United Airlines is making a promise to its largest corporate clients: the airline will be as reliable as American and Delta next year, or it will offer credits for upgrades and fees.
The guarantee is based on flight reliability rates that have improved from bottom of the industry to the top half of its peers, said Jim Compton, United’s chief revenue officer. Recent labor agreements with its unions also should help performance.
“If it were a short-term blip, we wouldn’t be making this commitment,” Compton said.
The offer, which follows a similar pledge by Delta last summer, marks a push to move beyond airfare discounts and available flights as the main reasons corporate travelers choose an airline. A key difference is that Delta’s credits can be used to pay fares, while United’s will only be good toward seat upgrades and other ancillary costs.
Parent company United Continental Holdings Inc., the world’s second-largest airline, has struggled with operational issues, poor labor relations and some bad luck since then UAL Corp. merged with Continental Airlines in 2010. The carrier had been mired in 10th place among 13 carriers for on-time arrivals for the 12 months ended in September, with a rate of 76.5 percent, according to government data.
Former Chief Executive Officer Jeff Smisek resigned in September after the government started probing his dealings with the Port Authority of New York & New Jersey. His successor, Oscar Munoz, had a heart attack after just a month on the job. The airline has said he is expected back early next year.
The carrier’s monthly on-time arrival ranking jumped to fifth out of 13 in September, with a rate of 86.2 percent, according to government data. More recent figures from aviation data provider FlightStats show it has maintained similar rates in October and November.
“We’ve been having months from September to November, that are some of the best in the last three years,” Compton said.
United’s new “global performance commitment” will cover domestic, international and regional flights next year, while Delta’s program includes only its domestic mainline operation. Also, United will use an on-time measurement that’s slightly different from its rival’s. United will measure flights that arrive before or right at the scheduled arrival time, where Delta uses a broader measurement of flights arriving within 15 minutes of their scheduled time.
The likelihood that United will have to pay out anything is “slim to none,” said Dave Hilfman, United’s senior vice president of worldwide sales.
Compensation would include upgrades to Economy Plus seating, waivers of change fees and waivers on charges for name changes, which enable a company to transfer a ticket to a different person. The program will generally be available to United’s bigger corporate customers and is tied to how much business they give the airline.
“They find this has every bit of as much value as if we were offsetting fares,” Hilfman said.
United may be trying to make its own program different enough from Delta’s to stand out, said Brad Seitz, a corporate travel consultant with Topaz International Ltd.
Delta Air Lines Inc. spokesman Anthony Black said reaction to its guarantee program has been “overwhelmingly positive,” though he didn’t cite any specific numbers
One customer authorized employees to buy a Delta ticket even when that ticket costs $50 more than a competitor’s, he said, without identifying the customer.
Seitz said he hasn’t heard that Delta has gotten more business because of the program.
This article was written by Michael Sasso from Bloomberg and was legally licensed through the NewsCred publisher network.