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Discussion in 'United Airlines | MileagePlus' started by meFIRST, Jun 9, 2014.
I'm sure everyone has read the WSJ article. Discuss.
Bet the consultancy agreement included GS status/access for everyone working on the account
Nice to know that the hublet was "a losing operation"
What will these consultants focus on, the customers or the internals? Will the companies have the brass ones to tell UA if it is indeed UA's own policies that hinder things? Will there really be any surprises outside of what we all know already?
These consultancy hirings and the regular blame game that comes out in articles and conference calls are tangible things that tell me the Continental folks bit off more than they can chew.
They probably have it without needing a comp.
The travel policy for McK is < 4 hours, refundable economy, > 4 hours, Business. Every 2 weeks away from the road they get a ticket to home or fly significant other to project location. Significant discounts / fast track elite matching program.. The employees are free to choose which airline best suits there needs / schedule, most actually fly Delta and American, because of the wifi and work on the plane . I don't work for McK but as a consultant myself, in another industry, I aware of their practices, which is very high end, being a top tier firm.
Giving the consultants a comp to GS is actually not good policy, they won't see how the regular travelers i.e 1K and lower travel travel and interact with United. Most travellers = Thats no customer service help and kiosk interaction mostly, on tasks that the kiosk cannot do ( this would be international check in with foreign passports, visa checks etc). I dread having to fly UA internationally, and try to avoid it where possible. My UA flights are for the most part domestic.
IMHO, Most of the bread and butter loyalists to United, are 1K and lower. I have been flying legacy UA since my college days, and legacy CO since UA left its JFK operation circa 2003. The highest level I ever got was 1K (for many years), but it has been a steady stream of revenue for United all those years. Many, many people left United after the merger.
Hopefully the folks at McK can dish it out to Smisek and tell it like it is.
I question though why the need to hire BCG as well?. Talk about hiring the competition. Someone at the BoD must have insisted on another opinion.
BCG + MCK = NOT CHEAP
So much for Project Quality......
McK has a mix bag of hits and misses. In the airline industry, one of the famous "total fail" ideas to come out of McK is the poorly executed Swissair "hunter strategy", getting swissair to basically buy equity states in other carriers to build an alliance. To be fair, I think management ( pre Mario Corti) had a lot to do with poor execution of this. This had disastrous consequences for SR. The rest is history. Etihad is sort of doing that today, albeit with Sheikh Al-Nahayan ( Abu Dhabi) bankrolling the acquisitions.
The McK hits I personally like was turning Aeroflot from a total crapshoot airline in 2002 to the nice airline with good service that it is today. I started flying Aeroflot a lot ( with pleasure, they got a lot of my spend ) after UA dumped IAD-DME. McK partly responsible for this transformation. Hopefully McK can do the same turn around at UAL.
The competitive market has changed. Part of the reason why VX still exists ( many thought they would go under) is because UA can't provide the same quality and VX has a following of people who are hooked. A lot of the ex p.s flyers I used to meet on JFK-LAX now migrated to AA, B6 ( mint) or VX. You also have mid east carriers competing with UA's ( albeit shrinking network). I spend a lot of time in Dubai, Smisek's solution to that is largely to ignore it. I don't know the answer, If the answer is something we already know, UA should just hire us, perhaps WA/ SBM12.
The info we have about 2Q is underperform. I suspect Smisek has until the shareholders meeting to come up with plan B.
For the amount of money McK and BCG charge to do their analysis, I HOPE THAT ITS SOMETHING NEW WE DON'T KNOW ABOUT.
A new idea. For me, the devaluation last year, and UA's stale product, I fly UA in the US only. unless it makes some sort of sense to fly UA ( often no) . Internationally I have better choices, on the Star Alliance or other carriers I like, ( i.e BA). Maybe if UA was exciting and a pleasure to fly, hmm.....I would reconsider my spend.
I would think the consultants would look at data ...interviews, focus groups, lots of research... rather than draw upon personal experience to make their recommendations.
I would also think some eye brows are raised at the need of 2 outside consultants to help lead them....isn't that Jeff's job?
Entirely possible one company examines operations/customer service, the other finances.
That makes sense, but I'm sure both McK + BCG could look at both.
One proposal may have been better than the other.
I will be interesting to see what comes of this.
- Shrink the airline further? Divest?
- Go private : UA has prime assets, I'm sure if the right private equity investor can be found.
We should see some results in 6 months or less.
There's only so much McK, or any other company in that position, can do. The three important elements are:
1. Will McK have the guts to tell UA like it really is?
2. Will UA accept what McK has to say?
3. Will UA act upon the areas that need improvement?
Part of me wonders if this is also a strategy by Smisek to leverage union negotiations. I have no idea about exact numbers, but I can't imagine this ongoing split work force among pilots, FAs and mechanics they have going on plays well with the financials.
1 Yes. ( without a doubt)
2.. Recommendations of this nature I'm sure go to the board as well as management. The board has a duty to act, if management does not. In return they get perks like a parking space at IAH and Global First Travel, Global Services and monetary compensation. Please note : Smisek is chairman of the board ( if I am not mistaken)
3. See above
There is absolutely a "political" element associated with bringing in the consultants. Big management/BOD decisions generally cannot, and do not, come out of thin air at Fortune 500 companies. From the consultant reports, political groundwork will be laid for next steps.
So, Jeff, what would you say you do here?
2-Yes as to "accept"
3-Not as long as King Jeff The First is charge
My guess is that BCG and McKinsey will advocate further cost cutting plans which will result in further service reductions. In many cases, the goal of consultants is to keep constantly adjustable plans, so they can get rewarded with more consulting fees. United could save the money being spent on the consultants and read Gordon Bethune's book From Worst to First to serve as a model as to how to turn their business around. One of Gordon's best quotes is that you can make a pizza so cheap, nobody will eat it." Make an airline so cheap, and nobody will fly it.
I don't think its so simple as cost cutting.
Everything should be on the table, including branding, product consistency, reliability, unions, fleet, assets,. Mileage Plus, the ancillary product strategy and unbundling Smisek & Co has been touting.
You may even see the tulip come back! ( perhaps as a way to entice old UA flyers to come back, "new United is old again"). If only it was that simple
The Rx may be too much for current management to execute, in which case BoD has a decision it needs to make.
Can't. It defeats the purpose of understanding the situation from the bottoms up.
How passengers feel at the back of the plane
How the crew feel working the back.
In fact, they should have "mystery flyers" with no status, back of the plane in the middle seat and do some test flights to fully understand the gravity of the situation.
Throw in some tight connections, last minute schedule changes for the kicker would help the process.
I very much like your suggestion about the Tulip. If the management had actually taken the best of both companies and combine them to be a powerful airline, they would be much more successful and profitable. Instead, they seem to be fixated on mimicking Delta without providing Delta's good hard product and operational reliability. If UA flyers want Delta and the devalued SkyPesos program, then they would fly Delta. Mileage Plus is certainly a major asset for the company that should not be further devalued.
Yup, often times, "everyone" can see what "needs to be done" but lack the will or support.
Other times, they are afraid of being accused of favouritism especially in this case.
A consultant report which is supposed to be unbiased would help push ahead unpopular and tough decisions
2 independent consultant reports (if similar) would hammer home the point nicely.
Bringing back an old logo is not without precedent. Case in point, Japan Airlines.
JAL brought the logo back because their research ( done by a consulting firm probably) showed that a majority of customers were more accustomed to the old logo and viewed it more favorably than the previous logo. JAL was trying to reinvent its image and finances, and saw the old logo as a way for rekindle positive references on JAL back.
The current logo / livery was decided by Jeff Smisek himself, with no research input, AFAIK
This could go the other way. Imagine if UNITED got painted over and the old CO brought back to life?
Lets wait till pieces of the report leak out in strategy, then we can decide.
Well this thread gives me the chance to repost one of the classics. Unfortunately a lot of the best material has disappeared even from the way back machine, but we can at least assume that UA probably signed a well crafted statement of work.
United's former image was positive only in the minds of FlyerTalk 1Ks showered in vouchers by an airline that ceased trying to fix its problems. United should refresh current image, or go all new, but even Tilton recognized the tulip had to go.
Delta had the wisdom to hire a designer* to refresh its logo post merger with NWA, to redo their corporate identity. . My understanding is that Jeff Smisek did the design work himself. So much for that
*the designer is Lippincott, the same people that ironically did the original Continental Globe logo in the 90s.
AFAIK, the combined airline adopted the CO globe livery on the back of the plane and then has the name United painted onto the plane. It is interesting that the logo design was chosen by the CEO himself without any further consultation. The decision to name and brand the company United was due in part to UA having one bankruptcy, while CO had filed twice.