Kahala777 and ORD
Let me see if I can bridge the gap between your relative positions while not giving away anything from my part of the plan that speaks to product:
Kahala777 in your post no 48 - I could not agree more with your post. It speaks exactly to the problem of the airline. In terms of product positioning, it does not offer the right product to the right people. In point of fact, United goes an awful long way of telling us (the customer) what kind of customer we are and on what kind of product we should fly. For example, if we are a business flyer, then we should get the full service of United (full service is an oxymoron), if you are a leisure flyer, you should get TED. However, where they place TED and United are in markets where both leisure and business flyers travel. What message is that sending to the market?
-I am very sorry, but in your reply 53, I have a number of questions for you. You make factual statements, yet I am curious to know a few things:
1. You make the statement that there are not enough people willing to pay F class on the domestic part of SIN
to make F class viable on that sector.
a) is that a correct interpretation of your statement? b) if it is, how do you know that? It seems to me that you have to be a really good revenue analyst to determine the ratio of F revenue that is allocated to the gateway-LAS
portion of the fare paid SIN
to determine if it is worth it to fly an F cabin to LAS
. My history is from Asia (particularly from Japan), there are a great deal of Japanese that fly C to SFO
, then F to LAS
to gamble their little hearts away in LAS
. Now that there is no C class on that last leg of the trip, there is less incentive for them to fly UA
across the pond. So if the SIN
flight that stops in NRT
then comes to SFO
is carrying NRT
passengers, the yield on that flight is diluted by the fact that those passengers may not take that trip.
Can you answer b) for me?
2. Most of the passengers on TED are not business travellers who want to upgrade. How do you know that? A great deal of United's argument is that they are losing business travelers to Low Cost Carriers (LCCs) like Southwest and JetBlue that don't have First Class. If Business Travelers are flying Southwest and JetBlue, then it is reasonable to assume that (if they are MPlus members) that they would fly TED if they had to? I'd like to know where you got your information.
The problem is that a lot of people tend to shoot off factual statements without having the data to back it up....its OK
to offer an opinion; but please do not state them as fact unless you have factual data to back it up.
Now with regard to the issue at hand, which is the product issue, Kahala is right. United's strategy is to have a network strategy with a "portfolio" of products. Then they stuff the passenger into these "products" very neatly as if every business traveler will fly UA
because of the service offerings, leisure travelers will fly TED because of the low fares, low density markets will fly Express because its the only game in town. The Alliance product is used when they can't justify flying there themselves, but the alliance partner can, so they make it worth your while to fly the alliance partner by waiving the FF
card. The problem with UA
's strategy: 1) Business travelers are also leisure travelers so a lot of crossover occurs. 2) Its a little more than arrogant to believe that because you have a product for a business traveler, the business traveler is going to fly that product and pay your high fare. In fact, is a little stupid to think that, because if they are flying Southwest, do you think that having a higher quality airline with very high fares is going to lure them back to United? NOPE. 3) To maintain a multiple products (Express aside) is more expensive to manage than a single product, especially when you are operating a network strategy (which United, unfortunately, must continue to do). 4) If United continues to operate UAX as a regional contract carrier scheme as they now do, then it must develop a product EXACTLY the same as the rest of its domestic product, even if it is on small prop aircraft. Why? The continuity of the product is critical, especially in the smaller markets where the passenger tends to pay more for his ticket on a per mile basis than passengers who fly the larger equipment.
Therefore the answer is a single product that operates across the network (domestically and internationally), a quality product that can operate at low cost.
This statement is important and is something that United just doesn't seem to get: A quality product does not mean a more EXPENSIVE product. The critical points to travelers on an airplane are: 1) on time arrival 2) space on the aircraft 3) things to occupy time on board. Then the ground stuff comes in to play, check in, baggage delivery, etc etc etc.
How does JetBlue and Southwest operate a quality product, e.g. a product that people come away feeling good about...especially JetBlue? They fly a lot of longhaul domestic, as a LCC. How do they make people feel good about their travel experience? They make it a) simple b) comfortable c) inexpensive.
Well, the last point is relative, since their fares are not so inexpensive anymore. Have you tried to get a seat on them? Average fare is about $250-300 one way...about $500-600 round trip. That's pretty high and their planes are packed every day in both directions between OAK
, for instance. How do they do it?
They focus on their employees. They take care of their employees. They make them feel valued, and they pay them a bonus when the company makes a profit. That's it. It's not rocket science. If the employer values its employees and makes them feel like their important...how do you think that will translate to the customer? The customer will be made to feel like their the most important thing in the world. Why does jetBlue get so many kudos in the press? Direct TV
, great seat pitch, leather seat, yes yes, but its the people, the friendliness of the people, how the customer is treated at all steps in the customer experience, that is why jetBlue works.
It is also why United does not. If the employees are down and bitter and tired, it is going to show in how they treat the customer. This is NOT a knock on the United employees, who stick it out every day and try their best to do their jobs in the face of the worst kind of uncertainty. The psychological damage these people are facing is truly sad and truly unnecessary. However, it is very real and this is why some people have less than a happy face when they great you at the door of the airplane. However, god love them, they will get you to your destination, in one piece and for the most part on time.
So, what am I getting to:
Kahala, yes, United is a worldwide airline, yet they are not acting like one. However, this does not mean that they cannot turn it around, with the right kind of leadership. They need new leadership, with a vision of what United can be. Something that the employees can grasp and hold on to and believe. The new leaders must focus on several fronts: 1) fixing the morale of the employees 2) working on developing a single product that serves all the different market segments that is cost efficient. Mind you, I did not say low cost. United cannot achieve low cost. They can achieve cost efficient. If they can achieve cost efficiency in every aspect of their business, they can bring their costs under control. The reorganization plan that I am writing talks to those points. If there is one word that I will talk about it is efficiency. Efficiency in every aspect of the business. Efficiency and respect. Respect for every employee, no matter where and what job they do. For without the employees at the core of the business, the business will not be a success.
These are the goals to be achieved...and then, possibly and with a lot of hard work and strong leadership, United can once again be the worldwide airline leader we all hope it can be.
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998