UAL Rebates For Disruptions

<B>UAL Rebates For Disruptions</B>

By David Jonas

United Airlines is offering corporations such concessions as waived change fees and an extra 2 percent rebate on most contracts to compensate them for schedule disruptions numbering in the thousands each month this summer, and many corporations are praising the carrier's efforts to keep them informed.

Meanwhile, the airline has tried to end its summer of discontent on a positive note by way of a tentative agreement with its pilots. If the agreement, which already staved off a potential Labor Day strike, is approved, it would be an important step in improving United's operations.

The rebate, retroactive to July 1 and good throughout the third quarter on all flown revenue across the board, will be sent to any corporation that has an active contract with United.

Melinda Samp, supervisor of the air travel and lodging unit for State Farm Insurance in Bloomington, Ill., expects a rebate check sometime this month and another possibly in November. "They explained it as a way to try bringing travelers back and to be supportive of us and reservationists," she said. "A lot of us feel we were burned, spending time calling travelers and rebooking them on other flights."

And that is for a corporation with a relatively small volume on the carrier, whereas the Hewlett-Packards of the world will receive back a sizable sum. "This mea culpa incentive back to corporate volume accounts is United trying the best they can to make restitution and amends wherever possible," said Kevin Iwamoto, global air and car travel supplier manager for the Palo Alto, Calif.-based company. "I admire their honesty rather than a defensive approach and this a very unexpected but pleasant gesture."

Aside from monetary compensation, travel managers said United in the past few months has been very attentive to them and supportive of their travelers.

Mike Mary, director of travel services for Adidas in Portland, Ore., said, "Typically, during these labor problems and such, airlines take the ostrich approach, stick their heads in the sand, and ignore the phone. United has been quite opposite," he said. "They are doing whatever it takes--waiving change fees, for example--and taking responsibility. There hasn't been any real issue if we have not been able to meet our goals."

United said it is encouraged by the positive reaction to its heightened communication efforts. "We know it has been a challenging summer and we want to keep travel managers in the loop," said Steve Praven, the carrier's director of strategic accounts and business development. "And we understand if some have had to shift support away."


<B>Extra Booking Hit</B>

As part of its image repair with corporate clients, United will have to determine how to return money to corporations for extra bookings. "We have a substantial amount of money locked up because we were forced to book a second flight for many travelers," Samp said. "When the dust settles, we are going to have to sit down with them and figure it out. We really took a hit."

United also is taking steps--in the form of frequent flyer mileage reparations--to compensate travelers for the rampant inconveniences.

Effective immediately, Mileage Plus Premier members will receive an additional Premier bonus for United flights between May 1 and Dec. 31. Premier members will receive an extra 25 percent bonus for flights, while Premier Executive and 1K members will receive a 100 percent bonus. The extra bonus will be credited to accounts in January 2001. Members who qualify for Premier status in 2000 also will be eligible for the bonuses.

For the rest of its displaced passengers, United already has taken steps to compensate customers who travel prior to Sept. 30 and choose to extend their stay or change their travel dates if their outbound flight was/is affected by a delay or cancellation. In that case, United will waive the $75 service fee. The new return flight must be within seven days of the original flight.

Customers traveling prior to Sept. 30 who prefer to postpone their trip may do so without paying the fee. New travel on United, from the same origin to the same destination, must be completed by March 31, 2001.

Some industry observers believe United's points for patience approach will keep many of its frequent flyers loyal. "During Northwest's strike [in 1998], we all assumed that when it was over the carrier would have a big sale. There was no sale but instead, Northwest offered triple miles and the customers in Minneapolis/St. Paul and Detroit--two cities that were virtually shut down for two weeks--were pushing one another out of the way to get onboard and collect triple miles," said Terry Trippler, airline expert at Onetravel.com. "Miles are king and United knows it."

Meanwhile, the carrier has launched an advertising campaign to relay its apologies to the public.

The new pilot contract is in no way a sure thing and needs approvals by the Air Line Pilots Association Master Executive Council, 10,000 United pilots in the union expected to vote sometime next month and the carrier's labor committee. Even if the contract is authorized by all parties, the carrier still must address staffing deficiencies. As a result, United will hire more than 1,300 new pilots by year-end.

While pilots have a tentative agreement to mull over, United's 15,000 machinists still are without one. Those workers, represented by IAM, have been on the job without a contract since theirs expired in July. Combined, both contracts are expected to cost the airline a sizable chunk of change, a fact that Wall Street did not look too kindly on in last week's trading.