United's May 2014 Price Hike

Old May 7, 14, 11:41 am
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United's May 2014 Price Hike

So, this discussion has kinda gotten buried in the LAS thread, but I think it deserves its own thread. Is UA currently doing some kind of pricing experiment where they are pricing various markets at significantly supracompetitive levels? Folks seem to be reporting ridiculously high fares. I haven't done much searching, I admit, and I'm not actively planning any trips, but I've noticed a bit of this myself.

If so, what's the rationale? Is this the new hold-out-for-last-minute-selling strategy? Is it to test the degree to which people's loyalty permits supracompetitive pricing?
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Old May 7, 14, 11:51 am
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Originally Posted by mgcsinc View Post
So, this discussion has kinda gotten buried in the LAS thread, but I think it deserves its own thread. Is UA currently doing some kind of pricing experiment where they are pricing various markets at significantly supracompetitive levels? Folks seem to be reporting ridiculously high fares. I haven't done much searching, I admit, and I'm not actively planning any trips, but I've noticed a bit of this myself.

If so, what's the rationale? Is this the new hold-out-for-last-minute-selling strategy? Is it to test the degree to which people's loyalty permits supracompetitive pricing?
It has been discussed in a number of places, United said on the 4Q 2013 and the 1Q 2014 call that they had changed their RM approach and were going to "hold back" more seats for later sale, hoping to get a premium. They do this by selling less up front for discounted prices. So the decission in intentional.

This has been widely announced (see e.g. today's presentation at the B of A conference): http://ir.unitedcontinentalholdings....&p=irol-IRHome (under presentations tab).

As I have noted before Delta tried this strategy in 1Q 2013 and fell on their face, said they got "too aggressive" and it cut yields. Delta underperformed in 2Q 2013 (compared to what is has done the last few years) when the bad results of this strategy were felt.

I think its a real mistake, given United's reputation, to be doing this as I think they will end up with many unsold seats and no new HVF traffic will show up. Time will tell.

But it is informative that the first quarter where this stratagy was partially in play (1Q 2014) United got killed, and for 2Q they are only projecting PRASM of +1-3%, while DAL is saying they will hit PRASM of more like +6-7% in May/June.
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Old May 7, 14, 11:52 am
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Thanks for starting a dedicated thread. Yes, this is a very interesting topic, and should not be buried in the half-dozen threads like it is now.
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Old May 7, 14, 11:55 am
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I'd suggest that of people find good examples of markets where UA normally competes (matches prices) but I'd currently not competing, they post the UA and competitive fares here.
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Old May 7, 14, 12:09 pm
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Originally Posted by mgcsinc View Post
I'd suggest that of people find good examples of markets where UA normally competes (matches prices) but I'd currently not competing, they post the UA and competitive fares here.
Washington DC Market (IAD/DCA/BWI) to west Coast (SFO/LAX/SNA/PDX/SEA) all have super high summer fares on weekdays as well as weekends. None of the lower bucket fares are even available. They are zerod out. The lowest fare bucket available is atleast a T
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Old May 7, 14, 12:12 pm
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Originally Posted by hobo13 View Post
Thanks for starting a dedicated thread. Yes, this is a very interesting topic, and should not be buried in the half-dozen threads like it is now.
Agreed. This deserves a new thread.
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Old May 7, 14, 12:15 pm
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Originally Posted by mgcsinc View Post
I'd suggest that of people find good examples of markets where UA normally competes (matches prices) but I'd currently not competing, they post the UA and competitive fares here.
It might not be the best example...
PHL-SFO roundtrip May 10-13
Cheapest economy seat available:
US: $370
VX: $1050
UA: $1100
Cheapest F seat available:
US First: $1300
VX First: $1300
UA First:$1800
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Old May 7, 14, 12:18 pm
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Originally Posted by nova08 View Post
It might not be the best example...
PHL-SFO roundtrip May 10-13
Cheapest economy seat available:
US: $370
VX: $1050
UA: $1100
Cheapest F seat available:
US First: $1300
VX First: $1300
UA First:$1800
For the sake of completeness, AA is at $1182 (on the US codeshare!!)
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Old May 7, 14, 12:19 pm
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I travel alot domestically and have alot of leeway when booking my own travel. I have a budget and need to stay within that budget. Recently I had to have a long discussion with the owner of my company regarding the sharply higher pricing from United on many of the routes I fly. I usually fly from EWR, and typically look at PHL, LGA and others when EWR fares get too high (which is frequent). The difference now is that my usual fall backs are also showing higher fares...dramatically higher. Suddenly there are no affordable options, and we are a small company that just cant regularly fly YB fares (or equivalent price). I may not be a HVF, but I spend a good $15-$20k each year on United.

I can tell you that I will be forced to book away in the near future if this trend continues. I dont see how this strategy can possibly work. "Charge more when your product and reputation are at its worst" I dont have an MBA, but don't think I need one to see the insanity of this.

Maybe I will be forced to book away...accept a status match with AA out of PHL and never look back! (I have been hanging on since I am just a few months from MM)

Savvy is as Savvy does Jeff!
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Old May 7, 14, 12:25 pm
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WAS-SEA roundtrip May 14-17
Cheapest economy seat available:
US: $469
DL: $470
VX: $1574
UA: $625
Cheapest F seat available:
US First: $1313
VX First: $3140
UA First:$1318
DL First: $1053
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Old May 7, 14, 12:28 pm
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It's not just UA, almost every other airline is charging sky-high airfares. The most expensive domestic non-stop I have seen is LAS-BOS on B6 for $717.
But shouldn't we be surprised by this? After all, competition is down and oligarchical tendencies are up.
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Old May 7, 14, 12:30 pm
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Originally Posted by dieuwer2 View Post
It's not just UA, almost every other airline is charging sky-high airfares. The most expensive domestic non-stop I have seen is LAS-BOS on B6 for $717.
But shouldn't we be surprised by this? After all, competition is down and oligarchical tendencies are up.
It's the summer, the economy is "good," and prices are higher. No doubt. But this thread is specifically about the seeming spike in markets where UA is refusing to meet the competition.
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Old May 7, 14, 12:31 pm
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Originally Posted by nova08 View Post
It might not be the best example...
PHL-SFO roundtrip May 10-13
Cheapest economy seat available:
US: $370
VX: $1050
UA: $1100
Cheapest F seat available:
US First: $1300
VX First: $1300
UA First:$1800

Close in fares are a different animal from what is being discussed. If you wanted to see the stratagy, you have to look a month or two out. But looking at the dates you posted, I am getting $1133 for non-stop on AA.

Looking at a Friday/Monday flight PHL-SFO on 6/27 back 6/30 (using Orbitz) I get:

US $508, UA $548, and VX $573 RT.
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Old May 7, 14, 12:35 pm
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I'm watching 2 trips for family / friends right now.

Trip 1. September. Very flexible. 2-3 airports to 2-3 airports. +/- 2 days on either end.

UA is $50-$150 higher than AA/DL.

Trip 2. Early December (very slow season). This time it's almost pure leisure destination to 2-3 airports at the other end, i.e. same flexibility.

UA is $50-$150 higher than AA/DL.

This isn't about UA wanting to sell FEWER cheap seats -- this is UA not wanting to sell ANY cheap seats. So for the past 2 years they told us that elites were over-entitled. And now they are saying that the damn Kayakers are buying up all their seats. So who exactly does UA think it's customers is????
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Old May 7, 14, 12:36 pm
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Just focusing on one city, BOS — there are still fare deals but with significant time restrictions.

BOS-CLD has a $176 base fare r/t posted but only departing through 5/31.

BOS-STT has a $197 base fare r/t posted but only departing 9/2 thru 12/11.

BOS-SFO has a $276 base fare r/t posted, matching a VX fare sale, departing 9/3 thru 11/19. (Remember when sub $200 transcons were posted all the time? That recession was the greatest).
BOS-LAX has the same $276 base fare r/t posted, matching a VX fare sale, also 9/3 thru 11/19.

BOS-SKG has a $164 base fare r/t posted (a/i about $700 for about 15k PQM), but only departing 11/1 thru 11/30 and, in 2015, 1/10 thru 3/10.

Otherwise, for "normal people travel", fares seem sky high. BOS-SFO is $600+ for any 2-3 day trip in the next 3 weeks (and is cheaper, like $350+, on some days in the next month). BOS-LAS is $400+ for the next month and $500+ on weekends.
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