star_world

I think you'll find that Apple and United operate in massively different worlds in terms of operating margins. That has a major effect on the amount that can be invested in 'nice to haves' like that.

The only real benchmark that UA needs to hit in terms of customer service is to be slightly better than DL and AA. From a financial perspective it would be foolhardy to do anything else. In the case of several metrics they are already there; in the case of many more they have a long way to go.

There are other quotes from UA staff in various threads here indicating that customer-facing staff are attending training based on a methodology developed by Disney in this coming year. That's the best you can hope for really.

nevansm

I'd disagree with the value they can provide. Things like quality training, positivity and an overall better work environment are not costly. There a lot to be said for hiring people that know how to motivate is important.

Thunderroad

Personally, I couldn't care less about marketing; it's the actual product (including the FF program) that matters to me. But even in terms of marketing, doesn't the goofy doofi (plural) holding the cards in the cc ad actually reflect the market UA is aiming for? That is, relatively inexperienced travelers who can be attracted by perks that MP members with status take for granted.

I wish I could recall the FTer who made a great observation in another thread, but in any event his/her point was that to a good extent UA is aiming to be an international version of Southwest. With that in mind, its marketing, Slimesek videos and (deterioration in) services make sense. Aim primarily for the mass market with claims of nice new planes (forget the sardine can aspects of 10-across Y in the 787s) and extensive route network. Now, the route network really is an asset for many travelers, including elites and J passengers who don't need the credit card perks. But the overall thrust is to get the more occasional and inexperienced travelers who are more indifferent to status, upgrades, reliability, etc. In that respect, I'd think that the marketing makes sense.

hobo13

Interesting. Over the past few weeks I have had some excellent experiences with the call centers. Much less attitude, genuine concern for helping 1K's, and most important words like 'No, the rules say no we can't do that' became 'Sure, we can move you to a different flight. What did you have in mind?'

Maybe he knew his butt was on the line and was trying to save his job? No idea. But I do welcome the changes, er, reversions to the old United way of treating customers. And if this guy leaving contributed to that, so be it.

I'm sure he'll resurface soon enough, and once again start screwing over somebody else's best customers.

FlyWorld

This is the truth.

anc-ord772

Unfortunately I am unable to do so. However, it is true that he held that belief, which influenced certain policies.

Jim Compton is Vice Chairman and Chief Revenue Officer for United, the world’s leading airline. In this role, Compton is responsible for overseeing the company’s domestic and international operations, sales, corporate development and alliances, network pricing and revenue management, and network planning.

Prior to this appointment, Compton was Executive Vice President and Chief Revenue Officer for United. Previously, Compton served as Executive Vice President and Chief Marketing Officer for Continental Airlines. Since joining Continental in 1995, Compton held leadership roles including Senior Vice President of Marketing and Senior Director of Pricing. As Senior Vice President of Marketing, Compton was instrumental in launching EliteAccess, Continental’s priority service for its most valuable customers.

I say he is a good guy, because he is very good on the revenue sides of the business and did great work at CO. Due to his previous responsibilities he will have a better understanding of the Marketing and Loyalty side of the company than Bergsrud did, I suspect. Bergsrud focused on merchandizing (as was his job) but I'm guessing some of the strategies he was responsible for caused challenges elsewhere. Jim is legacy CO, but IMO will work well with others on the leadership team to deliver a better airline for shareholders and passengers. Doesn't hurt that I've met him and was impressed with his communication and candor.

Of course, time will tell. I do believe the restructure was net positive for customers. I also agree with others that the new UA is a mashup of many sCO and sUA low and mid level management which are influencing not only policy, but also execution of said policies.

FlyWorld

Just came across a new article today on this:

http://www.nasdaq.com/article/united...2#.UM-qeo4nCZg

"United Continental also unveiled a realignment of its senior management team, effective Thursday, as part of its post- integration plans.

Jim Compton was named vice chairman and chief revenue officer, overseeing operations and the traditional revenue side of the business. Mr. Compton was previously executive vice president and revenue chief at United Airlines.

Jeff Foland will oversee the airline's marketing and loyalty, technology, strategy and customer-experience groups, as executive vice president of marketing, technology and strategy. He too held similar roles at United Airlines previously.

In addition to combining oversight of different functions under the new executives, United Continental will also merge its e-commerce and merchandising functions.

In October, it reported a 99% slide in third-quarter profit, falling short of expectations as special labor and integration costs wiped out most of its earnings."

I'm not familiar with the organizational structure at CO/UA and who does what, but generally, it sounds like the guy who was terminated is believed to be a driver of the war they've waged against their elite customers, and, I note that both of the aforementioned executives are former UA, and seem to be respected by other posters in this thread.

Is it too much of a stretch to conclude from these observations that someone decided the war against elites was a bad idea and that they want to return to business practices that show appreciation for high value customers because they've concluded that it's better for high value customers to fly on UA than on other airlines?

Is it possible that upgrade process and policy might return to UA levels of generosity and reliability?

channa

Compton was ex-CO, but he was well respected by FTers.

I think that Bergsrud was one of the key generals in the "war on Elites," and when you factor in the revenue performance this year, and the recent initiatives not to hate 1Ks (meal choice, extended upgrade certs, big Premier 1K on the BPs to aid in recognition/accommodation), I think there is some evidence to suggest that they may have begun to understand the value of this customer segment, which is frankly something that CO did not have previously, as CO capped at 75K and historically did not have SWUs or RPUs.

It's possible that with this shake-up, they will reassess the Y-Up policy, and whether it makes sense. And they have already said that they understand the fundamentals behind the TODs, and why they occur (there are four (4) systems that do not talk to each other that don't always align right). So we know that part has hopes of being addressed.

Just give them another couple years, and they will ultimately re-learn everything that United already knew, and they subsequently tossed out when they came through the Willis Tower.

FlyWorld

I don't know what the terms are for Smisek's $14 million bonus. If he can earn it without fixing these things, then your timeline seems realistic. If his cash is in jeopardy due to performance, and he thinks that fixing these things bring him closer to that cash, then I bet this will get more attention, sooner. In the end, it's all about that $14 million.

channa

The timeline is because they have to learn the nuances, and it takes time to overhaul things from a weak foundation.

It's going to take them a year just to fix the TOD issue. That's because they have four (4) systems that do not talk to each other, all of them contributing to the problem. That's after it's taken them 9 months to identify it post-3/3, and it had been going on for years over at CO.

Just like FastSHARES. UA understood the value of having a front end for airport staff. CO did not. Now they see it, but it's not like they can pop into Fry's and buy it for $99. It's taking them time to build it.

As you allude to, the awareness phase on a lot of it is happening now. The execution on these items may take longer than we (or they'd) like.

FlyWorld

I wasn't aware of the view that you have shared on the TOD issue - is there a thread on that?

The issue that matters more than any other, to me, is the ability to upgrade, particularly on international, and the problem there relates more to: system failures, stingy control of R space, and HODs or HOD equivalents.

I haven't heard any specific positive indicators on that topic, but, I agree with views posted earlier in this thread that what we see can be viewed, generally, as positive indicators for 1Ks, and as such, news of the past few weeks (all the points you summarized plus these re-orgs) - for the first time - gives us some reason at least not to continue becoming more pessimistic. I'm not yet ready for optimism, but a decline in the rate of increase on pessimism is a good change.

WineCountryUA

Just a word of caution, c-suite shakeups can be due to many reasons. Even if one individual have advocated for a certain policy that alone is not usually the reason of such alignments (unless the individual strong opposed the policy change or steamroll others in the first place). What has happen could have been driven for many different (and in my experience, more likely internal) reasons. Policies can be changed without changing people.

So I caution folks to expected policy changes just because of c-suite changes. Especially in the short term.

tuolumne

Remember that CO has long desired, dating back to the early 2000s, to pillage UAL. They were a major player in lobbying the ATSB to deny UAL's loan request, hoping to send the company into liquidation and harvest the assets at a firesale. There's long been disdain and animosity of UA from CO's executive leadership dating all the way back to their tail between the legs DEN pullout.

When UAL successfully reorganized and emerged from Ch.11 in 2006, CO's C-suite rebuffed the merger feelers Tilton had sent over. It seemed they were in the early stages of denial at this point, unable to accept that they wouldn't be able to fix their geographically limited operation with the old parts of a failed UAL.

By 2008, reality seemed to be setting in, CO's board agreeing to look at UAL's books. Unbelievably, Larry Kellner pulled out at the eleventh hour, and in what would mark his most shameless hour, (one that would get him later fired), he publicly smeared UAL's financial stability in the press.

UAL's board, burned by Kellner's tactless and insulting performance, enthusiastically threw their support behind a UA/US tie up. Tilton, however, knowing CO's board had fired Kellner for botching the 2008 deal, knew there was a chance of getting them to come running back to the table to ensure their carrier wouldn't be threatened going forward. And if not, a US tie-up would represent an acceptable combination. Win, win.

The irony is, rumor has it that Tilton agreed to give up far more in the 2008 Kellner deal, namely the name.

RealFan

Thanks for this most interesting post. I have been an exclusive AA flyer for years until a job change forced me to start flying UA. I don't have this deep historical understanding of UA the way I do of AA, so thanks for the insights, particularly that last one about the name!

grahampros

It's not really that surprising. It was an earnings call a couple of quarters ago that Jeff himself called out that it was ancillary revenue ( which is a big part of the distribution puzzle) that was well below expectations and attributed to earnings miss. That was a pretty strong signal right there.