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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, 3:40 pm
  #1411  
 
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Originally Posted by pdx1M

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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^ ^ ^ ^ ^
Bravo! Extremely well written. My sentiments, exactly.
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Old Jun 14, 2012, 3:58 pm
  #1412  
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Originally Posted by sxf24
Thank you for your objective and unbiased opinion.
You're welcome! Out of curiosity, which part strikes you as merely "opinion"??

Dave
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Old Jun 14, 2012, 4:02 pm
  #1413  
 
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Originally Posted by pdx1M
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.
Fully agree. I am giving them still the reason of doubt to sort things out or come to terms what it means not to compete from a fortress hub but will just send my money to the best carrier that fits my needs because the 'other' things just don't add to enough anymore.
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Old Jun 14, 2012, 4:19 pm
  #1414  
 
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Originally Posted by ibuyyoufly

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 been thinking a lot about this quote (not from ibuyyoufly but from OP).

Option 1: An airline such as AA or UA before CO that has a moderate route network and a good FF program including reasonable UG opportunities.

Option 2: An airline such as COdbaUA that has an outstanding route network but nearly impossible UG opportunities.

These choices present quite a dilemma.

With option 2, it's easy to get status, b/c the airline flies everywhere you want to go, often with good schedules, direct flights, and/or decent connections. Therefore, it's easy to stay with the airline for all/most travel needs and maintain status. But, the other side of the coin is that status has hardly any value if the airline trashes their FF program once they get a compelling route network. So, it's easy to get status, but the status is worth almost nothing.

With option 1, it's a lot harder to get status, b/c there are fewer places to fly, and less pleasant to be with the airline, b/c the routes/connections are less desirable. However, the status is actually worth something, as you can get UG frequently - such as reported by those who switched to AA and as I experienced on legacy UA for almost 10 years before 3/3/12.

So, given these two choices, what's best? It seems to me that a business traveller with budget to fly paid C would choose option 2, since he or she gets the limited benefits of status and enjoys a good route network and doesn't have to suffer with E- or E+ anyway. This is clearly the most valuable customer to the airline too.

But, for everyone else whose budget (whether personal or corporate) allows only the purchase of seats in the back of the plane, UGs are much more important, so what's the point in suffering through hundreds of hours in E seats for the chance to upgrade, maybe, once in a lifetime. Better to shoot for status on an airline that hasn't basically eliminated UG opportunities for elite flyers.

The more I think about it, it seems that one of the core strategies being executed by the CO regime is to squeeze frequent flyers by cutting every possible benefit and rest on the assumption that they won't leave due to the superior route network.

And, if you take into consideration the near omnipotent powers that have been attributed to SHARES, it seems plausible that SHARES has special algorithms that provide more benefits (i.e. upgrades or TOD offers) to fliers who are not already committed to the airline (i.e. kettles) or to fliers who are "at risk" of going to competitors (i.e. those flying out of airports with a lot of competition) while doing everything possible to screw in every possible way the frequent flyers going to/from/between fortress hubs with full knowledge that those flyers aren't going to fly on another airline anyway.

It's hard to imagine they are smart enough to do something this complicated, but as I put all the dots together, this is what it's starting to look like to me. Free market economic principles to the max.

The most upsetting part of this is that they could actually be right.
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Old Jun 14, 2012, 4:23 pm
  #1415  
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Originally Posted by pdx1M
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.
You make it seem like its wrong for an airline to compete solely on the basis of schedule/price/service. That's what the vast majority of people consider when making travel decisions and that is where airlines need to focus on effectively competing.

It is an absolute waste of resources to cater to those who put a disproportionate focus on "other," since "other" has very little influence on purchase decisions.

I'll come back to the question of whether there's ever been an airline that has succeeded because it had the most generous loyalty program.
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Old Jun 14, 2012, 4:30 pm
  #1416  
 
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Originally Posted by sxf24
You make it seem like its wrong for an airline to compete solely on the basis of schedule/price/service. That's what the vast majority of people consider when making travel decisions and that is where airlines need to focus on effectively competing.

It is an absolute waste of resources to cater to those who put a disproportionate focus on "other," since "other" has very little influence on purchase decisions.

I'll come back to the question of whether there's ever been an airline that has succeeded because it had the most generous loyalty program.
OK - you really are just being dense. It is FINE, TERRIFIC for UA to decide to compete on schedule/price/service. If they do that successfully then they will get my business without ANY loyalty program. However - they are NOT currently doing that. Internationally, they lose on service. Domestically they frequently lose on price. They may choose to fix those things and offer world class international service and matching pricing on domestic first. If they do - GREAT. But they are not doing that today and they show no real sign of doing so. They got away with this in the past because of the "other" - now they have to do it straight up. Let's see them do that. But seriously - do you see them evolving to provide a service experience to equal some of the Asian carriers TPAC?
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Old Jun 14, 2012, 4:32 pm
  #1417  
 
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Originally Posted by mitchmu
So, given these two choices, what's best? It seems to me that a business traveller with budget to fly paid C would choose option 2, since he or she gets the limited benefits of status and enjoys a good route network and doesn't have to suffer with E- or E+ anyway. This is clearly the most valuable customer to the airline too.
I am a business traveler and can still fly paid C international. You are missing in your comparison that to most destinations I can usually pick a superior foreign carrier to get to the same destination. I might need to use a US airline though to get to the domestic hub but since I get F then already for the feeder flight it is not a big deal.
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Old Jun 14, 2012, 4:42 pm
  #1418  
 
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Originally Posted by nycnnj
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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There is no question but that there are some people who are in fact over entitled, treating airline workers and fellow passengers like dirt, but likewise there are some workers who have bad attitudes as well. That an airline executive would state the obvious is not surprising nor disrespectful. I want my upgrades as much as the next person and do my best to get them, but obsessing over one remark makes no sense in light of the fact that stereotypes are bad, whether they be of elites like us, or the airline's workers. That said, I am no GS, but have been treated fairly in this process, and have been patient during the merger process. The lower the blood pressure, the longer we live!
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Old Jun 14, 2012, 4:52 pm
  #1419  
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Originally Posted by pdx1M
OK - you really are just being dense. It is FINE, TERRIFIC for UA to decide to compete on schedule/price/service. If they do that successfully then they will get my business without ANY loyalty program. However - they are NOT currently doing that. Internationally, they lose on service. Domestically they frequently lose on price. They may choose to fix those things and offer world class international service and matching pricing on domestic first. If they do - GREAT. But they are not doing that today and they show no real sign of doing so. They got away with this in the past because of the "other" - now they have to do it straight up. Let's see them do that. But seriously - do you see them evolving to provide a service experience to equal some of the Asian carriers TPAC?
No, UA will never have fawning and submissive flight attendants like some of the Asian carriers. However, I don't think handing out more bonus miles, upgrades and E+ at the time of booking compensates for smashing the fantasies of fat, white American business men everywhere.
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Old Jun 14, 2012, 5:14 pm
  #1420  
 
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Originally Posted by mitchmu
I have been thinking a lot about this quote (not from ibuyyoufly but from OP).

The more I think about it, it seems that one of the core strategies being executed by the CO regime is to squeeze frequent flyers by cutting every possible benefit and rest on the assumption that they won't leave due to the superior route network.

And, if you take into consideration the near omnipotent powers that have been attributed to SHARES, it seems plausible that SHARES has special algorithms that provide more benefits (i.e. upgrades or TOD offers) to fliers who are not already committed to the airline (i.e. kettles) or to fliers who are "at risk" of going to competitors (i.e. those flying out of airports with a lot of competition) while doing everything possible to screw in every possible way the frequent flyers going to/from/between fortress hubs with full knowledge that those flyers aren't going to fly on another airline anyway.

It's hard to imagine they are smart enough to do something this complicated, but as I put all the dots together, this is what it's starting to look like to me. Free market economic principles to the max.

The most upsetting part of this is that they could actually be right.
Thanks for qualifying the Quote. I do know I am no where near smart enough, no matter the number of years I too have been flying, to make that comment. My research shows that.

Your thoughts are spot on. We do have to give the Revenue Management and Customer Loyalty folks at any airline, more than enough credit for knowing the flying habits of their customers. They are very smart people to have those jobs and live that information every day. They have a great deal of information on all of us.

I'll also bet that the primary reason the company went with SHARES, is because thats the system they knew and didn't want to waste a single minute of their time learning a new system, when that same time could be spent immediately executing their strategy. What they didn't put a value to, or know it was even coming, was the backlash from the PMUA Elite customers when program features went away. I think they thought they could gloss over those loses/bugs/glitches.

So now I bet they are scrambling. "If", and it's a big "if", a few, some, or a bunch of PMUA Elites have moved some/all money to other airlines, thats a variable they didn't plan for. Now the formula might not look so rosy.

Couple the above with customer facing employee frustration and all of a sudden the Media, and FT, becomes an enemy (bad news multiplier), and then you even have "infrequent flyers" who say, "Wow they're having problems at United", let's book our vacations with another airline.

So its my opinion, and as I said in my first paragraph, I am not an expert on any of this, this is where we are at today and the manipulation of SHARES will have to go on "double time" to fill the revenue holes, that is if there are any, from the "unintended consequence" of lost revenue.

Time will answer all of these questions, but the big question mark is, what are Elites really doing with their spend, because that was the company's customer base for existing and on-going business and what effect did/does the below list of Media coverage impact the GM's and "very infrequent travelers"?

Pilot Group Files Suit
Pilots Break Mediation and Prepare for Strike
Million Miler Files Suit
CFO says Elites Over Entitled
Families with Kids Denied Early Boarding
WN wins battle for Houston
UA laying off 1300 Houston employees
SHARES Debacle
Elite Customers Lose Benefits
Customer Service Phone Lines Bogged Down
AA offers United Customers Program Match
First to Worst Report
Code Share with Qatar and Emirates dropped
DOT Report

....and I'm sure I have missed many other headlines. But the point is, this is a lot of news in a very short period of time that will/can influence the less seasoned traveler.
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Old Jun 14, 2012, 5:15 pm
  #1421  
 
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Originally Posted by sxf24
No, UA will never have fawning and submissive flight attendants like some of the Asian carriers. However, I don't think handing out more bonus miles, upgrades and E+ at the time of booking compensates for smashing the fantasies of fat, white American business men everywhere.
I think it may be time for someone to do their - route network - 787 - deep breathing exercises.
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Old Jun 14, 2012, 5:25 pm
  #1422  
 
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Originally Posted by sxf24
No, UA will never have fawning and submissive flight attendants like some of the Asian carriers. However, I don't think handing out more bonus miles, upgrades and E+ at the time of booking compensates for smashing the fantasies of fat, white American business men everywhere.
I did LOL on this. Only because that's me, or at least close enough, but you forget "old(er)" too. Good one!
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Old Jun 14, 2012, 5:45 pm
  #1423  
 
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Originally Posted by sxf24
However, I don't think handing out more bonus miles, upgrades and E+ at the time of booking compensates for smashing the fantasies of fat, white American business men everywhere.
You would be surprised.
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Old Jun 14, 2012, 5:51 pm
  #1424  
 
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Originally Posted by ibuyyoufly
Thanks for qualifying the Quote. I do know I am no where near smart enough, no matter the number of years I too have been flying, to make that comment. My research shows that.

Your thoughts are spot on. We do have to give the Revenue Management and Customer Loyalty folks at any airline, more than enough credit for knowing the flying habits of their customers. They are very smart people to have those jobs and live that information every day. They have a great deal of information on all of us.

I'll also bet that the primary reason the company went with SHARES, is because thats the system they knew and didn't want to waste a single minute of their time learning a new system, when that same time could be spent immediately executing their strategy. What they didn't put a value to, or know it was even coming, was the backlash from the PMUA Elite customers when program features went away. I think they thought they could gloss over those loses/bugs/glitches.

So now I bet they are scrambling. "If", and it's a big "if", a few, some, or a bunch of PMUA Elites have moved some/all money to other airlines, thats a variable they didn't plan for. Now the formula might not look so rosy.

Couple the above with customer facing employee frustration and all of a sudden the Media, and FT, becomes an enemy (bad news multiplier), and then you even have "infrequent flyers" who say, "Wow they're having problems at United", let's book our vacations with another airline.

So its my opinion, and as I said in my first paragraph, I am not an expert on any of this, this is where we are at today and the manipulation of SHARES will have to go on "double time" to fill the revenue holes, that is if there are any, from the "unintended consequence" of lost revenue.

Time will answer all of these questions, but the big question mark is, what are Elites really doing with their spend, because that was the company's customer base for existing and on-going business and what effect did/does the below list of Media coverage impact the GM's and "very infrequent travelers"?

Pilot Group Files Suit
Pilots Break Mediation and Prepare for Strike
Million Miler Files Suit
CFO says Elites Over Entitled
Families with Kids Denied Early Boarding
WN wins battle for Houston
UA laying off 1300 Houston employees
SHARES Debacle
Elite Customers Lose Benefits
Customer Service Phone Lines Bogged Down
AA offers United Customers Program Match
First to Worst Report
Code Share with Qatar and Emirates dropped
DOT Report

....and I'm sure I have missed many other headlines. But the point is, this is a lot of news in a very short period of time that will/can influence the less seasoned traveler.
Thanks for a great post! This sums up my opinion perfectly.

Somebody flamed me in another thread for looking forward to seeing (my expectation) of carnage in revenue #s for Q2/3. I admit I probably overestimated the short-term impact of all this as a lot of travel was already booked for Q2. However lots of biz travel is still last minute, and if that traffic went to AA and others, it will be seen in Q2.

Me personally I am burning up my UA miles. Haven't given them a cent since January - but enjoying fairly good domestic redemption during peak periods over the summer and holidays.

All revenue tickets since have gone to AA ($6K worth) and enjoying the 100% upg rate as EXP ^
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Old Jun 14, 2012, 5:54 pm
  #1425  
 
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Originally Posted by Beerman92
I think it may be time for someone to do their - route network - 787 - deep breathing exercises.
Or do you mean heavy breathing?
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