Jeff comments on loss of "unmanaged" corporate traffic/PRASM at JP Morgan conference.
#91
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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.
#92
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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!
#93
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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?
#94
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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.
Network & ops are important / necessary but there is more to a person's choice in provider.
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.
#95
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+1
Last edited by iluv2fly; Mar 5, 2013 at 10:35 am Reason: merge
#96
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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.
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.
#97
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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.
#98
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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.
#99
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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.
#100
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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.
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.
#101
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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.
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.
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.
That's a huge selling point for me. Heck, I'm even flying US more these days because they have Wi-Fi.
#102
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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.
#103
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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. 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.
#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.
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.
#105
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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.