To Nobody’s Surprise, United Won’t Have to Pay Out On Its 2016 Performance Guarantee

In the summer of 2015, Delta was so proud of its operational performance that it put out a guarantee for corporate customers. If Delta failed to best American and United, then it would pay out. That didn’t seem like much of a stretch at the time, but when United followed in December? That was a shocker. United had improved its operation somewhat from the hole it was operating in for years, but this still seemed like a shaky bet… until I saw the terms. As expected, United crafted this in a way that meant it was highly unlikely it would have to pay out. And looking at the 2016 data, that appears to be the case.

You’re probably wondering why I’m not talking about Delta’s results here. That’s because Delta has created some very specific rules that use the Department of Transportation Air Travel Consumer Report. It’ll be later in February before those numbers are released, but there’s little doubt that Delta is going to be fine here. United, however, opted out of the many carve-outs and so it’s much easier to review using real-time data.

As a reminder, here’s how United put this together. It said it would meet one of the two following goals for 2016:

  • United would have more flights arriving at the gate exactly on-time (A0) (or earlier) than American OR (not “and”) Delta
  • United promised to cancel a lower percentage of flights than either American OR (not “and”) Delta

If it failed to meet either one of those goals, it would have to pay out. Unlike Delta, [Update: I’m told that in 2016, Delta updated its guarantee to include international and regional flying] United used all flights worldwide, and it even included regional flights. Looking at those rules, it wasn’t exactly a huge stretch to think United could pull this off. And it did.

I took a look at masFlight to pull operational details for United, American, and Delta flights worldwide for all of 2016. To be clear, I don’t know what source United is using to get the official data, so this is just an approximation.

Let’s start with the cancellations. By my count, Delta had the fewest canceled flights at under 1 percent. United and American, however, were virtually tied at just over 2 percent being canceled. It looks like United may have squeaked ahead of American by a tiny bit, but really this doesn’t matter. Because remember, United only had to achieve one of its goals to avoid a payout.

If we look at on-time performance, United did indeed beat American pretty handily. I show Delta with just over 71 percent of flights arriving on-time or earlier. United was near 68 percent with American just above 62 percent. As I figured, United was quite deliberate in the metrics it chose. Take a look at this chart.

Big Three 2016 Operational Performance

The bar on the right for each airline is the A0 metric that United used. As you can see, and as I’ve mentioned, it beat American and so it won’t have to pay out. But the bar on the left is D0, departures that go exactly on-time. In that case, you can see United did come in last. Why would that be the case? Because United pads its schedules more than American does. As has long been the case, it looks like the happy medium is somewhere in between.

American has really pushed hard on getting its airplanes out on time, but it doesn’t leave as much time for the airplane to get to its destination. So you can see the arrival rate drops. United has the opposite issue. It doesn’t get planes out on time as often, but it has plenty of time to make up for it along the way.

With that in mind, United knew it could likely control the numbers enough to avoid paying out on its operational guarantee. Sure enough, it did. And really, that’s a good thing. While agencies and corporates might have appreciated the payouts, there’s nothing they want more than an airline that gets their people where they need to be when they need to be there. United has stepped it up, so kudos to United for that. But there’s still plenty more work to be done in that operation.

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