United’s First Class Sale: Brilliant or Foolish?

For about three hours this afternoon United Airlines offered up a sale in their first class cabin on four routes: Chicago to Seattle, Los Angeles, San Francisco and Portland, OR. Travel was only available over Easter weekend, with outbound travel on Friday and Saturday and the return on Monday or Tuesday. The flights priced out around $400 round-trip, plus taxes. Overall that isn’t a bad deal at all, but was it really a brilliant marketing move like some are claiming?

By some I mean Business Week. On their Traveler’s Check blog the magazine has a post describing how

…airlines – especially United – are innovating beyond the traditional weekend specials. That’s good news. One can imagine these kinds of efforts spreading, assuming the math works.

Yes and no.

For starters, United certainly publicized this sale differently than others they’ve offered, but the carrier has frequently offered up first class seats on a number of routes for a similar price and without the incredibly restricted travel dates or sales window. So, yes, it is somewhat new in that they are openly pushing sales of these seats, but they do often offer first class seats at discounted prices. As a random example, Orlando – Detroit is currently selling for $500++ in first class right now, without the terrible date restrictions. Fares of this nature can be found using tools like FareCompare.com’s Y-Up Search Engine.

Beyond that, this new sale happens to have come only two weeks after the carrier dramatically changed the way they handle upgrades on domestic flights. Previously the carrier required their frequent fliers to surrender miles, points or electronic vouchers for most upgrades. This approach resulted in the airline receiving a bit of revenue or at least revenue offset (removing the miles from their ledger) for the upgrades. But as of March 19th the carrier has implemented Unlimited Domestic Upgrades for their elites. Now elites are upgraded based on status and available inventory prior to the flight time, similar to how US Airways, Continental and Delta handle upgrades for their elite travelers.

The new upgrade scheme means that the airline is essentially giving away all of their unsold first class inventory. Yes, they can oversell the coach cabin knowing that they have the extra seats to move folks into but that was always the case. Comparing the two schemes head to head it appears that the new program extracts less direct revenue for the seats in the front of the cabin. So what to do? Make up that revenue elsewhere by selling those seats. Of course, if the seats are sold to revenue passengers then there are fewer available for the elites to get for free and that means upgrade rates will suffer for the revenue gain. Selling the first class seats out from under the loyal customers is most certainly not a good way to ensure future loyalty, something else that the Business Week post suggests in in the works with such sales:

Building customer loyalty can take many forms.

The ultimate irony in this sale is that for flights on those same dates in the coach cabin one would have to pay more – as much as $225 more for the cheapest available coach fares on the same flights that the discounted first class seats were available on. So all those folks buying regular tickets – and they’re probably loyal customers at this point to be buying at those prices – are actually going to be in the back while folks swooping in for the cheap seats will be up front.

Doesn’t strike me as a particularly great way to build long-term loyalty, the type that is profitable.

Related Posts

Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.

Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

One Comment

  1. My two power strategies are to select a few travel partners and be loyal to them to maximize your benefits. Secondly, use a single credit card with a good reward program for everyting. Yes I mean everything. You should have heard me and the Acura salesman negotiating over a $42,000 purchase being put on my American Express card!

    As for the travel partners, I have a friend who has used Hyatt hotels exclusively for 25 years. He hasn’t paid for an exotic luxury hotel detstination vacation in 12 years and he can get a great room at any Hyatt anytime – they never tell him they are sold out!

Comments are closed.