zombietooth

I am a free agent as well but decided to fly paid F on all transcons this year for comfort and safety reasons, and UA has been consistently cheaper and more convenient than DL. AA is often competitive causing me to fly about 25K on them so far this year.

spartacusmcfly

Yes, UA can discount to fill seats, instead of reinstating PQM, to appeal to the fired free agents, but it's sub-optimal for three reasons:

1. Requires UA to constantly monitor competitor pricing and adjust accordingly. This hard as UA's revenue management system wasn't designed with that in mind.
2. It's tough to offer low fares and keep business customers from accessing those low fares. Saturday night stays, minimum trip length, etc. make things very complex to manage.
3. Using a PQM model, which awards upgrades, ultimately means travelers will buy W fares to use those upgrades. The lowest economy fare is 50% of the W fare...

So in summary, low fares and PQM both fill empty long-haul seats, but I think reinstating PQM does it more efficiently -- and profitably.

IAH-OIL-TRASH

I think those days are gone. Someone flying a lot of miles with UA (I've seen $99 coast to coast) is not necessarily a valuable customer. I think the carriers are going to stick to a more meaningful $ or $ and segment scheme. The only way I see mileage coming back is part of scheme to reward mileage that exceeds a certain revenue per seat-mile, but that probably wont happen. Now, it's either straight PQPs or (for 1K) a minimum 26 flights at average $346/segment (52 flights at same $ in normal times).

spartacusmcfly

Long term, I agree. Was simply suggesting PQM as a bridge until business travel returns.

Remember, the PQM model wasn't broken. The economy just got so red-hot that UA thought they could now be Ritz Carlton and discard the guests seeking a Marriott.

UA's ascension to the Ritz of the airline industry will be delayed -- so they need to adjust in the short term.

zombietooth

I honestly believe airline "loyalty" programs are dead-analysis of a "loyal" flyer's last 10-20 years of travel on a carrier is useless in today's environment and for the foreseeable future-this coming from a guy who is going to hit 3 MM on my next UA flight. UA no longer cares what I did for them in the past, only what revenue they can get from me in the future. The way to get money from me in the future is to have competitive premium cabin fares. Now, if UA wants to incentivize me, they can just give me a 5% rebate on all of my travel with them every year. Do that and they will get most of my business.

n8-the-gr8

Agreed. I would imagine there was always some hesitance in moving to revenue earlier due to a combination of systems limitations (miles per flight used to be much simpler than trying to track every non-tax and fee $ of revenue per ticket) and avoiding diluting loyalty purely to revenue in how they communicate with consumers through loyalty programs.

Once they made the jump to the new model and customers got used to it, there's really no reason to go backwards. Sure the actual goal posts need adjustment as the economy changes but overall you want loyalty to be about keeping your most profitable customers. Filling seats is necessary but is a wholly different exercise driven by sales and discounts, competitive pricing, etc. That segment of the market doesn't care about what carrier they fly (definitionally not loyal) so why would United spend money trying to retain them?

lincolnjkc

I wonder personally for selfish reasons if we might see some kind of multiplier based on fare class to incentivize high fare travel while keeping the thresholds low, for example a 25-50% bonus on PQD for Y B M J, etc. That would let United preserve the PQD metric although at a lower threshold for this year because I don't think anyone would tell you that travel will be back to justify a high number of 18,000 flyers and also incentivises those who fly short distances expensively over those who do a lot of long-distance flying cheaply

rankourabu

Yeah, I m with you all, I dont see PQM coming back
- if it did - it would be in combination with PQD - an extra hurdle, so how does that solve anything
- if it did - its long distance travel affected the most right now - PQM is not an incentive, cant just pop down to SIN.

I do see UA doubling down on OPM as their continued business model for status, reducing the ridiculous 2020 requirements, and eventually revisiting the situation mid 2021 with promos or further reductions/extensions if needed

bocastephen

With this point of view, I could see the following happen:

1. UA sells Mileage Plus to Chase or a third-party to manage RDMs for aspirational trips and upgrades - everyone is treated the same, except possibly extra perks for certain credit card holders.
2. UA walks away from Mileage Plus and those customers - sort of what happened with Air Canada and Aeroplan
3. UA retains GS status on an invite-only basis for certain customers
4. All Elite tiers are tossed out - no more Silver, Gold, 1K etc - going forward, you are "awarded" a certain tier category based on your paid fare and margin which is valid only for that trip. So, if you buy a $99 transcon, you're basically a nobody for that trip, while someone paying a H or B fare would be given priority check-in, security, seat selection and boarding. For *A purposes, you could have status with another carrier and receive proper *G recognition on an international trip operated by United, but for a domestic ticket wholly within the US, you get nothing except the benefits attached to your fare

As to your comment about rebates, depending on which routes/fares you fly, that is something that could negotiated with an agency, it doesn't need United to be involved. For example, if someone is flying Polaris on a regular basis, or domestic F flights regularly, we can arrange a rebate through our agency that bypasses United, but includes the flexibility of flying AA and sometimes DL.

IAH-OIL-TRASH

I really think the airlines have come to the conclusion that racking up a lot of flying miles on very little money is a reward in itself. They're not going to revert to rewarding that already rewarding behavior.

zombietooth

That is interesting to me. I used to (in the 80's and early 90's) deal exclusively with travel agents to take the hassle out of bookings. Once I became addicted to miles, I was always doing a lot of searching myself to find UG seats, routes that would earn more mileage, bargain fares, etc. I guess I've come full circle now-I want less hassle, don't care about miles, and am enticed by the prospects of a rebate for travel spend.

n8-the-gr8

They already do this though no? If all I care about is seat selection, boarding order, check-in, etc., I can buy all those things in today's world. So why wouldn't they want to keep a program on top of this that drives incremental revenue back to United vs. competitors? I value the IRROPS handling, redemption flexibility, and special treatment from status - the other freebies (seat selection, etc.) are great but if I didn't fly a lot I would just pay for them on any airline and take the flexibility to choose my carrier.

Loyalty programs will not be very compelling in the next year or so for the airlines because loyalty programs rely on business travelers to work. That is the bulk of their profitability. Without huge amounts of frequent flying from a subset of customers (I expect it to be moderate to little flying from most customers and somewhat frequent flying from a tiny tiny sliver of flyers next year still), the value prop of loyalty for most customers will be diminished as will the program value to United. That doesn't mean it's not justified long-term though. While airlines still have shrunken networks, direct flights and price will likely guide many purchasing decisions in the next 12 months. This can't be extrapolated to when things return to normal - it's just that a return to normal will take 3-4 years at least in terms of flying.

We shall see if the loyalty programs are maintained in current form in that intervening period or if they find a different target to optimize for but I can't imagine the thesis will be that they have no value for the long-term and should be scrapped.

bocastephen

That was just an expansion on the theory that United no longer values yesterday's spend, but is only focused on your spend today. If that is really true, perhaps in the discussions happening behind closed doors today, there is talk about completely detaching the concept of annual elite status in the context of an environment where OPM is not spent, business travel is cut by 75% for years to come, and air travel, or travel in general, becomes a discretionary leisure pastime, restricted to a subset of people who can prove they are disease-free. If the customer has changed completely, and this could drag on for years, what is the best way to approach what appears to be a dramatic, deep change, but one which could reverse somewhat 'x' years in the future?

glbltvlr

This is how many corporate contracts are structured. From UA's perspective, it allows them to collect the money in advance for up to a year before refunding it. They could even return it in the form of a future flight credit which costs them less and lets them keep the shrinkage.

mduell

https://united.business/passplus