n late March, United Airlines president Rono Dutta stood before the Corporate Travel World conference and admitted the obvious -- that United's pricing structure is broken.

United was suffering, he said, because fewer business travelers were using unrestricted, full-fare tickets. "United's structure was designed for the business traveler. We've built it, and you're not coming."

I think this was said as an admission of poor design rather than the casting of blame at his audience. Of course, he chose his words carefully -- he could have said, "We tried to attract you with very high fares, but failed to anticipate that you would instead choose lower-fare alternatives."

United was betting that business travelers would pay almost any price for flexibility, but it turns out that many have noticed that they can write off quite a few nonrefundables -- or gamble that they'll have to pay the change fee -- for less than the cost of a full-fare, refundable ticket.

More on United and its plans to fix what's broken later. Let's look for a moment at what America West has done to its pricing structure.

In March and April, America West simplified its fare structure, reduced walk-up prices, eliminated Saturday-night-stay requirements, got rid of most of its Internet discounts and reduced its fares to seven categories: peak, off-peak, 14-, seven- and three-day advance-

purchase and refundable and nonrefundable walk-up tickets. Seven's still a lot, but it's a number most people can get their arms around.

America West claims the pricing change is a success, and that it has already made progress toward its stated goals of increasing yield.

One notable difference between America West and United is that America West was never dependent upon full-fare business tickets -- only 5% of its revenue comes from these fares.

Nonetheless, United president Dutta called America West's move "devastating." (He also commented that "business fares aren't too high -- leisure fares are too low.")

I would like to see United (and other large airlines not yet willing to admit their systems are broken) healthy again. They're facing a real problem, especially competing with airlines like America West, JetBlue and Southwest, which seem to be attracting travelers with low fares and simple fare structures.

It's instructive to remember that America West has had its share of problems over the years, and seems to have managed to reinvent itself. I've been looking for some sign from United to see what it might do -- clearly, something radical is needed.

Well, last week we finally heard something. United sent a letter to travel agents announcing that it was instituting new, internally developed technology to root out back-to-back ticketing, and gave yet another warning to agents against issuing these types of tickets.

I hope that United, which has faced devastating losses recently, didn't spend too much money developing a technology that can be so easily defeated and will most likely result in spreading some business to competitors.

With its earlier admission, United clearly recognizes that flyers have options -- it acknowledges that it can't force travelers to follow its strategies. If United now reminds travelers that they face penalties by buying back-to-back tickets on United, travelers don't have to be Einsteins to realize that they can buy one of the "back-to-backs" on United and the other on American, and there's very little, if any, chance they'll be caught. In that case, the only one experiencing a penalty is United, which has sent a little business to American to help reduce its excess capacity.

United seems to be stuck in its old model, where it tries to set rules to get people to buy for retail what it sells for wholesale. Instead of trying to prop up an old system the airline admits is broken, it's time for a serious overhaul.


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