Yes, getting to drive the deicing truck was the highlight of my visit to United Airlines last week. But that was on Thursday; Friday offered up the opportunity to meet with a number of executives from the company and ask pretty much any questions we wanted of them. Sure, not all the questions were answered in our favor, but it was great to have that access to everyone from the CEO down to department level managers. I asked a few questions of my own but mostly just listened to the others and to the answers and I came away with a whole lot of information. Really almost too much to process in many ways, but I’ll try to parse out the useful bits and split it up by category.
If you are interested in what Jeff Smisek has to say about the state of the company vis a vis some of its most obsessive and vocal critics, I recommend watching the recording of his keynote embedded below. I wish he would have been more direct on a couple of the issues rather than skirting them. But overall I remain impressed by his direct, no nonsense approach to running the business. I don’t necessarily like all the answers, but I appreciate that he’s willing to give them without wavering and because he believes they’re in the best interests of the company.
Beyond that, there are a few interesting bits of information which came up in the other sessions throughout the day. Here’s my take on them, split by category.
Social Media
United’s social media efforts have lagged their peers for a while now. It turns out that probably had something to do with the Social Media team being part of their marketing group rather than as part of the product team. That changed over the summer and, while the evidence of progress has been scarce thus far, they’ve got big plans on the horizon. The group is now managed by a direct report to Mark Bergsrud, SVP of Product, with a staff sized to handle the responsibilities. Also, the team will include employees from across the organization. This includes members of the reservations group. While it remains to be seen just how actively they are able to get involved on any specific incident, the plans suggest that United is going to try to catch up to the others in a big way. When pressed for details on a timeline the answer was "weeks" which is actually better than I expected.
Lounges
The lounges are too crowded, the amenities are mediocre and the wifi is slow. The concerns about the lounges haven’t really changed all that much over the years. Bergsrud addressed the inquiries with a few updates:
- O’Hare will be getting a new 12,000 square foot lounge in Terminal 2 later this year. That should help with the crowding issues there.
- San Francisco will get a new lounge when the renovations of the old terminal are completed. That’s going to take a while yet, but it is in the plans and the construction is already started.
- Newark doesn’t have a lot of space for new construction so that’s the main limitation to expansion right now.
- Los Angeles will undergo a major renovation effort starting in 2014 and lounges will be addressed as part of that.
- Dulles is a problem and they know it. Conversations are ongoing with the MWAA but don’t hold your breath at this point.
Regarding the wifi performance concerns, the migration off of the T-Mobile systems is complete. They are working on building additional monitoring platforms now so they can react in real-time to slowness and other connectivity issues.
Beyond that, don’t expect any additional airports to have lounges opening anytime soon. They’re pretty comfortable with the lounge network they have.
In-flight Entertainment & Connectivity
The company is very happy with the entertainment systems they have in place, particularly on their long-haul fleet. For in-flight internet connectivity they accept that they are currently slow on the adoption but they are also confident that waiting will allow them to leapfrog the competition. The plan is still to have 300-350 planes outfitted with satellite-based connectivity by the end of 2013. This will allow for internet service on nearly all routes, save for some in China and on Polar flights.
There is one A319 currently with the Panasonic wifi kit installed but not active, pending FAA certification. There is also a 747 in the shop getting fitted for connectivity. As part of the 747 fitting they are also installing streaming media servers on-board for so-called bring your own device ("BYOD") service. The BYOD content will be free for passengers in all cabins, just like the AVOD systems on the other aircraft. No word on power plugs in economy on the 747s, mostly because I forgot to ask.
Regarding the aircraft conversions, there are only 2 767-400s still pending the new seats and 7 777-200s which will receive the IPTE international flat-bed configuration. The 777-200s which will receive the new Hawaii configuration will start in 2013.
Product Differentiation
Pretty much every passenger wants a bigger, better seat with more amenities in the air and on the ground. It doesn’t appear that United is going to be pursuing that path. That’s not to say that they won’t remain competitive – they are the leader in business class flat beds flying these days – but they don’t plan to be running in front. As Bergsrud said, "We are not going to differentiate through pitch or through width or hard product." Essentially that’s a cash-heavy requirement and they’ll constantly be passed by others in the investment cycles. So they’ll remain competitive in the seats but look to win elsewhere.
There are two main areas where Bergsrud indicated that such effort will be invested. The first is in the route network. That’s been the party line pretty much since the merger and that was the first thing out of his mouth when asked the question. I don’t expect that to change any time soon. The other area they expect to excel is in technology. "We are going to differentiate ourselves through IT.… We should be able to spend a little more money on our website than Alaska." A noble goal, but it is going to take some work. They plan a number of small updates to the website in the coming months with a major redesign happening later in 2013. And there will be a number of back-end updates as well; they are still running different systems for some legacy United versus Continental operations.
MileagePlus
The session on the MileagePlus was probably the most contentious of the day. There were many questions asked about upgrades, how many people are at each level, how often upgrades happen and why United Club memberships cannot be purchased with points. Unfortunately there weren’t a ton of answers offered. Part of that is that many of the questions were about things which I wouldn’t have expected to be answered. And part of it was about who was running the session. Such is life.
Overall it was a very informative set of sessions. Lots of information to process and plenty of things to think about. And United stuck to their guns on a number of topics. As I’d expect a business to do.
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Really interesting that Mileage Plus got the poorest answers – why does that surprise me. They know that telling the truth about issues, such as upgrade priority, would be a huge issue for their frequent flyers. The business model where you promise upgrades and then sell cheap ones to infrequent flyers, is one that is here to stay.
Anything about the decidedly noncompetitive IFE on the 747s used on the SYD routes?
The 744s are getting the streaming media servers and wifi installed. The first one is in the shop right now.
The C/D gates at Dulles are absolute crap. There are two reasons I’d willingly fly out of there. 1) If my only other option was an early morning flight out of DCA or 2) If my only other option was to connect in the US on an international connection. For any other itinerary, I’d take a connection out of DCA.
getting wifi installed shows their project management prowess. more and more it appears their prowess is marketing to make you think you are getting something when you arent. domestically at least. thanks for the info
What’s the new Hawaii configuration? I don’t recall ever reading or hearing about such a change.
There will be a sub-fleet of 777-200s (the non-ER model) configured to fly to the islands. They are expected to have prior generation “business” seats with a bit more pitch than the current “first” config on the domestic 772s but not flat beds or anything like that. Basically a hybrid to account for the fact that the flights are often quite long but also that they don’t really have the same yields as the true long-haul routes.
How do you reach this conclusion: “they are the leader in business class flat beds flying these days”
@Tom: Number of planes/seats flying with the flat beds. That’s all. I’m pretty sure it is correct.
@Oliver: They did address the lounge for miles thing. It is a technology issue and they do have manual workarounds for some members but nothing automated and not for everyone. I expect that it will be 3 UClubs at SFO as well. And if you’re flying in Y with the BYOD streaming media on UA it really isn’t all that much worse than flying most other carriers in Y. That’s not to say it is fun or exciting. But it really isn’t all that much worse than what anyone else is offering.
Thanks for these notes. A couple of questions/comments:
– I assume the new UC at SFO will be in the old AA part of Terminal 3 and in addition to the existing T3 club, not instead? So in other words, there will then be three UCs at SFO?
– how do they expect to compensate with IT for an inferior hard product? Not clear to me that a better website would make up for 14.5 hrs in an aging 747 with no IFE. That said, personally, I don’t mind the C/F product they have… I know many people hate the 2-4-2 C layout and sure, I’d prefer 1-1-1 myself as well, but given that I don’t actually get to fly it unless I happen to get an upgrade or award seat, I always vote for more seats 🙂
– will they have enough bandwidth to support 200 streams from their media server to iPads and other devices in the back of their 747s?
– I am surprised that they didn’t/couldn’t answer the “pay for UC with miles” question. I always imagined it’s just a matter of their website not having the functionality and it not being worth investing IT resources into that particular feature. Given that they are willing to sell toasters and MP3s for miles, while not club access? (assuming they price it according to their cost)
I don’t really plan on using the streaming if I end up on one of those planes (other than to see how it works). More efficient battery-wise to use local movies/TV shows (and I have lots to choose from) and pretty much guaranteed better quality, too. Been doing that for a long, long time… long before the iPad even first came out.