United CFO: Certain elites were over entitled

There’s a thread on FlyerTalk discussing a comment United Airlines CFO John Rainey made during the 2012 Bank of America-Merrill Lynch Global Transportation Conference that caught my eye earlier today. I was highly intrigued, so had to take a listen to the presentation myself and here’s exactly what he said:

That statement was made while he was noting the benefits of SHARES from this slide:

Image courtesy United Airlines

First, he noted how SHARES, unlike Apollo, has the ability to revenue manage ancillary products, like Economy Plus. United can now charge different prices for an E+ upgrade depending on the day of week, time of day, type of seat (aisle, middle, window), etc. Then he mentioned how SHARES allows United to better manage the MileagePlus program.

This is when he dropped the comment, which has many on FlyerTalk pissed off beyond belief. While I’m not outraged by it, it does sting quite a bit and I’m surprised he’d say such a thing at a time when sooo many elites are already questioning a switch in loyalty, if they haven’t already jumped ship. I know that what he said is management’s attitude, but to say “over entitled” out loud… just ridiculous. Even if I’m not in the “certain” group he’s referring to (I know I am), it still stung.

Maybe I shouldn’t be surprised… the guy who introduced him said he prefers to be viewed as, “a finance guy more than an airline guy.”

So much for loyalty. A revenue-based elite program (vs. mileage-based) is looking more likely sooner rather than later.

Comments

  1. Don’t even get me started with airline loyalty! I had choice words this week with Delta over my lowly silver elite status. I went to use some of my points for a car rental and what do you know they decided that every elite tier above silver was entitled to use the sky marketplace except silver. Why not? You think they’d encourage burning points is ways besides award tickets. Really – why even bother having a silver level? We get nothing – nothing that I couldn’t get with signing up for the co-branded AMEX. Just makes me mad.

  2. Sadly he is spot on the money. Loyalty programs are really poorly designed and make no sense. We all love exploiting that. Some day in the future they will all be 100% revenue based which is what the airlines really should be rewarding. Meanwhile let’s keep on enjoying. And to those who say goodbye united, LO-freakin-L. Like any of the other airlines care more about you. Over entitled indeed.

  3. In my opinion it’s not the flyers that are to source of the problem, but rather airlines over compensating credit card users that devalue the overall mileage program.

    50,000+ miles, lounge access, upgrades and free baggage are ridiculous perks for signing up for a credit card.

  4. As a longtime 1K it certainly seems that the ‘over-entitled’ were everyone who was not a UGS to the new United. Everyone has seen plenty of examples of United selling upgrades to the infrequent flyer for a tiny number of $, whilst elites fly in coach. I am not surprised this is the view of the new United but it is a shame. Time for an AA match me thinks.

  5. Andrew – spot on. When one can buy Priority Access, First Bag Free and early boarding for $95 year (or close), what’s the point of a bottom tier in the program with the same benefits?

  6. @Mark-
    Or you could just pay for the upgrade. I mean if it is as cheap as you say it is – then buy it. nobody ever promised you UA wouldn’t sell the F seats cheap just so you could get them free.

  7. I think the club card isn’t really a big deal, the people who are getting that are likely just heavy domestic premiers, so they already have every perk the card offers except 1.5miles/$ and UC access, offering that for free for the first your is downright stupid, the clubs will be crowded as hell, and often I have trouble finding a seat already.
    I don’t like the explorer card benefits, for $95 you don’t deserve all you are getting, UA used to charge about $700 for what $95/year will get you, so if they are looking to maximize revenue, they are doing a very poor job.

  8. @Hunter – one of the biggest gripes is that elites CANNOT buy the upgrades – you are already on the waitlist for a complimentary upgrade, but an infrequent traveler will get a buy-up offer at check in and tatjumps ahead of you. Another example of how Continental vales transactional loyalty vs LVC (lifetime value of customer). The other issue is that there is declining differentiation between levels. when new boarding process started several months ago all hell broke loose because all elites were one clump. It caught Continental management by surprise, and took a few months to rectify. Sadly not the first flat-footed decision,and obviously not the last one as United descends and Continental doing business as United ascends.

  9. All of the elites are not in one groups. GS and Military pre board, group 1 is first class and 1K, 2 is platinum and I think business (it may be 1), 3 is gold, 4 is silver, 5 is cardholders, 6, 7, and 8 or zones 2, 3, and 4.

  10. I think this whole revenue before loyalty thing when it comes to upgrades is flawed. You purchased a ticket in economy, you are not entitled to first class just because you are loyal. If elites can’t buy up to first class, that is a serious flaw, but allowing people who pay to get ahead of people who don’t doesn’t really bother me.

  11. @Kris -that’s e frustration. UA previously sold upgrades via a 500 mile certificate (just like AA stickers). You earned 4 after flying 10k miles or could buy themwith miles or cash. That system was scrapped to match CO unlimited free upgrades right as the merger first announced. Many of us preferred the old system.

  12. I have been “Silver” Premier on United for about a decade. Along the way, I have sometimes paid more for a United ticket than I could have paid to fly on another airline. NO MORE! Like the current United management, out with loyalty and in with economics! I’m going to get a United Chase Explorer card (cheaper annually than my United Chase VISA that gives me a lousy 6,000 EQM’s per year) and fly most of the time on the airline that gives me the lowest price. What United’s current management does not understand is that United is not Continental. United is too big to be sufficiently revenue enhanced by a small number of high paying last minute flyers who are also being eagerly sought by most other airlines. I have been loyal to United because it has highly valued safety and has had very good flight crews–and I live in Chicago and it goes almost everywhere from there. I’ll use the Explorer card when I fly United. I have been upgraded so few times that maintaining “elite” status just isn’t worth it.

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