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Friendlier Skies at United

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I'm at Fool HQ this week. To get here, I once again flew UAL's (Nasdaq: UAUA  ) United and its see-us-at-the-podium-because-we're-overbooked skies. I like what I'm seeing.



I'm impressed by how UAL is using services to earn more from the seats it flies. The latest? A program called Award Accelerator. Pay a fee and United will double or triple your Mileage Plus mileage haul.

For $37, UAL offered to give me double credit for the 1,313 miles I flew from Denver to Washington, D.C. That's 2.8 cents per mile. I didn't pay the premium because I don't travel that much, and because UAL doesn't participate in American Express' Membership Rewards program, which I use to maximize vacation options. But I could easily see this system working for the regular business traveler who lives near a United hub city such as Los Angeles or (ahem) Denver.

Investors, meanwhile, should love the profit margins for this program. Charge $0.03 to fill unsold inventory? No wonder a Bear Stearns analyst estimated the Mileage Plus program to be worth $7 billion in a spinoff.

Award Accelerator is no panacea, of course. But I like the spirit of the idea: make more from every seat. That's the only strategy worth considering when labor relations are at an all-time low and oil prices routinely threaten to reach new highs.

And yet I see more that could be done with in-flight services. Make onboard Wi-Fi an option as Delta (NYSE: DAL  ) and AMR's (NYSE: AMR  ) American plan to. Rent premium audio or noise-canceling headsets. Install new video screens for pay-as-you-go in-flight entertainment. All are viable options for raising revenue.

Oppressive fees, on the other hand, are an instant turnoff. Just ask US Airways (NYSE: LCC  ) passengers. They're now paying a buck for a cup of coffee and $2 for a Coke. These astounding charges lend credence to Southwest's (NYSE: LUV  ) claim that peers are making ends meet at the expense of passengers.

As blogger Wayne Schulz put it last month: "US Airways introduces new free beverage service called bathroom sink." Funny? Yes, hysterical. But only because it's so freaking sad.

Join me in a golf clap for United, please. For all its faults, the carrier is trying to deliver value and make our overcrowded skies just a little friendlier. It's about time someone did.

Flap on over to this related Foolishness:

American Express is a Motley Fool Inside Value pick. See what other stocks the Fool's analysts have recommended for value investors with free access to the newsletter service for 30 days. The Motley Fool owns shares of AmEx.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. He hunts for the best of tech as a contributor to Motley Fool Rule Breakers. Here's how to try this market-beating service free for 30 days. Get access to all of Tim's Foolish writings here. The Fool's disclosure policy knows there are certain movies you should never watch while flying.

Read/Post Comments (2) | Recommend This Article (1)

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  • Report this Comment On September 25, 2008, at 11:38 AM, stockjock43 wrote:

    Cmon the airlines are getting killed...most stocks down 50-60% and your whining cuz they charge you a buck for a cup of coffee? Have you been to starbucks lately? It is imperative our airlines start making money again as the business is vital to America....we need to get Oil under $100 and keep it there

    Pathetic article

  • Report this Comment On October 12, 2008, at 2:36 PM, paddymelt wrote:

    Do you ride on a train and get free drinks? No, and on American trains you have to go get it yourself. In fact, name a place where this doesn't! This is going to be the new trend, so get used to it. AMR announced they will be doing it next year.

    You say, "Rent premium audio or noise-canceling headsets. Install new video screens for pay-as-you-go in-flight entertainment. All are viable options for raising revenue." where is the money coming from to get "premium equiptment"? We have a bailout happening, and airlines are at the top of the list as needing finacial assistance for fuel hedging, and other nessecities to stay in business, but you think the airlines should provide entertainment (with equiptment that not only adds weight, but has maintenance issues, and high costs) when most people carry laptops, mp3 players, or god forbid...a book!

    The flying public has been spoiled for years! Why should all passengers cover the costs for items not everyone needs?

    I agree, very pathetic article!

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