UA Bare Fares [Merged threads]

 

Old Dec 12, 06, 4:33 pm
  #1  
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UA Bare Fares [Merged threads]

From the Investor's Day Presentation, page 43
http://library.corporate-ir.net/libr...esentation.pdf

Fare Unbundling And Value-Added
Product Features Provide Significant
Revenue Opportunities

“Bare Fare” Concept
– Basic promotional fare where non-elite customers
have the option to purchase seat assignments,
checked bags, Mileage Plus credit, etc.
Fare Flexibility
– Customers on restricted fares can purchase flight
change flexibility for a nominal fee
or a nominal fee
The entire talk can be listened to at http://phx.corporate-ir.net/phoenix....Id=1424020&dc=

Last edited by gfowler-ord-1k; Dec 12, 06 at 5:43 pm
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Old Dec 12, 06, 4:48 pm
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http://www.denverpost.com/business/ci_4826081#top
United is considering selling tickets that would offer customers a bare minimum for air transportation that would not include in the price the ability to check bags, get frequent fliers and assigned seats. The "bare fare concept" would feature a basic promotional fare and the option to buy seat assignements, the ability to check bags and get a frequent flier mile credit.
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Old Dec 12, 06, 5:23 pm
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Wonderful. BD Tiny fares gone wild.

Maybe UA would make some money on it but on a selfish basis I would really dislike it if my corporate travel agent booked this type of fare for me.
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Old Dec 12, 06, 5:27 pm
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Sounds like they are copying AC: http://www.flyertalk.com/forum/showthread.php?t=617847
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Old Dec 12, 06, 5:29 pm
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Sounds interesting. A few days ago I booked a flight from SJC to ONT on Southwest, for about half the price that the UA flight from SFO would have cost me (around $100 vs $200, IIRC). Sure, no E+, no priority premier boarding, and a slightly longer trip to the airport, but for $200 savings (two pax) I'll live with that. I generally end the year just a few thousand miles above the 25,000 mile Premier cut-off, so collecting 500 miles to ONT really doesn't matter to me.

My concern, though, is that they aren't actually reducing the current lowest fares (very much), but rather just strip out some of the benefits that are available today.
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Old Dec 12, 06, 5:56 pm
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Now imagine this. Bare fares are offered at 75% of current lowest fares. Corporate travel services insist that they be booked to save on travel budgets. (you know many will) More flyers move to UA, but yields are low. To compete, all the major airlines adopt bare fares. Now how does an airline try to build loyalty. FF programs are ineffective for many flyers since they are forced to fly on bare fares. Since all major carrieres offer bare fares and competition makes those fares roughly equal, flyers might as well buy the most convenient flight rather than one that keeps them on a preferred carrier. To get them back, the airlines reintroduce FF miles for bare fare flights. Now they have both poor yields and FF obligations. Seems like a bad long term bet to me.
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Old Dec 12, 06, 6:22 pm
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The concept isnt to lower fares. The concept is to increase revenue on perishable seats. Hopefully filling them with LCC competition dollars (customers) and getting those folks to come back again because they like the service. Hopefully as regular fare customers that want to get MP perks.
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Old Dec 12, 06, 6:32 pm
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this sounds like a good idea for short haul flights or the TED market not that flights are not chick-a-block full already
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Old Dec 12, 06, 6:34 pm
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Interesting concept and I do remember reading about AC doing this; but would UA reduce the lowest fares or strip these benefits from the current lowest fares?
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Old Dec 12, 06, 6:38 pm
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Originally Posted by rwill11 View Post
The concept isnt to lower fares. The concept is to increase revenue on perishable seats. Hopefully filling them with LCC competition dollars (customers) and getting those folks to come back again because they like the service. Hopefully as regular fare customers that want to get MP perks.
As I mentioned in another thread, the problem is that these fares are offering less benefits than LCCs do -- like free checked baggage and free changes.

So these fares are going to have to be more than a few dollars below the comparable LCC fares in order to attract any buyers.

Not sure what you mean about "the service" -- LCCs provide comparable (some would argue better) service compared to UA's coach product. Also, I'm not sure we want to start encouraging people to carry-on even more and larger bags by offering lower fares if they don't check any bags.

I think this idea is interesting, but again, the fares are going to have to be nontrivially less than the comparable LCC fares.

This model has worked well for Ryanair, which charges for everything above and beyond transport from point A to point B. But Ryanair charges less than their LCC competition like easyJet.
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Old Dec 12, 06, 6:39 pm
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As much as I dislike the idea of no miles for these "bare" fares... I do believe that the airlines are in need of approaching sales of their tickets with more creative options. We all know of WN and other LCC's approach that stands different from legacy carriers, which has been successful for some of them. Perhaps this will help.

Regardless, to not getting the miles.
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Old Dec 12, 06, 6:43 pm
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Judging from this mini-piece of information provided, I have a feeling that this 'bare fare' is aimed at catering to customers who are only price driven. It could start with a super cheap fare. Then, you pay x extra dollars if you want to get miles for your flight/getting a seat assignment/check luggage. As I was saying in the other thread, I hope the wording "non elite" will mean minimal impact on us. Maybe all these fees will be waived for elites.
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Old Dec 12, 06, 6:51 pm
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Originally Posted by UALboy View Post
Judging from this mini-piece of information provided, I have a feeling that this 'bare fare' is aimed at catering to customers who are only price driven. It could start with a super cheap fare. Then, you pay x extra dollars if you want to get miles for your flight/getting a seat assignment/check luggage. As I was saying in the other thread, I hope the wording "non elite" will mean minimal impact on us. Maybe all these fees will be waived for elites.
From what I heard today, I dont think it will effect us at all. But those last few middle seats in the way-back of the bus may get sold. Also some people would be happy to fly say sfo-lax with no frills for 1/2 the normal price, who cares where ya sit its 400 miles and a lot less hassle than driving
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Old Dec 12, 06, 9:34 pm
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What UA offers over the LCCs (and, according to surveys in the presentation, the #1 reason why customers choose United) is frequency. From Chicago, at least, flights darn near anytime, anywhere.

I posted over in the investor conference thread:

AC has four fare classes:
http://www.aircanada.com/shared/en/a...faretypes.html

The lowest of the low (Tango with all discounts) lacks standby, refunds, and any changes; earns no EQM, only 50% RDM, and 33% of online booking bonus miles; and adds fees for sports equipment, call center or airport service, changes, same day changes, onboard food, seat selection, and checked bags. (Higher fare classes don't pay those fees, and get lounge access, etc.)

Compared to that product, at least the LCCs allow checked baggage, customer service calls, and standby seating.

Last edited by paytonc; Dec 13, 06 at 3:00 am Reason: eqm/rdm mixup
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Old Dec 12, 06, 10:52 pm
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Originally Posted by paytonc View Post
The lowest of the low (Tango with all discounts) lacks standby, refunds, and any changes; earns no miles, only 50% EQM, and 33% of online booking bonus miles; and adds fees for sports equipment, call center or airport service, changes, same day changes, onboard food, seat selection, and checked bags. (Higher fare classes don't pay those fees, and get lounge access, etc.)

Compared to that product, at least the LCCs allow checked baggage, customer service calls, and standby seating.
AC Tange earn 0 EQM and 50% RDM, not the other way around.

I don't like AC... none of it... I hope UA doesn't start introducing fares that will affect the way your earn EQM/RDM like AC.
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