UA CFO Rainey on Bloomberg: Global First "Effectively the Same" as J
Sep 7, 2014, 3:33 pm
#242
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The fact is that UA still has GF on over 60% of its long haul aircraft, and while it's still there, they need to be hawking and selling it as hard as they can as every sale counts. The big problem is that the attitude of the executive suite cascades down to the front line and undermines sales and service of GF. If your a sales agent, why push hard for sales of GF when the attitude of your leadership is "it's essentially the same as BF".
I think the only reason this gaffe isn't a huge deal is that GF is a small customer segment of the airlines which most people don't buy. If the President of Lexus came out and publicly said their cars were essentially the same as Toyota, it would be national news, Lexus dealers would be infuriated, and that person would probably be reassigned or shown the door.
I think the only reason this gaffe isn't a huge deal is that GF is a small customer segment of the airlines which most people don't buy. If the President of Lexus came out and publicly said their cars were essentially the same as Toyota, it would be national news, Lexus dealers would be infuriated, and that person would probably be reassigned or shown the door.
Sep 7, 2014, 3:35 pm
#243
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The fact is that UA still has GF on over 60% of its long haul aircraft, and while it's still there, they need to be hawking and selling it as hard as they can as every sale counts. The big problem is that the attitude of the executive suite cascades down to the front line and undermines sales and service of GF. If your a sales agent, why push hard for sales of GF when the attitude of your leadership is "it's essentially the same as BF".
I think the only reason this gaffe isn't a huge deal is that GF is a small customer segment of the airlines which most people don't buy. If the President of Lexus came out and publicly said their cars were essentially the same as Toyota, it would be national news, Lexus dealers would be infuriated, and that person would probably be reassigned or shown the door.
I think the only reason this gaffe isn't a huge deal is that GF is a small customer segment of the airlines which most people don't buy. If the President of Lexus came out and publicly said their cars were essentially the same as Toyota, it would be national news, Lexus dealers would be infuriated, and that person would probably be reassigned or shown the door.
Sep 7, 2014, 3:37 pm
#244
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With the trend toward lie-flat, all-aisle-access business class, it's a given that international first class doesn't have a solid future at UA or AA.
Business class began as seats very similar to today's Premium Economy (like that of BA, JL and QF) and thus bigger, roomier first class was still relevant.
Today's new business class (CX, DL, US and the new seats at AA) is even better than first class was back in those old days - when business was like today's WT+.
Most airlines are removing/reducing international first class as a result. No huge surprise.
Business class began as seats very similar to today's Premium Economy (like that of BA, JL and QF) and thus bigger, roomier first class was still relevant.
Today's new business class (CX, DL, US and the new seats at AA) is even better than first class was back in those old days - when business was like today's WT+.
Most airlines are removing/reducing international first class as a result. No huge surprise.
Sep 7, 2014, 3:43 pm
#245
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Yes, GF exists on over 60% of its long haul aircraft...and yet I'm suspecting that those seats are rarely sold and are most often upgrades to GS, upgrades to full fare J/C, and/or award travelers. You are assuming that UA SELLS those seats, and I know from friends at UA that that is not the general case. (No, I don't have specific numbers, nor are they made public by UA.) You may believe that more are sold, and we therefore will have to disagree.
Sep 7, 2014, 3:51 pm
#246
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Yes, GF exists on over 60% of its long haul aircraft...and yet I'm suspecting that those seats are rarely sold and are most often upgrades to GS, upgrades to full fare J/C, and/or award travelers. You are assuming that UA SELLS those seats, and I know from friends at UA that that is not the general case. (No, I don't have specific numbers, nor are they made public by UA.) You may believe that more are sold, and we therefore will have to disagree.
Sep 7, 2014, 3:52 pm
#247
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I agree with you that UA probably doesn't sell a lot of these seats, particularly on routes that are more leisurely in nature. That being said, sales in general are very hard and every sale matters, particularly at an airline that has profitability issues. Being able to price discriminate customer sales matters to overall company revenue at any company and there are people that will buy GF if it's available and if the product is properly presented. Having the CFO undermining that sales process is not good for business.
Sep 7, 2014, 4:50 pm
#248
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Sep 7, 2014, 5:56 pm
#249
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Sep 7, 2014, 6:35 pm
#250
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Yep - amazing the type of convoluted logic and selective ignorance that people will use to defend this type of statement. It's like arguing that this idiot calling FFs "over-entitled" didn't sway consumer behavior at all either.
Sep 7, 2014, 8:26 pm
#251
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B'ah hahahahaha
Funniest damn thing I've heard since Rainey drove away UA's over-entitled.
he and Smisek are certainly savvy...Given they can drive UA's premium traffic...if it has any left to LH on TATL and given the brilliance of pmUA to negotiate that JV still make the bank on those of us still buying F...although how long LH will tolerate having to prop up COua is anyone's guess. haven't flown ANA F TPAC as I'm on CX now, but assume that's a similar laugh to the bank strategy.
So sad that UA's deference to Pan Am F/sophistication has now been wiped away completely by COs Peoples Express mentality/legacy.
Yes Rainey, there's a huge difference between International F and C...and unfortunately anyone paying for either of these classes on the COua should have their head examined if they are buying UA at this point. LH F is a memorable experience...UA is only memorable for the aggravation and disappointment....not to mention the cheap, co-mingled lounges with the FF riff-raff.
COua should be shooting for a Y+/Y combo unless they are willing to invest in at least a competitive C product...which would still be a stretch given how much better BA, LH, CX are from the current offering. Even the kitschy and annoying OS C seat (given the control placement) is light years ahead of the current COUA variations.
Rainey ought to be explaining to Wall Street how he has a plan to $ milions + to invest in and to create a competitive sustainable premium business for their network. Nothing worse than being the laughing stock of global airlines once AA gets through its upgrade...definitely won't be good for attracting the people that actually make a global network profitable..o right we got JVs with real airlines...until they realize what an anchor these things are on their own premium revenues and re-negotiate to exclude F/C...that would be the savvy thing for LH and ANA at this point.
Funniest damn thing I've heard since Rainey drove away UA's over-entitled.
he and Smisek are certainly savvy...Given they can drive UA's premium traffic...if it has any left to LH on TATL and given the brilliance of pmUA to negotiate that JV still make the bank on those of us still buying F...although how long LH will tolerate having to prop up COua is anyone's guess. haven't flown ANA F TPAC as I'm on CX now, but assume that's a similar laugh to the bank strategy.
So sad that UA's deference to Pan Am F/sophistication has now been wiped away completely by COs Peoples Express mentality/legacy.
Yes Rainey, there's a huge difference between International F and C...and unfortunately anyone paying for either of these classes on the COua should have their head examined if they are buying UA at this point. LH F is a memorable experience...UA is only memorable for the aggravation and disappointment....not to mention the cheap, co-mingled lounges with the FF riff-raff.
COua should be shooting for a Y+/Y combo unless they are willing to invest in at least a competitive C product...which would still be a stretch given how much better BA, LH, CX are from the current offering. Even the kitschy and annoying OS C seat (given the control placement) is light years ahead of the current COUA variations.
Rainey ought to be explaining to Wall Street how he has a plan to $ milions + to invest in and to create a competitive sustainable premium business for their network. Nothing worse than being the laughing stock of global airlines once AA gets through its upgrade...definitely won't be good for attracting the people that actually make a global network profitable..o right we got JVs with real airlines...until they realize what an anchor these things are on their own premium revenues and re-negotiate to exclude F/C...that would be the savvy thing for LH and ANA at this point.
Sep 8, 2014, 10:03 am
#252
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Golden Opportunity?
Is this a golden opportunity for UA to ditch Global First and make BusinessFirst something worthwhile? Amping up the food and soft product, maybe a jump suit, convert the First Lounges and/or one of the duplicate hub United Clubs into a BusinessFirst Lounge with more than crackers. How about it Smisek? 
Sep 8, 2014, 10:19 am
#253
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This is starting to sound deliberate.
They don't like the extra effort/cost involved in having a legit GlobalFirst product.
What did SMI/J say? Diminished returns?
If they make First Class suck enough, ticket sales will go down, and they can claim, "oh look, nobody's buying F. We better get rid of it since it doesn't sell."
Well why does it not sell?
Because you won't make it a worthwhile product?
I've seen similar things at companies I've worked at before.
They downplay a product or service, with the express interest of getting rid of it either because it costs them too much to put forth a competitive effort. Or even because of something so petty as individuals at the company simply having a personal disdain for the product's mere existence.
They don't like the extra effort/cost involved in having a legit GlobalFirst product.
What did SMI/J say? Diminished returns?
If they make First Class suck enough, ticket sales will go down, and they can claim, "oh look, nobody's buying F. We better get rid of it since it doesn't sell."
Well why does it not sell?
Because you won't make it a worthwhile product?
I've seen similar things at companies I've worked at before.
They downplay a product or service, with the express interest of getting rid of it either because it costs them too much to put forth a competitive effort. Or even because of something so petty as individuals at the company simply having a personal disdain for the product's mere existence.
Last edited by JBEagle1000G; Sep 8, 2014 at 10:20 am Reason: sp
Sep 8, 2014, 11:19 am
#254
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First, what a #$%$#@!$; then, a couple of points:
Point 1:
HouCrew as a group does not get branding at all, and aspirational branding is way beyond them. GF is supposed to be a showcase of UA brand - and can be a differentiator even in the domestic market, if executed correctly. Case in point: AA and B6 are promoting their first-class cabins, even if they exist on a very small percentage of their fleets. (Not to mention that EK positioned itself as a premium brand, despite subpar Y product etc. etc.)
Spot on - an executive undermining his own product and brand, is, well, a bad executive. It really should be termination-level offense. It also proves that there is no strategy how to phase GF out, which is scary. Or, this is a spillover from an ongoing internal debate, which is even more scary. (Point 2, either way.)
Point 3:
GF and BF do not have the same seat, sorry. Being 6'3" and 200lbs, I do not fit in pmCO J seats feet-wise, and find pmUA J seats too cramped width-wise; I cannot sleep restfully in either. (I wish I could.) Conversely, I sleep like a baby in UA GF seat - and in OS/LX J.
For that reason, I fly in UA GF a lot - I usually pay for J, and use GPUs to upgrade to GF (or beg, borrow and steal to get a bulkhead pmCO seat on two-class aircraft when UA shuffles the equipment
; otherwise I fly OS - bulk of my long-distance flying is TATL). GF has some other advantages: I can come last on the plane and not worry about overhead bin space; and use F *A lounges etc. etc.
Point 4:
if UA gets rid of GF, my TATL flying will switch completely to OS/LX. Would I pay for GF list price? No - but I would not buy UA J if GF was not there to upgrade to.
Bottom line, points 1-4: UA's current J cabins are flawed by 2014 standard - if the UA seat was as good as OS/LX, then a lot of arguments about GF and BF being the same would gain validity.
As for the Rain Man, please let us hope he keeps it up. He just may catch up with Marie-Antoinette... Let me see - offend top customers, check; miss financial target, check; denigrate flagship product, check - I am genuinely curios what is next...
Point 1:
HouCrew as a group does not get branding at all, and aspirational branding is way beyond them. GF is supposed to be a showcase of UA brand - and can be a differentiator even in the domestic market, if executed correctly. Case in point: AA and B6 are promoting their first-class cabins, even if they exist on a very small percentage of their fleets. (Not to mention that EK positioned itself as a premium brand, despite subpar Y product etc. etc.)
Point 3:
GF and BF do not have the same seat, sorry. Being 6'3" and 200lbs, I do not fit in pmCO J seats feet-wise, and find pmUA J seats too cramped width-wise; I cannot sleep restfully in either. (I wish I could.) Conversely, I sleep like a baby in UA GF seat - and in OS/LX J.
For that reason, I fly in UA GF a lot - I usually pay for J, and use GPUs to upgrade to GF (or beg, borrow and steal to get a bulkhead pmCO seat on two-class aircraft when UA shuffles the equipment
; otherwise I fly OS - bulk of my long-distance flying is TATL). GF has some other advantages: I can come last on the plane and not worry about overhead bin space; and use F *A lounges etc. etc. Point 4:
if UA gets rid of GF, my TATL flying will switch completely to OS/LX. Would I pay for GF list price? No - but I would not buy UA J if GF was not there to upgrade to.
Bottom line, points 1-4: UA's current J cabins are flawed by 2014 standard - if the UA seat was as good as OS/LX, then a lot of arguments about GF and BF being the same would gain validity.
As for the Rain Man, please let us hope he keeps it up. He just may catch up with Marie-Antoinette... Let me see - offend top customers, check; miss financial target, check; denigrate flagship product, check - I am genuinely curios what is next...
Last edited by nikolastojsin; Sep 8, 2014 at 2:23 pm Reason: Clarification
Sep 8, 2014, 11:47 am
#255
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Yes, GF exists on over 60% of its long haul aircraft...and yet I'm suspecting that those seats are rarely sold and are most often upgrades to GS, upgrades to full fare J/C, and/or award travelers. You are assuming that UA SELLS those seats, and I know from friends at UA that that is not the general case. (No, I don't have specific numbers, nor are they made public by UA.) You may believe that more are sold, and we therefore will have to disagree.
Once you have lie-flat in C, you eliminate 90% of the business case for F for the vast majority of customers. Sure, you have the token snob here or there that expounds on how nice the 'privacy' is. You're on a common carrier, not a private jet. And of course, the F&B on carriers with real F is much better, but if I'm on a 7 hour TATL o/n, I don't really need a 2 hour luxury meal, I'd rather just sleep.