UAL CFO says MP elites "over entitiled"

Discussion in 'United Airlines | MileagePlus' started by js787, May 19, 2012.  |  Print Topic

  1. js787

    js787 Silver Member

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    Hot topic on all other forums--surprised not even mentioned here:

    United Airlines CFO John Rainey on May 17, 2012 said during the 2012 Bank of America-Merrill Lynch Global Transportation Conference:
    "We have certain groups in this (Mileage Plus) program that were over entitled..."

    Never heard of a airline executive insulting their best customers by calling them "over entitled."

    Seems to reflect just how they value their customers--not regretting moving to AA for 90% of my travel for the past 2 years. Did not trust the new UA management and they are not disappointing me.
     
  2. demkr
    Original Member

    demkr Silver Member

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    Keep it classy, COdbaUA. You're doing a great job driving us away.
     
  3. Geo
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    Geo Gold Member

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    Who says he's talking about the best customers? And notice the tense... "were".
     
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  4. chitownflyer
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    chitownflyer Silver Member

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  5. desamo

    desamo Gold Member

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    Again with the unfounded assumption that he was talking about best customers.

    Someone who flew a lot of miles was not necessarily a "best customer" from a cost vs. revenue model.
     
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  6. lightangel

    lightangel Silver Member

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    UA as a company can make a decision on how they do business. We as customers, "entitled" or not, can make a decision on where we want to take our business. Does it still make sense for us to retain our status with UA? It will get harder and more expensive to gain elite status down the road, and the benefit maybe taken away really fast. This UA will only get worse before they get better. We'll see.
     
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  7. desamo

    desamo Gold Member

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    One of several Negative Nancy sentiments from you, I see. I see no evidence that it'll get worse before it gets better, but then I haven't had any significant problems even during transition.
     
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  8. ducster
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    ducster Gold Member

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    This is in the "why CFOs do not come from the marketing side" category. He may be absolutely right, but to say it in public? And if you're going to address publicly the costs that are associated with your elites, spin it in a way that lets the Street know that you're being more fiscally responsible without irritating the elites further. Especially at a time when there is a lot of nervousness, frustration, outright anger, etc. about issues related to the integration.

    Further, AA is cooing soothingly in the ears of elites with status matches and promises of great customer service, exactly the opposite message that UA is sending out. I would worry that the baby will leave with the bath water, and those best customers will move also, along with the 1Ks who acquired status "on the cheap". (At least temporarily until they decide which grass is really greener.) Maybe the message is not that your highest volume flyers are "over-entitled," but that the airline will be concentrating on the highest revenue flyers. I'm clearly not a marketing guy, but I'm sure that they have a few at UA who are competent.

    One other point that came out on FT is that many people are reacting emotionally to the changes that are happening. UA, like any other business, needs to make money. If they think that the way to do this is to change how they treat elites, then they should. If people's emotional connection to the airline contributes to the bottom line, they should consider that too. I personally will shop at some stores - usually local - that I feel good supporting, even if their prices are a little higher than I would like, because I do feel a connection and I want to see them succeed. But in many cases, I will buy strictly on price or convenience, regardless of whether I know or like the people (I know that part of the frustration with UA lately is dealing with rude employees; rudeness is another story, and I won't patronize places where someone has been rude to, or insulted, me). Basically, the point that lightangel makes above is exactly right- UA - like all companies should- decides what they feel is the best way to do business, and the customer decides either to accept it or reject it.

    As a no-longer-elite member of UA, I have no skin in the elite game, nor will I for awhile. I really only care about cashing in RDMs, and so far there's been no difference for me. I have no idea whether this will get better or worse, although I'm inclined to think it will get better. But time will tell.
     
  9. LIH Prem
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    LIH Prem Gold Member

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    They are doing their best to diminish the value of Mileage Plus, the only consistent profit center in their portfolio, year over year.

    -David
     
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  10. meFIRST

    meFIRST Silver Member

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    CFO is a bean counter. The director of marketing would never call his/her customers "over entitled".
    Frankly UA-PR should do a better job in briefing this CFO in his choice of words. The audience for this conference was not only the finanical community, but also customers.
     
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  11. HeathrowGuy
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    HeathrowGuy Gold Member

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    The era of the Soviet United is over!
     
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  12. AZjohn

    AZjohn Silver Member

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    I have been reading a lot of post lately when people are referring what is UA's best customers or who UA doesn't want to have as a customer. In my opinion I'm not sure if anyone of us knows the true facts behind this as I'm seeing a more focus on the Kettles compared to the current UA's "elites".

    A recent example is I had dinner with a friend last night here in Zurich who has been a long time UA GS "elite". He is a international attorney and does a hell of a lot more flying on UA then I do, and of course last minute business tickets. I asked him if he has seen a difference lately with UA. He gave me a strange look and said "why yes I have, is something going on"?

    So I explained the merger and post 3/3 and some other issues. He said he had no idea but he felt a huge difference starting about 3 months ago. He then said last month he decided he wasn't going to fly UA anymore and has been using other *A flights instead.

    Now, he doesn't read any of these FF web sites, doesn't personally book any of his flights (has someone in his office do it), and knows absolutely nothing about his GS benefits. In fact I asked him if he ever uses his SWU's and he said he never used one in his life, he just had always been pushed up to F from C on all his flights. He also had no idea how many miles he had other than a few million.

    So, to be honest and again just my opinion, but I think if there is one kind of "elite" customer any airline would want to have is a guy like this. But is UA has somehow sent a message to several GS "elites" like this and the results are very likely they just switch loyalty (and yes, this guy said he has been loyal to UA for many years). And this is not the first story I have heard like this.
     
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  13. Mountain Trader
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    Mountain Trader Silver Member

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    What medical specialist does one consult to have a foot removed from one's mouth?
     
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  14. desamo

    desamo Gold Member

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    I agree on all points. I work for a large company that some people love and some people hate. It's even more opaque than United is.

    Fact is, many of us inside care a lot, but we're behind this opaque wall, and I suspect the same is true of many non-customer facing people in United. And it hurts when people say things like we don't care -- so I can imagine that people who are out there as the face of United, like sfogate, know exactly what I mean.

    But the fact is, decisions need to be made based on larger groups of people, because there's no way to granularly affect person A without roping a few person Bs in the net. There's always unintended consequences, like AZJohn's friend.

    I don't have a problem with United. I think selling upgrades makes financial sense for them, though some people call upgrade pricing "ToD" when it's really "HoD," which I find annoying.
     
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  15. sobore
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    sobore Gold Member

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    John Rainey is correct. :rolleyes: I got over it here: AA.COM
     
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  16. Art234
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    Art234 Milepoint Guide

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    Apparently UA's CFO has taken one from the Doug Parker play book. In the 2007 period, both Doug and Scott Kirby made similar remarks, showing an absolute disdain for elite customers, and Doug at one point even targeted Chairmans Preferred members saying they would not be exempt from added fees....

    While its true that some elites are not profitable, you still don't bite the hand that feeds you. I would like to remind UA that when we arranged the status match program for people wanting to leave US for CO in 2007 after the US meltdown and Dougie's comments, the average spend of the people we helped was $18k a year on air, and we estimated that in 6 months we moved between $6 and $10 million in revenue away from US to CO. If you extrapolate that to count people who didn't ask us for the match but quietly moved on on their own the true impact might have been more significant.

    I never thought I would see the day when we would get requests from members to leave UA / CO but that day has come...time to wake up UA!
     
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  17. Wandering Aramean
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    Wandering Aramean Gold Member

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    It depends on who you're trying to inform and convince.
    Difference is that Doug said it about all elites, not just some of them.

    I probably wouldn't have said it like this either, but that doesn't mean he's wrong.
     
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  18. gleff
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    gleff Co-founder

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    Truth is it really is impossible to know if he's right or wrong because we're really just hermeneuting a sentence here. Taken literally there certainly have been 'over-entitled' members of the program! The problem is which members he's talking about here, and what he sees as the solution. ;)
     
  19. JetsettingEric
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    JetsettingEric Silver Member

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    A minimum revenue hurdle for each tier would be a nice compromise. However, it should incorporate travel across all *partners, not just UA - just like how EQM are handled today.

    Airline pricing is my favorite example of perfect price discrimination. The airline tries to figure out what the maximum someone will pay to maximize their revenue. Business travelers pay high last minute walk-up fares. Vacationers plan in advance and pay lower fares.

    for the most part, i'm buying discount fares that have a nice EQM ratio, but I also buy on occasion a last minute paid J trip from work. the question is how many paid J seats do I need to buy to compensate UA for the lost E+ revenue on my domestic flights.

    For Transpac flights, UA should roll out a true Premium Economy product (think domestic first with more recline). Give it its own fare bucket, and allow full fare Y to upgrade for free, and elites for a small fee. Allow GPU to be used on any fare to Premium Economy, or from paid Premium Economy to J on any fare. Avoid this lottery of buying a high fare and having your GPU not clear.
     
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  20. rwoman
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    rwoman Gold Member

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    Wow...DL and SkyMiles frustrates me at times, but I would feel a bit insulted by something like this...true or not. My brother-in-law is an elite with UA and has been quite displeased.

    :(
     
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  21. Geo
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    Geo Gold Member

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    Which is where the bulk of the passenger miles come from, but it is a fairly diverse group and difficult to target market.

    A GS travels a lot, at least those who get the status from butts in seats. They amount that they are able to travel "extra" is limited, usually by Space-Time. So, the efforts there should be more retention oriented, ergo the secret thresholds that keep us guessing and asking "Do I have enough now boss?" <no answer> "Okay then, here's another $10k... is that enough boss?"

    The big bump is the partially committed customer who flies significant amounts, but doesn't care who they fly with... the Golds and Plats. Get them to give you another 25% of their flights and you may well hook them into the gravitational vortex of the upper levels. On the other hand, it takes significant thrust (to maintain the metaphor) to move a Silver up the ladder.
     
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  22. dayone
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    dayone Silver Member

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    If posts on FT are any measure, UA does have a lot of over-entitled elites.
     
  23. EWR764
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    EWR764 Silver Member

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    I don't think the elite benefits are part of the equation. The currency (the buzzword of the moment) of MileagePlus is what makes it profitable, e.g. selling blocks of miles to other entities for marketing purposes. The elite benefits are a cost item that drives business to the airline, but in an era of dramatically reduced competition, this becomes less important. Further, the profitability of MP is not connected to the loyalty of elites, as passenger revenue is not reported as part of the program.

    We might not want to hear it, but it's abundantly clear that United believes it can achieve the same degree of spend and loyalty with an elite program that costs less to deliver. At the same time, it is squeezing additional revenue from customers whose low-fare advance purchase ticket would normally be the extent of their business with the airline. In this environment of 85%+ load factors, consolidation, global networks and high fuel prices, my objective side is inclined to agree with them.

    It's a brave new world...
     
  24. jbcarioca
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    jbcarioca Gold Member

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    All this can be easily dealt with if airlines adopted a strict revenue-based model for their programs. That is the most equitable way to divide goodies, after all, because the airlines need money, not just bodies. We might not like it because our entire raison d'être is to get "money for nothing, and c..... for free" as Dire Straits once informed us. The airlines are in dire straits, and giving away their premium product is part of the reason.

    Now jump all over me, if you wish. The statements will still be true. We do not need to like it.
     
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  25. rwoman
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    rwoman Gold Member

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    You mean bargain basement $1 fares do not pay enough to move most planes with everyone upgraded for free??
    ;)
     

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