United announced today that there would be “major future fee changes” to help boost profits and increase pretax income by 2-4x current levels by 2018 after announcing disappointing earnings last quarter. From Businessweek:
An income boost is expected to come from ancillary revenue, the kind of bag, food, and seat-assignment fees that have helped U.S. airlines return to profitability over the past five years. United plans to target $3.5 billion of ancillary revenue by 2017, $700 million more than its prior plan. One way to do that is by better collating and analyzing data on customers so United can tailor its product and service offerings and sell more of them. “The marriage of big data and this mobile platform … becomes incredibly powerful,” said Scott Wilson, United’s vice president of e-commerce and merchandising. The airline has squeezed 30 percent more revenue this year from 2012 through “dynamic pricing” of its Economy Plus section, which has more legroom, on a flight-by-flight basis. United can gain about 20 percent in sales next year on that seat pricing, Wilson said. “I think we are just scratching the surface on ancillary,” Smisek said.
United also announced that they would be shifting several of their largest aircraft away from their Tokyo hub so that they can be used on transatlantic flights. Additionally, the Seattle (SEA) to Tokyo (NRT) flight operated since April 1983 will sadly end in January 2014, allowing Delta to continue building their Asian hub in Seattle. United will add another daily Tokyo flight from Houston (IAH) beginning in March as well as new daily Houston – Munich (MUC) service beginning in late April using legacy Continental 767-400ER aircraft.
Related
- Full Summary of United Devaluations & New Developments…plus my personal exposure
- What Does Lufthansa Think About United’s Devaluation & Member Redemptions?
- Delta & Alaska – Best Frenemies? The Battle for Seattle
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6 comments
Good. re increased fees.
Reasons:
Fees: They see economy has improved and people are feeling “spendy” and so let’s gouge them and eventually they will get used to this (first they stopped serving food and remember how Airlines justified the baggage fees due to higher fuel cost back when the crude was ~160/barrel?). Then they will bring back customers by offering higher credit card sign-up bonuses in one hand and reducing/restricting award seats and at the same time make people forget the cash back cards with helps from the some of the bloggers.
Flight changes: Texas is gaining in population both from within and from outside (Austin/Dallas/Houston/San Antonio) and so Airlines are simply responding to this demographic trend.
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Lol, thanks for the post. Upon reading this i remembered that I am booked on the nrt-sea flight on February. Sure enough the flight had simply disappeared from my booking! Good times, United.
@Julian – Lol, typical of the new UA! Let us know what happens!!!
[…] United to Increase Fees – “Just Scratching Surface”, Cuts SEA-NRT Flight […]