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Jeff comments on loss of "unmanaged" corporate traffic/PRASM at JP Morgan conference.

Jeff comments on loss of "unmanaged" corporate traffic/PRASM at JP Morgan conference.

Old Mar 5, 13, 9:40 am
  #91  
 
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Originally Posted by unavaca View Post
How is this arrogant? It's the truth. If you've got everyone else beat on network and your ops are good, that's a recipe for success.!
Hardly a recipe. A requirement for success certainly, but it takes a lot more than good on time performance to attract, retain good customer and to get them to want to fly more.
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Old Mar 5, 13, 9:47 am
  #92  
 
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Originally Posted by chinatraderjmr View Post
That's EXACTLY what it is. Every time our sales person visits us with more SWU'S & more offers of discounts etc his sales presentation always comes around to what we are "losing out on" by not being a managed customer
UA must be going off a script as we hear the same spiel as you do...almost on a monthly basis. UA wants us to be a "managed" customer but without the benefits and guarantees that should come with being a "managed" customer. The reality is that unless there are dramatic changes in the reliability and the quality of customer service at UA, we are going to be "free agents" for the foreseeable future...and enjoy reliability, excellent customer service and in many cases cheaper fares than we can get on UA. Plus, the carriers we are now using treat us a loyal customers...something UA used to excel at...but alas, no longer!
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Old Mar 5, 13, 9:49 am
  #93  
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Originally Posted by 5khours View Post
Hardly a recipe. A requirement for success certainly, but it takes a lot more than good on time performance to attract, retain good customer and to get them to want to fly more.
Indeed - what is being described are 'minimal requirements', certainly not an optimal product. Spirit can fly you from A to B safely and on time - does that make them an appealing product anyone here wants to fly?
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Old Mar 5, 13, 10:03 am
  #94  
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Originally Posted by WineCountryUA View Post
What folks are saying is network / ops are necessary items for successful but of themselves alone are not sufficient for success. There are other factors that matter -- for some it maybe price, for others it may be service, .... loyalty reward .... schedule .....

Network & ops are important / necessary but there is more to a person's choice in provider.
Exactly - it's a price of entry, but not a competitive advantage

Jeff seems to think it's a competitive advantage - it may be in the short-term vs. AA/US individually, but that will go away as they integrate, optimize their network, keep getting in new widebody deliveries, etc.
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Old Mar 5, 13, 10:13 am
  #95  
 
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Originally Posted by PHLstudent View Post
With the fleet wide roll out of Wifi (300 planes by Year end) won't that most likly increase ancillary revenues year over year just by having Wifi for purchase available? Or was the year over year implying Same product sales?
Given the history of when fleet upgrades and the like, I will be surprised to see a successful fleet-wide roll out of Wifi by years end.

Originally Posted by pinerd View Post
That's probably true. But I've also noticed this year that even though I am a Gold now vs Silver the last few years... my upgrade waiting list status is getting worse and worse. Seems to point to more elites?
+1

Last edited by iluv2fly; Mar 5, 13 at 10:35 am Reason: merge
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Old Mar 5, 13, 10:15 am
  #96  
 
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Originally Posted by UA-NYC View Post
Exactly - it's a price of entry, but not a competitive advantage

Jeff seems to think it's a competitive advantage - it may be in the short-term vs. AA/US individually, but that will go away as they integrate, optimize their network, keep getting in new widebody deliveries, etc.
The interesting thing about the network is that, excluding perhaps the managed customer, it is of much more value to UA than to the customer. The network means that UA can compete for one of my trips because they fly where I am going. However to me as the customer all I care about while booking a specific trip is that destination and not all the others UA flies to. Perhaps on one trip it is UA vs SQ and 4 other carriers and on another it is UA vs TK and 6 other carriers. In either case it is the same competition for UA to face and the rest of their network doesn't help them win that trip. Other factors do - certainly reliability, price, service quality, loyalty programs, etc. IT sounds like UA is overly focused on the admission ticket to be in the game (which admittedly they have been screwing up badly) but not enough yet on what it takes to win once they are in the game.
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Old Mar 5, 13, 10:40 am
  #97  
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Originally Posted by unavaca View Post
How is this arrogant? It's the truth. If you've got everyone else beat on network and your ops are good, that's a recipe for success.
I think that what you say is exactly what Jeff thinks. He comes out of a culture where you had 80-90% market share (IAH, EWR, CLE) and you could do basically whatever you wanted to your captive passengers, provide it did not destroy the core function of the airline (getting you from A to B) such that they drove to Hobby or JFK or LGA. The reliability spiel combined with an award winning elite program brought CO back. However, the elite awards were in 2001-2003, nothing since them. And "reliablility" was not backed up by good IRROPS when things went south.

Outside of IAH, EWR, and CLE though, UA now faces competition everywhere. At Major hubs (and for everyone outside of the hubs) there are options. At ORD, AA is an option, at LAX, AA/DL are options. At DEN, F9 is an option. At IAD, DCA is an option. At SFO (where UA has only 46% of flights) also lots of options.

Reliability is not going to sell these folks, particularly where UA is running at 81% OT, and DL and AS are at 87%, SW is at 85%, and US is at 84%, only AA at 80% OT is worse than UA. "fly the second least reliable airline" is not a winning argument, dispute UAs efforts to hype their supposedly good operational performance.

While there are slight advantages for each airline in certain regions, once you throw in the partners, it is frankly only UA that has a major hole it its network in that its southern and FL coverage is not good. AA/US lack own metal coverage to Asia, but CL/JL fill that in partially, and CX is a great airline.

Running a middle of the road airline in reliability and having no real network advantage other than at PMCO hubs is not going to be a big draw for UA.

Jeff is however, adjusting his game plane. At the JP Morgan conference he also stressed this:

"And of course, our loyalty program, which is a spectacular program. Not only does it win a lot of awards, it brings a lot of value to our customers and brings, of course, a lot of value to the airline as well. And of course, we're proud to show in front of this audience the Chase credit cards that we have."

and

"We've got 150 brand new Boeing aircraft coming, narrow-bodies coming including 100 of the brand new MAX's. We're very excited about the aircraft coming in the future including, we've got A350s coming from our friends at Airbus."

So the "spectacular" MP (and its "lots of awards"; have they gotten any for the new post post 3/3 program? perhaps I am missing something?), Chase Cards, and the "A350 coming from our friends at Airbus" may be the new selling points.
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Old Mar 5, 13, 10:45 am
  #98  
 
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Originally Posted by 5khours View Post
Hardly a recipe. A requirement for success certainly, but it takes a lot more than good on time performance to attract, retain good customer and to get them to want to fly more.
I think that's the false premise. If you have good ops and a superior network, price aside, you don't need to retain good customers/have them wanting more -- they'll naturally come to you because you have good ops and the superior network.
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Old Mar 5, 13, 10:50 am
  #99  
 
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Originally Posted by unavaca View Post
I think that's the false premise. If you have good ops and a superior network, price aside, you don't need to retain good customers/have them wanting more -- they'll naturally come to you because you have good ops and the superior network.
Sounds like you could get a job as Jeff's assistant.

But on a serious note, good ops and a good network are the ante. You need it just to get in the game, but you won't win the hand unless you offer superior service, great hard product, good FF program, etc.
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Old Mar 5, 13, 10:54 am
  #100  
 
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Originally Posted by pdx1M View Post
The interesting thing about the network is that, excluding perhaps the managed customer, it is of much more value to UA than to the customer. The network means that UA can compete for one of my trips because they fly where I am going. However to me as the customer all I care about while booking a specific trip is that destination and not all the others UA flies to. Perhaps on one trip it is UA vs SQ and 4 other carriers and on another it is UA vs TK and 6 other carriers. In either case it is the same competition for UA to face and the rest of their network doesn't help them win that trip. Other factors do - certainly reliability, price, service quality, loyalty programs, etc. IT sounds like UA is overly focused on the admission ticket to be in the game (which admittedly they have been screwing up badly) but not enough yet on what it takes to win once they are in the game.
My view is that the network only provides a benefit in two cases:

1. If UA flies direct, at a convenient time, to my destination, and nobody else does. This is almost never true. There is only one destination (SFO-LIH) where UA is the only direct option. For all other destinations I fly to, there is competition, also direct, also with decent schedules. If UA doesn't fly direct, then I can get just about anywhere in the world in the same time that it would take to connect with UA, so UA rarely has any advantage.

2. In the past, the route network meant that I could fly almost anywhere in the world, and I could stay with UA. I did this because I wanted 1K/GS status. I wanted 1K/GS status because of the benefits it provided, most significantly - upgrades. Now that the benefits have been diminished and upgrades are far less frequent, the benefit of being 1K/GS is far lower than it was before. Therefore, the motivation to stick with UA instead of a competitor is diminished. Therefore, the route network is worthless. Put another way, when I evaluated AA's Exp status match offer, it was not a smart choice for me, because their route network is so small that I'd find it nearly impossible to fly 100,000 miles on AA metal. Therefore, I could not get the benefits that their status offers. With UA, I can get the benefits, but the benefits are diminished, hence not worth having anymore.

Therefore, route network = irrelevant.
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Old Mar 5, 13, 10:56 am
  #101  
 
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Originally Posted by spin88 View Post
I think that what you say is exactly what Jeff thinks. He comes out of a culture where you had 80-90% market share (IAH, EWR, CLE) and you could do basically whatever you wanted to your captive passengers, provide it did not destroy the core function of the airline (getting you from A to B) such that they drove to Hobby or JFK or LGA.
That's pretty much like what UA has at SFO. They may have only 50% of the traffic, but the remaining 50% is so fragmented that it's not even competition. [/quote]
Originally Posted by spin88 View Post
While there are slight advantages for each airline in certain regions, once you throw in the partners, it is frankly only UA that has a major hole it its network in that its southern and FL coverage is not good. AA/US lack own metal coverage to Asia, but CL/JL fill that in partially, and CX is a great airline.
I disagree. OW has AA and JL to East Asia -- and that's being generous. AA only covers 3 hubs and JL has fragmented their ops between HND and NRT so much that connections are miserable. (You can fly SFO-HND on OW, but not SFO-NRT. Want to go to TPE or ICN? You have to fly SFO-LAX-NRT-TPE/ICN. How dumb is that?)

CX is hardly relevant in East Asia -- the vast majority of business travelers are not going to fly to HKG and backtrack to TPE or ICN.

Originally Posted by spin88 View Post
Running a middle of the road airline in reliability and having no real network advantage other than at PMCO hubs is not going to be a big draw for UA.
Agreed, their reliability needs work. I think you're downplaying the network advantage, though.

Originally Posted by spin88 View Post
So the "spectacular" MP (and its "lots of awards"; have they gotten any for the new post post 3/3 program? perhaps I am missing something?), Chase Cards, and the "A350 coming from our friends at Airbus" may be the new selling points.
I look forward to UA being the first US carrier with intercontinental Wi-Fi ^

That's a huge selling point for me. Heck, I'm even flying US more these days because they have Wi-Fi.
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Old Mar 5, 13, 10:57 am
  #102  
 
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Originally Posted by unavaca View Post
I think that's the false premise. If you have good ops and a superior network, price aside, you don't need to retain good customers/have them wanting more -- they'll naturally come to you because you have good ops and the superior network.
IMO, you are wrong - if the competition can offer the same/similar network reach and reliable ops UA doesn't have a slightest advantage that would force a customer to choose them. That's where the loyalty programs, price, etc. come into play as the differentiators.
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Old Mar 5, 13, 10:59 am
  #103  
 
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Originally Posted by mitchmu View Post
My view is that the network only provides a benefit in two cases:

1. If UA flies direct, at a convenient time, to my destination, and nobody else does. This is almost never true. There is only one destination (SFO-LIH) where UA is the only direct option. For all other destinations I fly to, there is competition, also direct, also with decent schedules. If UA doesn't fly direct, then I can get just about anywhere in the world in the same time that it would take to connect with UA, so UA rarely has any advantage.

2. In the past, the route network meant that I could fly almost anywhere in the world, and I could stay with UA. I did this because I wanted 1K/GS status. I wanted 1K/GS status because of the benefits it provided, most significantly - upgrades. Now that the benefits have been diminished and upgrades are far less frequent, the benefit of being 1K/GS is far lower than it was before. Therefore, the motivation to stick with UA instead of a competitor is diminished. Therefore, the route network is worthless. Put another way, when I evaluated AA's Exp status match offer, it was not a smart choice for me, because their route network is so small that I'd find it nearly impossible to fly 100,000 miles on AA metal. Therefore, I could not get the benefits that their status offers. With UA, I can get the benefits, but the benefits are diminished, hence not worth having anymore.

Therefore, route network = irrelevant.
+1. Excellent point.
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Old Mar 5, 13, 11:01 am
  #104  
 
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UA can't grow their ancillary revenue from their loyal customers if they are charging them extra money for services they can get free on other airlines or used to get free on UA. Why? Because if I don't get free GPU's each year anymore for being 1k and now have to take their buyups etc. I'm sure as hell NOT going to be flying UA in the first place. Thus the elites will not even be possible to charge these extra fees to because they will not be buying tickets from UA.

So by cutting benefits from elites only to think they can monetize these benefits back to elites is just not reality. Will UA make up that revenue with an increase in non elite purchases? Maybe, we shall see but I don't like hearing about them monetizing benefits that elites are presently getting or have been cut and are now being charged.
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Old Mar 5, 13, 11:02 am
  #105  
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Originally Posted by unavaca View Post
I think that's the false premise. If you have good ops and a superior network, price aside, you don't need to retain good customers/have them wanting more -- they'll naturally come to you because you have good ops and the superior network.
UA doesn't have the superior network - *A does. Most of us would gladly fly a partner if all other factors are equal. UA has far from "good ops", quite the contrary.
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