A Moment of Brutal Honesty: United Thinks Their Problem is Too Many Customers

After what I thought was the most blunt explanation from an airline I’ve ever seen for a devaluation, it seems the trend towards revealing honesty in the industry continues.

Usually devaluations are called ‘enhancements’ and benefits are removed ‘based on customer feedback’.

Instead, we have United — which has long believed their customers are the problem — admitting as much on Twitter.

United this week announced that the minimum revenue for elite status would go up 20% next year.

Now United admits they’re doing it because they have too many frequent flyers that buy their tickets enough to earn elite status.

Here’s United’s tweet:

The need to fix the ‘problem’ that they are inundated with many members.

The biggest problem with United, it seems to me, is that United believes its customers are the problem. (Of course, they also think the problem is their employees too.)

In fairness, an equally plausible explanation is that the tweet doesn’t actually reveal what United thinks about customers as much as what it thinks about Delta. When Delta raised their revenue requirement by the exact same 20% they declared that ‘when everyone’s an elite flyer, no one is’.

United may have just been revealing their belief that they need to mimic the marketing slogans of Delta (just as they need to mimic everything else Delta does).

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Well, I’m doing my part to help United with this problem by not flying with them any more than I have to.

  2. What would be so wrong with treating everyone decently? Now that I’m no longer an elite *A passenger, I don’t feel like they value my business at all. My next international flight is on Delta, and I like the idea that most of the plane is filled with normal, non-premium seats. We’ll see how it goes…

  3. Under a former chairman Continental (without United) went from worst to first. Just another example of United going from first to worst.

  4. We can parse United’s intentions, marketing messages, me-too approach and devaluations all we want. At the end of the day it really doesn’t matter one iota. United will do what it feels makes the most sense for their business. If that turns out be misguided and they make less or lose more money, well it’s on them.

    As for travelers, they usually have a choice about who to fly. If they’re not happy with the current state of things, they can fly someone else. As has been pointed out on this blog and numerous others, FF points are a somewhat perishable commodity due to future devaluations, and status/benefits can be nuked at any time. To cry and whine over it is rather pointless.

    When the system becomes harder to game, the ones who game it the most are often the ones who are most up in arms. Sure there are some folks who drive a lot of business in United direction who are also caught in the crossfire of these benefit reductions or a higher bar to achieve the same benefits. United (and their doppelganger Delta) try to minimize this, but it’s not always easy. Clearly they are trying to strike a balance, but from outward appearances they seem to be floundering.

    Time will tell whether these changes are a benefit or a drain on their bottom line. At least complaining about it provides good fodder for the blogosphere. 🙂

  5. I say United should merge withe Delta and maybe the new name will be Continenal-Northwest Holdings dba CNHAir

  6. Someday someone will figure out how to properly run an airline. But I think it’s a fair bet it won’t be United management. Anyone else miss Bob Crandall? LOL

    Here’s a great Crandall quote from 2008:

    “The consequences of deregulation have been very adverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An even higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable.”

    Not sure that re-regulation will help. But what we have now sure does suck.

  7. I’m reminded of another Newsroom line. They were talking about the presidential election and a Romney spokesperson was quoted as saying:

    “Sharron Angle’s angry because the press is reporting what she says to the press. The statement goes on; “We needed to have the press to be our friend. We wanted them to ask the questions we want to answer”. Do not laugh, I felt the exact same way about the bar exam.”

    I guess United is expecting us to want to sit in nothing but middle seats with no leg room and no recline. I must have missed that memo.

  8. As ridiculous as it sounds, assuming you do make elite status, wouldn’t you agree that the experience will be better because you will be competing with fewer elites for upgrades and benefits?

  9. As an over entitled Elite, I am fine.
    I just do not know how anyone else can do it
    Flying US-PEK/OVG/NRT is hell even with the useless business class seats
    Doing it in economy for fun is impossible to imagine

  10. well, they are right. I’ve been place 25 on the waiting list for an upgrade… as a 1k! There are too many elites, this will thin the ranks by eliminating those who do mileage runs. Fewer 1ks means that the upgrades have more chances of clearing – it makes the program a lot better. It’s also a way they can devalue without reducing the number of upgrade certificates.
    This is a major improvement of the program, coming after a series of devaluations (especially the award chart one)

  11. You can be place 3 if you makes you feel better augias, but they’re still selling that seat to a no status flyer on an s fare for $59!

    In fact, come to think of it, it will probably be even easier to sell TODs with more folks not on the upgrade list. (the ones they do not offer TODs to).

  12. On a recent United economy flight from SFO to HNL the flight attendant announced that I was aboard the newly enhanced Boeing 777, that’s the one with more seats, less space, no audio or video and one less bathroom. Thank you United.

  13. I laugh at all the leisure budget travelers getting upset that an airline wants to only reward the customers who pay the most money for its services. That’s called good business, folks–especially in the new market where there are only 3 legacy carriers with true international longhaul route networks and with the most extensive domestic route networks. With less competition, none of these major 3 carriers needs to be as generous to keep customers, since customers now have fewer choices. It’s just that simple.

    Feel free to whine all you want. UA and DL want to make it a bit more expensive to qualify for their elite status. The net effect of that will be to shrift the elite ranks a bit, making that status more valuable for the elites who DO pay more (e.g. mostly business travelers, which is the core for any airline).

    We’ve all enjoyed the gravy train for a long time, but the airlines have now become extremely profitable and now have less competition. The pendulum has now swung away from leisure travelers having the power, and too many of you are now whining about that fact. Suck it up and adapt. The airlines already have. And for the American/US Airways flyers among you, enjoy the year or so you have before you until American does exactly the same thing as UA and DL.

  14. Back in the ’90s many general interest magazines decided (well, their advertisers decided) they had too many demographically-inferior subscribers, so the industry went through a pruning exercise to reduce their readership numbers, but deliver to advertisers a premium readership. This appears to be the same strategy being followed by UA today. However, from a purely non-scientific observation of my friends who are FFers, the vast majority are not employed by companies who pay their way, but who pay their own way. They seek status to make travels more comfortable, and of course bring about a good ROI in award tickets in premium classes. As AC went about a similar strategy over the past several years, i’ve seen just about all these folks move their business to UA. I figure they represent about $15K in low-fare albeit upgraded where possible travel with UA today. Not a lot, but if I can extrapolate these dozen folks here in Toronto, across NAmerica (and based on my reading and meeting of many FT/MPers over the years this is no all that unscientific a sample) that could conservatively represent several thousand otherwise loyal FFers. Maybe that few million a year won’t mean much to UA’s bottom line, but I am seeing these folks moving over to AA and AS both in their elite programs and their revenue flying.

    I see this phenomenon to parallel what’s happened to the US economically with the hollowing out of the middle class and the vast shift of wealth to the 1%. The airlines are just keeping up with the shift of wealth in the US, and trying to benefit from corporate largesse when employees travel, and case little for the ordinary but dedicated flyer.

    I suppose I am fortunate to have lived through the best days of the FF programs, since they began in the 80s. Have no complaints at the benefits I’ve received over the decades, and the trips my late wife and I have taken over those years in premium cabins staying in 4/5 star hotel club level rooms/suites thanks to these programs. I feel for the generations below me who will not be so blessed in being able to see the world.

  15. I understand what they are trying to do, but they are only sort of doing it the right way.. just go purely income based.

    If you want to REALLY more fairly reward those that help the bottom line; I would say a Silver that spends $9,000 on 25,000 miles flown (and they exist) is more important to the airline than someone that flies 100,000 miles and spends 12,000, yet they reward the latter flier with more benefits.

    Further, those that think they may be thinning the ranks for upgrades against mileage runners are most likely mistaken; mileage runners tend to go most miles for the buck which is generally international; your domestic routes vs other 1Ks is rarely against a mileage runner.

    Where United is going wrong is they are alienating customers and monetizing their frequent flier programme to the point that the customers that used to spend a few extra dollars to fly United over the competition to earn that free ticket now realize they’ll need to spend $5,000+ to get a free ticket, where if they just fly Southwest or the cheaper alternative each time they’ll save 500-700 over the time it takes them to reach the $5,000 in spend.

    It is like if Starbucks monetized their programme, instead of buying 12 drinks to get a free one, you have to spend $50 to get a free drink. Many people get addicted to getting that free drink and spend more money at Starbucks on cups of coffee just to get that 1 $6 free drink.

    United cannot afford to lose the customer that previously paid a premium to fly them.

    In the past I spent $300-400 more to fly United vs *A partners because earning wasn’t 100% bonus.. now if my choice is earning 11,000 miles for $1100 (taxes of 100) or earning maybe 5,000 miles on a $700 ticket as a 1K I’m flying the partner and saving the money because the difference of 6,000 miles is worth $200 to me and saving $400 is better.

    UA now pushes me to fly a partner airline.

    In the end, I took my vacation time from work and will do mileage runs in January/February to hit my 2MM, earn 160,000 RDMs and be done with United.

  16. While I can see the business reasons United (and Delta) are doing it, I certainly don’t think it will make the programs better because there are fewer people in them!
    I wasn’t upgraded on an international flight on United as a Global Service member, because 8 people (!) where ahead of me on the upgrade list. When I asked for the reason, the agent, after some prodding, said that those were people paying for the upgrade, status or not! Obviously, UA values a one-time payment of $500 for an upgrade more than the $50,000+ revenue from a frequent premium class-flying GS member… I moved my spend to foreign carriers for international flights and are happier for it…
    If you think that as a 1K you will get more upgrades in the future, think again… there will be more upgrades sold, fewer available for GPU/RPU or complimentary…

  17. I understsnd the logic behind UA’s desire to reward transactional loyalty (to the almighty dollar) but the system just isn’t as lucrative as the other choices. Sure, AA/US and AS may change but I will continue to keep my loyalty with airlines that reward my loyalty based on more than dollars spent. If and when those programs change, then I will go to a purely transactional based purchasing model… If I save some $$$ by always booking the low fare, it doesn’t matter if I occasionally check a bag or pay for an upgrade.

  18. Actually, United doesn’t mimic everything Delta does. Delta values its employees, who have already received a portion of their profit sharing. Delta isn’t replacing their loyal hard-working employees with outsourced employees. “Because you know they’re (United) all about the buck, bout the buck, not service,
    ‘Cause every inch of them is greedy
    From the bottom to the top.”

  19. I’d like to switch but I searched for TATL awards out of SFO on AA and the choices were horrible.

    Many of the routings were over 20 hours because there was limited availability for the BA SFO-LHR direct.

    Maybe if I can earn miles and redeem awards strictly on DL, AF/KLM, maybe some AA, then Alaska might be workable but I imagine it’s kind of tough to be with them if you never fly to the northwest or Hawaii.

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