MSYnola

bingo. and welcome to flyertalk!

kiez

No I am not convinced of that - all tickets also the correct deposited say 4/xxxxxx on the e--ticket receipt. But be aware of the cross-account bookings - trust me this error is more tricxky than a simple query! Even just checking the account for miles dedctions before every call cann take time

so I think it is a combination of both Data and legal framework

AND NEVER FORGET
they DO NOT pay the revenue price for the f ticket to themselves or their partners (*A, QR)

PROBABLY rather something like 10% of the f class full fare value and thus the damage is a LOT LESS than selling a revenue ticket for 0 USD (instead of 5000+ USD)

SO here the legal cost would probably be much higher than inter-company and inter-alliance comp payments for AWARD tix!

hobo13

Agreed. The words simple and SHARES should never be in the same sentence. Your point, which could affect even a good rez system, just adds to the complexity.

I wouldn't be surprised if UA has deployed some interns to open up all the SFO/ORD/EWR-HKG seat maps for the next 327 days and go through the F and C cabins one-by-one looking for pax that don't below.

Ok, I'm kidding....... I hope.

iahphx

I didn't think UAL was going to "eat" this massive cost either (given the magnitude of the error, and the fact that we're talking about award chart tickets and not revenue tickets). The "Vegas odds" would still favor ticket cancellation. But the chances that somebody who's booked next month actually gets a free biz class flight to HKG are now greater than "zero." Not sure what the odds are, though. 30 to 1? 20 to 1? Where's my bookie.

In any event, this has become better than reality TV. Glad the media is getting in on the fun. And I'm glad I'm holding these "lottery tickets" to have some skin in the game.

CDKing

They need to update the first paragraph. This is not the first test of the DOT rules. It may be the first test regarding frequent flyer miles but the RGN deal was the first test.

Beckles

It doesn't cost them the cost of the tickets plus lost revenue, only one or the other.

escapefromphl

Most of the tickets are F not C. I had heard switching to SHARES was saving $100 million or so a year, wonder how much this will cost to honor.

kiez

what lost revenue - for UA and their partners its award tix so they did not really expect to sell usually

cost of tickets inter company and alliance I thin kwill not exceed 1000-15000 USD at max

Imagine US Airways with them cheap bought miles for 1400 USD (enough for eu to Asia First award) really would make such a big loss then why would the promo still be there in this form although many 1000 s of people booked

reason: The costs they pay UA, TG, OZ,LH, LX and the like mUST BE below that amout!

My guess 20 000 tix 50% on own stock so intercompany and little damage

10000 tickets with partners @ 500-1000 each so roughly 5-10 mio USD

BUT and that is the legal misery if for 50% they need to pay DOT compensation of 5000-10 000 USD than that would be a much higher loss so pssoble 50-100 mio in fines at max

so legal considerations are probably understandeable

hobo13

Except that these could book into standard inventory, meaning last seat availability. Surely there must be some F cabins on SFO/ORD/EWR-HKG that are fully occupied with FTers!

Xyzzy

The fact that one could select any flight with an available seat and book an award for four miles round trip means that they absolutely did affect the availability of revenue tickets. Had this been a glitch that nly allowed saver awards it would have been quite different.

iahphx

Right. Since nobody has revealed how many tickets have been sold, my guess since Sunday is that we're talking a $10 million revenue hit based on 2000 pax paying $5000 each being displaced on these transpac flights by freeloaders.

The biggest potential for error in this calculation is if a few people bought TONS of seats, and if UA honors these tickets along with the folks who just bought a handful.

Ten million would be material to UAL's Q3 earnings, but perhaps not so material when spread out over 4 quarters.

EDIT: BTW, if Smisek feels it's better to "give in" to the DOT than fight this, he could choose to recoup this cost by imposing a $5 surcharge on all future award tickets bought in the next quarter or so. Seems too vindictive? Look how he played hardball with the City of Houston over Southwest's new gates at Hobby. It would show that "over regulation" has consequences, and that regulation doesn't always benefit consumers.

amejr999

A few updates in the WSJ article:

kiez

well award seats are usually this close just given out space available - so I guess it just shyed away UA Standy employees that would have anayway paid little (although more than 4 miles equivalent!)

LAXOGG

Are there any estimates out there as to how many people successful grabbed these before UA shut it down? UA is expected to release earnings tomorrow and this could possibly lead to a delay in that release, accrual of the cost of snafu, or disclosure of the possible future financial impacts.


Assuming a standard award of 300,000 miles and valuing the miles at $.01, the approximate value is $3,000 per ticket. If 10,000 people got in on this, that's $30 million. I haven't studied the financials enough to make a judgement on materiality, but I suspect $30 million would be in excess of the threshold.

Edit. Just noticed the post by iahphx. Great minds think alike in terms of issues.......we came up with different estimates.

al613

Got email from United:


















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