United Airlines Unveils Changes to 2015 MileagePlus Program

[Art at ISP]

I am thinking that while this may be the future of FF programs, UA did this at just about the worst possible time--for them. Such an earth moving change in programs would have been okay if they had a strong and loyal customer base, but they are just putting another nail in their revenue shortfall coffin by making the change now. 
 
You make changes like this when you're in a position of strength, with decent labor relations and a strong product (read Delta). You don't risk upsetting the apple cart when your operation, labor relations and customer satisfaction is in the toilet, as UA's is at the moment. I think it will backfire on them.
 
There are other ways to reward more spend. What many of these programs fail to realize is that many business travelers are on highly controlled travel programs, where they can get in trouble for not taking the lowest fare. Some systems don't even let them book anything but the lowest....so to penalize travelers when the choice is out of their control is not very fair, and does nothing to create or maintain the loyalty airlines have seen in the past.

That said, I think the smart move for AA/US right now is to leave things as they are, which will differentiate them, and most likely let them pick up many new customers, who feel they are losing out on the changes made by UA and DL. We have already been told that no major structural changes to Aadvantage/Dividend Miles will occur until the programs are fully combined some time in 2015.
 
UA is playing Russian Roulette pulling this move at this time. The basic fundamentals of the Bethune Doctrine are still applicable today...happy employees yield happy customers, which in turn yield happy investors. It does NOT work the other way around....

 

[WorldTraveler]

your points are valid, Art. but the other side is that UA could well have traced some of its revenue leakage to the more generous policies which DL has made/are making for the highest revenue fliers.

Since DL is targeting UA in NYC, LAX, and to Asia, UA couldn't afford to be in a position of permitting any revenue leakage.

None of us will ever know with certainty how much of their revenue leakage is due to poor operations, labor relations, or their inability to match DL's pricing and loyalty moves but the chances are high that all of them are part of the problem.

If there is any truth to any of those reasons, it doesn't give AA a pass just by sitting by while DL and UA both have much more generous incentives for the most valuable passengers.

You are right that UA is facing more challenges than they likely can safely navigate without suffering losses in one form or another.

 

[MAH4546]

In what context is NRT "larger" than ICN? ATLICN is the single largest city pair between any city in the Southeast (including Texas) and Asia and is more than triple the size of ATLTYO local market. Largest Southeast-Asia markets are something like this:
 
1) ATLICN (~130k annual)
2) MCOTYO (~80k)
3) DFWICN (~75k)
4) MIAMNL(~70k)
5) MIATYO/IAHTYO/DFWTYO/ATLTYO all around the same size (~42-47k annual)

 

[WorldTraveler]

you somehow forget that DL delivers/has delivered hundreds of passengers to/from KE because they have a codeshare agreement so DL knows exactly what kind of revenue KE gets from ATL.

In terms of revenue, the Tokyo local market from the US is a far larger market and has been for years. It is true that the number of military installations in the SE and the US military presence in S. Korea elevate numbers of passengers but not revenue.

KE has overstimulated the number of passengers in the market by offering below average fares whether you want to admit it or not.

DL took steps in its business relationship with KE because of what it sees in reality.

KE is dependent on feed from a US carrier which is precisely why DL has cut its codesharing with them in key markets to protect DL revenue.



specific to this discussion, DL and UA are both not providing blanket upgrade and FF reciprocity across the FF partners.

that makes smart business sense whether other carriers do it or not.

 

[MAH4546]

I didn't forget anything. Atlanta-Seoul is a huge local market and Atlanta itself has a huge Korean immigrant community, one of the largest in the world. Seoul is often the largest Asia market from many major U.S. cities, including Los Angeles. 

 

[WorldTraveler]

I know full well what kind of Korean market exists in Georgia.

If it was solely about the ATL-ICN local market, we wouldn't be having this discussion.

but the issue, which you refuse to admit, is that KE undercuts DL's fares on non-ICN itineraries that are duplicated on DL on DL's own network vs KE's ICN hub.

DL made the decision that it will not reestablish a relationship with KE as long as KE uses DL's domestic network to undercut DL's int'l network.

and before you tell us that AA will gladly fall into the arms of AA (just like AS), KE will do the same thing to any carrier that has a hub presence in Tokyo because Japan is the highest cost Asian hub and its geographic advantage is being eroded by other hubs and by lower cost operators. KE happens to fill not only both of those things but also is the largest Asian TPAC carrier. Short of a fair and equal JV, they are a threat to every TPAC carrier.

And, again, DL and UA do not have blanket application of its FFP policies to alliance partners because they weigh the added value of each carrier to its own network.