spin88

I think you have a great idea. Just get rid of GPUs, people can just buy Y (cheapest available) for pay for C. ^ United would be in BKR in about 6 months, jeff will be gone, gone, gone.

The American network airlines (UAL, DAL, AAL) are different than any other airlines in the world in that they have huge domestic markets and world wide networks.

In 1Q 2014 United had $2.9B in domestic mainline revenue, $2.9M in international, and $1.5B in RJ revenue. Delta/AAL have similar (with slightly larger domestic revenue share) profiles.

SQ, CX, OZ, etc fly all, or nearly all of their traffic internationally. Most of their fliers fly them ONLY internationally, and they have far, far fewer people who are flying with them for 100K+ miles/year.

There business model is very different than the American network carriers who need to attract the domestic business, and get the international business of those who fly them domestically.

Take away the chance of upgrades internationally, then why would anyone ever chose UAL? If you pay for full F/J UAL is crap product. And why fly them in Y, let alone on anything but the cheapest fares, absent an upgrade shot.

And if there are no rewards on the international side, why fly UAL domestically (rather than B6 or VX or DAL or WN?)

Customer buying behavior can't be figured out on a spreadsheet of costs with hypothetical sales being projected. One needs to understand a companies true competitive posture and what is needed to attract the largest amount of total revenue.

p.s. an e.g. I am a former GS, SFO based, now kayaking due to how bad UAL has become... I have to go to PHL next week, just looked. United wants $1102 RT for the flights I want (bad flight times are $1068 RT), AAL wants $1082. Yet UAL is flying a dark A319 on the route, an upgrade willl not happen and E+ isles and windows are filled. I also looked at Delta, and T is $586 RT, but my AS status does not get me Economy Comfort, and there were no good seats, and a P was $1350 (if it were slightly cheaper, or better seats available I would have just taken DAL).

Now in the past, I would have booked UA The old A319 was not bad, and I could probably get an isle E+ at some point. Plus, I got lots of benefits from maintaining my status, you take the not so great with the good.

But, Instead, I checked VX, and they had out in Y, back in F for $1182. So, it will be VX. I'm not even part of their mileage program (I've flown them only three times) but will be after this trip. This is how the progressive loss of yield and total revenue that UAL has been experiencing has been occurring. Making the overall package UAL offers yet less attractive will not fix the problem... United just lost a 25 c/mi, earnings additive, sale.

AAExPlat

Of course he already gets extra mileage for buying premium fares, but that isn't good enough.

As a CEO from a publicly traded firm once famously said..."It isn't good enough for me to know that I fly in First. I need to know that my friends fly in Coach."

travelinmanS

This is my point. If they take the effort to invest in a good C class offering they can attract paying biz class customers. If they do this they wouldn't need to offer upgrades in as much abundance as today. I know I'd personally switch back to UA in a heartbeat for my PVG-SFO routes if they offered a decent seat and friendly service. Alas, they do not.

manstein58

Great post!

StingWest

Yes, I agree 100%. Get rid of "unlimited" upgrades and make people buy or earn them, and they will value them more. They will go to the people who care about them the most!

Baze

I don't know why people seem to think elites don't get upgrade offers. I get them all the time and yes, some of them are dirt cheap. I get them when purchasing, I get them when checking in and I have seen them when looking to change seats after checking in. And I am a Gold Million Miler.

StingWest

I get them too - but for me at least, domestic upgrades are such a free-for-all, and with prices changing all the time etc. In order to have a shot at an upgrade, even if you're willing to buy-up, you have to constantly monitor a reservation and compete with dozens of elites and non-elites for the wildly-varying offers. The E-500 (or whatever they were called) coupons allowed people to plan ahead a bit, pay something reasonable for an upgrade. For example a coast-to-coast upgrade was 5 coupons, or $250 - not horrible. The way they do it now is that one kettle pays $400 and the next one in line might pay $150, or vice-versa. Whether you're an elite flyer or not seems to make little difference.

The concept of "unlimited upgrades" sets a false expectation in most people's minds - thinking that if they buy a ticket on UA, they'll have a good chance of a free upgrade to first class. It's a system that guarantees that most people in economy will be let down when they don't get the upgrade. Isn't the best accepted business practice to "under-promise and over-deliver"? UDU seems to accomplish the opposite!

StingWest

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eflyte

That's the only reason I've stuck w them so far (written from row 7 on my way ORD-BRU). And I'm not an ultra-premium traveler but if I miss 1k this year it won't be for lack of PQD. Takes more than a full C cabin of contracted business fares to make a buck.

5khours

I don't think it's that's complicated. UA just needs to provide what the customer wants which for me is:

• A comfortable seat/bed.
• A modicum of privacy and quiet.
• Reliable operation barring bad weather.
• Respectful and friendly service.
• Decent food.

And I'd like to get it at a reasonable and predictable fare that I can purchase without jumping through hoops.

txp

OP here. Some comments to your reactions:

I am sorry if my post came across this way. Please allow me to rephrase:

This is not *about* premium travelers per se. It's about something bigger. Former AA CEO and legend Robert Crandall once eloquently explained that the nature of the airline business is such that premium travelers subsidize value travelers. That's the reason I was able to get $300 transcon fares back in the 1980s. I was not a premium traveler back then, but I was glad someone else was.

To a large extent this cross-subsidy still takes place today. A last minute ticket IAH-LGA without 3-day stay or Sa night stay could easily cost in excess on $1,300. Often the cheapest fare is the P fare. Someone buying the P or B fare is subsidizing the costs of the value traveler. That's the nature of the business and we all accept it.

My comments relate to the value proposition for the premium traveler. That value proposition is not there at UA. If UA wants us to spend more money with UA, they need to change the value proposition for us. Otherwise we will be subsidizing value travelers with DL and AA.

The net result is that UA loses its premium travelers, its value travelers will be worse off.

Agree. If they offered advanced purchase TATL fares in the $3,000 range I think a lot of people would just but straight in the BF cabin. Incidentally, this is what I had to do on a recent trip. UA C fare was $6,000. Upgrade inventory not released. DL had plenty of upgrade space but its upgradable fare was $3000. I went with DL. Now, two weeks before the trip, UA shows plenty of upgrade inventory for those same dates. Too late, I already made my purchase and they lost a sale.

If they don't, they should! Anyone willing to pay between $800 and $1400 RT for a domestic F ticket is a high margin customer. Surely they can use some of that margin to improve the F experience.

Maybe this is one of these cases where the grass is greener, but last summer I was in Australia and took a number of domestic flights on QF, all in business, courtesy of AA miles. The difference between QF's domestic premium product and UA's domestic premium product is like day and night.

Mr. Smisek, please travel to Australia and take a few domestic trips on QF in their front cabin for a good example on how to get it right.

Completely agree.

Oh yes, I forgot the RJs. I just don't fly them. Usually, AA, DL or even WN has a mainline jet to destinations no longer served by UA. Please bring the mainline jets back. I don't care if you reduce the frequency.

These are all good points and I generally agree, except that I think they should keep international F, but make it better. Think SQ or BA for example.

Yes, I forgot this one. Of course, wifi can't come soon enough on all planes.

You are right. Normally, I can find lots of direct flights from IAH but I can see how this can be an issue from other destinations.

My suggestions are meant to be constructive. There is a lot about UA I like. Their network is terrific. They have talented, hard working employees. I want UA to succeed because if they do, we all benefit from it.

And, speaking of their employees, I cannot overstate the importance of empowering people to make decisions. When a PAX is unhappy, someone should be able to resolve the matter on the spot in most instances. The idea of "write to customer care" and wait weeks is silly. It needs to stop.

asiapacflyer

Absolutely agree -- benchmark the PMUA cabin in Business -- 8 across flat-bed seating vs. other carriers at 1-2-1, 2-2-2 across. If United wants to gain market share for premium customers -- focus on the seat and personal space. The rest will all follow. US East Coast to Asia with 8 across seating (and a middle seat in business). I opt for better seating at 7K$ a ticket on another Star Alliance carrier.

UA-NYC

2-2-2 is already becoming outdated given the proliferation of 1-2-1 in reverse herringbone & staggered.

5khours

I don't necessarily agree on the seat. First the PMUA seat is more comfortable and has more space than nearly any J seat on the market. What it lacks is privacy and ease of access. Different pax value different things.

Also there is a trade off between price and seat comfort/space. If that ever gets reflected in pricing, then maybe as consumers we will start to see better choices for J (and F).

jackonferry

I don't know that they can get me back, at least in the next 3 to 5 years. For me, a relationship with an airline is sticky. I fly 100K+ miles per year, but I also have to shop for fares. Rarely can I buy F for domestic travel, though I can for international about 50% of the time. So, I concentrate my miles in one program so that I get roomier domestic seating (E+ or MCE) and an understandable and transparent shot at upgrades. I also want to be taken care of in irrops.

So, unless someone does a better job of ruining an airline than Jeff Smisek (I'm looking at you, Doug Parker!), I won't be back. And frankly, if I give up concentrating miles on AA, I'll probably become a Kayaker. In short, I left UA reluctantly (and because AA played it brilliantly) and it will take a fair bit to undo this new relationship.