Sometimes, you just have to wonder what the people in the C-suite are thinking. I know in theory the people running enormous companies like United Airlines are well educated, experienced and again in theory, competent. It’s just really hard to square that commonly held belief with the actions I have seen from United since it merged with Continental back in 2010.
I am no airline industry financial analyst, but it seems to me that the leisure travelers and those who always hop on the lowest fare come and go. The highest value customers for any airline are going to be the elites. This is for the simple reason that they are flying at a minimum 25,000 miles/year with a specific airline and or their alliance partners. Granted many are flying hundreds of thousands of miles/year, but even the lowly silver elite racking up 25,000 EQM’s/year is doing a good deal more flying than your average passenger.
It logically follows that if these elites are your core customers and the ones that bring you steady and fairly substantial streams of revenue, it would be in your best interest to keep them happy, keep them loyal and keep them from defecting to another airline/alliance.
This is where my assumption about the competence of our corporate overlords is called into question. Since the merger, Jeff Smisek and United have gone out of their way to kick sand in the eyes of their elites.
I think any heavy United flier will agree that every aspect of the flight experience from the booking process to catering to dealing with IRROPS, hell even down to the ratty blankets we now get on domestic flights (if you’re lucky enough to be in First and get a blanket at all) has gone way downhill. This is strike number one. The merger of United and Continental to form the world largest airline could have been a move towards a giant, global prestige flag carrier, the likes of which the U.S. hasn’t had since the days of Pan Am. Instead, it’s been a race to the bottom to see how close a full service carrier can come to operating like a LCC while still charging full service prices.
I could go on for pages about the problems at United, which are legion, but for the sake of brevity, I will only hit a few more of the major gripes.
TOD upgrades. UA elites know what I’m talking about here. A policy was put into place that elite members were given unlimited domestic upgrades from coach to first on domestic flights when space was available. This meant high level elites stood a pretty good chance of clearing a good % of their upgrades, a sort of thank you from the airline for flying 75,000 or 100,000 miles each year. Then United started selling day of departure tens of dollar upgrades at check-in. These are available to all travelers, and in fact are often priced lower for non-elites than for loyal elite members. Officially United claims they don’t sell TOD upgrades until all eligible elites have cleared into upgrade available seats, but in practice this isn’t the case. You can say elites should not act entitled to those seats, but United has told them they ARE entitled to those seats, and then it sells them out from under them. This lack of transparency is one of the more troubling things about the current situation at United and is a classic case of shortsighted mismanagement. Sure, you will see a modest initial bump as a few yokels throw in an extra $40 for a first class upgrade, but in the long term, you are going to have high value customers who are flying 50+ times a year on United leaving your airline for greener pastures.
PQD. United decided that just flying 100,000 a year with them wasn’t enough. Now if one wants to earn top tier status, the bifurcated qualification system is 100,000 miles flown and $10,000 spent every year. Mind you this isn’t 100,000 miles flown on United and all partner airlines (as it is now), or $10,000 flown on Star Alliance carriers, the miles flown and $’s spent only count if the flights are on UA metal, or on UA issued tickets with UA flight #’s operated by partners. This essentially removes the ability to pick and choose what airline within Star Alliance to fly with and often times forces more indirect routing if the flight have to have a UA flight # and you need to go somewhere UA doesn’t fly. This is a huge blow for a number of reasons. First, United, like most domestic carriers is garbage. If I am going to pay $3,000+ for a business class ticket, I would like to fly on a foreign carrier that remembers that service is more than a safety demonstration and a gruff grunt when wheeling the drink cart past. When Star Alliance was formed, the ideal was for cooperation between the carriers, so that it might feel like one global airline with many component members. United is clearly drawing back and trying to keep all of their fliers captive and on their planes…perhaps they don’t want us to see how the other half lives. The other dangerous part of this is that since United is keeping it’s elites captive, it can essential set prices wherever it wants. Many people will stick by United, and this will allow them to creep prices upwards until they find the exact price of loyalty, the tipping point at which jacked up rates cancel out the desire for status and instead push people away from the airline. This coupled with the already inflated fares they are able to charge business people who require close in bookings, or those whose companies have corporate contracts with the airline means two things for the average flier, and neither of them are good. Higher prices, and a lower level of service, because hey…what are you going to do about it?
The milespocalypse. The PQD announcement was a fairly large blow and started a wave of defections to other airlines, although to be fair, Delta had already implemented a revenue component into their elite structure as well. However, there was still value in United.
Redeeming airline miles for premium cabin award flights is one of the best value propositions out there. You can earn miles through credit card spending, signup bonuses, flying and a host of other ways. These miles can then be cashed in for flights that would otherwise have cost 10′s of thousands of dollars. United had one of the most favorable award charts in the business and perhaps THE most lax routing rules as well. For example one could fly roundtrip to Europe from anywhere in North America in business class for 100,000 miles. This might cost $5-$50 in taxes and the routing allowed for a stopover, a destination and two open jaws. Additionally, all international connections under 24 hours counted as connections not stopovers.
Just to explicate what that means, the following would have been a permissible business class routing. New York to Toronto on Air Canada with an overnight stop in Toronto. The next evening Toronto to Paris on Air Canada Business. A stopover of any length of time you would like in Paris followed by a flight from Paris to Munich in Lufthansa business class (overnight sub-24 hour stop optional), Munich to Istanbul on Lufthansa or Turkish (sub-24 overnight stop optional) then Istanbul to Tbilisi, Georgia on Turkish, with a stop in Tbilisi (your destination) for as long as you like. Utilizing the first open jaw, you could buy a ticket with $ from Tbilisi to anywhere in Europe, for this example, let’s say you chose to fly to Cyprus. Whenever it’s time to go home, you could get on a plane in Cyprus, connect to Athens, perhaps from there to Zurich and then get on a Swiss Air business class flight to Los Angeles and finish your trip there. The possibilities were endless. Then came the 2/1/14 announcement.
United effectively terror bombed the MileagePlus program. The new award chart slated to go into effect 2/1/14 introduces another two tiered system and a further rift between United and the Star Alliance. The new United chart has different prices for awards flown wholly on United metal, and those awards flown with partners. Across the board, the redemption rates for economy awards went up only a modest amount and on some routes remained the same. This is because redeeming miles for coach tickets isn’t as a good a return on your miles and is cheaper for United.
Rates on United only awards went up a modest 15% or so for premium cabins, but the Star Alliance chart is a bloodbath. Business class awards have gone up 20-40% across the board and first class redemptions have gone up a staggering 40-80%. Since many fliers hold on to their miles until they can redeem for first class tickets, as this is the best value proposition, their miles have effectively been halved in value. With the old award chart a roundtrip first class award from anywhere in North America to anywhere in Southern Asia was 140,000 miles + fees. Under the new award chart, such a trip will now be 120,000 miles EACH WAY. As an added bonus, they have added an ambiguous kicker that “some” roundtrips will not be eligible for stopovers, so while you will now pay MUCH more for your trip, the routing rules will be significantly tightened so that you get much less for those miles.
This final nail in United’s coffin has made their loyalty program utterly useless. The airline has slowly eroded anything that might keep elites happy. First the quality of the little things began to go, then they started messing with the upgrade system. Next United effectively removed the option to travel on partners and then finally they dismantled the award redemption program. There’s nothing left for me, or most UA elites here now. Just the emptied out husk of what could have been a great airline. They’re a few quarters from becoming Southwest with widebody aircraft, and I don’t think I need to stick around for the death rattle. Goodbye United, I have decided to (and it pains me to even type this, because I HATE this airline) to jump ship to American. They have old, dirty planes and surly crew, but at least they treat their elites well, they have a quality partner network in OneWorld, and their award chart is better even than the pre 2/1/14 UA chart, even if it won’t allow me the ridiculous and complicated routings I enjoy so much over the past few years. Such is the state of American aviation. While I am kicking United to the curb, and the airline is seemingly a case study in how to alienate your most profitable customers and hurt the bottom line, I have to thank them for the past few years. If not for UA awards and absurd routings like New York-San Francisco-Hong Kong-Bangkok-Phuket, Bangkok-Bali-Singapore-Munich-Moscow-Houston-New York, I would have seen much less of the world, and I would be a lousier person for it…so thank you, and goodbye.