Art,Tech Boy,
You have a point, but a smart airline management would rather have your $20-25K than the $200-$300 a year from the Kettles, yet US appears to favor the Kettles.
I will also guess that a good percentage of the $20-25K you spend is actually profitable for UA.
The entire fare/yield management system is broken and no one has the guts to fix it.
There is no place for $99 transcon fares any more--they are not economically viable. If the majors would just say let those people go to the LCC's instead of matching, they'd see higher AVERAGE fares, and more likely profits. The world has changed. People are no longer willing to be gouged. We (VFF's) are sick and tired of subsidizing the Kettles.
Upgrades are simply a low cost (no cost if the seat is empty anyway) way of saying "thank you for your loyalty, we value you as a customer". The problem here is US doesn't care about its most loyal customers.
I agree with you. US has a huge service problem, hence I avoid them whenever possible. I also agree that you and I are more valuable than the infrequent cheap fare passenger. But I don't agree that applies to all VFFs. I'm typically spending $500-1000 per ticket which should make me a profitable customer. But there are lots of VFFs who fly mostly on the same fares as the Kettles. I'm not sure that they are really worth much more to the airline.
Upgrades (and E+ on United) are ways to maintain customer loyalty. I agree completely with that. But I'm not sure that means that there should be lots of premium seats on every plane when the airline is selling very few premium tickets. In fact, it can be counterproductive to the airline at times. If the VFF can count on getting an upgrade almost all of the time, then they are less likely to actually buy a seat in the premium cabin. Clearly, United had a bit of a problem with this in their international operation and the resizing of their premium cabins may limit the problem.
I just don't know how many C fares US tends to sell, but it doesn't seem like a lot. So shrinking the C cabin seems rational to me. Of course, if the inferior service continues to drive away high fare customers (which is different from VFFs), there is a more serious problem that cannot be solved by number and type of seats.