Plenty of reporters will be covering the United Airlines first quarter earnings call, but largely focusing on the airline’s revenue performance and questions about the fleet – especially the 737 MAX.
For instance United executives were asked whether they have had discussions over compensation from Boeing after the grounding of the aircraft. There were no questions about compensation to customers who have had their schedules changed of course.
My interest is largely focused on customer experience – product, fares, and the loyalty program – and that’s something that gets discussed but not nearly as widely picked up in the coverage. So these are the things that struck me as interesting during United’s earnings call.
- Chief Commercial Officer Andrew Nocella, whom American AAdvantage reported up to when they were devaluing and moving to revenue-based earning, bragged about the carrier’s elimination of award charts and MileagePlus’ win in the FlyerTalk awards. He believes the move is good and also that they’ll win the same award next year.
- He noted that airline is experimenting with increasing the buy up cost from Basic Economy to regular economy, and suggests that when they require more money to buy a fare that allows assigning seats and carrying on a bag. So far he says the tests show people will pay.
first BE was first introduced – domestic gap was pretty static at $50. now the gap is $60 with dynamic variations way above $60 on some domestic routes.
on International – it was $90 initially, now its $110 – $180. the higher it goes, the less incentive to buy regular.
— The Flight Deal (@TheFlightDeal) April 17, 2019
- And also that the airline expects to complete Polaris business class seat retrofits in 2020, and that’s also when they’ll open the Washington Dulles Polaris lounge.
Polaris Lounge Newark
- Airline President Scott Kirby noted they’re now in negotiations with Chase over their card deal. Analyst Joe DeNardi suggested their card deal had had a 1% margin deficit relative to competitors but that with Delta’s new deal with American Express perhaps representing 10% improvement that United’s deficit is now closer to 2%.
- Kirby says that even though they have fewer passengers, they’re revenue is strong because they’re in the best markets. He’s pointing out that strong presence in New York, San Francisco, Los Angeles and Chicago means having a base of customers that spend. That’s a point that’s worth American’s paying attention to — as American scales back its role in New York, that means scaling back potential co-brand card spend.
- Their midcon hub strategy is to increase connectivity, where they’ve lagged competitors. Despite rebanking those hubs they still have a gap to close.
- They see Latin America as especially strong going forward. If that’s true and generalizable it would be even better news for American than for United.
- Scott Kirby refused to comment on training programs at Ethiopian Airlines even though they put their passengers on the carrier through the Star Alliance, mentioning only that there are pre-existing audit processes. He would not say whether they would re-look at the carrier in light of their 737 MAX crash.