UA CFO Rainey on Bloomberg: Global First "Effectively the Same" as J
 

http://www.bloomberg.com/video/u-s-a...OmRFt_uow.html

Rainey is first asked about the fuel price outlook, but then the anchor asks about UA possibly getting rid of F class like Delta. Answer: "We're moving more toward a two-cabin plane, with Economy Plus."

Rainey does not do much of a job justifying either the existence of GF or paying extra for it:

"It's effectively the same service: you've got essentially the same food... even the seat is very similar."

He concludes by complaining about taxes. "A crushing tax burden.... higher rate than alcohol, tobacco, firearms... we shouldn't be discouraging air travel in our country."

He is correct. There are a lot of people on FT who remember the old days of international first class and want those days back - but it ain't happening. As a good FTer I would rather have more BF seats on the plane in order to increase my upgrade chances. Screw GF. Anyone who is going to pay for GF isn't going to fly a US airline anyway.

Wirelessly posted (Mozilla/5.0 (iPhone; CPU iPhone OS 7_1_2 like Mac OS X) AppleWebKit/537.51.2 (KHTML, like Gecko) Version/7.0 Mobile/11D257 Safari/9537.53)

He's right . A total embarassment but at least he admits the truth

it's only the same because they made it the same. it doesn't have to be.

I think there are certain markets where a three-cabin F product is justified, but the UA fleet as currently composed has too much F capacity to allow the company to truly differentiate the product in a profitable manner. Instead, the company is pursuing the strategy of positioning the product as a sort of super-J, whereby HVFs can upgrade full-fare business class tickets using instruments while capturing some incremental (deliberate) F revenue where such demand exists.

One thing is for sure: the product certainly is not good enough to stimulate demand on the margin. OTOH, if United spent the money to really differentiate F, but did so only in the handful of markets which generate reliable paid F demand, it would really muddy the water with respect to the service quality and perception in markets where UA does not direct that investment. Certainly could be a branding faux pas as well.

On FT, we understandably want to have our cake and eat it too. Unfortunately, a globally-competitive F product in all markets is a non-starter. The best anyone can hope for is a small subfleet of F-equipped airplanes deployed to certain destinations with an improved, all-aisle-access next gen J product everywhere else. Only that sort of arrangement is viable going forward at UA, and even then, it is very much in doubt.

As long as they increase BF seats, overall, it is good for business.

in other news, the sky is blue.

I've been in GF all of one time. One extra entrée. "Better wine", although the Italian FA recommended one of the reds from BF instead of the choices they had in GF. A bit more room. I was under-whelmed and certainly wouldn't cough up $ out of my own pocket to go from BF to GF.

To make GF work, UA'd have to attract people who pay out of their own pocket because most companies say a lie-flat seat in BF is good enough. And UA isn't making the effort and my guess is they won't. Rainey's comments pretty much confirm...

I watched it yesterday and thought that it was a bad piece. He was talking on things of which he personally knew very little of. It's better to not comment on what you don't know than to comment and show the world. At least he admitted to never knowing about the knee defender before last week.

This guy should only be given a mike in response to direct financial questions on earnings day. Needs a few classes in PR presence. Clearly not a good salesman for the brand.

Headline should read:

UA CFO to Tiny Portion of Community that Buys GF: "Don't Buy Our Product."

UA should have fired this fool long ago.

Exactly. The US airline industry races to the bottom in hard and soft product. No surprise that no one can tell the difference.

Compare that to international carriers that have a real first class... way different experience and justification of the cost.

+1

Great messaging... maybe they should start selling Global First as Business First while they convert the fleet. Hey, it's the same same.

Agreed - this guy is a straight up doofus. Surprised he still has a job.

Guess this settles the A350 2 vs. 3 cabin debate, eh?

Interesting to see if UA goes w/ the sardine can UA model of BF as they get rid of GF or if they go w/ the less-dense CO model. Can they get 5 across in a 752 w new BF seats :eek: ?

My guess is they go with the "stuff as many BF seats as possible in every a/c", therefore becoming the least desirable business product.

To make GF work, it cannot be upgradable from J (and needless to say Y), cannot be purchased as a MP award, and cannot be given to GS as a perquisite.

I don't see UA making the effort either.

But non-rev employees still get the empty seats? I think that's the biggest knock against "exclusivity". Why does a CEO or self-paying ticket buyer want to pay $14k if he knows a baggage handler is riding free next to him? Nothing against baggage handlers, but employees should pay taxes on the value of tickets they receive. Certainly taints the idea of having to pay $14k.