Skift Take

United has a very long way to go to regain customer confidence, but the airline appears to be making some strides.

United Airlines is calling on turned-off customers to return to the airline after it claims to have turning around some of its summer operational transgressions.

While United’s smaller-than-anticipated third-quarter profits, reported today, landed with a thud on Wall Street, CEO Jeff Smisek told analysts that the airline had recovered from a woeful June and July in terms of performance, and is “back on track operationally.”

United 787 Dreamliner interior.

He conceded that some United customers took a “detour” to other airlines, just as drivers might do if they encountered road construction.

“The road is repaired,” Smisek said.

“We expect to earn back those customers who took a detour and we hope to win back new customers, as well,” Smisek said.

The CEO, tasked with the complex task of melding United and Continental airlines following their 2010 merger, provided some numbers to bolster his argument.

For example:

  • United achieved an 82% domestic on-time arrival rate in September;
  • For the full third quarter, United’s domestic and international on-time arrival rate stood at 72.4% and 71%, respectively;
  • The airline’s system completion factor was 98.6% for the third quarter; and
  • United’s incidences of mishandled bags declined 30% from July to September.
The 82% domestic on-time arrival rate in September triggered $5 million in cash incentive payments to employees for surpassing the 80% mark, the airline said.

Focusing on operations and new products

Smisek said United has been focusing on improving operations and recently rolled out a new interface for the SHARES reservation system, which should help customer service personnel take care of passengers more efficiently.

United has some things in the works that should please customers.

The airline expects to take delivery of the first five of its 50-ordered Boeing 787 Dreamliners by the end of this year, and the first revenue flight, from Houston to Chicago, is slated to take place November 4.

And, United will be introducing satellite-based Wi-Fi, which will be in use on United flights around the world. Some 300 of United’s 700 mainline aircraft are expected to be outfitted with the new system by the end of 2013.

Smisek says the airline will put into place a “dynamic pricing” model for Wi-Fi and streaming video.

Officials declined to say whether the airline’s earlier woes in 2012 — United attracted more than half of the complaints made to the DOT about all airlines during the first half of the year — produced pricing concessions to the airline’s corporate accounts. But, they said United salespeople are out in force having dinners with Global Services customers to inform them that operational lapses have been corrected.

And, United has a key selling point when it is making the rounds to win back customers, says Jim Compton, chief revenue officer.

“It is the best network,” Compton contends. “It is sustainable. It can’t be replicated.”


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Tags: earnings, united airlines

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