United Delays Premium Cabin Refurbishment Again

Uh oh. It looks like United has decided to delay its refurbishment of the premium cabins on the 777 once again. Now they won’t even start until February 2010, so the problem of dramatically different premium cabin experiences is bound to continue for quite some time.

The 767s are complete, and the 747s are almost there. They say 18 out of 24 aircraft are done with the full 747 fleet being finished by October this year. But those 777s, well, they’ll continue to limp along with the old product. Here’s how things will look when the 747s are done in a couple months.

United 777 Premium Cabin Delays

So what’s the excuse this time? Money. In an internal memo, they blame two things, but I’m not buying the first.

While our International Premium Travel Experience (IPTE) aircraft continue to double our customer satisfaction scores, and the modifications continue to progress well, the B777 program is more complex than the B767 and B747 programs, given the three different B777 sub-fleets. In addition,
we are facing a challenging year due to the global recession, changing market demand and increasing fuel prices.

Uh huh. This thing has been delayed so many times that I find it hard to believe that the complexity is still causing the problem here. Instead, I’ll put my bet on the little blurb that followed:

The decision to postpone the start of the work also allows us to better control our costs in 2009, helping us maintain a stronger cash flow through the historical trough period of the fourth quarter.

Ding! Ding! Ding! We have a winner! They say you have to spend money to make money, but how does that work when you don’t have money to spend? Sadly, the 777s make up a bit more than half the fleet, so the cost savings here are likely to turn into revenue pain as people look toward other airlines with better options.

38 Responses to United Delays Premium Cabin Refurbishment Again

  1. David SFeastbay says:

    I’m surprised they didn’t say it’s because “it’s what our customers want”. Isn’t that what the airline tend to say for everything they do these days, oh maybe that’s just when they add a fee for something. So that must mean if you are on an aircraft with the new seats you’ll be charged a ‘new seat’ fee.

  2. The Traveling Optimist says:

    On one trip in around 2000 I had three 747s between Hong Kong and Chicago, each with three different configurations and three generations of seats, from the old Barcalounger to the 1st “pod” which was new at the time. Par for the course for United.

  3. Neil S says:

    Well, at least in First on the 777, the width of the cabin makes it seem less dark and claustrophobic than on the 747.

  4. Ken says:

    Yea, and if United’s not even in existence in 2010….

  5. Ed Kelty says:

    Usually I travel economy plus on United. However, when I have had the opportunity to fly United’ 747s in business class, the experience was very positive. I don’t really go for the pods and lying flat. My travel experiences started with Greyhound, and any form of reclining seat puts me to sleep.

  6. David says:

    I’m curious as to why if United has such a bad name for chaotic management compared to other airlines, that United stays in business.

    Economics usually says that if one company in a marketplace consistently produces an inferior product at a higher cost, then its profits decline and competitors begin to increase their market share. United still has a significant market share of flights to, from and within the USA.

    Is there a quasi monopoly in effect ? Or is it simply that other major carriers in the USA are equally as bad but United-bashing is just more fashionable ?

  7. The Traveling Optimist says:

    David –

    Others will doubtlessly tell you the reasons are complicated but to me it’s always been very simple why United stays in business.

    The largest and simplest reason is the amount of financial exposure United represents to investors. Better to prop it up albeit with ever tighter constraints on current management and hope for a better day than let the thing die altogether and gain little to nothing for the trouble.

    If United folded there would be a temporary disruption in real terms regarding internal and external jobs as well as the movement of consumer goods. My view, however, is that in this economy, given the capacity cuts at the other majors, there is more than enough slack to make up for the loss.

  8. Siobhan says:

    I’m flying AUS-NRT in October 2009 on a Z fare – we were initially booked on a 777, and I’m so relieved that they’ve changed our flight to a 747. Except constantly on edge that they’re going to change it back, I suppose. The old biz class seats look miserable in comparison to the new ones, although it will be my first experience with them so I can’t really say.

  9. Bobber says:

    Not that I’ll be flying C class again anytime soon, but having taken a LHR-IAD round trip in the 777 C class last month (both 30k upgrades before the co-pay comes in), the change can’t come soon enough. The old configuration barely feels different to economy plus anymore (I know it’s all relative, but the new C class in the 767′s is a whole lot better). Perhaps it’s time United considered ditching F class altogether and trying a combined premium product. That I still wouldn’t be flying in. Very often. If at all.

  10. Hmm.. when you have to borrow money at 18%, perhaps upgrading the seats isn’t the best idea? Sadly this is a poor tradeoff, but understandable.

  11. Dan Hill says:

    There are still paying business class passengers out there – like me. I fly out of a regional airport that is only served by United for three out of four seasons so I have every reason to use United. But I avoid United them on international flights. Of the 40 or so international flights I’ve done in the past year, I used United once which reminded me how inferior their international business product is even compared to their US competitors, let alone the European and Asian carriers. MY most common route is DEN-LHR where they use the 777 which it seems will never be upgraded. Sure the BA 777 on this route doesn’t have the new Club World seat, but even the 10 year old Club World seat is a proper flat business class seat!

    Of all the dumb things to cut back on, this is the dumbest. The strategy amounts to “we know we’re a second rate airline [took them forever to get that message, but they finally did], and we’d like to do something about that, but we won’t spend any money. So when the industry picks up again we’ll be playing catch up from even further behind.”

    I hate to say it, and it would be very disruptive to my community for a while, but the best thing that could happen for the US airline industry would be for United to stop flying. Tomorrow.

  12. The Traveling Optimist says:

    Siobhan – The old C class seat was cutting edge when it came out 15 years ago. Other than not lying flat which is all the rage today, it’s a perfectly comfortable seat. When it first hit the market the complaint was that it had too many buttons, bells and whistles in an attempt to let each passenger customize exactly what type of seat they wanted.

    IF you get the seat on a Z fare, just remember to turn on the rotating lumbar massage and you’ll be fine.

    As for lie flat seats, only if they are 180 degrees. I’ve heard too many stories of people sliding down the proverbial banister on the angled ones to make them seem truly appealing.

  13. CF says:

    David – I think the short answer is that people continue to be willing to give the airline money. Chase, for example, has been instrumental in recapitalizing the airline over the last few years considering its card agreement. Now, we find that money is getting tighter and they’re paying through the nose to raise additional funds. United joins US Airways as being the weakest of the big carriers, and things are not looking good. My guess is that one of these days, Continental will take over and end up keeping the United name, hopefully restoring it to its previous reputation of quality. But that’s probably the best outcome I can think of for the United brand right now.

  14. Million Miler says:

    Perhaps another, closely related issue, is that not many people actually pay for first class on US carriers. The domestic airlines have done a pretty good job of training their customers to expect free (or low cost) upgrades. Consequently folks buy Business Class, and take their chances on getting upgraded to First at the gate, others purchase Economy Plus and expect to snag a Business Class seat vacated by someone upgrading to First, all the way down the food chain to the poor guy in the center seat of the last row looking to switch to a window seat before they start calling standbys.

    And since you are giving much of it away, how do you justify the cost of improvements?

    Until the domestics develop the intestinal fortitude to fly with a few empty premium class seats there is not much incentive for customers to change their thinking. The Europeans and Asians have been much more disciplined about this and look at their first class product…

  15. The Traveling Optimist says:

    Hear hear, Million Miler! Soooo true.

    CF – God forbid CO takes over only to keep the United name alive. CO has an arguably better product and brand reputation including marketing presence through Air Mike at Guam. If CO takes over, let it be CO as the surviving carrier in name, assets and corporate culture. Please!

  16. CF and Optomist. If I were Continental be worried about losing my culture to United’s even if I was the controlling partner in a merger. United’s culture is really horendous IMHO.

    I’d almost bet that being an alliance partner with United is more about having their hand forced than them actually desiring it.

    If I were Continental and it was a necessity to take over United I’d plan on running them as a seperate brand and airline until they were cleaned up. Say two years or so. This preserves both carriers major assets: Continental’s brand and United’s assets.

  17. CF says:

    Nicholas – A huge merger like this would certainly hurt the culture, but they would hopefully be quite mindful about that. Really what they should want to do is buy the assets that can be worthwhile. Pick up a bunch of planes, grab the good routes, and let the rest disappear.

  18. Ken Bechtel says:

    With the 777′s not being upgraded with flat beds in Business, how can they justify the start of co-pays of $250-500 for upgrading in mid-Jan. ’10? It doesn’t seem like they will be able to carry out that plan. This is all very disappointing. I guess we’ll just have to plan on taking Alliance partners on int’l. routes.

  19. CF – It seems like asset sales are no longer in vogue within the airline industry. Although I can see United going Ch11 then 363.

  20. QRC says:

    CF – I think you should rephrase. Customers aren’t “willing” to give United money, they are forced to with the overall far inferior legacy airline choices in the US. Solution (albeit politically unpalatable): allow foreign ownership of US airlines, and allow more foreign airlines to compete on domestic routes. Stick SQ or CX…or even BA…in the US and allow them to actually compete (more than the once daily QF JFK-LAX) on multiple routes where business travelers are at a premium (SFO, LAX, JFK) and see where passengers are “willing” to give their money then.

  21. robert says:

    Cranky, I don’t know if you’ve covered this but in the spirit of some of the comments, what do you think of the latest thinking that airlines should just get rid of first and concentrate on business class? I believe BA are not even bothering to create a first class cabin on newer aircraft they’ve ordered. Is first a relic of a previous age or does it still make $$$ for the airlines?

  22. The Traveling Optimist says:

    Robert – I see a mix of things that need to be cleared up as far as the death of First Class. As was written earlier, US carriers are famous for giving away premium products in the face of hot competition while Asian and European airlines have shown far more restraint. I don’t have the numbers to back up the conjecture but I’d say that Singapore Airlines gets real revenue from it’s F product, as does BA and QF between Europe and Australia.

    At the same time, C class seems to be turning in to the new F class, the major differences being seat dimensions and food service. “Two-cabin” carriers have introduced Premium Economy, essentially putting them right back in to the 3-cabin market. AA only offers true F on its 777s, anymore, leaving UA, dismal as it may be, the only 4-cabin airline in the US with F, C, Y+ and Y on nearly all of its international fleet.

  23. SEAN says:

    To me both US &UA need to be merged with another airline or be shut down. There’s just to much in the way of poor management with these airlines.

  24. CF says:

    Million Miler – I think it’s important to separate out the domestic flights from intl ones. United made a point of saying that the new business class would reduce the number of upgrades and require more paying passengers to make it really work out. They have been getting more discipline in that regard, and I think it makes a lot of sense. If you’re simply taking upgrades, then there is no incentive to make the product better.

    QRC – I have no problem with foreign ownership of US carriers, but I honestly don’t think it’s going to make much of a difference over here. Sure, these guys could try to build up big, bad domestic carriers but it’ll just cost a lot and people won’t pay for it. I think domestic ownership is likely to have a different impact. Lufthansa would buy United and run it as a separate airline. Would service improve? Not sure, but you wouldn’t all of a sudden see a tremendous impact, I’d guess.

    robert – No question that’s a serious consideration. BA has started to ditch the First Class cabin on some airplanes, but there is still large demand on key routes. It’s funny, because on BA you have coach, then you have premium economy which is what business used to look like, and then you have business which is better than what first used to look like. So not much has changed – just the way they’ve named the classes.

  25. Million Miler says:

    Sorry CF, just to be clear, I was referring to US carriers and their international routes. Are you suggesting that US carriers are flying with empty first class seats on international routes – as opposed to filing them with free or nearly free upgrades?

    Ken mentions co-pays of $250 to $500 to upgrade. What percentage of the published fare difference between Business and First does that represent on his trip? a third? a quarter? less? I also note that without the new seats Ken seems to be hinting that even at this reduced price level the current product might not be worth the relatively small premium asked. ouch!

    I am simply making the observation that US carriers have devalued the product by giving it away. This might be good, it might be bad, depending on their business plan. But either way they are reducing the revenue the premium product is generating, which reduces their ability to fund refreshes of the product.

    The Europeans and Asians have tended to go the other way, especially in markets that don’t involve North America. They don’t give it away and they are constantly refining the product. On North American routes , where they have to compete with the US carriers, they have reacted by renaming and reclassifying the product – First Class is replaced with Business Class, etc. They are subscribing to the theory that you can’t devalue First Class if there is no First Class. Right or wrong they are trying to defend the brand.

    Which strategy will win out? who knows, but it will be fun to watch! (except maybe from that dreaded center seat in the last row that doesn’t recline)

  26. J Aero says:

    I think one thing that most do not realize is the complexity with the 777 that has not arose with the conversion of the 767 and 747. This has added to at least the first delay, and is that is now being propagated downward because of the current economics. To put in the new C and F, the entire IFE system had to be replaced. Naturally, that meant the seats had to take in this new system, including the Y seats. The initial Y seats United planned on having in the 777 did not pass the g-test or load test. This is because the 777 has higher safety standards compared to the older 767 and 747. So they had to go in search of new Y seats that could take in the new IFE system, hence the initial delays. Now after all these problems, they are facing lower premium cabin load factors due to the economy, and various other factors so they are sacrificing product consistency to better manage their money. Everything is a trade.

  27. Ron says:

    Million Miler — I don’t know about United, but last month I took a transatlantic flight on Delta, and on the outbound I wasn’t allowed to even purchase an upgrade because my base fare was too low (BusinessElite was half empty). On the return, however, coach was oversold so they had to move some passengers up front and I was among the lucky ones :-) Are you suggesting that non-US carriers would leave passengers behind in such a case?

    As for why people fly US carriers on international flights, for many it is the Fly America Act.

  28. CF says:

    Million Miler – I agree with you completely. The US airlines have devalued the product with upgrades over the years, but my point is that they’re trying to change that going forward. These copays are just the start of further restrictions. I imagine over time that we will see fewer and fewer upgrades allowed as they try to regain some sanity in the premium cabins. If not, they’ll need to just throw a bunch more seats on the plane instead.

    J Aero – We’ve talked about the 777 problems here at length in the past:
    http://crankyflier.com/2009/01/06/united-777-premium-reconfiguration-requiring-changes-in-coach/
    http://crankyflier.com/2009/01/07/followup-on-uniteds-777-reconfiguration/

    But that was 6 months ago and now it’s a different excuse. I understand United is hurting for cash, so I can see why they’re delaying it. But I still think it’s just another hit to the brand. People aren’t going to want to fly the old seat if they have a choice.

  29. Ken Bechtel says:

    I wanted to clarify my previous statement on United co-pays on econ. tickets, being upgraded to bus. class seats (which starts around mid Jan.). The co-pay I mentioned is in each direction, so for example, a $1850 econ. ticket to ASIA might require a $1000 co-pay + miles to upgrade. That’s a 54% incr. in that fare to upgrade from last year. Then, you have the hassle of checking out the equipm. to make sure the new flat bed is available on your particular routing you’re considering.

    If you’re buying a bus. class ticket for the comfort of the flat bed on United, you have to check carefully to make sure you’re flying on a 747 or 767 to ASIA. Also, the menus and inflight service are considerably much better on Thai Air or Sing. Air (SQ). There is just no comparison between the Asian carriers’ bus. class inflight service and the US carriers. If you’re searching flight schedules on Thai Air or SQ, you know all their int’l. flights have nice flat beds. The menus and inflight service are so different on Thai Air & SQ, that once you’ve enjoyed their high level of service, you tend to want to avoid US carriers on flights to Asia. Finally, I’ve read that United won’t “start” working on their 777′s conversion ’til Feb. ’10.

  30. David SFeastbay says:

    I’ve always felt bad for people who really pay for a first class ticket and have to sit in the same seats as people who were upgraded from a lower class cabin/fare. They are paying for a product that the upgraders didn’t pay for. I’ve paid for first class and always felt like I was cheated, granted upgraders don’t know if they will be upgraded, but it’s great for them if they are.

    Even when I’ve flown in coach, when passing the full front cabin on the way to coach, you can always tell who was upgraded and who paided to sit in front, they just have that upgraded look to them :-)

    I think eons ago the airlines thought it would be a good idea to upgrade full Y (or C on three cabin aircraft) thinking if people saw how nice it was they would start buying the higher priced cabin. Well that might have been true in the beginning, but not now. Have you ever seen some of these business men at the check in counter. They act like they are King of the world and how dare the agent not put them in first (or business on a three cabin aircraft) on their coach ticket. That shows the airlines have just made the front cabin worthless dollar wise and it’s just a place to put people who fly a lot but purchase lower cabin fares. So now, why have the product any more?

    The airlines always knew they made the money to pay for the flight off the first/business cabins, but continued to give the products away to lower cabin upgraders. Well now with times being tough, they need to get back to saying ‘hey if you want to sit up here, you’ll have to pay for it’.

  31. CF says:

    David SF – I think the rationale became if they didn’t have the cabin, then the frequent fliers would go fly someone else. So they would rather have the relatively (theoretically) higher dollar coach fares from biz travelers and then stick them up front. It became a competition game. United has always acted like the world revolved around Chicago because that’s where they’re based. And in Chicago, it became a big fight with American. They forgot that their roots are as a western airline and that’s where their strongest base was. It’s long since been eroded by other airlines, but they saw the American competition in Chicago and that became the focus for the whole airline. Then everyone else jumped on board and the downward spiral began. Now they’re trying to pull themselves out of it.

  32. David — I’ve been thinking about “I think eons ago the airlines thought it would be a good idea to upgrade full Y (or C on three cabin aircraft) thinking if people saw how nice it was they would start buying the higher priced cabin. ”

    I’d argue the airlines were really stupid about this, and probably contributing this was the older systems. But if airlines used the free upgrade as a tool to expose you to it instead of just upgrading based on how much you’d flown it’d be interesting..

    Take a look at how Amazon uses their Prime service. They offer it to some people for free. Probably people that they know have a good buying history with them, but who might both make more purchases as well as get a paid membership. But you only get that once. Then as far as I know they’ll never offer it again.

    So what if an airline selected who to give a free upgrade as follows:
    1. People who didn’t purchase through a contract that required them to buy coach.
    2. Those who haven’t had a free upgrade in over two years.
    3. People who fly often.
    4. People who buy extra ancillaries. (e.g. BYOB, liquor, check bags, movies etc. The BYOB stuff could really be easily tracked by just putting in the seat number in the new electronic handheld credit card machines, then parsing it all out later.)

    This would offer the free upgrades to those who might buy an upgrade later, either as a paid upgrade at the gate, or integrated with the full fare.

    If they only offered free upgrades based on this, or for operational reasons it would add some value to F or C without just handing it out willy nilly. If no one met the airline’s marketing requirements for the empty seats they’d fly empty.

  33. Ron: How much of UA’s customers are there because of the Fly America Act? I’m there because of the City Pair contracts, which is a similar (have to be a US airline to bid) issue but not the same issue. City Pair contracts are only available to people directly employed by the government, so the Fly America Act is the only entanglement for most USG-paid air travel.

    While the FAA certainly does the taxpayer no good, it’s not that difficult to work around. Pretty much any international itinerary can be flown on a foreign-flag carrier using a US carrier’s codeshare flight number, which satisfies the law.

  34. Simon says:

    Have travelled on United a lot – and being from Britain we seem to have the pick of airlines to travel with, and whilst I would say they are deinitely not the best airline going, they are also definitely not the worst. It these trying times where even highly efficient and profitable outfits are losing their shirts, it is prudent ofr United to manage their cash flow and ensure the airframes are relaible and airworthy and the crews aren’t stretched to breaking point.

  35. Charles says:

    What are the chances that the business class seating upgrades will be complete in 777 by April of 2010?

  36. CF says:

    Charles wrote:

    What are the chances that the business class seating upgrades will be complete in 777 by April of 2010?

    Zero.

    United just has one more 747 to do, and it had said it would start its 777s in February. Now, however, it just says that the 777s will follow the 747s without giving a timeframe. Even if it does start in February, there’s no way it’ll be done by April.

  37. Tim says:

    Using miles on United (mostly an American flier). Just found out that my flight to Shanghai next week is on the 777. I was expecting the lie flat. Totally PO’d. Seems the longest routes are on the 777. Also unfair that for the same miles we in the 777′s get a vastly inferior experience. Asked about using more miles to upgrade to first-there are empty seats-but not allowed. Don’t understand why not. Nothing makes sense with these airlines. They’re SO INFLEXIBLE. The answser is always NO.

  38. CF says:

    Tim wrote:

    Using miles on United (mostly an American flier). Just found out that my flight to Shanghai next week is on the 777. I was expecting the lie flat. Totally PO’d. Seems the longest routes are on the 777. Also unfair that for the same miles we in the 777’s get a vastly inferior experience. Asked about using more miles to upgrade to first-there are empty seats-but not allowed. Don’t understand why not. Nothing makes sense with these airlines. They’re SO INFLEXIBLE. The answser is always NO.

    And the reality is that things are much better at United now – at least you know if you’re on a 747 or 767, you’ll get the new product! For the longest time, it was a crapshoot as to whether you’d actually get it or not. Now for the 777, well, I hope to see one of those coming soon.

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