AAExPlat

Someone smarter than me can calculate just how much money that cost UA. 100 basis points on their quarterly revenue. That is not an insignificant amount. But nobody will hold them responsible of course. They get their usual bonus and we get amenities and bennies cut further...

BearX220

From The Street: "In the Pacific, (Levy) said, United is seeing 'continuing lower demand out of China than we expected to see.' United has cancelled San Francisco-Hangzhou service effective Oct. 14."

I hope they have in-theater consumer research quantifying how much of this slump is linkable to scathing post-Dao publicity in Asia.

Gig103

I am personally thrilled that this "self-inflicted injury" occurred and hope the same happens to Delta and American because basic economy is a crap idea for the legacy carriers. The US3 should be taking a stand and saying "We might be $10 more than Spirit, but we're worth it."

The customers that fly LCCs more than once know what they're getting into or are getting fantastic deals that US3 still can't reach. Others fly an LCC and say "never again" because of the shoddy treatment and upcharges - now they go to United or AA and suddenly have the same purchase experience.

Intelligent corporations like Costco don't go for rock bottom, they aim for a balance of quality and price. For example, my Costco-booked UK vacation package cost the same as DIY, but included 1st class train tickets and 4* hotels (instead of my priced up 2nd class and 3*).

BThumme

With AA rolling it out now, and no indications from Delta that it's going anywhere soon, I can't help but feel it's just a small setback for UA, and only a matter of time before it comes back bigger and better (--> worse).

Can someone translate what 100 basis points means? Maybe not in terms of revenue but what it means for the company?

EWR764

More striking, to me, is that Southwest just revised its PRASM guidance upward for the quarter. Customers are clearly taking notice, and voting with their wallets.

But hey, United, that's no big deal, just stay the course and keep on diluting the product (see domestic F class cutbacks)...

spin88

it is about $90M per quarter in lost revenue. The number is ever more impactful since United actually did gain revenue from the price increase, it was just swamped by losing business. Some of that traffic is permanently gone, just like with past missteps.

United is doing really, really badly. Delta just lowered its PRASM guidence to +2-3% for 3Q. United's is now (3%) - (5%) http://ir.united.com/~/media/Files/U...e-sep-2017.pdf

If I back out the 150 basis points that UA claims is due to Harvey, I get a midpoint for UA of (2.5%) while Delta's midpoint is +2.5%. This suggests that United lost - compared to Delta's performance - $450M in revenue this quarter.


This comes on top of quarter after quarter of under-performance in revenue.

As someone who called this from the beginning (check out my early posts in the BE thread) I am not surprised. United just fundamentally does not understand the markets in which they operate, and believes they can run their business off a spreadsheet. Hunter Keay says they ought to monetize their elites, and they jump. A crazy BE rip off is the result.

And oh, confirmation that sure enough they have really damaged themselves in Chinese markets. Not a surprise.

Run a crappy, anti-consumer business, and people eventually catch on.

JHake10

Hey, Kirby, "we voted with our wallets". Take that BE nonsense somewhere else.

minnyfly

Now that AA has finally rolled out BE to nationwide coverage, the saga will continue. Should give UA a boost back as AA isn't an airline people can run to anymore. Further BE adjustments by all carriers would be expected. It will be really interesting to see 4th quarter financial numbers now that the legacies are on a relatively even domestic playing field for the first time in about 5 years.

ermintrude

It's my understanding that it's his baby. It's not going to go away unless he goes away.

It's complicated as the other legacy airlines have/are rolling out there own forms of BE. UAs BE IMO is the worst of the bunch and was rolled out utterly poorly.

Collierkr

I don't see many people standing in the Group 5 line at boarding. In fact most flights are void of those people completely.

3Cforme

Your thesis does nothing to explain why DL has been successful in five years of efforts with BE and UA is not. Delta's BE fares are plainly identified on delta.com, orbitz.com, expedia.com, and travelocity.com on the very first flight selection/price screen.

Darlox

Indeed! But only on competitive routes where options are apples-to-apples. UA's BE started popping up across the board, giving them the little "warning" icon where NONE existed before -- and, in fact, on routes not even served by LCCs.

I have no (well, fewer) problems with BE as a competitive tool. As a way to rake naive flyers over the coals, in the way UA did, however... nope.

spin88

And this is the key point. Delta has had a limited form of BE for several years. No way they were going to follow what a looser of an airline like United did. AA chose to go with a less extreme version of BE, and then roll it out slowly. United decided to stick a shiv into its elite fliers with a tax that hits those loyal to United the worst.

Delta has sat back and picked up some traffic, AS/VX and WN have benefited quite a bit, WN probably the most.

The entire thing has been a major disaster for United. While they have backed off the fares they offered BE on (rescinding the elite tax on mid-range priced flights and taking it off some competitive routes other than in the very lowest range fares, in effect matching what DL does) they still have the worst deal BE wise of any of the big three. United elites - and corporate travel departments - will take UA's extreme version of BE into account in deciding who they want to fly moving forward, so the damage is likely to continue.

aacharya

Actually, quite the contrary, lots of those boarding late are clutching those colored BPs. I imagine those in Group 5 have no reason to line up early anymore, so basing low uptake on gate lice is skewed.

spin88

You are buying the fake narrative that what UA has done is just like what Delta did. They are VERY different.

Delta only has had BE on some routes where it faced ULCC (mostly NK) competition, and then only in the very lowest fare bucket, and then BE as only a little bit (usually $10 o/w) cheaper. And if you buy a DL BE, you can still being on a roll-away, you still get FF status credit. Any DL elite flier loses access to C+/F upgrade shot. Non-elites don't really lose much at all since they may be unlikely to get a good seat anyway.

What Delta did impacted far fewer people, than then the impacts were not as major (or the price change) as great as the extreme form of BE UA rolled out.

As I have said many times, flying DL 350K+ miles in the last few years I have never, not once, been offered a BE by DL. United I was seeing them on every single flight I looked. Very different.