WineCountryUA

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WineCountryUA
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sinoflyer

Going by the numbers that we talked about previously, any airline would be stupid not to go after the 95% and upping their 74% revenues. WN ate the legacies' lunch by serving the great unwashed. DL finally got smart and started monetizing F UGs before the others did. UA is really just catching up.

In the least, now that airlines have been monetizing for several years, if they are really impacted by stiffed "HVF"s taking their business someplace else, you would have expected them to reverse course instead of even more aggressively hawking TOD as OP described.

aCavalierInCoach

I do wonder what the real math is. Baggage fees, change fees, FCM, etc. are all incredibly high margin and non-existent for HVFs.

I fly full fare for work up front, but I also am a heavy user of my FF miles and my upgrades (and as a GS, a fairly heavy user of GS agent phone time to when applying upgrades, etc.). I have no doubt I'm a profitable customer, but I'm guessing I think the comparison is not a simple one.

Kacee

If by HVF, you mean full fare pax, I would agree.

But many MVF (middle value flyers) spend an awful lot on change fees. For me it's typically a couple thousand dollars per year. That's pure marginal revenue.

I'll add that UA gets $12K PQD (or more) from me every year due almost exclusively to MP. I'd otherwise be flying HA to Hawaii, B6 to NYC, and foreign carriers TPAC and TATL.

gold23

In reality, the only thing that will really hurt UA is if the institutional business is impacted by change. With footholds in SFO, ORD, EWR, and IAH, they have arguably the best hub layout of any of the major domestic carriers. Route and cost is going to always drive this business. At the gate upgrades will minimally impact their bottom line (more likely to improve it, actually), much like the completely unfair elite bumps they offered last year to mostly non-hub based semi-frequent fliers.

It does stink for those of us who have been very loyal and do not feel as if it's reciprical at all. The airline industry is one of the few where catering to your one-time customers is more effective than keeping your regulars happy....but that's the truth. Might it change? Not unless there is a major de-hubbing and slots in large markets open up to all carriers (which likely would create operational difficulties, etc.).

I HATE that UA may be selling upgrades to the masses at the gate. As an elite, as mentioned earlier, either do this prior to or at check-in....or, go through the upgrade list with a slightly discounted offer. If it's $199 to upgrade for those without status (I hate the word kettle), offer it to me for $169. Offer it to the 1k ahead of me for $159. Instead of CPU, provide each elite member (annual amount based on status) instruments in order to apply them at the gate for upgrades.

The above would accomplish a few things. One, it would make me more likely to purchase in the front of the cabin when I initially buy my ticket. Two, it would eliminate CPUs almost entirely, increasing UA revenue while still treating elites much better.

Sure, elites will complain. But I don't really care if someone is complaining that they aren't getting something for free that someone else is paying for- that's an entitled argument with no basis in reason. Many elites, this one included, will feel as if we're "first in line" for otherwise discounted upgrades and can make decisions as to whether or when to opt for them.

sinoflyer

Unless one works in that specific department within that airline, this is the big mystery. However, seeing the direction that the airlines, not just one airline, are headed wrt monetizing F UGs, it's pretty telling that the 5% are just "cream on top" as another poster had mentioned upthread.

Call me crazy, now with spend-based FFP, I see more value in paying for a better F product than obsessively refreshing my mobile app at the 100-hour mark.

Kacee

{T}his was Smisek's whole pitch and strategy, and we all know how that turned out . . . .

gold23

I'm of the belief that the colossal failure was due to many factors, with complete and utter disregard for the passengers- elite and non- amongst the most egregious. The fact that institutional business drives a ton of the revenue would be recognized by any leader- and Oscar most certainly understands.

I'm suggesting that UA can continue to operate in a revenue maximizing way with respect to at the gate upgrades.... but attempt to do so where your most loyal customers have first crack. I don't want a freebie...I want an earlier opportunity to improve my seat.

UA has changed a lot since Smisek, almost all of it good (how could it go anywhere else?). But they still don't have a good handle on how the tone of some decisions play out. Communicate changes to me, and allow me to feel valued through "first chance" offers if something is going to be monetized.

AirbusFan2B

T100 CPUs turned into T96 when UA became UAdbaCO half a dozen years ago. Smisek's mission was to jettison as many unique UA features as possible to make the airline feel more like CO.

Now nothing ever happens at T96 anymore as a 1K, which takes us back to OP's post.

Boiler84

I’m confused. Please clarify . . .

You’ll gladly give your Y business to UA because of the tangible benefits and superior route map. Seems the tangible benefits to which you refer are E+, a free drink and something to eat. But not upgrades, since you don’t seem to get those very often.

You’ll take your F and J business to other carriers because their product is superior. OK. Fine, that makes sense as well. Lack of upgrades is not an issue in this case either, since you are buying F or J fares. You’re making the choice based on F or J product quality, not based on upgrades.

So, if you are keeping your Y business on UA despite lack of upgrades, and taking your F/J business (where upgrades don’t matter since you’re purchasing F/J) somewhere else with a higher quality product, how does the lack of upgrades affect your spending decision?

If your point is that UA is losing your F/J business due to inferior F/J products, I can understand that. But that has nothing to do with you not getting upgrades due to UA's F monetization efforts. It's a "product quality" issue, not a "lack of access to the product" issue.

AirbusFan2B

My first $12,000 (PQD) of spend in 2017 will go to UA. I will reach that by midyear. The additional $10,000 or so that I typically spend on UA in the latter part of the year (some of which is purchased premium fares) will now go to other carriers as this business won't result in upgrades on UA nor will it result in GS. Nor will it result in any other benefits beyond 1K whatever that means. RPUs completely worthless. CPUs nonexistent. Up until 12/31/2016, UA got most of this additional business in hopes of generating benefits for me but no longer.

Boiler84

Really, what you've said is not all that different than the way things have been. CPUs, RPUs, GPUs have always (or at least for quite a while now) been on a "space available" basis. CPUs have a time aspect as well - within 96, 72, or whatever number of hours correspond to the flyer's status level. An RPU or GPU request 6 months in advance may not go through if the right space is not available, just like a 1K's 96 hour CPU may not go through if the right space is not available.

Someone flying SFO/IAH on a Monday morning is not likely to get an RPU to go through no matter how far in advance they request it, because the algorithms know that F is very likely to sell out. But book a Sunday afternoon IAH/MSP flight and it will clear right away.

The only thing that is changing is method of sales. Along with advance purchase discount F, time of purchase upgrades, time of check-in upgrades, and others, airlines (not just UA) are adding prior to boarding upgrades.

SF1K's original post said the upgrade offer was a general announcement. If a 1K was #6 on the list for some reason, that 1K could have bought an upgrade. If whoever was #1 on the list really, really, really wanted or needed to be in F for whatever reason, that person could have bought one to guarantee the F seat. On the otherhand, if that #1 person was happy with the E+ exit row and didn't want to pay whatever price the upgrade was offered at, no need to do so. Open market. Informed consumers making their independent decisions.

When the algorithm says "no likely to fill these F seats," upgrades start to go through. Just like today.

halls120

Yes, they have been that way. Where on UA's website does it say this?

prometa

I think eliminating the whole CPU program is the only way to provide the revenue UA wants and satisfaction elites desire. Aside from all kinds of hassles/errors/screw-ups trying to get the CPU list right causes, and the extra work for GA and flight crew on the last second upgrades, the CPU program seems to do nothing other than irritate elites, based on the number of posts in this thread.

Instead, UA could change the way RPUs/GPUs are distributed, by increasing the number that go to Plat/1K, and also giving a small number to Silver/Gold. They could also change how they are applied. To steal from another FT poster I saw a year or so ago, apply one instrument to book R/waitlist, apply two to the same flight to get last seat F/J availability.

That way, elites are virtually guaranteed to get some kind of 'free' upgrade over the course of the year, and they get to control on which flight it is.

That all said, I've only flown UA regular domestic F when I've upgraded an itinerary with a layover and the other leg was lie-flat. The regular domestic F experience has been so indistinguishable from Y that I've never cared I didn't get the CPU. I'm surprised at the anger in this thread--you'd think that UA domestic F was some miracle product.

AirbusFan2B

I'm an extremely experienced UA 1K traveler and well aware of the STATED policy as a 1K for 10 years, including the 'space available' language. I'm conversant in the published parameters that determine upgrade probability. That language has remained largely constant since the merger. But something else UNSTATED has changed. OP's report is clearly one such instance. The fact that UA will go to extreme lengths to reduce F inventory. My CPUs as a 1K went from 90% 5 years ago to 50% 2 years ago to now 5%. RPUs don't clear either. UA's STATED policy has not changed. What HAS changed is that UA is pulling out all stops to sell upgrades so that no space is available for Premier members. Only HVFs and GS get upgrades/upsells by and large.