Five star name, three star quality: What happens?

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united global firstI’m writing this posting from the United Airlines Global First lounge at Washington Dulles airport. A few weeks ago, rock singer will.i.am was kicked out of the counterpart airline  lounge in Los Angeles because he didn’t qualify. Fortunately, my wife and I are quite rightfully in this place — in fact, outside of four United Airlines employees, we are the only people here (and we saw our names handwritten on the permitted entry sheet when the desk clerk reviewed our boarding passes.)

There are some reasons why a rock star presumably travelling on a business class ticket couldn’t access the lounge, while my wife and I are allowed to be here as part of a multi-segment international trip, for $750 each cash cost, plus several thousand Aeroplan points.

The reasoning relates to some of the greatest marketing opportunities and challenges available. How do you extract premium revenues and client loyalty in a competitive marketplace?

will.i.am fell into the “exclusivity” concept trap — if something is rare, virtually inaccessible, and totally “special” to enter, it is worth more.  It seems the rock star, while famous, didn’t purchase an expensive enough ticket. You see, to access this lounge — instead of the regular premium Red Carpet Club, you need to be a Global Services  member — that is, be an extremely high revenue generating United Airlines passenger — or travelling on an international first class (not business class) ticket.

In other words, you don’t get here unless United Airlines considers you to be one of the top five to 10 per cent of revenue generating/influencing clients or you are able to afford or otherwise snare extremely scarce seats at the very front of a three-class plane.

Wait. This sounds okay, but Mark Buckshon isn’t the type of person to blow $20,000 on a first class plane ticket. However, I have a fairly good understanding of airline frequent flier program rules and restrictions, and a year ago decided that I really would like to treat my wife to the first class experience.

Air Canada doesn’t have a specific first class section on its flights — its international ‘Executive First” class is quite luxurious, of course, but it is business class, after all. But Air Canada belongs to the Star Alliance, and so does United, and United indeed has three-class flights on international routes (and on domestic flights from the east coast to Los Angeles).

Now, United’s first class doesn’t win records compared to other Star Alliance carriers, the best (I think) being Singapore Airlines. But you won’t get a first class ticket on points with Singapore Airlines — you need to belong to that airline’s own program. In fact first class tickets are about as scarce as you can find, if you want to go for cheap points seats.

So I realized I had found something quite exceptional last August when (as soon as points tickets for the year following became available), I discovered a couple of first class seats available for points on the flight Washington to Amsterdam on July 1, 2014. I grabbed them. We then built the rest of our itinerary, including a visit to Croatia and a cruise on the Dalmatian coast. Total cost for our flights: $750 each (business class most of the way, but with the first class segment from Washington to Amsterdam.)

There are only six first class seats on this flight. Why would United release two of these rare (and expensive, if you read the price list) seats for this flight so rather modest-means travellers could travel on the route for less cash cost than the cheapest possible economy seats?

The reason is simple, in my opinion. United could never actually sell the seats at the listed price.

I haven’t experienced the flight yet. I’m sure it will be pleasant, with a six-course meal and plenty of attention. But I could see things were not quite right from the start when we checked in at Ottawa airport for our initial connecting flight to Washington.

“Are you a Global Services member,” the clerk asked?  “No,” I truthfully responded. “Then you need to get in line with everyone else.”

“Wait,” I answered. “I am travelling on an international first class ticket, and think I am supposed to be able to use this line.”

Only then the clerk looked at the boarding pass and realized that my ticket indeed had “First Class” marked on it. I think she reacted this way because she has never seen anyone actually with an actual first class ticket.

The lounge here, the equivalent of the one which will.i.am could not enter, says something else.

It is virtually empty — in fact my wife and I are the only people in the room. Exclusivity, eh. Well, think of a time warp back to the 80s. This place needs an upgrade, fast. It makes me think of a three-star hotel, but this is supposed to be the exclusive place for five-star travellers.

In fact, I expect, United only fills its “First Class” seats with high-revenue business class passenger upgrades, part of the special Global Services group, who get special attention and rewards because of their loyalty and high revenue generating potential.

The airline, also knowing it won’t be able to sell the seats for cash, also releases some to the Star Alliance program, and these seats, it seems, are the ones I obtained with my wife.

I don’t mind a three-star “first class” experience. It is kind of surreal. I mean, there are some trappings of five-star service and facilities, and some that aren’t quite to that level, but I’m only paying $750 for the overall ticket — and this includes several segments. So it is a bargain. And I can see how the exclusivity and extra services for Global Services passengers helps generate more conventional business-class revenue.

But you can’t simply dress up a three-star hotel to make a five-star experience. That takes something extra. It is hard to do. Only a few can pull it off. (I can’t, I admit.)

When you do that you have the paradox of very expensive seats and services sitting unused unless you can find a way to fill them with people who won’t “compete” with potential revenue-generating clients. And you end up with customers like me, with no loyalty, not much money, but a fair bit of savvy and patience and interest in gaming the frequent flier points systems.

We’re looking forward to our flight and vacation and six course meal and amenity kit and all the service that goes with First Class. United Airlines, however, won’t get the real revenue-generating passengers without a major investment in genuinely creating the first class experience for passengers with the money to actually pay for the service.

Lessons learned.

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