A year ago this month, United
Airlines in the wake of the merger with Continental Airlines was reeling from a
buggy transition to a single passenger services system, aggravating customers
with unsynced passenger name records, missing itineraries,
check-in troubles, mileage accrual issues, upgrade challenges and drawn-out
hold times to speak with customer service agents.
The subsequent months didn't get much easier for
United or its customers. There was a period of woeful operational performance
last summer, followed by evidence of deteriorating corporate buyer sentiment
and business travelers jumping to competitors.
That turbulence since has subsided: System glitches
largely have been addressed, operations have stabilized and, according to
United, corporate business that fled to other airlines is returning.
"Obviously 2012 was a
big year for United, and frankly it's a year we're glad to have behind
us," said executive vice president of marketing, technology and strategy
Jeff Foland during a recent interview. "Integrating an airline of this
size is not an easy task. We know we made our fair share of mistakes, but we
also accomplished a lot last year. Most of the integration work is behind
us—not all of it, but most of it—and we're full-speed ahead at advancing the
business again. That's a very refreshing place for us to be."
Righting What Went Wrong
Since the post-transition
period of glitchy systems and service disruptions, Foland said
"high-priority service IT interruptions" have declined significantly,
and "the time it takes us to resolve these issues has been reduced by more
than 70 percent since the second half of last year."
Serving as anecdotal evidence
of stable operations, gripes from frequent flyers on message boards like
FlyerTalk about United systems have waned from the post-cutover uproar.
While the passenger services
system was among the most profound and widely discussed system hiccups, Foland
said Continental and United's "very complex environment" included
more than 1,400 IT applications that had to be addressed in a single-carrier
configuration. Additionally, "hundreds, if not thousands, of business
processes also had to be changed during that same time period."
"We had loyalty programs
to integrate," Foland said. "There were all sorts of process and
policy elements that had to change. There was boarding process integration, a
plethora of operational process integrations, credit card program integrations.
When you talk about system integration, the systems support a lot of these
United acknowledged that it
attempted to change too much too quickly. Last year it was "stitching
together these 1,400 applications" and "simultaneously retiring
hundreds of applications in the process," Foland explained, and the seams
showed. "When you have that much change and that many applications and
you're stitching it all together, you have data that is flowing across systems
in ways they weren't designed to flow in the ways the systems were originally
architected years back."
While United continues to tie
together systems and business processes, the largest hurdles appear to have been
cleared, and "by the end of this year, we will be very, very close to
being completely done with that, with only a few loose ends to tie," said
Meanwhile, as most critical
systems now are largely linked, "system stability has dramatically
improved," Foland claimed, and "our call center performance has
dramatically improved since last year."
Though glitches sometimes
still arise, United has built what Foland called "self-healing and
self-identification mechanisms in all of our critical systems so that they
recognize issues before a human being would even realize there's an
Operational Stability Improves
If system glitches weren't enough to turn passengers
off, United last summer also posted lackluster operational performance. The low
point came in July 2012, when only 64 percent of the carrier's flights arrived
on time, according to data from the U.S. Department of Transportation.
United CEO Jeff Smisek at the time acknowledged the
carrier "added new stress to the system by simultaneously converting to a
single passenger system, implementing hundreds of new processes and procedures,
rerouting aircraft across our network and harmonizing our maintenance programs.
Those changes were in large part responsible for the degradation of our
Since September 2012, however, the airline has
righted itself by averaging "over 80 percent on-time"
performance, according to a United statement issued this month.
It's no surprise that
corporate travelers sought solace with other airlines, and the carrier on
multiple occasions last year referenced that loss of business. Amid United's
troubles, corporate travel buyer opinions of the carrier fell dramatically, according
to Business Travel News'
Annual Airline Survey, released in November.
Citing customer surveys and
interactions, Foland claimed a reversal. "Sentiment across the board from
customers and certainly within the corporate community has risen significantly
over the past few months," he said.
Smisek during an investment
conference this month said the carrier "lost some of the customer experience,
some of the customer service, in the integration. We're getting that
back." He pointed to the improved operational performance as well as
investments in products as keys to winning business back.
"We're recovering the
temporarily lost corporate share that we had through the torn-up road last
summer," Smisek said. While both managed and unmanaged corporate travelers
"fell off last summer, as you would expect them to, the unmanaged travel
fell off even more than the managed travel. We're working hard to get both back,
and the way you get them both back is just proving yourself."
Smisek highlighted ongoing
training initiatives and employee incentive programs as ways United is improving
customer service. Additionally, the airline is investing in facilities and
bringing to 300 airplanes by the end of the year satellite-based Wi-Fi systems,
which are operable for transoceanic travel.
While United declined to
share corporate-specific revenue data—some of its competitors release that
information—to prove the returning business, Foland said the airline is "encouraged
by what we're seeing. Work is not done. I don't want anyone to misinterpret
that we think we're done. Every day, we're improving and gaining momentum.
We're pleased but not satisfied."
Smisek, meanwhile, noted that
United's unit revenue growth is a good indicator that higher-yielding business
is returning. "The trends we're seeing is the business is coming
back," he said. "You're seeing our [passenger unit revenue] results.
You'll see it in our yields. And that's how you'll judge how well we'll get it
Indeed, the carrier's passenger
revenue per available seat mile lately has outpaced the industry average,
according to analysts. Cowen Securities airline analyst Helane Becker in a
March 25 research note wrote that "United became the
PRASM growth leader among the airlines last month when it reported a 7 percent
increase." Yet, Deutsche
Bank analyst Michael Linenberg noted that United's recent PRASM
growth is coming "after more than year of underperforming industry PRASM."
System Upgrades Ahead
While last year's service
disruptions certainly were felt by travelers, some complications struck closer
to home for travel buyers and managed travel processes. As
part of its transition to a single passenger services system, United suspended
sales of Economy Plus seating through global distribution system channels and
halted its prepaid PassPlus program. While the latter has been restored,
Economy Plus still is not available through GDS channels. "We expect to be rolling out Economy Plus on a more
broad basis in the second half of this year," said Foland. "We're
making progress there."
United senior vice president
of sales Dave Hilfman last year told The Beat that combining United and
Continental on a single system would enable the merged airline to
provide additional details in corporate client reports, including
company-specific data on ancillary spending, on-time performance and baggage
Those enhanced reports,
"which reflect certain operational and value metrics by company,"
according to Foland, were relaunched late last year. "That's back up and
operational for the new company, and our sales managers across North America
started taking these reports to their accounts in the fourth quarter of last
year, and we'll do more of that this year."
With baseline functionality
largely restored to United's systems, the carrier is eyeing enhancements. Among
projects underway are new interfaces for airport employees and contact center
agents, which Foland called a "much more efficient system—an intuitive
point-and-click system" that should speed customer service interactions.
Additionally, the carrier now
is "rolling out new e-commerce improvements" around its website,
mobile applications and kiosks, Foland said. "We're rolling out in phases
new features, look and functionality this year, but in the second half of this
year—really in the fourth quarter—is when we're targeting a truly major
overhaul in our e-commerce channels. This is going to be a step change from
where we have been pre-merger and certainly in the past 18 months. We feel good