Randy Petersen's Opening Remarks – September, 25 2009

Randy Petersen's Opening Remarks – September, 25 2009

King Kong

As we enter the countdown to the end of 2009, it will certainly go down as a year to remember for this industry for any number of reasons. Primarily, that despite predictions that United was going to fail, they seem to be on the cusp of accomplishing what formerly was considered the impossible. By being the main whisperer behind the decision of Continental to join the Star Alliance, and bringing closer an airline that they once tangled with for consolidation, they very likely have done more in 2009 to steady their future than any airline going–other than Delta with its WorldPerks acquisition.

But, it is the marketing moves United has made in recent months that is really setting this airline apart. No other airline in the world can match the precision with which United and more appropriately, Mileage Plus, has executed a plan which defines ancillary revenue as a model for the loyalty industry. Charging for benefits once included in the price of loyalty is not new, but the extent to which Mileage Plus has expanded the boundaries and the feedback from their existing member base is something new. Now, this observation doesn’t mean I personally approve of this (more on that later) but I might have thought that Mileage Plus would have been content with its recent introduction of three new credit cards, all of which feature newly minted opportunities for Mileage Plus members to thinly slice out the part of the travel experience they want from United.

United’s latest move consists of offering these same travel experiences without the tie-in with a credit card. Aptly called Premier Travel and Premier Travel Plus, it can easily be referred to as Premier Solo, because the benefits are wrapped into a single trip, not the annual membership that a real frequent flyer Premier elite level offers. Here’s a sample of these bundled benefits: Premier Travel offers extra legroom with Economy Plus seating, early boarding with seating group 1, priority security line access at selected airports (who needs the Clear program anyway?), Premier check-in line access, bonus miles equal to 25 percent of your flight miles, first two standard checked bags free. Premier Travel Plus offers all the preceding benefits, plus Red Carpet Club lounge access at airports located in the U.S. and bonus miles equal to 100 percent of your flight miles. All these single trip benefits start at $47, one way.

There is something unusual about all this. Usually, we’d see a “Premier pushback” and a mild outrage about sharing Premier benefits with outsiders. But strange as this may be, I surfed around the Web looking in on the early comments from Premier members about these new options and was stunned at the overall general acceptance of these changes. Not that I think that Al Gore’s Internet is laden with keyboards with pitchforks, but in the past, products such as this would have surely raised the NIMBY rule. Here are just a few of the comments that I read:

“At some point we have to recognize that United needs revenue to stay in business, and that doing so may be at odds with our desire to have half a cabin to ourselves and a quick stroll through a metal detector without waiting in line first.”

“We also have to recognize that United doesn’t configure a 757 or 320 differently for different markets, and that there will be routes that are elite heavy and fill E+ while others will have a full dungeon and relatively-empty E+. It makes sense for United to more aggressively market E+ and various other amenities for those areas lighter in elite traffic.”

“Thank god this won’t dilute the upgrade waitlist.”

“I personally don’t think it will be very popular–except maybe for people who have two large suitcases and were going to have to pay out the @$$ anyway.”

And United seems to have thought this out well in advance. An explanation to overburdening the existing benefits to Premier members gets this response: “To maintain the value of your Premier experience and ensure shorter wait times we limit the number of sales for the Premier Line offer based on hourly capacity at the airport. There may even be peak times when we do not offer the sale of Premier Line to non-Premiers.”

Count me in as a traditionalist, but my only beef with this is that it tends to downgrade the absolute title of being a Premier. I wish there was some other way they could identify these travel benefits other than referring to them as they do as “Premier.” The average person buying these benefits is likely to not know the history and honor of being a high-flyer with United, but they will share the “Premier” moniker along with the others who have well-worn cards in their wallets. In the future, when someone touts being a Premier member, I just won’t be able to help wondering if you are a stick-man Premier or the real thing.

Bottom line: Mileage Plus is finding ways to change the footprint of this industry for many years to come and the footprint is the size of King Kong.

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