The points you make are true...but don't necessarily spell success for United in the post 09/11 environment.
The reason why jB is doing so well is not only because of the increased demand for low-fare business traffic, but also because of less demanding needs of the business traveler.
Yes, less demanding needs. It sounds crazy doesn't it? Especially when airlines are upping the in-airport amenities for business travelers, like priority security lines and upgrading of lounges.
Well if you are a biz traveller and the big bucks for astronimically priced full-fare tickets are fine by you, then you're good. But if you're the growing set of biz travelers looking for lower fares, you're going to choose a low-fare carrier because it costs too much to become an elite on a "major" airline. And, when all else is equal you still face the same long security lines and "hassles" of showing up to the airport earlier than before.
In other words, air travel has not become so time sensitive. Before, the plus side of flying full fare were those aforementioned elite perks, but the main reason was the schedule offered by the major airlines. These days, that's become less relevant because you have to show up to the airport earlier than before anyways. This is a key point.
So... let's sat that increasing type of affordable seeking biz traveller is going indeed going to do as predicted and go for the low fares. He lives in Denver and has the choice of Frontier or United -to- Dallas/Ft. Worth at the same price. According to the pre 09/11 model, we'd say he'll go for United if he is a biz traveller because he likes miles and wants to work his way up to or maintain elite status with the airline. Now, we can't be so sure. In fact, it depends on the biz traveller.
However, let's consider how the appeal of M+ would be less effective in this case (these could be his thoughts):
Frontier will always try to offer low fares... my perception of them is a low-fare airline, and their slogan is "Always Affordable"
I might as well join Frontier's mileage program because they will probably offer more lower fares than not, so I will probably fly them more
HEY!!! Frontier offers free DirecTV at every seat.... I've heard about how great this is from news about that cool new airline JetBlue... Frontier must be pretty cool too!
Frontier isn't all that more inconvenient than United... I still have to go through that same security line after ticketing... and in fact their terminal is closer and I can walk to it instead of waiting for the train.
Froniter has pretty frequent schedules in and out of Denver too...
I'm gonna fly Frontier!
As you can see, if a lowest-fare seeking biz traveller in Denver is already considering Frontier, they are already thinking positive thoughts about it against choosing United Airlines. Once information about Frontier offering DirecTV (a very positive thought) is brought up, this will make the potential Frontier customer even more positive about F9.
In advertising, we call this "hypothetical THOT analysis". It's a practical way to look at the psychology of consumers, because when we think about their perspective, we will most likely come to their conclusion.
And you know, everybody knows I'm a United fan for life. But the harsh reality is that UNITED is fighting a losing battle against FRONTIER. Just take a look at this article.
United Air Market Share Drops At Denver Hub; Frontier Gains