United Upgrades Biz Travelers

<I>Chicago</I> - United Airlines is trying to satisfy the 9 percent of frequent business travelers who generate 45 percent of all revenues to airlines, with the hope that everyone else will warm to the enhanced service too.

Among the physical service enhancements United has planned are new seats in all classes of service starting this summer, laptop power for first and business class starting this fall, meal improvements, new airplanes that travelers find more comfortable, expanded entertainment options and new technology to speed the boarding process. In addition, United is enhancing communications with customers through its Website with e-mail responses promised within 48 hours, and revising its onboard and gate area announcements to be more candid.

Beyond physical changes, United is striving to change the culture of its employees by adopting a blueprint called Customer Service Philosophy that will deliver a customer-driven airline over the next five to 10 years. All current and future service enhancements, employee training programs and customer communications are based on the CSP. The company hopes to instill CSP in its employees -- including flight attendants, the only major employee group that doesn't own part of the airline -- in coming months. Beginning this month, United's 85,000 employees around the world will start the 2.5 hour CSP courses.

Training will focus on six core components:

* Provide warm, genuine attention to each travelers' needs.

* Offer comfort as the minimum experience and enjoyment as the ideal.

* Recognize and reward loyalty with more preferential treatment and better rewards for Mileage Plus members.

* Be open and candid and take responsibility for delays, changes and problems.

* Design a simpler, more hassle-free travel experience, with the trip viewed as door-to-door, not just gate-to-gate.

* Provide unsurpassed global access by strengthening its worldwide route network through internal expansion or alliances.

This overhaul has been developed since a nine-month study of 2,000 people revealed severe shortcomings in airline service. At a cost of more than $1 million, United hired The Cambridge Group, Chicago, and MSB in London, to survey more than 1,800 customers, and conduct 50 focus groups with customers in eight countries, more than a dozen other focus groups with United employees and a series of interviews with key travel agencies, corporate accounts and suppliers. Initially, the study identified problems and perceptions travelers have with air travel today. In the focus groups, researchers focused on learning what travelers want.

Particularly distressing to United executives were the findings that road warriors, the six percent of UA passengers who generate 37 percent of its revenues, are extremely dissatisfied with the service they receive. Global travelers, the 3 percent of customers who fly frequently on long, international flights and generate 7 percent of UA's revenues, are skeptical of U.S.-based airlines' abilities to provide the superior customer service they associate with overseas, state-owned carriers. These two groups faulted airlines with a list of customer-service shortcomings covering everything from ticketing, checkin, departure times and inflight amenities to baggage handling and cultural sensitivity.

These travelers perceive air travel as a "game," that is stacked against them. Even though they pride themselves on learning the "tricks," they're continually frustrated by airlines that withhold important information such as delays and alternatives they could use to control their travel schedule.

"We took it as a wake-up call," said Gerald Greenwald, UA chairman and CEO. "We decided we are not just going to try to get a better grade, we're going to change the standards by which air travel is graded in the next decade, by raising the bar to its highest level ever."

Greenwald concedes that United is just now building the infrastructure to deliver on its CSP and new ad campaign promises. The new ad campaign is called "Rising," replacing the "friendly skies" tag line used for years.

"United is a work in progress. Our expectations keep rising. We, as an airline, are trying to catch up with customer expectations and rise above them," he said. "We've been overpromising for years, in that our passengers don't think we're the 'friendly skies.' We're trying to narrow the gap between what we say and what we do."

The research revealed five key business segments, which represent 72 percent of airline revenues and three key personal-driven segments that represent 28 percent of revenues, according to David Coltman, senior vice president of marketing for UA. Besides the road warriors and global travelers, the business segments included eager corporate soldiers, representing 10 percent of customers and 11 percent of revenues, reluctant corporate soldiers who represent 11 percent of both customers and revenues, and do-it-yourself price shoppers who represent 10 percent of customers, but only 6 percent of revenues.

The research revealed that travelers expect three things of all airlines: safety, dependability and competitive cost structure and pricing. But where an airline can distinguish itself on service formed the basis of the CSP.

Attracting these high-revenue generating business travelers has become United's focus, in keeping with its strategic plan to significantly boost revenues, rather than cut costs like Delta and other competitors, according to Rono Dutta, senior vice president of planning.

"If we can get a 1 percentage point increase in the share of road warriors, it will add $200 million to our bottom line," Coltman said.

Consequently, United's relationships with corporations are intensifying, to attract all segments of business travelers to the carrier.

"First we have to meet the needs of the corporation, otherwise we don't have any of those people flying on United," said Joe Laughlin, director of business markets.

The $400 million that United is investing in new services over the next two years are designed to take the drudgery out of business travel. Among the changes travelers can see:

* Deployment of boarding gate readers starting at O'Hare in July and rolled out throughout the airline in the next 18-24 months.

* The start of electronic ticket interlining with American Airlines by year-end, with gradual expansion to other carriers.

* Elimination of smoking on all flights in July.

* Deployment of a Windows-based interface to Apollo for customer service agents to help speed passenger checkin and ticketing, starting last fall.