United Airlines is committed to improving its operational performance in 2016, so much so that it is offering some corporate customers a guarantee for both on-time performance and completion rates. This is spectacular news on the surface – any commitment to more on-time flights should be seen as such – and United’s approach is far broader than a similar offering Delta brought out earlier in the year. But there are also a number of “quirks” in the announcement which raise questions to the overall value proposition.
The United Promise covers domestic and international flights. It also includes regional operators, not just mainline. And for on-time and cancellation the company is taking A:00 (i.e. actually on time, not the DoT “within 14 minutes” rule) and counting cancellations from any source, including weather and ATC. Delta excludes regional and international routes. In both cases the airlines are committed to beating only one of the other two major carriers, not both. In other words, it is unlikely either will pay out. United’s program also requires it to lose on both the A:00 and the completion scores to pay out. Adding in regional carriers, for example, gives UA a decent chance of besting American Airlines on at least one of the factors as its Envoy operation has historically sat at the bottom of the DoT rankings.
If United meets either the A:00 Rate or the Completion Factor operational goals, then no United Services Funds will be credited to eligible Corporate Accounts under the GPC.
There’s also the question of which companies are eligible and the overall value of corporate contracts in general. The generic discounts system-wide for companies are mostly a relic of the past at this point; the more valuable deals are closely focused on specific city pairs and this guarantee is, too. For a company to be eligible its UA agreement must include “one or more market share targets” and “the Corporate Account must have achieved at least a combined weighted average of 95% of all the market share targets of that Corporate Account.” In other words, the company must commit to a significant amount of United flying and actually meet those commitments. If a payout is required United will issue it in the form of United Service Funds based on the number of seats on flights which were delayed or cancelled occupied by the company’s employees.
So, fewer grand discounts on corporate contracts and the guarantees being offered up sound a lot more like markets speak than a useful commitment. Of course, if the airlines really do try to have better performance numbers to meet these goals I’ll take it. But the cynic in me doesn’t see a ton of potential value given the fine print.
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