOUT YOUR CUSTOMERS. THEY PAY THE BILLS, EVEN IF YOU HATE THEM.

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Old Jun 14, 2012, 12:55 pm
  #1403  
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Originally Posted by sxf24
While domination never hurts, holding the largest market share is generally sufficient to drive corporate share and a yield premium.
OK, for the sake of argument, I'll buy what you're selling. HOWEVER, it's not what you were selling at 10:22am this morning when you said:

"you have to dominate the cities that provide the majority of your traffic".

Maybe I'm just a stupid rube from the middle west, but this appears to be goal post shifting in the extreme to me.

Originally Posted by sxf24
On the other hand, I can't think of a single airline that has used its loyalty program to obtain or maintain a yield premium.
I guess we'll see if a very large, regional, fortress-hubbed airline which suddenly takes over the management of a world wide, competitively hubbed airline will be able to do so. If they can't, then IMO, COdbaUA is in trouble.

Dave
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Old Jun 14, 2012, 1:18 pm
  #1404  
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Originally Posted by bseller
OK, for the sake of argument, I'll buy what you're selling. HOWEVER, it's not what you were selling at 10:22am this morning when you said:

"you have to dominate the cities that provide the majority of your traffic".

Maybe I'm just a stupid rube from the middle west, but this appears to be goal post shifting in the extreme to me.
Are you trying to quibble over the definition of "domination," or do you have a point?

Originally Posted by bseller
I guess we'll see if a very large, regional, fortress-hubbed airline which suddenly takes over the management of a world wide, competitively hubbed airline will be able to do so. If they can't, then IMO, COdbaUA is in trouble.

Dave
Thank you for your objective and unbiased opinion.
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Old Jun 14, 2012, 1:43 pm
  #1405  
 
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What is the characteristic of the "GS flyer?"

This thread has been very enlightening for me, actually. It seems clear to me that UA feel they can manage their loads via price - "dynamic SHARES pricing" - irrespective of loyal flyers - GS included. My sense is many GS flyers spend alot of time using "super" domestic 1K-type benefits that UA now, apparently, loathe. This, in addition to, say, four $10K trips to Asia a year takes this 1K flyer to GS. Otherwise, why would a $100K spender care less about any "GS benefits" because they, effectively pay for the treatment on every flight regardless of airline. UA feel they can replace the GS on the four $10K flights - albeit at a lower price point, but save on not having to provide the massive domestic benefits the GS has come to enjoy. Of course, I could be way off base...
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Old Jun 14, 2012, 1:58 pm
  #1406  
 
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Originally Posted by 7182713
This thread has been very enlightening for me, actually. It seems clear to me that UA feel they can manage their loads via price - "dynamic SHARES pricing" - irrespective of loyal flyers - GS included. My sense is many GS flyers spend alot of time using "super" domestic 1K-type benefits that UA now, apparently, loathe. This, in addition to, say, four $10K trips to Asia a year takes this 1K flyer to GS. Otherwise, why would a $100K spender care less about any "GS benefits" because they, effectively pay for the treatment on every flight regardless of airline. UA feel they can replace the GS on the four $10K flights - albeit at a lower price point, but save on not having to provide the massive domestic benefits the GS has come to enjoy. Of course, I could be way off base...
There are certain vestiges of the loyalty program though that you don't get with high fare tickets. UA has really killed one of those with the phone service lately, but over at AA, the EXP desk is a significant plus that just being a F passenger doesn't get you, and IROPS handling seems better for EXP than basic premium fare passengers.

These things make keeping a given elite status preferable to just being a premium customer. I too usually spend on premium cabins, but the EXP benefits are still a plus IMO.
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Old Jun 14, 2012, 2:02 pm
  #1407  
 
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Originally Posted by 7182713
This thread has been very enlightening for me, actually. It seems clear to me that UA feel they can manage their loads via price - "dynamic SHARES pricing" - irrespective of loyal flyers - GS included. My sense is many GS flyers spend alot of time using "super" domestic 1K-type benefits that UA now, apparently, loathe. This, in addition to, say, four $10K trips to Asia a year takes this 1K flyer to GS. Otherwise, why would a $100K spender care less about any "GS benefits" because they, effectively pay for the treatment on every flight regardless of airline. UA feel they can replace the GS on the four $10K flights - albeit at a lower price point, but save on not having to provide the massive domestic benefits the GS has come to enjoy. Of course, I could be way off base...
I would love to see my 'massive' benefits. You don't get much as a GS, mainly arrivals in major hubs, higher upgrade priority (which they can still TOD) and faster phone service. Upgrades I don't even count as real costs since if UA does not have a TOD sell and not a GS they would just upgrade the 1K or the 1P.

Not sure how much that really costs but it can't be that much.
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Old Jun 14, 2012, 2:14 pm
  #1408  
 
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"Just voted "Best Frequent Flyer Program" for the 8th year in a row"

For whatever reason, UA is certainly publicizing that in full-page Hemispheres ads and on departure-gate screens.

Reasons can be found in an article titled The airline frequent flyer programme: for love and money, in Airline Leader, advertising "independent coverage of global aviation news and analysis for airline executives."

One of the major claims in the article is the revenue value of credit cards to airlines. For that reason alone, it would seem to make sense for UA and any other airline to maintain a competitive loyalty program, or at least the pretense of one.

One excerpt from the fairly long article...

It’s difficult to know who owns whom in the credit card-airline partnerships. Although the airlines rarely make a return on capital, they are the processing centre for billions of dollars in sales, so are a magnet for the cards. The dollar-surrogate points that move between them can become real cash when, as happened with United’s and Delta’s Chapter 11 bankruptcies, Chase and American Express respectively helped them through with financial support, relying on the neo-cash value of their frequent flyer points. American Airlines, the only US major not to undergo the cleansing impact of Chapter 11 bankruptcy, would probably also not have avoided it without support from Citi, which effectively purchased points from the airline when it was in trouble.

In this respect the miraculous thing about an airline’s partners is that they generate both income and “loyalty” from the extended families that they deliver.

The days are long past of joking that FFPs are more valuable than the airline they belong to. Or at least, if the programmes are leveraged effectively they should be. And there is a further value in that, if not completely bullet proof, FFPs are to some extent countercyclical. When airline revenues slow, their partners’ fortunes often improve. Choosing the right partners, for example food chains, is important; consumers have to eat.
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Old Jun 14, 2012, 2:15 pm
  #1409  
 
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Originally Posted by German Expat
I would love to see my 'massive' benefits. You don't get much as a GS, mainly arrivals in major hubs, higher upgrade priority (which they can still TOD) and faster phone service. Upgrades I don't even count as real costs since if UA does not have a TOD sell and not a GS they would just upgrade the 1K or the 1P.

Not sure how much that really costs but it can't be that much.
Massive was meant to be relative to, say, a Silver...understood that massive benefits exist for no one these days. It seems clear to me if you value any sort of legacy FF benefits you are no longer flying UA...and that's the way they want it...
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Old Jun 14, 2012, 2:59 pm
  #1410  
 
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Originally Posted by sxf24
I disagree that a generous program can or should compensate for competitive weaknesses. There is no financial benefit to trying to build a relationship with customers when you can't compete on the merits of your network and product.

If UA doesn't offer a competitive schedule, price and product, I'm not sure why you would want to have a reason to continue flying them.
Sigh - it seems you aren't really reading what I am trying to say or you just like to defend UA. Of course if an airline is garbage I am not flying them. But the reality is that UA isn't garbage - it is typical US quality. They compete for my dollar. Very simply - I get a total value when I spend. That value comes from price/convenience/service/other. For almost any trip I have competitive alternatives in terms of schedule. UA is in the mix. The question is do they get that next ticket. That can be a decision purely based on that trip or it can include larger relationship value (the "other"). The old UA did well competing for my spend because they were acceptably close on schedule/price/service and won on other. The new UA has effectively zero'd out the value of "other" so now they compete for that same dollar on schedule/price/service. My point is simple - schedule is usually a wash; price and service they are weak on. That makes alternatives more attractive and they get less (not none - I am not suggesting I am abandoning UA in spite or such silliness) of my spend. Maybe this equation doesn't impact you and you choose trip carriers based on other criteria. It is my criteria set however, and it appears to also be the criteria set for some other GS/1K types. For this subset of people the new UA is less attractive than the old UA. That is my reality - doesn't have to be yours. Whether it works well for UA remains to be seen.
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