FlyWorld

To me, the single most troubling aspect of this regime's anti-premier stance is their refusal to offer TODs to 1Ks.

Your argument looks at one aspect - get a TOD from a Kettle instead of giving the seat for free to a 1K.

I get that.

But, why, then, do they not even make the TOD offer available to a 1K?

There's something perversely punitive about what they've done. It's not simply based on the argument you put forth, suggesting that kettles + fees are worth more than a 1K on cheap fares with no extra fees.

It goes beyond that.

It seems like they are deliberately trying to punish 1Ks and cull them out of the population by making the value proposition for 1K actually much worse than that for a kettle.

dcdavido

I'd LOVE to see that data. Obviously, it's easy to do if you had the raw data - figure out the average revenue per flight mile flown by status. If you fill up 3/4 of the plane (just as an example) with super low and low fare codes, there is still 1/4 of the plane that would be sold at higher fare codes. My theory is those are sold to business travelers that have less flexibility in their travel plans. Business travelers could be GM, Silver, Gold, Plt, 1k, or GS - it depends on your job requirements on how much travel is required. However, to make the higher tiers it is tough to do without business travel. What surprises me is that the higher tiers wouldn't be skewed with more revenue per mile, while the GM category (or even no-status, someone who travels and doesn't bother with signing up for the FF program) wouldn't have a lower revenue per mile, weighed down with a lot of super low fare leisure travelers. Even after you add in the unbundled services. The fare difference between a leisure super low fare and a last minute ticket can make up for an awful lot of ToDs and baggage fees.

There are better ways to drive the "correct" behavior. For example, they could follow the European model and base PQMs on the fare code of the ticket. Sure there would be a mass exodus of FF to other airlines, but the people leaving would be those FF that always buy low cost tickets. The FF that remain would be those that buy higher cost tickets and would appreciate the fact that they can actually get an upgrade because there are a lot fewer FF in each status level of the program. As an added benefit these "moochers" that buy low cost tickets, and don't pay unbundled fees would be sucking up resources on other airlines.

I suspect the real reason they don't do it, is that they know that it's a lot easier to have a repeat customer than to have to attract a new customer and they'd suddenly find themselves running a much smaller airline. Even though it might be a good business model to go after GM and GS, the fact is the "middle class" makes up the bulk of their revenue. Although I'm sure Jeff and company will blame external factors, the most recent financial figures should be a wake up call to them. He's driving away the "middle class" and it's hitting his bottom line. Getting one person to take 20 trips a year on your airline (with one or two high priced tickets) is better for your airline than finding 20 kettles and charging a baggage fee.

The main reason I left was the lies. Telling us that ToDs are "computer glitches" is just not how I do business. You think I am not a good customer, just tell me. Don't play games.

TWA Fan 1

Just one clarification: I was really just trying to play devil's advocate. I don't agree with PMCO's policies on this issue at all.

When I wrote "I understand" how they came with them, I meant that I understand their rationale, even if, in fact, I disagree with their conclusion.

As far as your point regarding ToD's the way this initiative was originally explained by CO was that kettles would be eligible for ToD's after all elites had been upgraded.

It is interesting to note, however, that CO never made a public announcement about ToD's, but that its parameters were only explained by COInsider after a major bourhaha erupted here on FT. So right from the beginning, CO was not being completely upfront about ToD's.

Of course, ToD's hardly turned out they way they were originally announced, as can be demonstrated by literally hundreds of conclusive examples here on FT.

At one point more recently, UAInsider confided that there were "glitches" in the system that would be addressed.

Many months later, is anything different?

The most cynical view would be that CO dba UA has its elites by the clutches and that offering a ToD to a kettle before upgrading an elite (for the same seat) would generate a little marginal revenue.

A more nuanced view would be that, in the opaque Wizard of Oz-like upgrade system that CO dba UA has devised, there is a constantly shifting inventory of seats available for free upgrades vs. other mechanisms, including ToD's. But, truthfully, at the end of the day, that's just corporate double-speak for saying the same thing as the "cynical" view above.

As far as your second point about CO dba UA trying to push out 1K's, I believe a truly candid CO senior executive would agree with you.

In their transactional business model, in some ways, the 1K is the customers that represents the greatest liabilities and the lowest return.

Unlike GS's, 1k is just achieved based on BIS miles, all of which can be (and most likely most often are) acquired at the lowest fares.

So, in this transactional view, there is no marginal benefit to a 1k who achieved his/her status on the cheap, expects to fly FC for free all the time, never pays for any unbundled fees, receives a discounted membership to the UC, expects superior CS, which cost the company more money, etc.

CO believed that these frequent fliers would easily be replaced by kettles and, in the experience in the final years of CO, did nothing to dissuade them of that view, perhaps in some part buoyed by the fact, as J. Edward wrote, that CO operated from fortress hubs.

halls120

I agree. I've never been motivated by a "fly 5 flights, get 25K miles bonus" because I no longer use my miles for free flights.

If they truly believe this, they are very much mistaken. I almost always have an alternative to United out of the DC area. yes, it might not be as convenient as what UA offers, but if they think I'm their hostage, they are sadly mistaken.

While my UA spend this year is almost on a level compared to last year's, my spending at DL and AA this year is much higher than it as ever been, and that is directly the result of the post 3/3 and summer disruptions. While I will probably fly UA most of the time next year, I used to hardly ever fly AA and DL, and that isn't going to be the case in the near term.

Excellent analysis. I'm far less concerned about the changes to MP than I am about the downgrades to frontline C/S and my ability to fairly compete for an upgrade. In a glass-half full frame of mind, I think some at UA get this. My last flight in domestic F had some really good food, and the recent announcement that turn down service in GF suggests that UA realizes that their soft product is lacking, and needs more than just a few new 787s to compete properly

channa

But, but, they really don't have a handle on their technology. How many technology screwups do we have to see? Functionality releases that don't work, new products that have significant usability flaws, the various "glitches" with upgrades, seat assignments, reservations and partners, etc.

While I agree they have motive to want to tinker with upgrades here or there, I don't really think they're wanting to drop customer seat assignments, drop partner flight reservations, have reservations fall out of a ticketing queue, highlight their incompetence by showing upgrade status that's unreliable, and write a SHARES front end that few people use because it's too slow and hogs limited gate logins so it gets in their way.

While I agree there is a sinister component along with the incompetence, the incompetence definitely plays a significant part.

spin88

I don't think that UA is (apart from immediately post 3/3) offering TOD upsells only to GM. Every time I check my reservation I get the buy up offered. Some of those are what UA says it is doing (fare difference for up-gradable fare) some are to put it mildly odd (and are truly "TOD" as FTers talk about them). Reading between the lines UA's plan is to offer more paid upgrade offers and do them in real time (see Shannon's posts re Expert Mode). They want to scream at you "Hey Mitchmu, buy now for $109 before No. 2 on the list gets it from you." I find this aggressive and continuous upselling to be the problem. Do I have a problem with selling F upgrades when the cabin in not full and no one is waiting? No. But what is happening (fiddling with fares so the spread between F and Y changes so they can offer TODs) upsets me. Neither DL or AA do this.

PM on UA there were a number of statements on conference calls about what portion of revenue came from top tier elites and "high value passengers", and it was high. I am recalling something like 5% of passengers provided 40% of the revenue. [I would love it if someone can dredge up the actual figure.] These folks are two sorts. People who travel a lot, and sometimes or often times have to buy last minute tickets often (I am in that group) and some folks who fly less, but buy either F seats or full Y. They are really different marketing segments in that the FF is effected by MP program and the "high value walk up" traffic is effected by the level of service they get/experience.

But it is not hard for anyone to (as I have noted before) figure out if they are net revenue positive. UA's PRASM was 13.10 c/mi, CO's was 12.95 c/mi, and DL's was 13.57 c/mile in 2011. So using UA's figure, anyone who is paying over $131.00 per 1000 miles is (apart from FF program costs) likely net revenue positive. This is because they either (1) did not displace someone in a seat (so added to load) or (2) if they did, paid more than the midpoint in fares. I am not saying UA is making a profit on these folks, I am saying they are net revenue positive.

If you figure UA values its miles for accounting purposes at 1c mile (very high, I think its far less) and assuming the person is 1K then you would need to add the value of the FF miles, which would be $20. Upgrades really don't cost the airline anything, unless they can sell the seat and forgo doing that, which UA is most certainly NOT DOING NOW, and I seriously doubt that the special 1K line, boarding, etc, COSTS UA much, and certainly not what the miles cost. So any 1K who is paying over arround $151 per 1000 miles is net revenue positive. And again, unless they are displacing someone else (and most flights they are not) then any money is 100% Net revenue postive as it increases load.

I think that the system is no longer spitting out incorrect TODs, and as I noted above, I think the offers are not being withheld from 1Ks. But I think as you describe it is correct the system fudges/changes (depending upon your view of these things) with fares in ways to allow TODs by changing fare spreads. e.g. on a flight where K was 400 and M was 900 and A was 1200, when they have not sold enough M/A fares, rather than giving upgrades away, they lower the spread and a M becomes 509 and an A becomes 659. Suddenly, the "buy up" to an M is $109 and for a GM a buy up becomes $159. F fills up.

Re the CFO, it has been said, and I think it is true, that he was talking about Silvers. That said, the similar approach to CS issues for 1Ks and even GS folks has made the line applicable to the entire elite ranks.

I am sure that COdbaUA does not like mileage runners (although if they don't displace someone else on the flight they are likely net revenue positive) and I am sure that the old UA system was gamed by a VERY FEW folks (people who always booked far in advance and did overlapping tickets to avoid a saturday night stay). But I seriously doubt that those folks - who might actually be revenue neutral or even negative - were more than a very, very very few.

If there are more than a few 1K on this board paying much less than $151 per 1000 miles of travel for over 100,000 miles in a year ($15,000 for the year) AND flying almost entirely on planes that are full (so that they are not simply adding load) I would be surprised. And then, FTers are probably not a random sample of "normal" travelers.

GBadger

Having gone through the NW-DL merger, I would say that this is not too far from the truth. The thing that's missing from this analysis is the timelines involved. Believe me, DL/NW elites were just as pissed off as UA/CO elites are, and DL made just as many PR blunders after the merger as UA has. The changes that are now becoming apparent at DL took time to implement -- on the order of 3-4 years in total. I don't think it's fair to say that UA is failing with their "changes you will like" until they've had a chance to implement the changes.

bearkatt

http://www.nytimes.com/2009/12/23/bu...ite.html?_r=2& here is an old story that talks about continental setting up it's presidential platinum level. they were expecting 20,000 to hit the 30,000 spend level. someone who was a presidential platinum later posted that he was told there were only 1200-1500 pplats. if this is true, then the pres plat was a big bust for them. i could see why they might have an "over entitled" mentality towards elites.

anc-ord772

My net spend on UA fell this year, although my $/mile didn't drop as significantly. Same pattern here regarding spend on AA/DL.

I agree. I would add my concern about the back-end system. PNR splits, lost segments, cancelled itineraries, upgrade list integrity, etc.

I agree.

What we are seeing is dynamic pricing. The new UA management was very clear that this ability was fundamental in their selection of SHARES. Unfortunately the technology just can't keep up with where they want to go. The C suite didn't expect the collateral damage would matter to customers. Jeff said so himself.

Passmethesickbag

Yes but that, combined with the limited benefits, meant that they would have largely been left with PPs who either (1) didn't have a choice of airline, (2) were too indolent to care, or (3) were too big spenders on airline fares for the scheme to engender any increased loyalty

FlyWorld

To clarify, I never thought or meant to suggest that you agreed with the positions of CO that you were explaining. I understood that you were explaining what you knew, not advocating for it.

I don't believe for a second that they are only offering TODs after elites have been accommodated. We heard the same thing from UA Insider but it lacks credibility in light of all the posts here providing contrary examples.

But, it's more than just TODs (or HODs, which I consider to be the transoceanic equivalent), it's also about upgrade priority and clearance.

As for your comments about the lack of clarity or forthrightness around policy communication about similar issues from the CO regime in the pre-takeover area, I've also noticed stunning silence around this issue from friends that I have within UA. People I have talked to regularly, people I've had open communication with about any number of issues - they refuse to speak to me about questions that I raise regarding upgrades. I'm convinced there has been a gag order placed on UA staff to not speak about the shenanigans that are going on behind the curtain because there is not one single topic I've ever raised with a UA staffer that elicits such stone cold silence as this one.

Here's a story for discussion.

I've been watching very closely flights from SFO to LHR in the next week - have had my eye on these for 2 months now.

Until 2 weeks ago, loads on all flights from SFO to LHR in this timeframe were exceptionally low. This is to be expected, as October is the start of low season for travel from US to EU. My observation of low loads is based on fare class inventory, seat maps, and also correlated with the fact that fares have been very low and there have been special promotions, such as a bonus mile promotion in effect now for flights to LHR.

Now, when I look at the same flights that have had very light loads for the last 2 months, I see them packed, particularly in J. There has been a dramatic increase in J class tickets apparently sold or otherwise made unavailable as of last week, and it spans multiple flights and multiple days.

How likely is it that there has been a sudden surge in purchases of full fare J tickets on days that have otherwise been very weak?

Rather than believe that a large bunch of high spenders have suddenly decided to pay $7K to go to London next week, I'm more inclined to believe that those seats were given away, either with HOD offers, or upgrades, and if upgrades, potentially favoring $/miles ahead of GPUs.

And, of course, not to me. I just sit on the waitlist, a 1K on a U fare, with a GPU. Not clearing. Never clearing. Whereas a few weeks ago, I could see multiple flights all more than half open in J, now I see only a few seats left.

While it's true there could have been a bunch of GS's ahead of me and a bunch of 1K's who purchased tickets before me at the same fare class or higher fare classes, it's hard to believe these kinds of explanations, day after day, month after month, year after year. It just can't be true. Not when compared with my pre-$mi$ek experience at UA in which I only missed a single GPU on a transoceanic flight in more than 4 years.

My hypothesis is that they filled up all the empty seats with offers that were targeted to kettles, while they happily pocket the extra cash I paid for a U fare and offer nothing in return. Why give me an upgrade when they could have the alternative of giving me nothing, taking the U fare extra cash, and then, getting more incremental cash from a kettle? The only thing stopping them from that strategy would be ethics, and I see no indication that ethics exist amongst this regime.

The CO apologists will jump in and critique what I'm saying or how I'm thinking - but my thoughts and strategies worked perfectly and consistently up until the very day that $mi$ek took control.

I'm very close to capitulation. I don't think I'm going to play this rigged game for another year. BA and CX are not bad ways to get around the world.

Any guess as to why I've never had an HOD offer? Not once?

spin88

very interesting, and thanks for posting the numbers are interesting (20,000 PPs out of 20M members at CO) and DL's comment that top 1000 fliers log over 300,000 miles is very revealing. I am sure that the number from CO is correct in who would hit that level, it would be easy for them to figure out and they are not going to make up a figure to tell the NYT. So I don't think the numbers were a bust, but they clearly did not view it as a large traffic driver.

100% agree this is the model. They have been doing it more and more at CO over the last few years. BUT CO had fortress hubs, and what they are now seeing is what effect naked dynamic pricing is having on elites who have options of other carriers who offer upgrades and little dynamic pricing (DL and AA) or offer often times cheaper fares and good service (VS, B6, WN) so that playing the "pay more for a shot at an upgrade" game no longer makes any sense.

The problem is that they don't appear to have a back up plan, and PRASM and resulting yields are bad.

I think this is a good list of why top elite handling was not so important for CO. But I might add a (4) which is that none of PMCOs hubs had huge amounts of "full fare" traffic at them. The heavy hitters in NYC went to JFK (not "jersey"), and IAH has never been a large market for full fare premium traffic. CLE certainly was not. The goal was high overall fares and upselling the captive traffic. This is very different than the transcon markets UA did, LAX/SFO, and the transpac service. As a result CO narrowed the spread between F and Y, while UA kept it much wider.

CO management simply has little experience having to compete for folks who will plop down $5K to fly some RT to NYC from SFO or LAX or someone who will pay $20K to fly someone SFO-PEK.

No idea.

If you go into your reservation and click upgrade, it should pop up the buy-up offer as an option. I've done this many times when I've not been upgraded. It will always display the cash price. I then get the buy up offers at OLCI (if not upgraded yet). As a GS I can only recall one or two upgrade offers via EasyChick'n

I've run dummy bookings for M price and checked the price spread. Sometimes the "offer" is the spread between my original ticket and a M (which clears into P) and sometimes it is less than the spread. This is "dynamic pricing" (UA has said its a blended fare, not the actual you paid they use to calculate the buy up) but RECENTLY I have not found it to be massively off. But then, that may be that I am seldom in the bottom fare categories.

This all said, using a GPU may turn off the ability to see the buy ups, I don't have any post 3/3 experience checking that. My checking has all been with PS or domestic flights.

UA-NYC

It does - I'm able to use RPUs for basically every domestic flight, and once you're waitlisted, you can't get the cash option...conveniently "online upgrade not available".

FlyWorld

That is what I'm doing. And, it has a message saying no offers are available. They won't even give me the opportunity to pay a grossly over-inflated buy-up to full fare. Nothing.

entropy

PP didn't have a benefit package close to what GSes at PMUA had. I doubt there were only 1200-1500 pplats; a $30,000 spend level is nothing for anyone that flies internationally in J a few times a year. CO had more than a few of those. However, I doubt many people had the aspirational need to "get" PPlat. GS offered tremendous benefits to its members (benefits that matter when you're a big spender that often flies in a hurry). Opening up inventory on sold out flights (GS were allowed to book onto oversold flights something like an hour before departure), holding flights, concierge service for tight transfers, no waiting in line. These are people who might appreciate the upgrade on a leisure flight but what they really need most of the time is to get where they're going efficiently. CO is INCAPABLE of delivering that level of service with the pile of junk computer system they have.