PV_Premier

AA has MCE...?

LarkSFO

Did UA just start doing this ('rock bottom fares to attract bottom feeders and kayakers') after the end of Q1?

Perhaps they see a weak point with DL and AA and are trying to exploit it? I don't think there are too many $pin88's () and his brother who will spend thousands more to fly another airline, for what most people perceive is the exact same experience.

Did UA have the excellent results in Q1 even with this strategy?

04.23.15 United Announces Record First-Quarter Profit


I guess we'll see how they are doing (Q2 results) on or about 7/23/15.

spin88

Lark, the fare difference is quite large at this point on the TPAC routes for UA I have checked over the last 6 months, and if UA has to do this type of discounting to fill its planes it says that my attitude is not unusual. Its the result of probably two things (1) the loss of elites who would pay more because they did not look around, and (2) the book away factor. This happened to US, and they only were able to fill their planes by offering connecting fares that substantially undercut the competition. [US made it work because their unions were at war with each other, keeping the wage rates low.]

The book away factor is particularly problematic as it means you are trying to sell you seats to a smaller (and more price sensitive) group, hence more discounts. If I was unique in my willingness to pay more NOT to fly UA, well then the price offered by UA would be the same as OALs, or would be $10-20-30 less. It is not, it is consistently much greater when UA metal is added. That says UA is pricing its metal much lower when its added to an itinerary. I paid $1825/ticket, the "all UA" routing was $1225, that says a lot, and accepting one or two UA legs pushed down the price considerably from $1825. Check out a site like Hipmonk on some searches and you will see the pattern very clearly as it shows what each airline is willing to offer for each leg.

Your suggestion that UA is kicking it in the profit department, let alone that it is the result of Jeff's "savvy" plan has been disproved multiple times. http://www.flyertalk.com/forum/24715548-post216.html http://www.flyertalk.com/forum/24778852-post1022.html http://www.flyertalk.com/forum/24710336-post97.html If you want to make a data based counter case, great, we are all ears. But until you do, Suffice it to say that UA ONLY made money last quarter due lower fuel and a better bet on hedging. Had fuel costs been what they were in 1Q 2014 UA would have bled red ink, DL would have made a profit. The underling Operating numbers are not good, and UA has something like 1/5 of the revenue growth that DL has had, with DL going from lower to substantially higher revenue. Delta's better service is being in much more revenue, and UA's cut rate service is bringing in far less revenue.

This is then reflected in the fares UA has to offer.

LarkSFO

I'll take your word on this, I have not checked or flown.


Please admit this is pure speculation on your part.


So concludes spin88....

I think it says alot. About you and your priorities. Which cannot be extrapolated any further than that...

Suggest some routings ex-SFO and I will go take a look.

This was not my suggestion at all. And thank you for continuing to insult everybody who does not buy in to your 'analysis'.

My question was: Did UA have their (self proclaimed) record breaking Q1 even though they are deeply discounting fares to attract kayakers?

Or did they start this deep discounting after their (self proclaimed) record breaking Q1?

ani90

How do you reconcile these two statements?

What is source of this information? Is this publicly available data, non-public industry data or speculation?

FlyWorld

I've flown a fair bit of Y on both UA and AA in the past couple years and I've noticed several key distinctions:

1. The Recaro slim-line seats on United Continental aircraft are brutally uncomfortable. I have never experienced so much physical pain in an airline seat on any other airline, including AA in Y, and including LH in Y, who also uses Recaro slim-line seats but probably paid a few more bucks for more comfort. I have flown Recaro slim-line on both UA, LH, and AA. UA is uniquely painful, I'm guessing because they ordered the cheapest possible version of it.

2. No other airline has such hostility towards its customers as United Continental does. See recent threads in this forum documenting the fact that United Continental has lowest customer satisfaction and highest complaint rates. If they were in fact the same as other legacy carriers, then they would not be rated dead last on these surveys and studies that compare it with others.

3. No other airline that I've flown on, including AA in Y, has the mind-exploding endless loop of in your face advertising that United Continental has installed on sCO aircraft. The seat back entertainment centers I have experienced on other legacy carriers, including AA, are much easier to turn off than those installed on United Continental aircraft. I've counted that it takes me an average of 17 button presses to get that thing to turn off, and that it is typically turned back on no fewer than 3 times per flight, meaning that for each flight, I have to press the off button a total of 51 times. That's 102 times per round-trip journey. The comparable number on AA, as I recall, would be 2, or at most, 4. Also, most legacy airlines have a static display on that screen by default. United Continental is unique in playing an endless loop of advertising that never stops for the duration of the flight. This is an irritant that is unique to United Continental.

I could go on. That's enough for now. There are differences.

Tchiowa

I just checked my TPAC flight (BKK/SFO) on the UA website and there is no significant difference in fares from last year.

spin88

This plane will have (a) direct passengers (on the e.g. flight NRT-SFO), (b) connecting passengers (e.g. HIJ-SFO-HIJ, or LAS-NRT-LAS) or (c) it is part of a more complex itinerary, and is sold separately to be combined (which is what all of the travel sites (Kayak, Travelocy, etc) do; e.g. SFO-HKG-TYO-SFO in my case.

What United does is match price (but not exceed, sometimes is less) on a search for NRT-SFO (or NRT-SFO-NRT). They will charge $1000 for that leg when ANA will be $1049. This is the high/maximized price for UA, but its lower than in the past as UA no longer commands a premium.

United will then offer some of the seats on "connecting" trips, again undercutting. For example it will offer HIJ-SFO, they will match other connecting airlines, or undercut them. My guess is that the tag on ANA leg is not discounted, its UA that takes it in the shorts. For example, the all ANA HIJ-SFO flight when I checked was more than doing the last leg on UA.

But if I am looking at a complex routing, that is where the deep discounting happens. United will offer its flight NRT-SFO for e.g. $200, which causes that routing (which may be on *A, or even some other carriers) to be cheaper. When a Travel Agent (or someone looking at expedia, kayak) pulls option, those which has the UA flight are the cheapest. Kayak pairs the cheapest legs and bingo, you get one/two/three UA legs at the cheapest price. This is what I have seen in my recent searches.

This allows UA to maximize its "route monopoly" premium (what the OP is seeing) while then selling the rest of the seats at a deep discount. The fewer high yield direct passengers the passenger gets, the more of this type of discounting the airline has to do. The problem for UA is that it is having to do more and more of option (b) and (c) to fill the plane.

Dude, no offense, but what you paid for a ticket a year ago is meaningless.

I ran a search SFO-BKK-SFO in mid June. if I do the UA/ANA flights its $1465 RT. This is the absolutely cheapest non-garbage routing I found in a search. (China Southern/China Eastern will sell it to you for $1432, but with 32 hour travel time and god awful times, its not really comparable).

All ANA is $1774. The flights are basically side by side NRT-SFO, same NRT-BKK legs, but UA prices its SFO-NRT flights for $309 less! [We call this the "savvy" effect. }

EVA is $1547, Philippines Air (much longer travel time) is $1508, CX is $1773. CX and ANA are competing at the top end, and well, UA is the "low price leader" on this connecting route, and its selling SFO-NRT for far less on a RASM basis, as its better than letting those seats go out empty.

I could go on, this is just an example, run some searches and you will see the very clear pattern. United has killed its brand value, and its suffering badly in the revenue department as a result as it can only compete on (much cheaper) price.

ani90

Again I ask the source of your information - is this publicly available data, do you have inside information from UA or are you speculating?

Always Flyin

spin88 has provided the data on the fare searches he has performed that support the conclusions that are presented.

Rather than blindly questioning the data and conclusions, perhaps it would be more helpful to present conflicting data to challenge the conclusions with a legitimate factual basis.

Assuming any such contrary data can be found . . .

embarcadero1

I just paid $300 more on an F ticket SFO-ORD to fly American. I would have flown Virgin but their fares were $600 higher than United's and, therefore, $300 more than AA.

I'm flying SFO-LHR-MAD-SFO later this month. I paid a $1,200 premium to avoid United, whose flights were far and away the least expensive.

By nature, these data points are anecdotal, but United is clearly struggling to compete in these routes, at least on the days I chose to fly. I find it hard to believe that I'm the only one paying good money to avoid United. Especially in the summer, it can't be all contract fliers.

transportbiz

Probably so, since the record breaking profits had more to do with lucking out on fuel costs than anything UA did in terms of pricing strategy.

transportbiz

I think spin88 is on to something here (as usual IMHO). I recently priced out LAX-SFO RT for early June, UA was $6 less than AA, VX, DL and AS, who matched each other. It would seem this strategy would be to be at the top of the Kayak and Expedia lists. It's a strategy, but clearly, it does come at the cost of RASM. It's one route, where UA dominates in terms of schedule and frequency.

ani90

I am not blindly questioning anything but am just asking the source of this comment. Personal observations on ticket pricing is hardly data to say what constitutes an airlines load on a particular route. I have no views on this matter and no knowledge on who fills the seats united flights between US and Japan. Spin88 provided this and I just wanted to know where this information came from and how FT members get about knowing the breakdown of passengers on a particular route.

DenverBrian

Just turn the brightness down all the way?