August 29, 2002



Changes apply to upgrades, fare rules and corporate discount fares
For Immediate Release

CHICAGO, Aug. 29, 2002 -- United announced today several policy changes aligned with current market conditions and overall corporate objectives.

“These changes are part of United’s overall strategic plan to cut costs wherever possible, while maintaining a product that our customers have told us is important to them,” said Chris Bowers, senior vice president-Marketing, Sales and Reservations. “At the same time, we must be sure that our products and services are priced appropriately for the value they offer.”

United’s policy changes will apply to customer upgrades; fare rules; and discounts on sale, promotional and other already deeply discounted fares.

Upgrades

In the fall, a number of changes will be implemented for United’s upgrade program.

“Upgrades are a major motivator for our customers,” Bowers said. “Consistently, we receive feedback from our best customers that upgrades are too complex and not simple to use. Today we are announcing a number of policy changes to make travel easier.”

· United is streamlining and simplifying the markets where customers can use their upgrades, giving them greater flexibility and ease of use across United’s network. The number of upgrade award levels has been reduced to two. (effective first quarter 2003)

· Internationally, United is simplifying the number of miles needed for Mileage Plus Award upgrades.

· Over time, United will move to automate all customer upgrades, similar to previously announced e-ticket initiatives.

· As an added bonus for Premier members of United’s award-winning Mileage Plus program, upgrade clearance policies will increase to 48 hours before departure, from 24 hours. All other upgrade clearances will follow existing time lines. (effective first quarter 2003)

· Lastly, the monetary purchase price and miles needed to purchase upgrades will be increased effective, Oct. 1, 2002 – the first increase since 1996. This will not affect the way that customers earn complimentary upgrades, or applicable booking codes.

Monetary purchase price:

Premiers, Premier Executives, 1Ks

Four, 500 Mile Upgrades -- $200

General Members and other customers

Four, 500 Mile Upgrades -- $325

Mileage Purchase Price:

Eight, 500-mile upgrades – 50,000 miles

Miles for North America Mileage Plus Award upgrades

Y/B Booking Codes – 8,000 miles

All other booking codes – 15,000 miles

Miles for International Mileage Plus award upgrades:

Y/B Booking Codes – 15,000 miles

C/M/H Booking Codes – 30,000 miles

Clearance Policies

1K 100 Hours before departure

Premier Exec 72

Premier 48 an improvement over the previous 24-hour policy

General member/Non-member 24

Additional information regarding United’s upgrade program will be available through future communications from Mileage Plus and via the company’s web site, www.united.com.

Fare Rules

Due to the dramatic reduction in published fare levels and in support of the company’s recovery plan, United has a renewed commitment to the integrity of our fare rules.

As a result, effective August 28, 2002, United will no longer allow waivers on fare rules, including, but not limited to:

· Advance purchase;

· Ticketing time limits;

· Minimum/maximum stay requirements;

· Administrative service charges; and

· Other requirements and tariff rules.

United will be enforcing these rules internally and throughout the corporate and travel agency community. The company will no longer be granting Fare Rule Waivers on any fare. This applies to North America and all International markets.

Discounts on Sale, Promotional and Other Deeply Discounted Fares

Continuing with its cost-saving efforts, as previously announced, the company also is eliminating discounts on sale, promotional and other deeply discounted fares when negotiating contracts with corporate customers. This applies to North America and all International markets.

“While we are doing all we can to maximize revenue, the growth of low-cost competitors and the soft economy are out of our control,” says Bowers. “We believe even when the economy improves, the changes in air travelers’ habits and attitudes, and the impact of low-cost carriers, will keep revenues depressed. A continued focus on lower costs is vital to United's future.”

Other cost-saving initiatives include:

Paper Tickets

As United continues to leverage technology to better serve its customers, the company recently announced that it will move to full electronic ticketing. United will stop issuing paper tickets within the United States by July 2003; the carrier plans to issue only electronic tickets for all eligible itineraries, at all locations - domestic and international - by January 2004.

Effective September 1, 2002, United’s $20.00 paper ticket fee will apply to all customer-requested paper tickets issued in the United States, U.S. Virgin Islands and Puerto Rico for E-Ticket eligible itineraries, including those issued by travel agencies. The fee applies for printing transactions, either at the time of original ticket issuance or upon request to convert existing electronic tickets to paper. Travel agents should collect this fee on a Miscellaneous Charges Order (MCO).

Corporate Solutions

United announced in March that it is implementing Corporate Solutions, a contract management system for corporate sales agreements.

Corporate Solutions provides the technological tools to develop, track, analyze and generate contracts tailored to the specific needs of a corporation. The system also will issue reports for improved contract financial performance, higher market share and better customer communications, therefore establishing a more collaborative relationship with customers.

“Corporate Solutions is the centerpiece of a suite of enhancements to our way of doing business that will benefit our customers and us," Bowers explained. "We have a unique opportunity for positively changing the way this part of the business is done."

Back-to-Back Ticketing

As a result of an audit of tickets earlier this year, the company detected a sizeable number of transactions that involve violations of its tariff rules.” The prohibited practice is commonly referred to as “back-to-back ticketing.” Flight coupons across tickets are used in an order other than that in which they were issued. Ultimately, it results in a wrongful effort to obtain a discount to which the customer is not entitled.

This resulted in travel agencies receiving formal notification in June of United’s plan to enforce its ticketing rules, including suspending or terminating the agency’s ticketing authority on United and taking action against the agency to recover the difference in fares by:

Requiring the traveler to pay the applicable fare differential; or
Issuing a debit memo to travel agencies for the fare difference and collecting the amount due in full.
United Airlines operates more than 1,900 flights a day on a route network that spans the globe. News releases and other information about United Airlines can be found at the company’s website at www.united.com.

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"The prohibited practice is commonly referred to as “back-to-back ticketing.” Flight coupons across tickets are used in an order other than that in which they were issued. Ultimately, it results in a wrongful effort to obtain a discount to which the customer is not entitled."

Wrongful? Get outta here! Gaming the system (legally, I might add) is no more wrongful than coming up with all these restrictions to try to wring more money out of customers.

With attitudes like this, no wonder the airlines like WN and AirTran are having a field day.

 

QUOTE: As a result of an audit of tickets earlier this year, the company detected a sizeable number of transactions that involve violations of its tariff rules.” The prohibited practice is commonly referred to as “back-to-back ticketing.” Flight coupons across tickets are used in an order other than that in which they were issued. Ultimately, it results in a wrongful effort to obtain a discount to which the customer is not entitled.... END QUOTE

In light of this announcedment, I think that if a person is going to purchase back-to-back tickets, that he or she should do so only by purchasing the ticket set to be used for the outgoing flights through a different ticketing agency than what will be used for the returning flights. Also, the outgoing flights and the returning flights should be on different airlines which are not related through any codesharing arrangements or alliances.

 

Re: nested tickets on codeshared/alliance airlines. Has any airline out there attempted to claim that back-to-back tickets using its alliance partners are a violation of fare rules? Example: I buy a CO ticket on CO metal nested inside a NW ticket on NW metal. Seems perfectly fine to me as I am doing business with two separate companies.

If the airlines try to use their codeshare agreements to extend the tentacles of their fare rules, I would think The Feds would say "Now you are acting too much like one business. Back off a little bit."

 

UA obviously doesn't think many customers will just buy back-to-back tickets through more than one airline. And given the near monopoly airlines have in many markets, plus the desire to build miles and reach status on one airline, they may well be right.

It is interesting that UA has not said it will audit MP accounts for back-to-back purchases, where comparing flights taken to ticket numbers would make make back-to-backer pop out in living color.

 

Legally? Oh, I hardly think so. Back-to-back ticketing specifically violates United's Contract of Carriage.

 

Lets see If I purchase a ticket on United and come back on American or Northwest. United just Lost 50% of the revenue. So much for strategic thinking by the accounting Dept.

 

If they did that then it wouldn't be back-to-back ticketing in the first place.

This whole topic makes me wonder just how pervasive back-to-back ticketing is? I mean if you ever have to call reservations the CSR will see what you have done immediately, right? and for that matter how can they possible not have any auditing of this sort of thing that should be cake to automaticaly detect??

Or am I just being naive and "everybody is doing it.."

 

I have purchased back to back on another airline consistantly for 2 years (I travel coast to coast every other week) and I do this with just one airline and I do it on their website and I have never been caught nor has the customer service reps noticed when I call for the upgrade. Therfore I don't think it justpops out at them. By the way where can I review the text about "contract of carriage"

 

United's contract of carriage is at:

http://www.ual.com/page/article/0,1360,2743,00.html

That's a link to the pdf version, do a search for back ticketing in the pdf to find the couple lines about it. It's like 40 pages long.

 

Is this really back to back ticketing? for instance my wife used to have to travel from SFO-BUR for three days during the workweek for a year and basically we just bought the tickets outbound (BUR-SFO)thursday, return tuesday(SFO-BUR)...creating a saturday night stay out of her "vacations" to san francisco. Unless I am misreading your post, anytime you have frequent travel between the same city pairs it would seem that it wouldn't be "back-to-back" ticketing, and completely legal.

 

is this contract the same for all other domestic airlines

 

As an an example I purchase a ticket for Pit to lax LV 9/10/02 and returning sfo to pit 9/26 and then a second tix LAX to Pit 9/13 with a return PIT to SFO on 9/23. I was under the impression that this was back to back asI use the outbound parts first and the returns second.

 

Here's a link to the website of a travel agent-turned-lawyer who's on AA's case for debiting an agency for 34 grand for tickets used in violation of C of C rules, check out the AA Class Action: http://www.travelagentlawyer.com/

 

Back to back example:

Say I fly from New York to LA all the time, fly out on a Tuesday and back on a Thursday. No Saturday night stay.

Next week I am flying on Sept 3 and 5, the following week on the 10th and 12th.

Ticket number one - Round trip New York to LA flying out on Sept 3, and back on Sept 12

Ticket number two - Round trip from LA to New York, flying out of LA on Sept 5, returning on Sept 10.

Both tickets have a Saturday stay and will be less expensive then if they didn't (assuming I bought in advance and all the rest).

When I fly I use the first coupon of the NY to LA ticket on ticket number one for the tuesday, and the first part of the LA to NY ticket of ticket 2 that Thursday.

The next week I fly out on the return portion of ticket 2 and back to NY on the return portion of ticket 1.

Airlines don't like this, but I wouldn't be stupid enough to do it on the same airline.