[tonyw]

It Woos Business Travelers
With Range of Services
As Rivals Cut and Simplify
DVD Players, Reclining Seats
Next month, United Airlines parent UAL Corp. expects to emerge from the largest, longest-running airline bankruptcy in history. In three years, the nation's second-largest airline has shaken up management, improved its on-time record and slashed costs by $7 billion a year.

Now United is gambling on a flight plan that takes it in the opposite direction of the rest of the U.S. industry. Determined not to be another clone of low-cost, low-fare juggernaut Southwest Airlines, United is making an all-out effort to raise revenue by pampering its best business travelers -- and keeping them on United whether they are flying to a meeting on the coast, or taking the family to Orlando. That means accepting higher costs, the very problem that drove it into bankruptcy in the first place.

In the face of rising fuel prices and continuing losses, competitors have cut back on frills and simplified their offerings across the board. United is keeping onboard blankets and pillows, making seating more spacious and designing new services for both the high and low ends of the market. The airline hopes these steps will allow it not only to charge more but to steal some customers from rivals, or, in the case of its new leisure division, Ted, to better compete with discounters.

One big risk: United is sticking with a seven-year-old program that rewards elite frequent fliers traveling in the front of the coach section with a few extra inches of legroom. The program, dubbed Economy Plus, has generated additional revenue, but it also has raised costs, because United now has fewer seats than rivals on most of its 450 jetliners. AMR Corp.'s American Airlines last year undid a similar program it launched in 2000, saying adding back seats generated an extra $100 million in annual revenue.

United has reduced the number of seats on more than 100 regional jets flying with its commuter affiliates so it could install roomier Economy Plus seating and first-class cabins -- the first time anyone in the industry has so broadly tried an upscale approach on such small jets. It radically cut the seating in a luxurious transcontinental service called "p.s." The extra room enables United to be the only airline that offers fully reclining, first-class seats on coast-to-coast flights. Now, following a big expansion of overseas routes, United also is planning a multimillion-dollar upgrade of its international first- and business-class cabins.

"It doesn't take talent to take the pillows off" planes, says [Glenn] Tilton, a former oil-industry executive who has guided United since September 2002. "In the industry's herd mentality, we were supposed to trundle down the runway of commoditization," he says. "But if you're blessed with this network, to optimize it, you overlay an array of products that people want."

Most major airlines like American and Northwest Airlines are streamlining their offerings and stripping away perks. Northwest, which filed for bankruptcy-court protection in September, no longer serves free pretzels. American's Eagle commuter subsidiary is experimenting with charging $1 for a soda. Delta Air Lines, also in Chapter 11, is ditching its leisure division, Song. On the other hand, Continental Airlines has rejected the take-back of customer perks and still offers free meals and other amenities, but the nation's No. 5 airline isn't offering as many levels of service as United.

http://online.wsj.com/article/SB1137...ys_us_page_one

Good on United. I can tell you that keeping e-plus is a big way for them to keep my butt on their metal, and I'm willing to pay more for it.

Sure, the I want the cheapest airline out there types won't fly United, but given that they're flying with 80 percent load factors, so what?

And I like how United's saying eff off, Wall Street analysts. You said be like Southwest, we're going our own way.