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Wow - selling the upgrades at the gate so explicitly.

Wow - selling the upgrades at the gate so explicitly.

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Old Mar 25, 17, 8:30 pm
  #211  
 
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During a short delay at EWR today I was speaking to a friendly GA (I know, oxymoron) that I've gotten to know a little and asked her about the gate buy-ups. She said she's never done it, but that she knows of a few supervisors that have instructed GA to do so over the past few months on occasion. Almost all primarily leisure routes, and she said she believed they processed all GS first.

She also said that a lot of people check in either on their way to the airport or otherwise very close to departure. Business people uncertain of whether they'd make their flight, etc. If they check in an hour prior to the flight, it's possible their buy up offer is suitably aggressive...and they take it. This would give the impression that it was a gate buy up to some people watching the list, when in fact it is at check in.

Again, I have no issue with UA maximizing revenue- as long as the approach is clear and as an elite I have an equal or ideallyt greater opportunity to purchase than someone without status.
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Old Mar 25, 17, 9:22 pm
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I'm interjecting to offer my POV that this is a discussion unique to FT, and that our views are clouded because many of us overlook the fact that we are only a subset of a small subset of the traveling public at large.

Many of us can't seem to grasp, or are reluctant to accept, the reality that many "HVF"s don't fly regularly, aren't "elite" nor do they seek it, but nevertheless pay high average fares because they are compelled to do so for whatever reason, not the least of which company business. Their choice of airline/flight is based on the convenience of a nonstop or schedule, not the bourbon in the beverage cart or what's playing on IFE. And if they don't have to fly, they'd be doing something else instead of obsessing over the UG list at the 100/96/72...24 hour windows. Just using the theoretical 5/95% split (and as reminder, we FTers represent only a subset of that 5%), there are more than enough high-fare-paying "kettles" to draw incremental revenue to offset the comparably handful of "elites" going somewhere else. The truth is, the airlines hardly notice that you're gone.
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Old Mar 25, 17, 10:22 pm
  #213  
 
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Originally Posted by findark View Post

I don't want to single you out on this, and I understand your point, but especially from the perspective of a UA stockholder, I think it's important not to lose sight of that. Many other industries make do with no loyalty program at all, and manage to keep customers by offering a quality product at a favorable price compared to the competition.

....

Loyalty programs can be helpful in driving some decisions, but I hope nobody is suffering an inferior schedule, worse product, etc. in return for some perceived loyalty benefits.
There are few consumer products where someone spends $10-20-30-50+K/year on multiple purchases and has multiple options on each purchase. Closest I can think of is Groceries. But it is not in any way of the same magnitude. In addition, Mileage programs have one other feature making the situation different, benefits go to the flyer, who is usually the person selecting the purchase, but often the person paying is their employer/company.

If United always offered the best combo of price, fight time, and product, then they would not need a mileage program. But, other than out of two fortress hubs (IAH and EWR) at any one time most people have multiple options. Before the advent of AA's program, people would buy each leg on whatever airlines, the idea behind AA's program was that by rewarding loyalty, people would still fly AA even when it was not absolutely the best combo of price/schedule/product. As a result AA would get more business, and particularly from business travelers who were not flying on "excursion" fares (as they were called back then).

To the extent that United cuts back its "benefits" well then with each purchase it gets easier to stray. Going somewhere, well Delta has a nicer aircraft and a slightly better time, discount F, so I buy. Oh well better experience, so I buy again and then I figure "oh, and they give upgrades, and if I get to DM I get lounge access. Well since United does not give upgrades, well then perhaps I ought to switch my travel to Delta and get those benefits....

Originally Posted by 5khours View Post
Just my $0.02.

5. The problem with the TODs is that they allow UA to maximize revenue on any given flight, but IMHO they have a long term adverse effect on retention of their best customers which I think UA has underestimated and which I think UA can not accurately measure.
The modeling is not difficult, but you would have to want to do it. Pick a random sample of elites current/former and ask them what their travel patterns are, and who they are flying, and what they think of each airline. If they answer you are flying them less, ask a series of detailed questions as to why.

I in fact got one of these detailed surveys (and got paid to take it) from Starwood the other day. I'm lifetime PLT, and my stays dropped last year, clearly they wanted to know why. It was well designed to look at (a) if they had actually lost business, (b) to whom, and (c) why.

Then you compare the former, and currents and determine how much they dropped in spending and why, and compare it to the new elites you got (and sample them too...).

Under Jeff United did not want to ask these type of questions, as they did not feel they needed to, they just KNEW that no-one would leave as they had to fly United.

Originally Posted by sinoflyer View Post
I'm interjecting to offer my POV that this is a discussion unique to FT, and that our views are clouded because many of us overlook the fact that we are only a subset of a small subset of the traveling public at large.

Many of us can't seem to grasp, or are reluctant to accept, the reality that many "HVF"s don't fly regularly, aren't "elite" nor do they seek it, but nevertheless pay high average fares because they are compelled to do so for whatever reason, not the least of which company business. Their choice of airline/flight is based on the convenience of a nonstop or schedule, not the bourbon in the beverage cart or what's playing on IFE. And if they don't have to fly, they'd be doing something else instead of obsessing over the UG list at the 100/96/72...24 hour windows. Just using the theoretical 5/95% split (and as reminder, we FTers represent only a subset of that 5%), there are more than enough high-fare-paying "kettles" to draw incremental revenue to offset the comparably handful of "elites" going somewhere else. The truth is, the airlines hardly notice that you're gone.
The idea that there are lots of people paying high fares that just pick random airlines is contrary to everything the airlines have said for years. I posted the quotes above, all of the big US carriers have said that a massive part of their revenue comes from a relatively small number of frequent travelers. https://www.flyertalk.com/forum/28051886-post73.html

And while their are some companies that via corporate deals make picking another airline impossible, most don't. And my experience as a lawyer, with lots of domestic travel for many years, is that I nearly never run into someone who is not tied into a particular airline program. Some fly two airlines, but I can count on my hands the number who were truly agnostic.
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Old Mar 25, 17, 11:39 pm
  #214  
 
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It appears that UA is burning the furniture to heat the house.
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Old Mar 26, 17, 2:20 am
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Originally Posted by spin88 View Post
The modeling is not difficult, but you would have to want to do it.
Yes and No. Yes, I agree they don't want to do it....No it IS difficult.

The problem is that a) you have to measure what people actually do not what they say, b) there's usually a complex set of circumstances that cause people to change their behavior, and c) the behavioral change often takes place long after the action that triggered the change.

That said, I agree the bigger problem at UA has been an unwillingness to seek data on this or consider the possibility that their strategy was wrong. But it's not just management. The quant jocks in IM don't want to admit that their algorithms are worthless if they don't have good long term data. And it's not just UA. Data driven decision making threatens the job every slick tongued MBA totting executive in the business.

Last edited by 5khours; Mar 26, 17 at 3:19 am
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Old Mar 26, 17, 2:25 am
  #216  
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Originally Posted by SF1K View Post
But shouldn't United then at least stop advertising CPU and possibly RPU as elite benefits? Or somehow openly say that upgrades may be sold to anyone before these are processed. Just seems like a little bit of "truth in advertising" issue? Or not?
Indeed.
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Old Mar 26, 17, 6:13 am
  #217  
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Originally Posted by sinoflyer View Post
The truth is, the airlines hardly notice that you're gone.
If that's the case, why did UA start a "surprise and delight" upgrade program last year? Why did they bump up the status one level for many MP members?

Originally Posted by spin88 View Post
The modeling is not difficult, but you would have to want to do it. Pick a random sample of elites current/former and ask them what their travel patterns are, and who they are flying, and what they think of each airline. If they answer you are flying them less, ask a series of detailed questions as to why.
This. My annual spend on UA has dropped by half from what it used to be. In this data-driven era, running that kind of search for customers like me shouldn't be difficult.
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Old Mar 26, 17, 6:32 am
  #218  
 
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You don't have to outrun the bear. You just have to outrun your hiking partner. Until the other airlines offer better routes, more convenient timing, and better overall fares, UA has little incentive to cater to us with CPU and other things that literally result in less immediate revenue.

Do we really know UA hasn't internally studied this issue and determined that, as others here have said, the $ lost from those of us throwing business at other carriers is not offset by the same thing happening on the other end?

I will fly DL and AA on other routes where I prefer the equipment and/or their reliability....but 80% of my business will always be UA based on my location and their network.
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Old Mar 26, 17, 7:01 am
  #219  
 
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Originally Posted by spin88 View Post
There are few consumer products where someone spends $10-20-30-50+K/year on multiple purchases and has multiple options on each purchase. Closest I can think of is Groceries. But it is not in any way of the same magnitude. In addition, Mileage programs have one other feature making the situation different, benefits go to the flyer, who is usually the person selecting the purchase, but often the person paying is their employer/company.

If United always offered the best combo of price, fight time, and product, then they would not need a mileage program. But, other than out of two fortress hubs (IAH and EWR) at any one time most people have multiple options. Before the advent of AA's program, people would buy each leg on whatever airlines, the idea behind AA's program was that by rewarding loyalty, people would still fly AA even when it was not absolutely the best combo of price/schedule/product. As a result AA would get more business, and particularly from business travelers who were not flying on "excursion" fares (as they were called back then).

To the extent that United cuts back its "benefits" well then with each purchase it gets easier to stray. Going somewhere, well Delta has a nicer aircraft and a slightly better time, discount F, so I buy. Oh well better experience, so I buy again and then I figure "oh, and they give upgrades, and if I get to DM I get lounge access. Well since United does not give upgrades, well then perhaps I ought to switch my travel to Delta and get those benefits....



The modeling is not difficult, but you would have to want to do it. Pick a random sample of elites current/former and ask them what their travel patterns are, and who they are flying, and what they think of each airline. If they answer you are flying them less, ask a series of detailed questions as to why.

I in fact got one of these detailed surveys (and got paid to take it) from Starwood the other day. I'm lifetime PLT, and my stays dropped last year, clearly they wanted to know why. It was well designed to look at (a) if they had actually lost business, (b) to whom, and (c) why.

Then you compare the former, and currents and determine how much they dropped in spending and why, and compare it to the new elites you got (and sample them too...).

Under Jeff United did not want to ask these type of questions, as they did not feel they needed to, they just KNEW that no-one would leave as they had to fly United.



The idea that there are lots of people paying high fares that just pick random airlines is contrary to everything the airlines have said for years. I posted the quotes above, all of the big US carriers have said that a massive part of their revenue comes from a relatively small number of frequent travelers. https://www.flyertalk.com/forum/28051886-post73.html

And while their are some companies that via corporate deals make picking another airline impossible, most don't. And my experience as a lawyer, with lots of domestic travel for many years, is that I nearly never run into someone who is not tied into a particular airline program. Some fly two airlines, but I can count on my hands the number who were truly agnostic.
Delta is happy to push paid first class even harder at the expense of elite benefits. And their product advantage is a slim as it's been the last 5 years. I view product as reliability, onboard, and lounge. All significantly improved at UA now.

Page 37

http://s1.q4cdn.com/231238688/files/...entation_F.pdf

First paid load: 57% vs 45% in 2013, target 70% in 2018
Comfort plus paid load: 36%, target 50% in 2018

Complimentary upgrades are a joke on both airlines for their heaviest fliers unless you're nonhub. Even then tends to be mostly short haul. DL just gave a big finger to BOS and WAS based elites, eliminating comp upgrades on the transcons.

As regard to extra legroom seats, UA is the clear winner here for top elites. No games of being 'upgraded' to extra legroom, much bigger footprint, so less likely to be in a middle, and free full run of the menu, not a pre-selected 'snack.'

Also, keep in mind the GS program.

Delta doesn't super-serve that subset of fliers the way UA does. The networks are different, and perhaps Delta felt it was concentrating too much risk into one small group of flyers.

GS + 1K coexisting was fine when UA was mostly trunk routes and limited domestic coverage.

Add in the CO network and not raising the $$ threshold much, it seems the curve to get into GS is easer than it was before the networks combined. As in, a lot easier to do all your spend on UA than in the past.

Was a better answer demoting more GS, increasing 1K requirements, and preserving some more long haul upgrade inventory?

Another question to ask is whether the Airbus fleet should become should become 12 - 16 seats in F with a reduced E+ cabin now that more of F is monetized.

Last edited by cerealmarketer; Mar 26, 17 at 7:07 am
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Old Mar 26, 17, 7:05 am
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Originally Posted by spin88 View Post

I in fact got one of these detailed surveys (and got paid to take it) from Starwood the other day. I'm lifetime PLT, and my stays dropped last year, clearly they wanted to know why. It was well designed to look at (a) if they had actually lost business, (b) to whom, and (c) why.
I was thinking exactly the same thing. Personally, after years of making Plat, I dropped to Silver. There must be dozens, if not hundreds, of FT users reporting they dropped an elite level or two (or more) in the past year. Seems odd to me that they aren't surveying some of those people to find out why they reduced their UA spend... and how they can earn it back.

If they were doing this type of survey, like the one you did for Starwood, someone (or lots of people) would have reported it here on FT.
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Old Mar 26, 17, 8:29 am
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Originally Posted by skgolf91 View Post
not defending United or anything but they are running a business and trying to make as much money as they can.. just like we all do!
I have owned my own businesses - yes I was good at making money - but I never undercut one product with another!

It is difficult enough to get status on UA with their "new Deltatized" mileage plan - but then to advertise complimentary upgrades to these loyal customers, while giving away (nominal amounts of $) First class just prior to boarding is tacky!!

It is very nice to walk into the airport knowing you have been upgraded to First - all the perks of FC are available to you - and no last minute decision about whether you have a meal or not!
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Old Mar 26, 17, 8:31 am
  #222  
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Originally Posted by cerealmarketer View Post

Complimentary upgrades are a joke on both airlines for their heaviest fliers unless you're nonhub.

Another question to ask is whether the Airbus fleet should become should become 12 - 16 seats in F with a reduced E+ cabin now that more of F is monetized.

UA flies hardly any non-hub routes, so why would it be "easier" if you're flying from a spoke into a hub rather than the other way?

Both airlines are pushing distance and fare-linked domestic F, and its at a price that may make a significant number of people buy it in advance. It seems like a more rational strategy than the "old school airline" way to pricing it super high.

I'm a sample size of 1, but I prefer a reliable and reasonable way to get into F rather than the lottery that even as a Plat I'd have trouble getting upgraded on even leisure routes.
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Old Mar 26, 17, 8:37 am
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Originally Posted by entropy View Post
UA flies hardly any non-hub routes, so why would it be "easier" if you're flying from a spoke into a hub rather than the other way?
It's not. However, it's substantially easier to get upgraded from a spoke to a hub or vv than hub-hub.
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Old Mar 26, 17, 8:40 am
  #224  
 
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Originally Posted by spin88 View Post
The idea that there are lots of people paying high fares that just pick random airlines is contrary to everything the airlines have said for years... all of the big US carriers have said that a massive part of their revenue comes from a relatively small number of frequent travelers. https://www.flyertalk.com/forum/28051886-post73.html
It’s foolish to base assumptions on companies’ public statements, especially when they pertain to revenues. They are deliberately broad-brushed and unspecific. For now, even if we take the two articles that you have cited at face value, there is some sloppy logic in concluding that “all of the big US carriers have said that a massive part of their revenue comes from a relatively small number of frequent travelers.” In actuality, AA and DL are suggesting quite the opposite:

1. Kirby stated: 50% of AA’s revenues came from 87% of customers, who only flew AA once (presumably a year). From that, the only logical inference is that the other 50% revenues came from pax who flew AA 2+ times. Unless that defines “frequent flyer,” 2 trips do not make an “elite,” neither do 3 or 4 trips. One theoretically needs at least 5 transcon roundtrips to qualify for the first elite level (AA Gold). By that threshold, the pax is well above the 90th percentile, perhaps even the 95th percentile as DL described (next).

2. DL stated that 5% of its customers account for 26% of its revenues. The statement actually reveals nothing about the pax’s elite status. Nevertheless, assuming that DL meant 5% to be PM and DM (although more likely it’s all elites from FO upwards), this implies that 95% of customers, the “kettles” who rarely if ever receive CPU or don’t qualify for it, generate 74% of revenues—still the bulk or overwhelming majority.

* * *
Suppose a hypothetical airline that, like AA, generates 50% revenues from once-a-year pax (87%), and like DL, gets 26% revenues from the 5% elites. This means 8% pax are making multiple trips but not enough to reach elite status. They also generate 24% revenues, roughly the same as elites. Even if all 5% elites behave in lockstep over CPU (which they don't; they're just as diverse as the traveling public in general), the hypothetical airline would be foolish not to monetize F and go after that 8% high end non-elite segment. The CPU-obsessed among the elites can be given their “binary choice.” If they leave, the airline will only have more revenues to reap.

In any event, the two readings cited above actually refute the assumption that “elites” generate most of the airlines’ revenues. They don’t; they’re just cream on top. The true bread and butter are the “kettles.” WN thrived on them. DL learned to do the same. And UA would be merely catching up.
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Old Mar 26, 17, 11:07 am
  #225  
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Originally Posted by cerealmarketer View Post
DL just gave a big finger to BOS and WAS based elites, eliminating comp upgrades on the transcons.
DL flies WAS-West Coast non stop? Since when?
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