bmwe92fan

It's not complex -- it's just capital versus expense -- the decisions to improve hard product take 5+ years to implement -- while soft product changes are short term and easy...

bluedemon211

To me it's basic financial accounting for Kirby. He'd spend $1,000,000 in CapEx before he spends $.05 on OpEx. That allows him to hype "The best airline adding planes, IFE, etc." while maintaining a robust Net Income where his (and other Exec's) bonuses are measured and paid.

Unimatrix One

I think this is the best description of the US airline industry I've ever seen. I remember that a certain airline consultant said several years ago that the US airlines have made a conscious business decision to get out of the customer service business and are now focused only on moving the largest number of bodies for the lowest possible cost.

Fortunately this philosophy doesn't seem to apply to many other countries, where airlines deliver the high quality that they advertise.

chleonard

Certainly not just limited to airlines. Every US business of any notable size runs this way now - cut costs and funnel the saved money to shareholders, and rely entirely on monopolies like captive hubs vs making your product competitive. The whole airline race to the bottom is bad here in Europe too, but not even remotely close to how bad it is in the US (and it doesn't affect premium cabins - AF Y is cheap and terrible, AF J is a whole other experience).

I only keep flying Polaris because there aren't a lot of good alternatives for the routes I need to fly, but considering switching to LH when possible. They aren't always that great either but they will definitely be ahead of UA once they get the new business seats in the next couple of years.

ijgordon

But they’re not - UA’s unit revenues were 6% lower than DL and—gasp—AA in 2022. They’re being penalized for something. Wouldn’t surprise me if in-flight soft product is a part of that. Are the costs lower by enough to offset this? Perhaps, but they’re not doing loyalty any favors.

HNLbasedFlyer

Yes, quite a penalty. UA had a higher net income than DL or AA Q4 2022 and the stock is near 52 week highs.

ijgordon

Not sure why you think Q4 absolute dollars of net income is even relevant, but if you want to insist on that metric, adjusted net income (excluding non-recurring & unusual charges/gains unrelated to operations) at UA was $811m, AA $827m, and DL $950m. DL the highest despite being the smallest of the three.

What *really* matters:?

• UA operating margin in 2022 of 5.5% significantly lower than DL's 7.8% (but higher than AA).
• UA PRASM in 2022 of $16.15, ~6% lower than DL's $17.24 and AA's $17.13. (Was ~5% lower than AA/DL in Q4'22)
• On the stock, UA stock trades at lower forward P/E and EV/EBITDA multiples than both DL and AA.
• And for kicks, full year 2022 adjusted net income of $831m for UA, well below DL's $2,053 (but higher than AA)

So yes, there's a penalty.

Sykes

None of which can be clearly attributed to the difference in soft product. How much narrower was the "penalty" when Polaris had a top-notch soft product that was competitive with Delta?

EWRFlyerAL

It's so bad. It was a factor in me moving a ton of flying to *A, Delta, and SkyTeam last year and not requalifying for GS.

jpezaris

Given the disappointing quality of the food I've had at the sit-down portion of the Polaris lounges, I'm not sure it's a good suggestion, either. Pre-pandemic, the food was at least respectable and on occasion, quite good. Now, I can get better grub at my local bar.

IAH-OIL-TRASH

Seems like Kirby thinks he can narrow the metrics w/ DL by cutting costs on food. I wonder if he thinks to himself, “They could have made even more if they cut catering costs - if I was at DL, the numbers would have been better.”

oposs54

Many travelers don't leave out of cities with Polaris clubs. Many United clubs suck for food and drink offerings. Most of time my connections in airports with Polaris lounges don't allow time to use them. Use to be loyal UA customer but not anymore. There is no loyalty back. It's about the $ to UA. That's fair, but they can't be upset when you see through their excuses and take your $ elsewhere. Giving up United branded high end Chase card as has little value to me. Polaris was started with a vision to compete with top European carriers. Competes now because the top European carriers are going downhill not because United has excelled. United satisfied with just being okay. My last Polaris flight about 6 months ago was just that. Nothing memorable. Did not compare favorably against my earlier TATL flight on Aer Lingus. These were mileage flights. Have upcoming trip to Middle East. This is a paid fare. UA not competitive on price and their overall product is not something to pay a premium for. I will not feel sorry for them when the market catches up and I believe it will. Been a loyal customer for 20+ years. Will continue to use them when it is the best option but not something I will seek out.

bocastephen

I think we need to remind ourselves that Flyertalk brings together a rather broad cross section of the typical United customer who is most certainly griping about the same topics that we are - either to themselves, their friends/family, their colleagues or directly to UA through other channels. I have clients who put United on their do-not-buy list specifically because they were outraged at the absolute crap they were served onboard with less than stellar service, and refuse to spend their money when they can get a better value elsewhere unless UA is at a significant price discount to another option, at least enough to make it worth their while, hence my comment in another thread about "save the $1,000 and buy yourself a nice meal to recover with after you land."

That is not a strong brand selling point unless you're Walmart.

Lux Flyer

I know Flyertalkers likes to think we somehow represent the "typical" United customer, but I don't think that could be farther then the truth. Flyertalkers are a very niche and generally more critical portion of the overall United customer population that seeks to take advantage of benefits the airline offers that the majority of passengers don't know or even care about based on their travel habits.

seanp7

This.

They'd rather keep things as they are (or slight improvements at a time and then market it accordingly - ala sundae cart), and argue the meals are semi-edible, you have PL and UA club options, else ask for snack from down the back, bring your own, etc etc. I don't think UA thinks too much about lost customers since their route map and seat are competitive, and if folks switch it might just be to a JV partner anyway. The grAAss isn't necessarily greener elsewhere...