I don't think selling the lie flats at under $600 is economically viable for the legacies, unless they can get a lot of customers paying more than that close to the flight. Also, airline still gets more money from selling 1 J at $1000 and 1 Y at $200 vs 2 Js at $600 if they can get the Y to use one of their RPUs.
Based on FT threads, there are always people use system wide upgrades on D1 routes and other non-rev passengers.
UA does have the luxury of large corporate base on this route that have been paying for FC on this route, which DL does not.
It's great for customers. DL also introduced their D1 to DCA-LAX and are charging over $1000 to start off, but AA is not offering a competitive product.
My previous post is from experience, one of the major problems the US3 faced and still face is customers not buying first class seats domestically because the airlines were giving away those seats for free. I've been with UA now for over 20 years and there have been plenty of times where the entire first class cabin on a domestic flight has been filled with top tier FF's none of them actually purchased a first class seat instead they were all complimentary upgrades. The only way your statement makes any sense is if the airlines had actually been selling first class tickets then you would be correct.
However the reality is top tier FF's would purchases the cheapest economy ticket because they knew they would be upgraded to first class for free. Now that is changing because airlines are doing something called dynamic pricing which differs based on each market served. You can't compare DCA-LAX to BOS-SFO they are two completely different markets with completely different price points.
It is not uncommon at UA to see Global Service passengers stuck in economy plus because first class is completely full with passengers who actually bought a first class seat. Airlines aren't loosing money they re making money because you can't loose what you never sold and now they are starting to sell more first class seats domestically because they are pricing the product more competitively. So instead of the lie flat seat going to a FF who only paid $200 dollars one way now the seat will be taken by a customer who paid $549 one way. If no one is purchasing the seat at $1,000 dollars one way dynamic pricing ask what is the price point for this particular market on this particular day that people are willing to pay. Selling 16 seats at $549 dollars beats giving away 16 seats to top tier FF's who purchases the cheapest economy ticket. This is what we are seeing on the BOS-SFO-BOS route and on other routes around the system. It has been well documented on a.netters and other aviation blog cites, that free upgrade are harder to come by now days.
I don't know if you work for an airline or have access to inside information but the US3 are reversing a trend, we are see more people purchase first class seats now days and it is angering the FF's who have become accustomed to getting a free complimentary upgrade.
I hope United Coast expands beyond EWR,BOS SFO and LAX to other airports on the east and west coast. I hope UA installs lie flat seats in some of the new 737Max's they have on order and I hope they continue to price the product competitively. The days of free upgrades are coming to an end thanks to dynamic pricing
Thanks for your thoughtful response here. I will just break down on my thought price here.
First is the question of whether or not an airline can afford to price this route at $549/599 for lie flat seat with the assumption that cheapest Y seat are 175 to 200.
Here is Delta's layout for 757S, basically 16 D1 seats with 152 Y or Y+ seatshttps://www.seatguru.com/airlines/Delta ... 00_75S.php
This is a regular 757, 20 domestic F, 179 Y or Y+ seats.https://www.seatguru.com/airlines/Delta ... 75H_v2.php
a regular 739ER, 20 domestic F, 160 Y or Y+ seatshttps://www.seatguru.com/airlines/Delta ... -900ER.php
So if they were to use an all Y/Y+ seating, a 757 could squeeze about 179 + 20 F x 1.8 (50% wider seats + 20% more pitch F to Y) = 179 + 36 = 215 seats. So the addition of 16 D1 seats is about 63 Y/Y+ seats in an all economy configuration.
Similarly on United PS 757, basically 28 lie flat, 114 Y/Y+ seatshttps://www.seatguru.com/airlines/Unite ... _C_new.php
So if we assume that an Y/Y+ configuration would yield 215 seats. 28 lie flat seats is replacing about 101 Y/Y+ seats.
So in both cases, going to a premium configuration transcon 757 vs an all economy would be trading about 4 economy seat per 1 lie flat seat.
Notice how for Jetblue, they went from a 190 seats all economy A321 to a 159 seat (16 J + 143 Y/Y+) mint configuration. So due to the efficient layout and already greater leg root on economy class, 47 Y became 16 J, which is about 3 economy seat per 1 lie flat.
In addition, premium routes on United and Delta's J class also offers lounge access, dedicated check in area, premium boarding and baggage handling, real meal service with drink options, nice pillows, more attentive service and amenity kits. And on top of this, there will be people getting free upgrades using RPU/GPU. So the J seats need to be priced at least 4 times as much as Y seat to get the same return per square footage of space. It probably needs to 4.5 to 5 times if you add in the additional premium service cost. Notice how Jetblue can sell mint for a little more than 3 times Y seat (since they have little of the ground experience stuff with no free upgrades). That's probably how they got to $549/599 for the cheapest seats.
They also mentioned when mint came out that they were doing terribly with their all economy configurations and probably had to pull out of JFK-SFO/LAX if they didn't have a premium offering. So if all economy is a money looser on these transcon routes and charging 3 times Y price for lie flats is a money looser, then UA/DL are going to loose money big time if they can't get higher yield on those lie flats.
The next is to look at upgrades. I fly AA mostly. Based on my personal experience in the past year with checking A321T J class availabilities and reading the A321T threads on FT. It seems like other than the most popular hours, at least 1/3 of the J seats are either complimentary upgrades or with SWUs. And looking at similar DL threads and UA threads on upgrade chances, it seems like there are some people getting upgraded on premium routes with their RPU/GPU (UA/DL don't have CPU on these routes I think). On B6, I think if there are still empty mint seats at the gates, they try to sell upgrades for total purchase price of $549 or just go out with empty seats.
My impression is that airlines don't want to sell out all of the J seats at less than 4 times the Y seat price. They try to keep some inventory closer to the flight to sell at premium. We are now 3 weeks out from the first day of DL/UA lie flats, they are still pricing J at $599. The entire month of June, DL has their morning flight priced at $599 and evening flight priced at $649 with Saturday priced at $549. I've even heard someone buying R/T J seat on DL for $900! UA has different price point sprinkled throughout. B6 is selling their seats at over $1000 on most week days.
Overall, I think UA will do fine since it has large corporate client base in SFO and BOS that will purchase plenty of the FC seats at higher cost than $599. B6 was the first mover with a lot of corporate clients in BOS and can still make money at $599 in the worst case scenario, so they will be fine (from the flights I checked, selling quite well). Now, DL, as a new entrant with smaller corporate base on this route and weakest schedule, doesn't even seem to be selling out their J seats at basement prices (from the flights that I've checked). That's why I think this is an offensive play by UA against DL.
As for spreading to other cities, B6 kind of got it right with mint that they have significantly lower cost with a competitive J product, so can operate on routes that don't have a lot of fat corporate contract, but with individual willing to pay $500 to $600. So they've been able to continue to expand on mint flights and earning higher RASM along the way. I'm not sure UA and DL can do the same with routes like BOS to LAX/SAN/SEA or EWR/JFK to SAN/SEA. Just looking at JFK/EWR to LAX/SFO, that's typically the kind of prices legacies need to charge on J to be making money.