[P]Hi Sumsonic,[/P]
[P]That's a good point. But IIRC, Northwest's continual rejection of fare hikes and the subsequent retreat by the other majors affected routings far beyond those of NW's hubs. I could be wrong on that but I don't think so. [/P]
[P]As for low fare carriers, who beyond Frontier in DEN is setting up camp at UAL hubs? Nobody at SFO, Nobody at ORD (though I'd grant you ATA and WN operations at MDW probably have an effect), nobody at IAD that I can think of, and WN is the only low fare carrier with an operation of any size at LAX who comes to my mind. [/P]
[P]As I see it, the problems the majors are suffering began before 9/11 and have only gotten worse. It seems to be a combination of the lagging economy and the associated backlash by business travelers against exhorbitant fares. If a rational pricing structure were adopted, which was not based upon what is essentially retaliatory price gouging against the carriers' best customers -- the business traveler they covet so much, than perhaps they could make some money.[/P]
[P]I think business travelers would return if your product was priced reasonably. There has been discussion about this issue on numerous threads so I won't go into detail, but the object would be a vast reduction in the number and complexity of fares, with the outrageous walk-up fares reduced to palatable levels, and perhaps some rational pricing adjustments upward on the low end. I understand that low fare competition makes the latter more difficult, but as is so often pointed out, you offer a different product than WN & Co. Accordingly, you appeal to a different customer who is willing to pay some reasonable premium for the amenities United has to offer. But blatantly ripping them off ain't gonna cut it any more.[/P]
[P]I would respectfully suggest that United lead the way out of the current pricing debacle and into a reformed structure, because quite frankly, they have absolutely NOTHING to lose by taking such a gamble, whether the other majors initially match them or not. One of the models often suggested is the ill-fated value pricing scheme Bob Crandall tried to institute at AA in the early '90's. United is too large for the others to ignore. Your company could make itself a hero to millions of frequent travelers by offer a good product at a fare and easily understandable price with a correspondingly simple rule structure. The current structure is going in the wrong direction. Newly adopted regressive fare rules are nothing more than punitive toward your customers, with use it or lose it ticketing, high penalties for standby and itinerary changes and the other draconian measures introduced by US and adopted by the others. How does this encourage customer patronage?????[/P]
[P]In many ways the company that was on the right path was TWA. Had they enjoyed the expansive network and girth that United has, they would have been able to attract many more passengers. But with their world revolving around STL, they simply lacked the breadth to be a competitive force. Nevertheless, had they not been saddled with the Karabu agreement and exhorbitant aircraft lease prices, they would have enjoyed substantial profits even without benefit of fuel hedging. That is a fact and it can be proven! And the way they went about retaining their best customers was through excellent treatment and service, but especially by ensuring their best customers were treated like VIP's in terms of first class upgrades, which are clearly the business travelers' number one priority. They added seats in their first class cabins to make sure these people could be accommodated--20 F seats in their MD-80's. They didn't gouge frequent flyers with rip-off upgrade fees and coupon purchase requirements. If you had elite status and an upgrade seat was available, it was yours, even on discount economy tickets. That's how you retain customer loyalty. Charge 'em a fair price and treat 'em right![/P]
[P]I really don't think this would be so difficult to do, if you simply refuse to be intimidated by competitor reaction. All else being equal, the guy who wins is the guy who has others dancing to his tune, not the other way around. It's time for United to exercise some BOLD leadership. Leadership which would not only have the potential for UA's salvation, but the other majors as well.[/P]
[P]Why not look at your unit costs, what are they something like 11.5 cents per ASM? Just take those costs and add a reasonable markup to them the same way millions of retailers do. The resulting pricing would then have some correlation to reality and the stage length of any given trip. Like I said, what does United have to lose? The company is on its last legs, losing $7 million a day. It's time for something BIG, or this company is not going to make it. Feel free to email this post to Mr. Tilton. Let him laugh it off the table if he likes, but I honestly don't think that would be his reaction. He's not from this industry--he's capable of fresh thinking. [/P]
[P]There seems to be a consensus that this industry needs to reinvent itself in order to survive. That the majors must restructure or fail. But when it gets down to brass tacks, they're ALL too chicken**** to do it. They only focus on cutting costs--on the backs of their employees primarily, but precious little is evident in the way of new thinking on revenue enhancement. When is the last time a good idea came out of United? Maybe 1985 when they bought PanAm's Pacific routes? Ray Charles could fly one of your planes better than recent management has guided the company. If I were the new guy, Mr. Tilton, I'd do something, do anything, even if it's wrong, because there is absolutely nothing to lose at this point and the clock is ticking big time.[/P]
[P]Very best of luck to you,[/P]
[P]Marky[/P]
[P] [/P]
