[FoRK] useful mplus analysis
Rohit Khare <
rohit at commerce.net
> on >
Wed Apr 26 19:19:02 PDT 2006
The Friday-night frequent-flier massacre
Big companies and politicians often bury bad news by releasing it on
Friday because it means that the unhappy tidings first appear in the
seldom-read Saturday newspapers. When they have particularly bad
news, companies announce it after the New York markets close at 4
p.m. And when they have unbelievably rotten information to own up to,
they release it on a Friday before a major holiday when they think no
one at all is paying attention.
Earlier this month, United Airlines announced a new package of fees
and higher award levels for its Mileage Plus frequent-flier program.
At 5:10 p.m. on Good Friday.
Since we know what United thinks about the annoying new fees and
jacked-up reward levels by the timing of its release, there's no
reason for us to waste any space formulating an analysis of the
specifics. As you can see for yourself in United's announcement, the
changes are at least as horrible as the airline's tortured attempt to
bury them would seem.
We're better served by discussing what the changes say about United
and Mileage Plus in particular and about the increasing devaluation
of Big Six frequent-flier plans in general. Herewith some thoughts
about those very topics.
The big airlines think you're gullible
With their total seat capacity down sharply since 9/11 and paid
travel demand roughly back to year 2000 levels, the Big Six airlines
have precious few seats available for frequent-flier redemption. And
judging from the howls of protest from fliers who never quite
realized that the Big Six were serious when they said the cheapest-
priced awards were "restricted," the airlines are gearing up for a
summer of discontent about restricted-award availability. But rather
than own up to the shortfall, United Airlines said this in its Good
Friday press release: "United has reserved a percentage of Saver
Award [restricted] seats on every flight to every international and
What's the percentage? United doesn't say. How many seats on each
flight are we talking about? Again, United is mum. But let's do a
little math: A United Airbus A319 in domestic service is configured
with 120 seats. If United reserves just two of those seats for
restricted awards, that would be a "percentage" of 1.66. A United
Boeing 747-400 in international service is configured with 347 seats.
If United reserves just four of those seats for restricted awards,
that's a "percentage" of 1.15. See how easy it is to manipulate the
"reserve a percentage" game when you don't commit to something tangible?
Learned your lesson about 'mileage banks' now?
If you look at United's new award chart, which goes into effect on
October 16, you'll see that most of the award levels have increased.
An unrestricted first-class ticket to Hawaii, for example, will cost
190,000 miles, up from the current 160,000 miles. That's an increase
of 18.75%. An unrestricted first-class award to Australia has jumped
to 270,000 miles from 200,000 miles, an increase of 35%. An
unrestricted domestic coach award will cost 50,000 miles, up from the
current 40,000, or a 25% jump.
It's useless to try to compute the "average" Mileage Plus award cost
increase because no one claims the "average" award. But one thing we
can say: Any United miles you have in your Mileage Plus account are
going to be devalued by around 20% when the new award charts become
effective. So now do you understand why I've been telling you for
years not to treat your frequent-flier accounts like bank accounts?
There simply is no, er, "percentage" in allowing miles to sit unused
in a Big Six frequent-flier account. Use them now or watch them
continue to devalue like a third-world currency.
What a difference 50 miles makes
United's Good Friday night massacre makes much of its so-called Short-
Haul Saver Awards. Introduced by the Big Six for limited periods in
recent years, these awards have typically required just 15,000 miles
for a restricted roundtrip on routes of up to 750 miles each way. But
in extending its program through 2006, United capped the applicable
routes at just 700 miles. What purpose is served by looking petty and
knocking 50 miles off the 15,000-mile award? Plenty. A slew of routes
are no longer eligible for the "short-haul" award, including those
from United's Chicago/O'Hare hub to New York/LaGuardia (731 miles),
Newark (717), Montreal (745) and Winnipeg (706).
New surcharges spring up
Come October, United will charge a fee of $50 if you book an award
seat less than 14 days before departure. Book within six days of
departure and that fee jumps to $75. These surcharges won't apply to
United's ultra-frequent customers (Mileage Plus 1Ks and Global
Services members), but all other elite fliers and regular travelers
will pay. What rationale can United have for these fees other than it
is an opportunity to beat more revenue out of customers who have
already paid for the right to claim the award?
Finally, this must be said: The new fees and award levels that United
is imposing are not onerous if you compare them hypothetically to the
fees and award levels charged by the other Big Six carriers. Mileage
Plus award levels and fees starting in October will generally be in
line with other big U.S. airlines. (And those huge new mileage
increases for Australia awards are designed to put United on a par
with what Qantas charges its frequent fliers for free seats.)
United has traditionally kept Mileage Plus somewhat richer and
somewhat less expensive than the competition. But now the airline is
sticking it to their best customers, the very flierss who stuck with
them through the 2000 meltdown and the three-plus years of bankruptcy.
Joe Brancatelli is editor and publisher of JoeSentMe.com, a website
for business travelers. He is also the former executive editor of
Frequent Flier magazine, travel advisor of Travel Holiday and
contributing editor to Travel + Leisure. He can be reached at
travel at usatoday.com.
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