Union chief to United, "Let's talk."

It's not me, it's you. In not so many words, Union chief and pilot, Mark Bathurst, delivered his assessment of UA's current state of business. Read the Chicago Tribune article for more details.

In a direct quote from the article, of a quote from his letter, Bathurst says: "United, is not in a good place." But despite its troubles, he said, company officials appear content to let UAL remain stuck in a "fog of mediocrity.""

I'm not really sure what all of this would have to do with re-opening contract negotiations though. Do the pilots want to give back more money so UA can buy more planes, or invest in more onboard/airport amenities? I doubt that. Though I would agree to a certain extent that it seems UA is getting stale. Many things have been made internally of the push to increase customer service/experience, but the work, and the ability to change employees attitudes, is slow at best. Can you collectively bargain for a smile and a friendly attitude? The constant us-vs-them mentality of management-vs-unions continues.

One of the final quotes in the article, (not the one about demanding a new management; that might cut this blog short), is this: "United, Bathurst told Tilton, has "reached a crossroads. You can either take bold, dramatic steps now to reverse the decline or stand by and watch things continue to deteriorate.""

I'd echo this sentiment with a classic quote from a fellow Chicagoan: "Make no small plans; for they lack the magic to stir men's blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble and logical diagram once recorded will never die, but long after we are gone will be a living thing." ~ Daniel Hudson Burnham (1846-1912); Architect and Planner of the 1893 World's Columbian Exposition in Chicago.

Blocked at Wacker

Apologies for the long delay in posts and for the cheeky nature of my last post. UA has instituted new web policies and is now blocking blog sites and the like. Thus, I've been unable to post while between projects at the office. Surprisingly enough, access to FlyerTalk was not blocked. Much news has reached the press since my last post and I'll try to capture some of that soon. Until then, I'll post this now, before I'm blocked again by the IT-folks.

"...and she dances on the sand."

After drunk-dialing our ex-girlfriend for over a month, she's finally decided to take us back. That's right...UA will start non-stop service from Dulles to Rio in October. It's a hard habit to break, wait, that's Chicago not Duran, Duran...anyway, it's seasonal service. So it's only a matter of time before we start ignoring her again and playing poker with our college buddies. We'll also be adding a new non-stop from LAX to Hong Kong, in case Chris Tucker needs to fly over and fight some crime.

How will your time fly? New AA Biz seat.

Yes, yes, yes...this is supposed to be a United blog, but it's also pertinent to know what our chief rival is up to. As many who might be reading this know, most of the major US carriers, United included, are updating their premium cabins. Take a look at what AA has to offer and when UA is ready to announce more news, you'll have something to compare us to. But like the Wizard of Oz might say, "Pay no attention to the International airlines." The US carriers are playing catch up. I included the photo to the right because at first glance it looks like they're showing a laptop circa 1994...but in fact, it's their new entertainment unit. Take the tour at howwillyourtimefly.com. The Flash is snazzy, but the "Play" section about the seat is really lame. Should I sit in a "theatre" to watch a movie, at a "concert" to listen to music, or on the "toilet" to read the paper. Ok, so that last one isn't in the tour, but that would be news...an airline updating the WC.

"Just drive in and get a Coke, 'f yer thirsty."

Coke is it. After a 5-year partnership with Pepsi, United will switch back to Coke on May 1, 2007. Expect some lag time before all flights are stocked with Coke products. You'll also get: Diet Coke, Sprite, Sprite Zero, Seagram's Ginger Ale, Tonic, Seltzer Water and Spring Water. No Coke in the Red Carpet Clubs, yet. Those contracts are separate from the onboard contracts, but the RCC's should be making the switch later this year when the contract with Pepsi is up.



"...anything you know. Cokes..."
Libby Mae Brown (Parker Posey) explains her day-to-day life at the Dairy Queen in Blaine, Missouri, from Waiting for Guffman.

Orient Express of the Skies

Unfortunately, I'm not talking about United. I stumbled across this story on one of my favorite blogs: thecoolhunter.net. Check out this new First Class Cabin offering from Jet Airways. Imagine your own private cabin with table seating for two. Sign me up! Once again, it looks like the US airlines are two steps behind our international competitors. {Sigh.}

Here's a link to Jet Airways website where you can find a Flash tour of the new cabin.

Freddie Awards: Industry Impact Award

Last night, Thursday, April 26, United received an Industry Impact Award at the 19th annual Freddie Awards. The award went for the launch of the Mileage Plus Choices program...not to be confused with Elite Choice. Choices was introduced in 2006 as a new MP Visa cardholder benefit and to quell the rising tide of Capital One and its imitators. From the Freddie's website: "It's an innovative program that allows members to shop for airfares online as they normally would, but when it comes time to pay for the ticket, they can use their 'Choices' miles at the prevailing rate instead of cash. Randy [Peterson] tells the audience, 'I actually think this is one of the best things to come along in a long time.'"

Kudos to the team for receiving some recognition...only wish that Mileage Plus might someday be able to win a Freddie without this caveat: "Industry Impact Awards, also known as the "Randys”, are determined by editorial decision rather than by ballot."

UAL Corporation Reports Improved First Quarter Results

Much creative writing time was also devoted to the new Mileage Plus accounting system: "The negative effect of the change to a deferred revenue method for the company's frequent flyer accounting depressed first quarter revenue by $107 million. ... United now applies the same deferred revenue accounting, previously used for miles sold to third parties, to also account for miles earned for flight activity." The new method "...also leads to greater revenue volatility, increases revenue seasonality, and lowers the amount of passengers revenue recognized in the current period."

In short, United reported $107 million of it's loss because passengers earned miles for flying. I estimate you'll be seeing statements like this one until United can figure out how to utilize the new accounting method for a profit:

"If the company had continued to account for Mileage Plus under the old incremental cost method, first quarter passenger revenue is estimated to have been $107 million higher."

For more of the non-accountant view on this, check out: "How does Fresh Start Accounting effect Mileage Plus".

For the complete filing, go to united.com.

Now Open: New Denver airport facility

The new United Express facility at the Denver airport (DIA) is now open. Check out this article in the Rocky Mountain News for more info, or this blurb from a recent MMP article. Don't call it a terminal though...it's really just an extension. I don't get out to DIA very often. Last time I was there, I never left the airport. Pretty nice airport, but a bit confusing...but then, aren't they all? Excited to see that I had a comment to my first post. Appreciate the feedback. Let me know if anybody out there reading has any questions/topics they'd like to hear about. I'll try to answer, or find answers, for anybody with a reasonable request. (FYI: No, I can't upgrade your next flight. Sorry.)

Flyclear: Fast-Track security

An interesting post today I found on Gizmodo about a new program called Flyclear. From their website: "Get through airport security faster and with less hassle. Enjoy a more consistent and stress-free airport experience. Allow our concierge to help you with your carry-on luggage. Join the thousands of members who Fly Clear®. " It also looks like the capitalist way to go. If the government (TSA) can't get me through security faster or make flying safer from the big bad wolf, then maybe I can throw some money at the problem to buy my way through security. Now that's the American way. We just need the scanners from Total Recall. Though this is starting to look like technology in Gattaca. I haven't heard any developments of United or our hub airports jumping onboard...yet.

#2 of 20 most profitable companies

UAL emerged as the 2nd most profitable company on the 2007 Fortune 500 list. In their words: "The holding company that controls United Airlines returns to the Fortune 500 after emerging from bankruptcy in February 2006. With net income of $22.9 billion, it's the second-most profitable company on the list. However, UAL's big profits were mostly due to bankruptcy-related accounting. Revenues are up 11.3% over last year." Interestingly enough, we're ranked 120 on the full list of 500...right in front of Apple.

A house divided...

While many of the floors have now begun be occupied by HDQ employees, many of the managers seem strangely absent from 77 W. Wacker. It seems our house divided is making it even more difficult to float between offices in Chicago, and with the majority of high-level execs still in Elk Grove, it may be some time before we see the expensive suits wandering the halls.

How does Fresh Start Accounting effect Mileage Plus

Let me preface this by acknowledging that I am not an Accountant, nor do I know the intricacies of "fresh start" accounting beyond how it was explained to me. After United emerged from bankruptcy last year we were required to account for Mileage Plus miles in a markedly different way than over the past 25 years.
When American and United created the modern-day frequent flyer programs in May 1981 they made their own rules. In effect both airlines, and all other loyalty programs since then, began printing their own currency. This wasn't necessarily a new thing, as Green Stamps had been around long before. Members earn miles or points for some form of activity and the airlines allows them to spend their miles for future travel. Now, before we get into "Why can't I redeem my miles to Hawaii over Christmas?", let me stop and say that the system isn't perfect, but it's what we have to work with right now. Fresh start accounting, however, may change that.
Since emerging from bankruptcy, United now considers all the Mileage Plus miles that members currently hold to be a financial liability. Yes, yes..they've always been some form of liability. After all, if every member tried to cash out their miles in one day, we'd have a serious problem. But now, unlike most US airlines, United is taking a genuine financial hit every time a mile is awarded...but...United benefits when miles are redeem. Yes! United now makes money if you redeem your miles. Wha, wha, what?!
This should be public knowledge in our financial records, so those of you with more accounting knowledge than I can feel free to correct me. Picture this scenario to further understand:
You purchase a ticket from United for $100. You fly and earn 500 miles. All other costs excluded United makes $100, right? No, United makes $100 MINUS the cost of the miles. Lets say a mile cost $0.02...that's $10 worth of miles. So on the day you fly, United makes $90 from your $100 ticket. Now the kicker, you redeem your 500 miles (plus a bunch more) for an award ticket. With fresh start accounting, United now makes that $10 when you redeem. Essentially, the cost of the miles are differed until you use your miles. So how does this change things?
First of all, Mileage Plus is now changing the mileage expiration policy from 36 months to 18 months. This has caused quite an uproar in some circles, but please, does anybody really need 3 years between activity. With the old policy, miles wouldn't expire as long as you did something within 3 years...yes, 3 years. For most frequent flyers this is a mute point. They're flying every month, every week or maybe even every day. The new policy gives you a year and a half to show us you're breathing. That doesn't mean you have to fly. No, just do something. Buy flowers for your mom from FTD.COM and earn miles in the process. Bam, you've got another year and half to sit on your hands watching your miles. Why would United do this? Well...since miles are now a legitimate liability, expiring miles means reducing our financial liability. And who does this hurt?
Occasional customers. Not frequent flyers. A 1K could care less.
Look for this new policy to go into effect on December 31, 2007...so if you haven't earned any miles since July 30, 2006, I'd suggest you buy some flowers because come New Years Day on January 1, 2008, your miles will have expired.
More about the effects of this new accounting; in the short term, fewer broad-based bonus mile offers. Large broad-based bonus mile offers to earn up to 25,000 bonus miles by flying from Chicago to Peoria will be too expensive to justify. True, all airlines utilize bonus miles to entice customers to fly new or weak routes. United will still do that. But, now the finances are real. In United's past, and all other US airlines present, miles are really "funny money." Think of it like playing Monopoly for 25 years. You'd probably run out of $500 bills after about the first few hours, so you reach into your old Monopoly box, with the vintage battleship and wooden houses, and grab some more $500 bills to use. Then, after a while, you'd just take the Monopoly money to work and Xerox a whole sheet, or ream of $500 bills. This is how we did it for 25 years, and all other US airlines are doing it still today. I say US airlines because currently Air Canada is also using fresh start accounting for their mileage currency as well.
So, "Why can't I redeem my miles to Hawaii over Christmas?" Well, for starters, there's a simple thing called supply and demand...but more importantly, there's a department called Revenue Management. Revenue Management, or RM for short, is the organization that determines how much each seat on each airplane will cost at any given time. Now, from my perspective their process might as well be magic. I know there are algorithms and programs that crunch most of the numbers for them, but why my seat in 12F cost $213, while your seat in 12E cost $1,560 is beyond me. It's an Econ 101 student's biggest nightmare, and an Econ professors wet dream. Now that I've painted that picture for you, I'll get back to it. In United's, and I'm assuming most airlines RM groups, award tickets are considered "free seats." Yes, you earned 25,000 miles and redeemed your miles for a "free seat". Right? Well...not exactly. Sure, you didn't pay for that seat today, but how did you earn those miles? They didn't just magically appear. You bought two tickets last year and charged your Christmas shopping on your Mileage Plus Visa. Over the course of time, you accumulated those miles by giving us money and for that, we gave you miles for a "free seat". Perhaps you've already connected the dots. With fresh start accounting, the seat isn't really free. In fact, United will make money when you redeem for that "free seat". Back to math, a United saver award ticket costs 25,000 miles. Again, assuming a mile is worth $0.02 each, that means your seat really cost $500. So RM now has the option of pricing a seat at $375 or opening it up for award inventory and getting the equivalent of $500 for it. What does that mean for you? More award seats! You will be able to go to Hawaii for Christmas...eventually. United's RM "magic hat" doesn't yet account for award seats in this way, but they will. Until them, award seat availability will be limited. But, given this basic analogy, it's now in United's financial interest to give you that award seat you wanted. Not to mention, you might like us more. Now let me disclose that I have no idea when, or if, RM will be ready to change that system. So, in the short term, look for more negatives than positives, like changing the expiration policy. We'll save big bucks by expiring the miles of those occasional travelers, and our frequent flyers will actually benefit. Some day, you and I might benefit, too. If the accountants figure out that a "free seat" is actually worth money, and that ultimately, is what its all about.

77 W. Wacker

United Airlines is currently in the process of moving it's world headquarters operation to 77 W. Wacker in downtown Chicago. With this move, the plan is to consolidate "senior management" into one location and create a higher profile location for the company. At least, that's what we've been told. This "Ivory Tower" of ours is quite a departure from the Elk Grove Village location. The Elk Grove location will now be referred to as the Operations Center, or the "OC", but to many it will retain it's title as "The Big House". Yes, aptly named for the size of the facility as well as the feelings of dispare it seems to instill in the inmates, err employees.
In contrast, HDQ is a pristine building in the center of the city. The paint isn't even dry on the new offices. This will be my new home, Monday-Friday. A different commute, a different desk, a new computer (replacing my circa 2002 desktop with a circa late-2006 laptop). The new building won't fit everyone and many of my close colleagues have been left behind in Elk Grove, thus the divide that this location was set to remedy will continue. At least until the next re-org.

Good Friday -- Good Start

Inspired by a recent article in WIRED, I've taken it upon myself to push United Airlines and myself into the 21st century. While the article, and much of the issue, is dedicated to transparency, I haven't received any official approval from United to begin this blog, nor can I guarantee that they won't shut me down. With that said, I'll continue.

I post anonymously for the reason expressed above. If, or when, anyone ventures to this blog, that may change. For now, I will tell you that I am a United employee with slightly over 5 years of experience with the company. I work in the Marketing division and have little-to-no understanding of how we get planes off the ground each day. In fact, based on United's level, or lack of, technical advancement on the internet, the fact that our planes depart at all is mind boggling to me. Obviously there are a great deal of things about the company that I don't know, but I hope to expand my knowledge as I begin this blog. I look forward to feedback from other employees, frequent flyers and anyone with any interest in how our company works.