Possible new upgrade order

Discussion in 'United Airlines | MileagePlus' started by zabes, Feb 17, 2011.  |  Print Topic

  1. zabes
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    zabes Active Member

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    I spoke with a UA supervisor today about my IAH-LIM flight tomorrow that they seem to be selling upgrades on instead of upgrading people.... well that led her to tell me that she just got a memo about the new order in which upgrades were to be processed with revenue trumping status.... she said she did not have all the details, but she believed it might mean that a 2P on a $1,000 ticket would trump a 1K on a $700 ticket,or that it might just be fare class based.

    ie 2P on M ticket trumps 1K on W ticket.... I hope this is not the case and she said she didn't know all the details, but there was definitely going to be a change to how upgrades were handled
     
  2. Sean
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    Sean Gold Member

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    This is a surprise. For a long time United's been reported to be accepting upgrades for cash at the gate in from of people with waitlisted SWUs, but if they are switching to a Fare then status system instead of the status then fare system they have now, this would be big news.

    Lower tiers who travel infrequently on expensive tickets would certainly be better off, and almost no upside for 1Ks, only the possibility of now being skipped for upgrades by the lower tiers.
     
  3. CrazyMonkey
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    CrazyMonkey Silver Member

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    Hmmm....maybe, what UA might do is, people on full Y and B fares will go to the top of the list (filtered according to status within the Y and B fares), then all other economy fares would be done by status first, then fare basis within each of the status.
     
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  4. EWR764
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    EWR764 Silver Member

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    CO has done this for quite some time and I find it to be generally fair. If auto-upgrades are not available, I see no problem with upgrading a Silver on a Y fare over a Platinum on a G fare.

    Before long, revenue generation will be the primary driver of status.
     
  5. Revenue generation is the ONLY (legitimate) purpose of premium cabins, so all of this is perfectly sensible IMHO.
     
  6. Totally reasonable, and a smart move.
     
  7. From NYC
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    From NYC Gold Member

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    As a long-time CO flier, this has been the way for quite a while.
     
  8. Sean
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    Sean Gold Member

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    I don't agree. While this could be justified in some situations, in others I can't really see how United is better off.

    Using the IAD-LAX one way as an example.

    1k on M Fare = $609.70

    Premier on B Fare = $787.70

    With the 50% bonus that comes from the B fare the 2P can requalify with 4 roundtrips as
    (2,288 miles X 8 = 18,304x1. 5= 27,456 EQM)

    So total revenue for the 2P is 8 x $787.70 = $6,301.60.

    Meanwhile with no bonus for the M fare to achieve 1K the 1K would need to take 44 flights or 22 round trips.
    (44 x 2,288 = 100,672 EQM)

    So total revenue for the 1K is 44 x $609.70 = $26,826.80

    Clearly the 1K on an M fare is giving United much more revenue than the 2P on a B fare. How is it good business for United to give the 2P the upgrade first when the 1K could switch to AA and get their old upgrade priority back?
     
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  9. As is typical on these boards, there is confusion as to what is really important to a business. The "1K" above is less profitable to UA than the "2P", since the 2P is returning way more per mile than the 1K is. Flying a pax has costs to the airline. The 2P is covering them with a reasonable profit to the airline.

    Not to mention, you chose a city pair where the B and M fares are very close. Not to mention you assumed the 1K is on an M fare, the fare right below B. What about the 2P on a Y fare vs. the 1K on an S fare JFK-SYD, where the difference is in many thousands of Dollars?

    The "high mileage but low fare" people need to stop thinking they're valuable to the airline. It's a delusion.
     
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  10. Sean
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    Sean Gold Member

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    If UA's system was so obviously "wrong" it would have never been implemented in the first place.

    Even if the 2P is "returning way more per mile" to UA, I think UA as a "business" would be happier making $200 in profit from a 1k 44 times vs. making even a $500 profit from a 2P 8 times.

    The 2P would only be a more valuable passenger if the 1K would be displacing a higher revenue passenger by purchasing their ticket. Given that UA doesn't operate at 100% load factors very often, I don't see the benefit.

    The route I chose may be an extreme example, but it's my normal route and ticket prices are for this Saturday.
     
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  11. Geo
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    Geo Gold Member

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    I gotta fall on the disagree side too. I will hit 100k and $20k by the end of March. Zero EUA's because all my trips have been paid pointy end. On my one or two flights a quarter that I go cheapest possible, I'm now not going to qualify for any priority in EUA??? Sorry, but P Plat has already paid the high fares. That is where the revenue is, not the odd M or Y fare from the light traveler.

    Margin on a particular flight may be higher, but this is a business. It is short-sighted to look at a single flight margin.
     
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  12. Hannaman
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    Hannaman Silver Member

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    That's a ridiculous assertion. Both of those are good fares, and while the 2P represents a higher fare per mile, the 1K represents the better customer given the volume at that fare level. Now if the example had used a 1K on cheap G fares, I probably would have agreed with you.

    You can't assume that there are endless customers willing to pay the fares to fly (unless they're bottom-of-the-barrel type fares, and even then, that's not always the case). If you had a choice of which customer to keep, and you kept the 2P, how would you replace the $20,000 in revenue? And to replace that $20K in revenue, what would you have to spend to acquire those customers and how much inventory would need to be consumed in order to replace the $20K. If on average it's more than the rate at which the 1K was spending, then the 1K is clearly the better cusotmer.
     
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  13. Minnesota Bruin
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    Minnesota Bruin Silver Member

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    Hmmm... Is it clear that this only applies to Y and B fares? No concerns for a 2P on a S trumping a 1K on a T, right?
     
  14. Sean
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    Sean Gold Member

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    Nothing is clear at this point. This entire discussion is based on a conversation with a GA who may be either misunderstanding the rules or grossly misinformed. Because the flight the OP was discussing was IAH-LIM its entirely possible that the GA was talking about UFC vs. SWU priority.
     
  15. Hannaman
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    Hannaman Silver Member

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    This was also in IAH for a UA-operated flight on a CO route. It's possible they'll be using the CO upgrade scheme for this flight and this flight only until they standardize things.
     
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  16. 2lovelife
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    2lovelife Silver Member

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    I can't comment if it's fair or not.

    I will also not feed the obvious troll on this thread :confused:

    But, I guarantee it will affect future purchase behaviour!

    Money may not talk when it walks out the door... but it'll sure make a big thump if thousands of 1Ks drop their loads on the competition's doorstep.

    Let's wait to see if the rumour is true first.
     
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  17. Axey
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    Axey Silver Member

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    It'll be interesting to see if UACO uses the size of its program as a sort of liquid courage to make changes like this. My guess is a lot of airlines are itching to make changes like this, but won't due to competitive reasons. Like it or not (I personally don't), there is a strong business case for this move and it perfectly fits with the airlines' new view that "what have you done for me lately" is out the window and that "what are you doing for me the next time" is the new norm.
     
  18. jswong
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    jswong Gold Member

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    I can't see UA doing this but if they did I guess it would go on fare basis rather than revenue for that segment (which is quite a different thing). If they did it on revenue per segment I would be sunk

    Jeff
     
  19. Xyzzy
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    Xyzzy Gold Member

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    It s:eek:unds to me as if UA is becoming more like CO in this area...
     
  20. Mrs. Fredd
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    Mrs. Fredd Silver Member

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    Are they talking revenue or fare class? Using revenue would make for some ridiculous calculations, considering that any group of 100 people on any one plane would likely have a multitude of departure and destination points, miles flown, etc. I wonder where the SWU's and regionals would come in, given that so many upgrades are now clearing much later than in earlier years. I am beginning to wonder if status will be worth it at all.
     
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  21. Captain Oveur
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    Captain Oveur Gold Member

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    <thumbs up>
     
  22. zabes
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    zabes Active Member

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    Well it wasn't a GA, but a Supervisor in 1K Reservations, but again, that being said, she did say she received a memo that there was going to be a change, so anyone that calls Reservations ask them if they know about it.

    Going onto the question of who is more valuable, I'd say that the 1P buying higher fares can be one of UA's most valuable passengers, especially those business warriors.

    I'm a leisure 1K that flies 200,000 miles a year or so, so I may not give UA as much money, there is at least 1 difference in my situation, I fly with 3 to 6 people through out the year that are 1Ks, and they choose their airline based on me, so I become sort of a little business, so I control about 45,000-60,000$ in income to UA depending on which airline I fly.... and as I see myself sitting in Y way more often than I might on AA, I could consider leaving and taking that money with me, so that 2P that brings in $6,000 a year may cost UA 45,000+.
     
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  23. Xyzzy
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    Xyzzy Gold Member

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    it's fare class, n:)t revenue.
     
  24. carsonheim
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    carsonheim Gold Member

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    AAnother AAirline would welcome the business, I'm sure!
     
  25. Misplaced Texan
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    Misplaced Texan Gold Member

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    I can't imagine them doing it by straight revenue for all of the reasons above in terms of the complexity of the administration. Plus, unless they made the calculation even more complicated, straight revenue would create odd situations where someone with a domestic segment of a cheap international ticket could be "above" someone in full Y on just the short domestic segment. That would seem to defeat the business sense behind switching to fare first.

    If they were to re-order to UDU list, I would imagine that they would just change from status->fare basis to fare basis->status which would be much closer to a trivial programming change to the existing systems.

    Of course, one conversation with a GA and an alleged "memo" does not a policy change make.
     

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