United’s Clever Pricing Strategy for Access to the Fancy Private Suite

LAX - Los Angeles, United

If you’re super rich and famous, you may have heard of the Private Suite at LAX. If you haven’t, well, then you clearly aren’t rich and/or famous enough. United has just entered into a partnership that will allow the airline to offer its passengers access to this private terminal. The implementation is actually being done in a rather unique way. I might even call it clever. Even though I imagine demand will be very low, United could approach other partners that have a broader appeal in a similar way.

The Private Suite at LAX is a ridiculous splurge. You go to a separate terminal on the southern end of the airport, away from the passenger terminals. There, you get a private room there where you can relax, eat, sleep, etc. Here’s a photo from the Private Suite website:

When it comes time to fly, you go through security there, and then you’re whisked away in a BMW directly to your airplane. It sounds perfectly delightful, but it’s not cheap.

To be able to use the Private Suite, the website says you have to pay a $4,500 annual membership fee. (United says it’s $7,500 so either that’s a United typo or the rate has gone up.) Then each time you use the service, it’ll cost $2,700 for a domestic flight or $3,000 for an international one. That’s per direction. If you’re a guest of a member, you can use it for a mere $3,500 per domestic flight or $4,000 for an international flight. That’s a whole lot of money just to avoid a crowd.

If you’re a big star with a boatload of money, then I can see the value here since you can avoid all the paparazzi and have some peace and quiet. For everyone else, it’s hard to see how you can generate enough value to justify using the service. It’s really just for people with money to burn. Fortunately for the Private Suite, there are a lot of those people living in Los Angeles.

Some airlines already take good care of big Hollywood stars. Delta launched a service to escort them to a secret place off-airport upon arrival, for example. But United has instead decided it would be best to just partner with the Private Suite. That’s not necessarily a bad plan.

Travelers who are flying on paid premium cabin fares will be able to purchase access to the Private Suite without a membership if they’re traveling on all long-haul routes (London, Melbourne, Shanghai, Singapore, Sydney, and Tokyo) as well as flights to Newark and celebrity-friendly spots Aspen, Cabo, and all Hawaiian airports. The price of admission? It’s cheap at $1,250 plus tax for domestic travel or $1,495 for international.

Ok, so it’s not cheap. But if you’re a solo traveler, it’s far more reasonably-priced than the regular cost. (Since these prices are per person and the Private Suite’s are not, the comparison shifts quickly as you add people.)

Normally, this kind of partnership isn’t something I’d write about. After all, how many times have we seen an airline team up with some ancillary service provider? It’s not all that exciting. What I do find far more interesting is how United is going to sell this.

United is building the price of the Private Suite entrance into the ticket. For those who want to really get into the weeds, it’s a Q surcharge using a special passenger type (STE). That means that it’s effectively built into the fare, but it’s a fare that won’t automatically price unless you’re specifically looking for it. So there is no impact on your regular traveler at all. This kind of arrangement creates a lot of incentives.

  • Filing it as part of the fare makes it very easy for a travel agent to sell. And many of the rich and famous folks who would be interested do use a travel agent.
  • Travelers on corporate accounts who have generous travel policies that allow for premium cabin travel on longer haul flights may be able to get away with booking the fare that includes the Private Suite if it isn’t too outrageous. If it fits in the policy, then this is easy to clear since it just looks like airfare.
  • Travel agents that have a commission agreement with United will be able to also earn commission on the sale of the Private Suite, so there’s incentive for agents to offer it up.

There are a couple of downsides here as well. Most notably, since it’s part of the fare, the fare rules determine whether you can cancel or change at all. The other downside is that having it included in the fare means it’ll be subject to the 7.5 percent tax on domestic flights. If it were a true ancillary service, it would be tax-free. I assume United has decided that the ease of booking makes it worth having it be taxable.

The idea of including services in the fare seems to go against what airlines have been trying to do over the last several years. But at least in this case, this is a wise way to make a product as easy to sell as possible.

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

18 comments on “United’s Clever Pricing Strategy for Access to the Fancy Private Suite

  1. This looks like it is meant to be compared to the convenience and cost of chartering a private jet, where a lot of the utility arises from avoiding the terminal and saving that time. Against that measure it isn’t so expensive. Still seems crazy but there are perhaps enough people who simply don’t care about the expense.

    1. I guess if a person or their company is paying 5 figures for a first class international roundtrip, paying another few thousand to turn the land side of the trip into a FBO-type private jet experience probably isn’t a big deal.

      I imagine that the Private Suite is or will be contractually required by many A-list entertainment personalities when their work requires them to travel from LAX, and I could see this succeeding if just for that reason. Surprised someone hasn’t done or tried to do something similar in JFK, EWR, LHR, etc, as this would definitely have appeal for the finance types as well.

      I’m a little surprised that Uncle Sam lets this happen from a resource side, in terms of TSA, immigration & customs, etc, but again, maybe it’s not that much different than what they deal with at airports for private jets. Seems like it would be a super primo gig for those government workers too, only having to deal with only a few (if occasionally very spoiled) pax.

      Definitely sounds like there are a ton of people in this operation being paid good money just to stand around most of the day, which must be a large part of the cost.

      1. In general, private charter passengers do not go through TSA security. But this service will be mixing their customers into the air transportation system and therefore every passenger will be required to go through security screening. Given the scale of this operation, it would surprise me greatly to hear their security screening is being done by TSA personnel. Most likely, I think they contract security screening to a TSA-approved company. This would also be needed because the company cannot manage government employees and tell them when they need to work. Customers could be without security if they travel odd hours. But a contracted company could be told when they need to be on site and working. So all things considered, this is not a boondoggle for gov’t employees.

  2. It’s always interesting to see how airlines’ fare rules interact with these special services. Cranky, do you know if there’s any distinction between nonstop and connections for this perk (ex. flying LAX-SFO-SIN vs. LAX-SFO).

    1. My guess would be that travel must be nonstop. You lose the perk of privacy if you have to connect and enter the terminal with the rest of passengers

  3. So let me get this straight: Pay a lot of money (although, as Cranky says, not at all unreasonable for the target customer, I’m sure) in order to avoid the rabble… right up until you get on the same aluminum tube as Chuck and Gwendolyn from Topeka and their 3 screaming children.

    I get that the customer purchasing this option is going to be flying First Class exclusively, but still: On almost all planes, that’s not like the isolated upper deck on a 747 or something. Avoiding the sea of humanity in an airport isn’t that hard. In an airplane it’s impossible.

    I don’t fault United for filling a niche that makes them a few extra bucks, but seriously. If I were in the stratosphere to afford something like this, I’d just value-up to a private plane and be done with the whole public flying thing altogether. Fractional jet shares aren’t as expensive as they once were.

    1. I’ve flown international F a few times, and often that cabin is reasonably well separated from the rest of the plane. Often, the boarding for premium cabins is through a separate jetway than economy. I flew SQ F and QF F on the A380, and the way those cabins are laid out and boarded, I had zero sense that I was on such a humongous airplane.

      So I’m really not sure that it’s as hard to avoid the sea of humanity as you indicate.

      As for the private jet thing… Domestic vs International is a very different game. The kinds of planes that are appropriate for long haul international flying are at the upper end of the price range — and you’re flying *lots* of hours. Think $9k+ for a GV. 30 hours round trip to say Hong Kong, and you’re looking at a $270k bill.

      International F on a premium carrier is actually a competitive product to the private jet. Back in my day, I’ve seen people fly in a private jet from a small(er) city in the US to an international airport, and then fly an airline trans-oceanic.

      An option like the suite does make airline flying a it more palatable.

  4. I think of this in the same vein as doctors who specialize in “Diseases of the Rich,” who have been around ever since there have been people with too much money. Besides, what’s the fun of being filthy rich if you can’t flaunt it?

  5. My only thought is about the private screening. Who’s screening these uber-rich people? TSA employees, pulled from the standard passenger screening checkpoints? If so, I hope that part of United’s exorbitant fee for this service is to reimburse TSA for those screeners. TSA has a fixed number of FTEs, and when they’re pulled from their positions to screen a small number of people, it definitely impacts the hoi-poloi.

  6. A lot of corporate customers are sending executives on private jets now instead of commercial first class which makes this look like a ploy to claw some of them back. They’ll never be able to compete with the schedule of flying private but perhaps this will win back a few of those customers without much investment on United’s part.

  7. They can church up the on-ground experience as much as they want but the fact remains in the end you’re getting on the same plane as all the unwashed masses. I find it funny that airlines seemingly spend more time trying to prove they cater to the elites when they wouldn’t be in business if not for the Y travelers that make the economics of those big jets work.

    I get who the market is for this stuff but seriously, spending an hour in the club lounge with strangers is nothing compared to the up to 10 hours with nothing but a plastic panel dividing you from Cousin Eddie.

  8. Who is showing up to the airport this early for a flight that it would be worth paying for this? I’ve never been at an airport early enough where I thought, “Hmm, a nap would be great right now.” I could see if it was targeting passengers on lengthy connections, but this product is clearly aimed at the LA POS, not connectors.

  9. It looks like the first outward noticeable new marketing point from United’s president, California-Janet Lamkin. It will be interesting to see what additional new add-ons UA comes up with.

  10. … there is one Golden Rule for international F travel – avoid all USA airlines … ( the grim design of this alleged F+ suite symbolises a clueless approach to F travel – contrast with the fabulous Concorde lounge at T5 LHR …) .

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier