Dutta's "Plan"
Jul 24, 2002, 9:52 pm
#31
Join Date: Dec 2001
Posts: 5,748
Re: Loyalty. The biggest problem with airlines is the commodization of services as well as the FF program. But there is still loyalty whenever there is significant differentiation and that is the key. CO domestic flyers, for example, would never switch as long as they keep getting unlimited FC upgrades. Starwood fans will never switch as long as Starwood keeps making awards availabe with no blackout dates and redeeming points easier that is very different from other programs. The only challenge is to leverage such differentiation into generating revenue.
Southwest and JetBlue also thrive in an environment where they provide significant differentiation that captures a niche. If enough airlines start doing the same thing then they lose their advantage.
The solution for UA or any major airline is to create differentiation whether it be routes, upgrades, customer service or whatever. For each such differentiation they will gather a loyal following. I don't see anyone doing this in a focused way. There appears to be a herd mentality amongst all the airlines that creates very little differentiation.
If I were in Dutta's shoes I would be looking very hard at what assets of UA would allow it to be positioned to create a differentiation from other airlines and build it up very strongly. If there aren't any such assets then I would identify what I could acquire to create the differentiation.
Southwest and JetBlue also thrive in an environment where they provide significant differentiation that captures a niche. If enough airlines start doing the same thing then they lose their advantage.
The solution for UA or any major airline is to create differentiation whether it be routes, upgrades, customer service or whatever. For each such differentiation they will gather a loyal following. I don't see anyone doing this in a focused way. There appears to be a herd mentality amongst all the airlines that creates very little differentiation.
If I were in Dutta's shoes I would be looking very hard at what assets of UA would allow it to be positioned to create a differentiation from other airlines and build it up very strongly. If there aren't any such assets then I would identify what I could acquire to create the differentiation.
Jul 24, 2002, 10:51 pm
#32
FlyerTalk Evangelist
Join Date: May 1998
Location: Texas, U.S.A.
Posts: 19,523
Intrepid, I invite you to think about who the audience for this was.
In all fairness to Dutta, this was a financial conference call, put together strictly for the number crunchers, stock analysts, and financial reporters. These things at almost all companies I've experienced, rarely focus on the nuts and bolts of the product. You'd hardly ever hear someone say, "We're rewarding our most loyal flyers with 6 Systemwides a year" or even talk about the United Committment.
They rarely even mention advertising or marketing!
Why not? Because those things cost money. And that "audience" rarely wants to hear that tune!
I know United has customer inititives in the works and generally cares very much about their customers and employees.
It's (this conference call) just not the place I would expect to hear such things. So I wasn't surprised or disappointed at all. The average John Q. Public didn't even know or care this was going on. IMHO.
In all fairness to Dutta, this was a financial conference call, put together strictly for the number crunchers, stock analysts, and financial reporters. These things at almost all companies I've experienced, rarely focus on the nuts and bolts of the product. You'd hardly ever hear someone say, "We're rewarding our most loyal flyers with 6 Systemwides a year" or even talk about the United Committment.
They rarely even mention advertising or marketing!
Why not? Because those things cost money. And that "audience" rarely wants to hear that tune!
I know United has customer inititives in the works and generally cares very much about their customers and employees.
It's (this conference call) just not the place I would expect to hear such things. So I wasn't surprised or disappointed at all. The average John Q. Public didn't even know or care this was going on. IMHO.
Jul 25, 2002, 12:28 am
#33
Guest
Posts: n/a
I certainly know of no plans or rumors to confirm or deny what I'm about to say, and I want to emphasize this is MY opinion only.
I can't imagine you will see a large dilution of current MP benefits. I can't see us not offering a mileage program that isin't competetive, and in line, with what other carriers of our stature offer. (ie AA, DL, NW) I see two possibilities. Adding another status level after 1K, perhaps based on addl miles/segments flown, or perhaps even mileage/revenue pieced together in some fashion. I also think that someone who flies 4 FUA transcons or intl trips, generating $10,000.00-$15,000 in revenue should be recognized in some fashion. Perhaps a different status level alltogether is in line for these folks. For a 1k running 50 roundtrips a year on 300.00 fares generates the same 15,000.00 in revenue, at much less of a cost for UA I might add. Please don't mi-interpet me as saying those 1K's aren't important. They are. But I think it's also a good business decision to recognize that other segment of travelers as well.
Now I realize those above numbers can be played with in any way to make or break this position, and I don't know what formula the company would ever use in trying something of this nature, but I think it is certainly coming.
Intrepid. I know you hate RJ's, and, for what it's worth so do I. Being furloghed out of my station, I now must use them to see family, and I agree with all of your points about the aircraft itself, as well as the level of customer service offered by UAX (ACA mostly). With that being said, they are not going to go away, and if anything, you are going to see more and more of them. That is a simple fact. I think this applies to all airlines with the exception of WN. As long as a company like ACA doesn't unionize, pays what they do for their "customer service" department, and generally cuts corners where possible, they will have a large cost advantage over any major. That being said, once that cost advantage disappears, so will the large RJ expansion. I have it on authority that IAM is pushing hard to get into ACA, and that ACA execs are rather white knuckeled at the notion. It will be interesting to see what happens on that front.
edited for thinking faster then I can type
[This message has been edited by GGpillow (edited 07-25-2002).]
I can't imagine you will see a large dilution of current MP benefits. I can't see us not offering a mileage program that isin't competetive, and in line, with what other carriers of our stature offer. (ie AA, DL, NW) I see two possibilities. Adding another status level after 1K, perhaps based on addl miles/segments flown, or perhaps even mileage/revenue pieced together in some fashion. I also think that someone who flies 4 FUA transcons or intl trips, generating $10,000.00-$15,000 in revenue should be recognized in some fashion. Perhaps a different status level alltogether is in line for these folks. For a 1k running 50 roundtrips a year on 300.00 fares generates the same 15,000.00 in revenue, at much less of a cost for UA I might add. Please don't mi-interpet me as saying those 1K's aren't important. They are. But I think it's also a good business decision to recognize that other segment of travelers as well.
Now I realize those above numbers can be played with in any way to make or break this position, and I don't know what formula the company would ever use in trying something of this nature, but I think it is certainly coming.
Intrepid. I know you hate RJ's, and, for what it's worth so do I. Being furloghed out of my station, I now must use them to see family, and I agree with all of your points about the aircraft itself, as well as the level of customer service offered by UAX (ACA mostly). With that being said, they are not going to go away, and if anything, you are going to see more and more of them. That is a simple fact. I think this applies to all airlines with the exception of WN. As long as a company like ACA doesn't unionize, pays what they do for their "customer service" department, and generally cuts corners where possible, they will have a large cost advantage over any major. That being said, once that cost advantage disappears, so will the large RJ expansion. I have it on authority that IAM is pushing hard to get into ACA, and that ACA execs are rather white knuckeled at the notion. It will be interesting to see what happens on that front.
edited for thinking faster then I can type
[This message has been edited by GGpillow (edited 07-25-2002).]
Jul 25, 2002, 5:07 am
#34
Join Date: Jan 2002
Location: ORD, MBS
Programs: UA Plat., 1.52 MM
Posts: 2,053
PremEx:
I hold your opinions with esteem. You have airlines travel experience that doesn't match mine.
GRANTED.
Now,
- UA has great and mostly modern equipment.
- UA has employees who as individuals are dedicated workers (not as Unions, mind you).
- UA has good routes, hubs and gates
What UA lacks is leadership by an agent of change. A LEADER whom the employees/owners will look up to as a visionary and will unify them to follow behind him.
Beancounters are at the lowest rung of social esteem these days. They excel at leading corporations to bankruptcy courts.
UAL will get more inspirational leadership from Archbishop Desmond Tutu than from Ronnie Dutta.
[This message has been edited by Intrepid (edited 07-25-2002).]
I hold your opinions with esteem. You have airlines travel experience that doesn't match mine.
GRANTED.
Now,
- UA has great and mostly modern equipment.
- UA has employees who as individuals are dedicated workers (not as Unions, mind you).
- UA has good routes, hubs and gates
What UA lacks is leadership by an agent of change. A LEADER whom the employees/owners will look up to as a visionary and will unify them to follow behind him.
Beancounters are at the lowest rung of social esteem these days. They excel at leading corporations to bankruptcy courts.
UAL will get more inspirational leadership from Archbishop Desmond Tutu than from Ronnie Dutta.
[This message has been edited by Intrepid (edited 07-25-2002).]
Jul 25, 2002, 1:11 pm
#35
FlyerTalk Evangelist
Join Date: May 1998
Location: Texas, U.S.A.
Posts: 19,523
Intrepid, I agree with you about leadership. My comments were only regarding this specific financial conference call.
There are many other channels of communications that we are not always aware of (including personal interaction) that would be better sources of communicating leadership.
I'm just saying I would never judge the leadership qualities of anyone from one of these boring dry financial chats.
Let me give you an example. Disney was a very dynamic, exciting place to be associated with. And we had great leadership. But if you sat in on one of these conference calls with the Wall Street chaps, you left the room wanting to put a gun to your head. Talk about yawners!
The pep talks and the exiciting stuff comes via other avenues.
There are many other channels of communications that we are not always aware of (including personal interaction) that would be better sources of communicating leadership.
I'm just saying I would never judge the leadership qualities of anyone from one of these boring dry financial chats.
Let me give you an example. Disney was a very dynamic, exciting place to be associated with. And we had great leadership. But if you sat in on one of these conference calls with the Wall Street chaps, you left the room wanting to put a gun to your head. Talk about yawners!
The pep talks and the exiciting stuff comes via other avenues.
Jul 27, 2002, 7:47 am
#36
Join Date: Jan 2002
Location: ORD, MBS
Programs: UA Plat., 1.52 MM
Posts: 2,053
According to this report:
http://www.washingtonpost.com/wp-dyn...2002Jul26.html
UA is still flush with cash ("some already tapped") and is not deemed eligible for the federal loan guaranty.
So, cheer-up troops the skies are still friendly, although flying leaderless.
[This message has been edited by Intrepid (edited 07-27-2002).]
http://www.washingtonpost.com/wp-dyn...2002Jul26.html
UA is still flush with cash ("some already tapped") and is not deemed eligible for the federal loan guaranty.
So, cheer-up troops the skies are still friendly, although flying leaderless.
[This message has been edited by Intrepid (edited 07-27-2002).]