United-Continental seeks revenue benefits from new passenger service system

Washington DC
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Once it accomplishes a complicated system cutover this weekend to a single passenger service system, United-Continental is looking forward to using the system to maximise ancillary revenue.

After the carriers merged a decision was made to migrate to the Shares system used by Continental.

Other benefits the carrier will enjoy after the migration include maximum fleet optimisation to "match the right aircraft with the right markets", said United-Continental chief revenue officer Jim Compton during a recent earnings discussion. "While we have already done some modest optimisation on a limited basis as opportunities arise, we plan to make more material schedule changes as we move through the year," he says.

Compton also says the single system allows the carrier to introduce new ancillary products and "harmonise our ancillary product portfolio". Travel research consultant and Atmosphere Research Group co-founder Henry Harteveldt says he understands Continental was looking at the potential of the Shares functionality to allow for improved revenue management of ancillary products. Shares will allow the merged carrier to manage sales based on demand, which was beyond the capacity of United's Apollo system.

Harteveldt notes that United-Continental was the second carrier to opt for Shares. US Airways opted for the Shares system used at America West after the two carriers merged to form the current US Airways in 2005.

He observes in each instance the system used by the smaller carrier in the respective mergers was selected. Both carriers saw benefits in Shares not offered by the larger platforms used by their merger partners, Harteveldt says.

Likening a passenger system cutover to a simultaneous heart and brain transplant, Harteveldt says he hopes United-Continental have taken steps needed to note what went well in other airline cutovers and learn from the mistakes of others.

WestJet had some glitches when it transitioned to Sabre as did Virgin America.

But cutovers at Delta-Northwest and JetBlue's transition to Sabre went reasonably well, says Harteveldt. He notes JetBlue capped the maximum number of bookings on flights during its cutover below 100% occupancy.

Allowing some buffering in scheduling allows a carrier to more easily rebook passengers if there are glitches in the midst of the cutover.

Harteveldt believes allowing as much buffer room as necessary is a tough business decision, but should be viewed as an investment to keep customers happy to ensure they will return to United-Continental in the future once the carrier has mastered the cutover learning curve.

During the company's year-end 2011 earnings discussion United-Continental executives noted that Continental customer service staff had worked to train their United counterparts on the Shares system.

Harteveldt says he had been informed that United agents shadowed Continental agents while they worked on the Shares system, something which he thought was beneficial since it allowed hands-on training and advice "from a colleague that is just like you".

United-Continental management assured the airline was well-prepared for the cutover. "We've had four, full-scale dress rehearsals," the company says. However, the carrier also cautions it was being prudent, and has scenarios in place "in case we have some unforeseen issues".