luv2ctheworld

Actually, no where in my post did I make any reference to being "No Status". I don't know where in my post could you infer that.

My point is that 17 transcons RT @ normal market rate is what is possible to hit 1K; adding a revenue component is not necessarily going to help UA get more profit, as cited by another poster:

uastarflyer

Yes I need you to do this.

The only defense of these changes is that people are stealing all the goodies without paying for it. To which I rightfully ask, what goodies? Specifically, what cash goodies? At silver, Gold, or 1K?

Certainly. I never said otherwise. Of course, I haven't yet booked any 2014 travel. If I had, I might be ticked off (or not).

.

kokonutz

Since the Houston Boys took over UNITED, I have flown extensively on premium tickets on other airlines. My experience has been varied but generally similar to or better than my experience as a 1k in the 2011-12 time frame. My experience on premium tickets on UNITED have been pretty much identical to what they were when I was a 1k now that I am a 75kplat.

So my piece of advice #1 is: if you want to get premium treatment, pay premium price.

And there IS something to be said for extending that concept out to the elite programs. Look at mutual funds as an example. Any investor can get the benefits of a certain mutual fund for a small minimum investment. But if you are willing and able to invest over $100k or $150k in that fund you will get lower fees and better service. Why? Because it is entirely financially rational to give discounts and perks to high revenue customers.

Look at dealer incentive programs. If a dealer sells $X in high profit product that dealer gets a profit. But if a dealer or retailer sells $Y in high profit product he or she gets a fabulous trip for his or her family to Hawaii or similar. Why? Because it is entirely financially rational to give incentives to high revenue generating dealers.

So, again, I don't blame the airlines for wanting to make revenue generation a feature of incentive/discount/elite programs. Fidelity would never dream of giving me access to preferred funds just because I opened 20 accounts with relatively small balances. An OEM wouldn't dream of giving an incentive trip to a dealer who sold even tens of thousands of unprofitable widgets. Because volume doesn't matter. It's all about the money.

Again, FFPs were a product of a paradigm where distance=cost. In that paradigm mileage programs were perfectly financially rational.

But that paradigm has been over for a long, long time. Today, mileage is a terrible indication of cost/revenue.

You know what IS a good indication of cost/revenue? Cost/revenue. @:-)

IOW, the free ride is ending. It sucks for many.

I hate $misek as much as anyone. But this move is perfectly financially rational.

Superguy

So the solution is to replace it with another flawed scheme? If something is broken, you don't replace with something that's even more broken and call it fixed.

FFPs in general have rewarded long haul pax and screwed the short segment hoppers. Many of those short hoppers paid high fares and only got marginal status. Even with the PQDs, they still don't get any more recognition - just the chance to get a higher status - if they either start flying long haul or keep doing those miserable puddle jumpers. It still doesn't help them. What

The problem is in how value is determined. The most common way is to say that more profit = more value, but it's also a very myopic way of viewing it to look at it quantitatively. There's a definite qualitative aspect that the beancounters miss. Some examples:

Pax A flies 30 segments of short haul at high prices, but only makes silver. Is he/she less valuable than the person who did 30 segments all as transcons, makes platinum, and paid less than the short haul pax?

UA has a flight with 10 seats left and is not expecting to sell those seats. They're expecting to lose $5000 on the flight. UA decides to sell those last seats at as a last minute special at $250 a piece. UA only loses $2500 instead. Is there not value in those 10 pax?

Pax B flies the same transcon trip one a month and does so for the long term. He's also made done that for the last 5 years. He usually pays $350. UA sees that it can count on $4200 a year from Pax B. Is there not value in that constant revenue stream.

Pax C flies about 25-30k a year - barely making silver. However, because he gets a free checked bag, expedited security, gets E+, and has a shot at the occasional upgrade on the Saturday redeye to BFE. UA consistently charges $250-300 for this route, while AA and DL may only charge $175-$200 on this route. Is there no value in that Silver consistently choosing UA over the cheaper competition because UA offers a better value thru the Silver program?

Pax 1K flies a connection from a smaller airport that gives UA serves a few times a day. Pax 1K flies the early afternoon flight, leaving him plenty of time at the connection to hit the club and enjoy a drink. Pax 1K pays more than the Kettles and Silvers on the flight. While UA doesn't make a whole lot on the flight, but enough to keep it. UA's costs increase at the airport to the point that it doesn't make money, so it raises fares and fewer people fly the route. There's enough to keep service - just with fewer flights. UA decides to can the early afternoon flight and does an early morning flight and a mid afternoon flight to coincide with the morning and evening bank of flights. Pax 1K now chooses between taking the early morning flight, the late afternoon flight, or driving. Did those pax flying on cheaper fares not have value - especially to that 1K?

There are a lot of scenarios.

I'm not saying people who spend big bucks on an airline shouldn't be recognized. In many aspects, they already are (or were) with better chances at upgrades, more bags, higher priority in IRROPS, etc. What I am saying is that there are a lot of different value propositions to look at, and eliminating some of those can affect things more deeply than just "hey, there's less competition for that upgrade now."



Hogwash. It's not a "game" that only "gamers" exploiting "el cheapo" MRs are upset about. This goes to the myopia I talk about earlier.

It also leads people to think that they're more valuable than they are to an airline. Continue that smug attitude - when you no longer have a job that pays for travel, you'll be in the back of the bus with the rest of the riffraff. That is, unless you're one of the fortunate who can afford a lot of premium travel on their own dime, then you can continue the righteous indignation.

If those el cheapo fares are so awful, why does UA offer them? Or give credit for them? If I buy from Priceline, I don't get FF credit. It's not like it's a terribly hard concept. So it's not like there aren't solutions.

UA needs those flyers just as much as it needs the higher value too.

There are plenty of people who fly UA domestically but prefer to fly the better *A carriers internationally, or are forced to fly US to some places UA doesn't reach. This program screws them unless they can somehow convince UA to ticket the itinerary on 016 stock, or pay for more expensive codeshares.

Miles have generally been a fair yardstick for measuring how much a person flies an airline - or an alliance. So have segments. The more you have, the more you've flown. There have even been COS bonuses to recognize higher fares.

UA also needs to recognize that value cuts both ways. If it wants to demand more value out of pax for the status it offers - fine. However, it needs to make it worth striving for. UA is looking for ways to give less and expect more for it.

If how much money you spend is how you determine loyalty, fine. Scrap the whole concept of miles and segments, and reward only on money spent. It means miles are irrelevant because those don't indicate how much value you are to an airline. However, this system can still be gamed too. All it takes is his employer buying one expensive C or F ticket and flying el cheapos the rest of the year. Does that make that pax a valuable customer? Perhaps for the premium flight, but according to you, he'd be a bottom feeder the rest of the year. However, according to the metrics, he's quite a valuable customer because he spent $10 in a year ...

Here's the bottom line: loyalty can't be determined by a number. It may be gauged somewhat by one number or several numbers, but it doesn't explain how that number came to be. Numbers can be mucked with, but they don't take into account what happens outside the realm of numbers. Only looking beyond the numbers can you see the real story.

And only then, will UA realize that people can be fickle and can leave just as easily as they were loyal. But it will be too late when Jeff and Co. realize that.

uastarflyer

This is an argument to eliminate RDM completely. Please don't give them any more ideas.

If the incentive truly drops to 1% then it's simply a zero sum game lowest bid wins. If that is where UA unilaterally wishes to go, I will enjoy seeing the result.

Jacobin777

For now possibly. However its not always the best business maneuver to alienate even so-call "marginal customers".

Also, its not as if earnings at the various carriers are "gangbusters". P/E's are low for a reason as profit margins are usually slim even during the best of times.


Demand is elastic. People (and business) will pay only so much. If the economy starts going down-well, you know what happens.

As I've mentioned before, telling those customers to "screw-off" isn't necessarily the best business maneuver.

IMHO, the economy isn't improving and if anything, is getting worse (but that's a completely discussion).

As I've previously mentioned, that one elite many times brings in a lot of other sources of revenue. The 8 different customers also might not fly UA in the first place. They also might not spend money with UA if the economy goes "south" or for other reasons.


You are certainly entitled to your opinion and you certainly might be correct. I happen to respectively disagree with you.

Only time will tell us who is correct and who isn't. I'll leave it at that.

DaviddesJ

You're way off base. United offers instant upgrades to PP and 1K buyers of B and M fares. When I book a B/M fare, I'm offered, at time of booking, an upgrade to first class. This upgrade occurs when I buy the ticket and gives me a guaranteed F seat at a much lower (usually) price than an F fare. There's no "selling out from under", once booked it is guaranteed. Of course, there are are only a limited number of such upgrades available.

Passengers who booked B/M fares and got guaranteed upgrades, even months in advance, show up as confirmed upgrades on the flight status page once they check in. So if you are looking at that upgrade list to see who upgraded ahead of you, you have to bear in mind that they might be on the list not because they had a higher status than you, but because they booked a guaranteed upgrade weeks or months ago.

Superguy

Many "loyal" flyers will also tell their family, friends, and associates when a particular carrier screws them over and it's no longer worth dealing with them.

^ It's not like someone goes up to UA, holds a knife to their throat and says "you will sell me that transcon for $200."

There's another hub nearby that you may want to consider.

I know how it's SUPPOSED to work. However, if there is no Y/B upgrade available - guess what? You don't get it!

There's plenty of stories of 1Ks and GSs on FT being on Y and B fares and sitting in the back.

Putting you in F on one of those fares would "cost" them money. Why do that when they can sell a TOD, put a Kettle or another elite up front, and pocket more money?

I'm not saying Y/B/M up don't happen, but I am saying that they're not guaranteed and are still controlled by revenue management. They may only free up one such seat - capacity controls ya know. If UA thinks they can sell that F seat - you're not going to get it.

Quite honestly, I don't care how the pax higher on the list got the upgrade -whether Y/B/M, miles, TOD, whatever. Point is, if UA thinks it can make a buck keep a Y fare in the back and selling that upgrade, it will. After all, you paid for, and got Y. You can't demand more without buying F.

You also clearly have more faith in UA than I do.

uastarflyer

Only if they actually provide better service for that premium price. Relative to the competition.

Given you buy "Z" fares on OAL, clearly they aren't - you are probably making sound buying decisions.

And slashing the majority of their current FF base doesn't make that issue any better.

Also, I am not sure how putting in a waiver for anyone with $25K spend at all things non UA, but on a UA Chase card, fits your idea of "perfectly financially rational".

Though BofA does waive monthly checking fees since they hold my mortgage (and my jewels as a result).

rankourabu

^ Almost all people who support this move are OPM flyers, and would never make any status on their own.

jlivengo

It's not as black and white as you say. In your case, once a week you sit down to have a meal. A quarter of the time you might bring a friend, or a business associate. They order something a little more expensive. Once in a while you bring a big group (the family?). The kids eat off the kiddie menu because they take up far less resources, are lighter, don't carry around a 2 ton roller and consider it a "carry on". Other times it's just you again.

Frankly, I say that makes me more valuable than someone who just blows through the restaurant once a year on their b-day for a bit of a binge.

cae2010

If you mean CLT, I do fly out of there regularly. That's why my European flights are only 14 CPM.
If you mean ATL, that's a great deal more trouble to get to, which would have to factor into the decision.

kokonutz

I generally fly whoever has the cheapest business class fare anymore. Often that's US. Which has a demonstrably lower standard of service than UNITED on flights less than 3.5 hours. But wifi MORE than makes up for that. So service levels are relative.

As for the card, I imagine that, as they are for bloggers, credit cards are a huge source of revenue for the airlines. And pushing that make financial sense for them.

What this hue and cry is really about, imho, is that for a long time the airlines acted somewhat financially irrationally. To my and everyone here's benefit!

But now they are wising up. Which sucks for us. But you can't blame a dairy farmer for stopping the practice of giving the milk away for free and instead saying: want the milk? Buy the cow.

LarkSFO

Uncle. I decline to continue this conversation.

You may now say: "I am right, nobody can tell me what the benefits of Silver are on United, and why they justify a 25,000 PQM / $2.5K PQM commitment from UA's customers."

Even though you are a 30,000 post FT evangelist...

And your point is?

Why is this distinction important?

(About 60 - 70% of my travel is reimbursed. As with my personal travel, I look for the greatest cost / benefit ratio when I purchase. In fact, my company travel policy mandates this.)

capnbob

Rationality and sanity after 1700 comments. Bravo!