Why does UA fly planes?

Old Mar 11, 14, 12:18 pm
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Why does UA fly planes?

I know you think I'm trolling, but hear me out on this. Why does UA fly planes?

Actually flying planes represents the majority of UA's costs and is the least profitable aspect of UA's operation.

I mean service is crap, food is crap, UA's operation goes to crap at the slightest gust of wind. Very few rational people chose to fly UA over other carriers. I'm not saying it doesn't happen, but it is rare.

If UA stopped flying planes it gets rid of UA's cap ex, the unions, the majority of Jeff's coworkers, and massively cuts costs.

Since UA wouldn't be flying planes, they would be free to ink deals with DL and AA to redeem the miles MP members have on AA/DL flights. Also, UA could continue selling huge blocks of miles to Chase.

UA could become a corporation that looks a lot like Aeroplan + LSG + Priority Pass. Which I think are the most profitable aspects of UA's operation.
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Old Mar 11, 14, 12:22 pm
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Fun topic

Why would Chase buy miles from a non-flying UA though?
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Old Mar 11, 14, 12:25 pm
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Originally Posted by UA-NYC View Post
Why would Chase buy miles from a non-flying UA though?
Because gullible consumers would still think they were valuable, even though they would pretty much be just like Ultimate Rewards.

Originally Posted by colpuck View Post
they would be free to ink deals with DL and AA to redeem the miles MP members have on AA/DL flights.
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Old Mar 11, 14, 12:28 pm
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Originally Posted by UA-NYC View Post
Fun topic

Why would Chase buy miles from a non-flying UA though?
If UA could get MP miles redeemable across airlines then they would still be valuable. Also, UA could just run an express only operation and just contract out everything to the likes of SkyWest and others and other ground services. Like an Austrian style operation.
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Old Mar 11, 14, 12:37 pm
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It's a loss leader

It's like a lot of Las Vegas hotels. You don't make a lot of money from the people in the rooms, but you hope they spend more in the casino or restaurants.

If you don't sell someone an airplane flight, UA can't charge for luggage and change fees. It won't benefit from non-refundable, un-used tickets. It can't charge for phone reservations fees. There's less incentive to have the UA Chase card. They can't market car rentals and hotel rooms. There's less incentive for other carriers to pay UA to market their flights. Less people on expense accounts in Clubs buying Premium Wines/Liquors/Beers. etc

So the less you spend on passengers during the flight experience, the higher your profit margins are.
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Old Mar 11, 14, 12:41 pm
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Originally Posted by IAH-OIL-TRASH View Post
It's like a lot of Las Vegas hotels. You don't make a lot of money from the people in the rooms, but you hope they spend more in the casino or restaurants.
There are plenty of apt metaphors: cruise ships and bars / excursions / spa fees, movie theaters and overpriced popcorn, etc. The core product is the inconvenient thing you have to offer, often at break-even rates, in order to make profit on the upsells (nobody would buy an $8 tub of popcorn if they weren't at the movies).

It's a shame that UA is so much better at dreaming up the upsells than at fielding a competent core product.
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Old Mar 11, 14, 12:41 pm
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Stay in *A, sell miles to Chase and through Award Accelerator, stop flying and you have a viable enterprise. Brilliant!
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Old Mar 11, 14, 12:51 pm
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Interesting proposal. Is Jeff monitoring the forum? Glad to see him making this change.
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Old Mar 11, 14, 12:59 pm
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UA could also run an entirely outsourced operation like Austrian Airlines. With that UA could fix the majority of its costs and UA could still keep all of the fees. I mean that wouldn't fix the service issues, but...
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Old Mar 11, 14, 2:44 pm
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The OP's question is not so far away from other corporate experiences.
When the Penn Central was in bankruptcy, it offloaded rail operations to CONRAIL; the stock soared and PC sold off valuable properties for great profit. United Continental Holdings could possibly follow a similar path, but the political/regulatory climate is perhaps a bit different now.

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Old Mar 11, 14, 2:45 pm
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Originally Posted by colpuck View Post
UA could also run an entirely outsourced operation like Austrian Airlines. With that UA could fix the majority of its costs and UA could still keep all of the fees. I mean that wouldn't fix the service issues, but...
It wouldn't fix the service issues, but it would certainly give them a convenient target for blame
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Old Mar 11, 14, 2:49 pm
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Originally Posted by JetAway View Post
Stay in *A, sell miles to Chase and through Award Accelerator, stop flying and you have a viable enterprise. Brilliant!
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Old Mar 11, 14, 4:58 pm
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Originally Posted by Flyer420 View Post
The OP's question is not so far away from other corporate experiences.
When the Penn Central was in bankruptcy, it offloaded rail operations to CONRAIL; the stock soared and PC sold off valuable properties for great profit. United Continental Holdings could possibly follow a similar path, but the political/regulatory climate is perhaps a bit different now.

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in beautiful Falls Church, VA
that's me corporate raider genius.
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Old Mar 11, 14, 5:01 pm
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Originally Posted by colpuck View Post
that's me corporate raider genius.
Jeff, do you ever have the nightmare in which the High Council of FlyerTalk votes and you are immediately forced to wear 1,000 stickers that read "World's Biggest Underachieving CEO" for Halloween?
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Old Mar 11, 14, 5:15 pm
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Wirelessly posted (BlackBerry: BlackBerry8530/5.0.0.601 Profile/MIDP-2.1 Configuration/CLDC-1.1 VendorID/417)

"Why does UA fly planes?"

Because trains don't develop enough lift.
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