United Cannot Win a Race to the Bottom

The overall wisdom of Jeff Smisek, the dear respected Supreme Leader of United, is beyond reproach. However, even the most ardent UA loyalists cannot help but be concerned by a steady stream of service degradation which, taken together, lessens the value proposition of being a United customer, and puts the airline in a position to squander the "second chance" afforded by the merger. Most recently, United has implemented a serious degradation to the complimentary product offerings featured in the United Clubs. This change is particularly distressing, since the United Clubs are themselves not a complimentary offering, with many flyers shelling out hundreds of dollars per year for membership to access lounges already featuring laggard amenities.

Some might assert that United can (or should attempt to) get away with service quality reductions in a "race to the bottom" because Delta, its most similarly-sized rival, has been engaging in its own round of service quality reductions. This assertion is at once foolish.

Delta and United approach the marketplace from very different vantage points. At core, Delta is still a more connection-centric airline, with every hub except JFK a fortress operation where competition varies from modest to virtually non-existent. Delta can afford to degrade itself because most of its customers either have minimal choice, or because the airline's overall network connectivity frequently offers schedule propositions that competitors struggle to match. United, OTOH, remains more focused on targeting O&D travelers from hubs (both legacy UA and legacy CO) that generally feature much stronger domestic and international competition, including rivals that are offering, or will soon offer, enough of a superior value proposition to warrant objective review. Simply stated, in a race to the bottom, Delta wins and United loses (or at least, cannot "win" as much as Delta would).

We have seen United try to heal itself in the past by degrading service quality levels. Those past efforts left United the bane of the industry, winning not one industry recognition for its service in the 21st century, and with increasingly undersized hubs as choosy fliers chose other carriers who valued their business. Let us all hope that the service quality renaissance often professed by the drSL and publicly reaffirmed by senior United executives in recent days will be objectively delivered without delay.

 

Define some of DL's service quality reductions, because when I look at them and see CRJs being replaced with 717s, what they've done with their newest Sky Clubs, the fact that they still hand out a small complimentary snack in Y with beverages and Wi-Fi fleet wide, I don't see a ton of cuts on board or in their lounges. I do see cuts and lots of reasons not to fly them when it comes to their loyalty program, but these days, they arguably offer a better on board product than UA on most domestic routes.

 

I gotta give UA credit. They managed to source pruno for a lower price than the bathtub gin that AA gives out for free at the Admirals Clubs. I didn't know that the nation's prisons had sufficient production capacity to meet United's stringent requirements (I understand that methanol content will be kept strictly below 5% and that antifreeze will only be used as an adulterant on an as-needed basis). Kudos!

 

How much more de-flowering can this tulip withstand?

 

DL has cut the quality of its free alcohol in lounges and made changes to its Same Day Confirmed rules. Domestic upgrades are less likely due to reducing the number of FC seats from 16 to 12 on the A319s and A320s. For international upgrades with instruments, required fares are still increasing while upgrade space is being reduced. FF award availability is unchanged (and bad).

 

Wow, for a minute there, I thought you were talking about UA's existing product, but then I remembered that UA's A319s only have 8 F seats instead of 12, which is what we already have on the A320s. Other than than.....

 

True, but many claim that the big advantage of DL's FF program is its free domestic upgrades.

For DL in general, people praise the frontline employees and IROPs handling in general. I think the aircraft with flat beds and direct aisle access are wonderful.

 

Haven't you seen the new UA motto?
"We're all in a race to the bottom. But, United is leading the way!"

 

I don't know if they can "win" the race to the bottom or not.

Maybe they did an analysis and decided the kind of people who want free drinks in airline clubs will drink basically anything.

For me, this may be the end of my UC membership.

I've noticed lately that the better food options In most airports have substantially cut into the amount of time I spend in the club anyhow.

I'll see how it goes for the rest of the year (my club membership expires the end of December) and make a decision then. But if it's cheaper to just have another drink where I eat lunch rather than wandering to the lounge and paying those prices, I probably won't find a lot of reasons to head for the club.

Sent from a place using a fruit thing.

 

Their departure to the bottom was the only on-time one I've experienced from them this year. :-:

 

Only because they pushed early.

 

I would rather see UA take away all free alcohol and just reduce the club price by 100 per tier.

I've been a member of the club (prior pres club) for last 5 years and I think I've had less than a dozen or so alcoholic drinks since I've had my membership,

Or give people options to opt out of "free" alcohol for a discount.

For me the club is all about fixing travel issues and just a place for quiet and wifi.

 

I must say that I enjoy it more than expected for those two reasons alone. Since I fly so much intl, I thought it would be a waste of money. Then I got the UC Business Club Card, and the miles earned more than pay for the membership. I can't believe how much I actually use the club on domestic connections now. I don't drink, but I am addicted to the internet.

 

LMAO

 

It was a STAR* departure.

*Start The Airline Right

 

I keep on reading how UA wants more premium international customers. It has the IPTE configured planes which offer a broadly similar product to its competitors. But the lounges, already poor in comparison with those of its competitors, are now even worse. Why would those premium travellers choose UA over BA or VS or pretty well any of the Asian airlines in such circumstances? Or are we going back to the drink chits for customers - such a tacky way of doing business.

 

What tulip?

More like "We're all in a race to the bottom but COdbaUA won"

 

Would you do 1 or 2 drink chits per visit if it got you premium drinks?

The cost of serving alcohol is not insignificant. My first child's Bar Mitzvah was an open bar evening affair. The second was an afternoon event serving only beer and wine and the third was a morning party with breakfast but no alcohol. Even with the difference in years (increased price of food and service), adding in the alcohol substantially increased the price of the first affair compared with the last.

UA has substantially opened the doors of it's lounges to many more people due to it's membership in *A as well as credit card deals and the like. I suspect that running lounges with open bars, even at $495/yr has become a losing proposition for the organization. The only way to staunch the bleeding is to either restrict access or cut expensive amenities such as alcohol. They really cannot do the former. I do not think that reducing the food much further would save significant sums of money (although after seeing what is served gratis at an Admirals Club I guess they could try ).

So what we have left is the slow degradation of the open bar at the UC. I honestly suspect that sometime in the not too distant future the end of the open bar.

 

If UA wants to cut amenities, that's fine. Pass the savings along to us and LOWER the price. $400 for a 1K is ridiculous.

 

I've lost count of the number of companies that are making short-term narrow view decisions because their businesses are being managed quarter to quarter instead of anything resembling a long-term strategy. This has been happening for some time in many unrelated types of business and is quite disheartening, especially considering that United is now following that trend.

 

Only the lowest cost provider can win a race to the bottom. Otherwise you have to provide an attractive value proposition to your customers. The problem UA faces (and DL and AA also) is that it tries to be all things to all people. It wants to play in the Southwest market, it wants to play with credit card offerings, it wants to sell lounge access, it wants to gain premium domestic business, it wants to get premium international business, it wants to fill up the back of the plane. It's next to impossible to provide a range and consistency of products to suit all those different customer bases - and what works for one group (eg credit card holders) might put off other groups (eg full fare Business Class international customers). If UA needs to satisfy all, then it needs to differentiate its offering.

 

How often in business do we see the price go down? Companies downsize packages of cookies, size of detergent and volume of orange juice but don't lower the price.
I doubt that many would have liked UA to raise the price of a club membership to $595/yr. Just like the cookie manufacturer, making the package too expensive would reduce sales. So rather than do that, companies reduce the number of cookies in the package for the same price as before.

UA has done the same thing. They have decreased the cost of providing alcohol. They can still claim that they do provide gratis drinks, but you may not want to imbibe the ones being provided for nothing.

 

Two things to remember about lounges:

1. They generate cash flow for the airline from membership and access fees.

2. The expenses associated with operating them can be written off by any combination of United and, in some instances, the suppliers.

 

That would help a lot, yes, even if only to demonstrate good will. But I'd prefer 1 or 2 an hour seeing how I might be there due to a long delay on UA's end.

The lounges didn't exist to make money on their own. The lounges exist to encourage people to fly that airline. Now the message being sent is closer to "We do things in a low quality way. Fly with us."

 

Didn't UA just raise club fees earlier this year?