As most of you are probably well aware, airlines really make their money on corporate contracts, especially with companies that require a lot of international travel in premium cabins.
Continue reading: Fascinating: Apple Buys 50 United Business Class Seats Every Day Between San Francisco & Shanghai
Share your questions, experiences, and thoughts below.
50 percent plus discount is not unheard of. I have taken trips internationally booked by client travel department and sometimes manage to see the price listed on itineraries which can be a massive discount from the market price.
I've always wondered if these corporate agreements offer a fixed price per route, or simply a percentage off a certain fare basis?
Those are amazing numbers. These seem like non-public information. It blows my mind that apple would spend 10x the amount on travel as two big consultanting businesses even with the majority of their travel being international.
Just as we are all wondering why PVG gets double daily from SFO (rather than NRT or others)! For corporate I guess it's more about the schedule, convenience over fancy products. Most would far prefer two frequencies.
Working for Oracle, I can say I’m surprised it’s so low! We are told to fly first, phone later. So if I have a 30 minute client meeting scheduled 2k miles away, it’s recommended that I don’t use a hangout and hope on that plane for some face to face.
@Lucky 50 seats per day would have to be 25 seats each way. Not many seats left for other passengers if it is 50 - SeatGuru shows combined seats of 84 per day each way
Is the banner on the right United’s top customers or United@SFO’s top customers? Funny how all of the companies are Bay Area or consultancies. I find it hard to believe that Applied Materials spends more with United than BCG or KPMG globally.
Also a route should be a pair of cities. Is the assumption those are all from SFO.
Might explain why getting biz seat saver awards out of SFO on UA metal is so difficult. DAMN YOU Apple. (And your sucky stock.)
NEVERMIND:
United has few First/Biz saver award seats out of SFO because they don't want customers to actually use the miles they've collected. While I'm all for a smaller government, amazed that Congress hasn't looked at the roadblocks that carriers use to make it difficult to redeem miles.
Also is there not a corporate governance issue here allowing up to 50 or even 25 employees from the same company on a plane at the same time?!!
Spare some thoughts for Silicon Valley giants who are stuck with United. Serves them right for dodging/minimising taxes
@Mark Why should United allocate seats for award redemption if they have someone willing to pay (even discounted) to buy out a large percentage of those seats. United is a business. They are entitled to look at yield management with those seats and release award redemptions as it suits demand. Not sure what part of the game you are missing here other than to imagine that "free" is an entitlement. It's not. Gaming the system as they do is the key and far more rewarding in the end. Which is why we have Ben and others with blogs to helps us. It's a dance. There are many other options.
@Rob these numbers are non-public and California-specific. The bottom of the banner says "please don't share outside United."
It’s not surprising to me that the consultancies aren’t higher on the list. I work for another one of the Big 4 and international travel generally consists of small portion of our travel. Deloitte, Mck, and PwC all have international partner firms that often will do work outside of the US - and at a much lower rate. Clients don’t love eating the cost of international travrl if there’s a much cheaper option.
I wonder if Apple only has corporate contracts with United and not other carriers. At least one of the big consulting companies has contracts with many, including the US3, Alaska, and Southwest (and I bet Delta and AA have a larger share than United for the one I work for).
"If this is such a lucrative market you’d think they’d fly a Polaris-equipped plane, but then again, I guess they figure they have the contract, so they don’t really need to complete."
I'm assuming you meant compete? Because, not completing would be bad.
I can confirm that by no means do Apple employees have to fly United. They have a choice but most do pick United.
Interesting that only 2 out of the top 10 are European (LHR & MUC) and 7 (if I’ve gotta my codes right) Asian with a single Middle East.
Of course other apple offices might have a different top 10 but interesting non the less.hris
A couple of years ago I flew from SFO to HKG to work with Apple employees in Shenzhen. J ticket prices (market rate) charged by CX:7k, UA:8k and SQ:5.3k. Apple employees flew the same day as I did. I chose SQ, they flew UA. I knew they must have had a corporate contract with UA at much better rate than what's quoted on united.com.
I used to work for Delloitte a while ago and was based in DC and often flew United to LA. Sometimes I even saw the price paid for the ticket and it was often cheaper than the market price.
I recently started work handling these types of corporate contracts at my company. Being based out of Seattle our contracts land with Delta, and I'll tell you this: we routinely get >50% discounts on premium cabin tickets. In our case, the "number" of seats we book is really just a maximum, reserving the right to book up that number of seats, though in practice it's rare that more than half of them end up occupied. When a seat is "reserved" and doesn't end up used, we pay just half of our rate, should we alert Delta at least 24 hrs. prior to departure.
I use to work in the department at one of the big 3 carriers doing these corporate contracts. Large companies such as Apple will get huge discounts in exchange for a certain volume or share of their business. It’s up to each company to determine their employees’ compliance with travel policy. Some are better than others, but we’d remove discount levels if compliance was low. That 50 number probably represents 1 way / segments. And it’s an average number I’m sure. Also, Apple I’m sure doesn’t pay for tickets on every flight if they’re not occupied- the 50 number is the average.
Separately, I have tons of friends who work for Apple who travel frequently to these destinations for work. Mostvwork so hard that they just want to get on the plane and go to sleep. They don’t care about the product. They want a nonstop flight and to be left alone. There are some who are aware of the things this forum obsesse over, but most just care about the nonstop.
Shanghai
Hong Kong
Taipei
London
Seoul
Singapore
Munich
Tokyo
Beijing
Tel Aviv
Interesting , all served by United from SFO
@ABC
Shenzhen is not on the list because united (and most major airlines) doesn't fly there. Shenzhen can also be easily accessed from HKG.
Fascinating indeed. Easily the most provocative post I’ve seen anywhere in a while.
Basically this is just highlighting the unspoken fact that airlines really are not that different from hotels who do group/reduced rates for conventions, special events or regular corporate clients. These contracts are not difficult to negotiate. Although the airlines are on such a larger scale and don’t focus on small group business, I.e., a wedding that might block 10 or 20 rooms.
Yeah this is definitely Bay Area stats only. My company spent $71+ million with UA and I don't see it listed. This looks like a banner for a recruiting event in the Bay Area. The recruiter will definitely get in trouble now that's spreading online, way beyond its intended use and audience!
We also get sub $2k business class to Europe and Asia all the time so it doesnt seem surprising to see it in writing. Domestic flights in first class are also sometimes cheaper with corporate agency than even economy on the airline's site.
I know a number of folks at Apple and this is not surprising. It’s largely their supply chain / procurement / planning folks that make this trek all the time (every few weeks). Extrapolating across their products with so many sub components being managed by different teams and it makes sense.
These are definitely SFO only stats though.
I work for United and I saw this in our break room, I also talked to a Global Services Apple employee, he says Apple buys Z fare for him every time. He said that was one of the most expensive fare classes to buy.
I've heard of Apple employees flying from the Bay Area to China weekly. People involved in hardware / supply chain need to visit the factories.
Sounds pretty rough tbh, even in business class. I bet they're all Global Services at least
I can 100% guarantee you Apple did not authorize this information being released publically. From the text on the bottom of the banner and given we are in January my guess is this came from some UA "sales kick off" event. I'm also very surprised UA would be this dumb. I've previously worked at a company much larger than UA that had Apple as a customer and internally we were never allowed to refer to that account as Apple but rather by a codename (by their request) even in internal emails or documents you'd never see "apple" written or spoken...if someone even considered something as stupid as making a banner - which was probably printed by a 3rd party (yet another confidentiality fail by UA) they'd be walked out
Used to fly that route a lot, met lots of Apple people on that route. Some brag about doing mileage runs to rack up their miles
BTN publishes an annual report on top 100 travel buyers in U.S. Apple came in #5 spot for 2017 with $275m in air travel spend alone.
For subscribers, BTN delves into detail about regarding the air, hotel and ground choices by vendor also.
Idiots who had the banners made and printed.
Idiots who leaked the pictures to the world.
* I'm still shaking my head in disbelief at the stupidity *
So after seeing this, plus all the constant TLV expansion by DL and UA lately, who still believes the AA lie that despite hubbing at all the largest US-TLV markets, in terms of both volume and business travel, like JFK MIA ORD LAX, they still claim they can’t find any single route that works. BwhHhahhaahahahha
Almost certainly it's 25 seats each way per day.
Corporate contract pricing for mega accounts like Apple is more complex than simply a flat % discount. Might include tiered discounts applicable to different fare classes, special meeting fares, free tickets or rebates, different discounts for domestic and international, automatic premium class upgrades on certain coach fares (and J-to-F, where applicable) and/or special pricing for high-volume city pairs.
@Mrramper: Z is actually one of the cheaper business fare classes (with P being the only one lower). Still expensive, but the fares can go substantially higher.
@Henry LAX: In fact, I remember reading somewhere that United makes a very tidy profit on TLV flights...
anyone with a decent TA can get fares close to $3K on this route so using P and Z class..
United had better hope that the folks from Apple arent reading this. Otherwise they may have to change their retrofif schedule.
No wonder United treats the average passengers like crap, with guaranteed money they don't care about your trip to see mom.
@Stuart I'm as much a capitalist as the next guy. I get why they do what they do. But like so many things that over time don't pass the sniff test, FF programs will, at some point, face increased scrutiny. At issue is a system of issuing liabilities (the miles/points), but then the issuer having carte blanche authority to determine what value, if any, those miles/points have at a future date. On top of that, the issuer can restrict the use, even up to a point of making it virtually impossible for the recipient to get value out of it.
Consider this: United has 14 daily flights from SFO-EWR. On an average day there are 332 business class seats on those eastbound flights. A quick look at availability on their search tool shows not a single biz saver award (non-stop) between today and December 2019. TWELVE MONTHS. Not even one. Now I realize it is possible that there are some false results from their search tool, but the result, in general, is absurd. I'm not saying it is impossible to get to NY on United on miles, just likely a 1 or 2 stop experience.
As Ben has pointed out more than once, miles aren't "free." They have a cost. (Since we can easily get a credit card that gives a 2% cash return.) Imagine if a restaurant sold you a $50 gift card with a disclaimer "Redemption restrictions apply." At first, you couldn't use the card on Saturday meals. Then they decide you can't use the card on odd numbered days. How about if they later decided that the gift card could only be used on dinner tabs in excess of $300? Or how about the gift card only applied to items on a "special menu" applicable only to those redeeming gift cards when salads cost $40 (instead of $7), and a steak was $130?
The way the system is setup now, United could run a sale on miles tomorrow for 2.2 cents each. And then on March 1st, they could unilaterally decide to abandon their current award pricing structure (25k for saver 1st, 50K for everyday 1st) and decide that all miles will be applicable to any flight at 1 cent per mile.
Over 20 years ago I was at a dinner party in Chicago. I was in my 20’s. At the time, I did a lot of travel with UA. I think I made it to Exec Premier or whatever it was called back then. At the party was a UA employee who worked on the MileagePlus team in some capacity that involved planning. (Party had nothing to do with UA…just coincidence.) I found him to be bright and articulate. I asked him why the company would have a program (MP) designed to earn the loyalty of customers (most miles then were earned from flights, not credit cards), but when those loyal customers wanted to use their benefit, the airline treated them like dogs. Answer? Because we can.
Can I work within the guidelines? Sure. Do I think some crafty attorney or legislator is going to stick it to our airline friends at some point in the future? Yup.
I frequently fly SFO-PVG. In the front cabin, it can feel like an Apple employee networking event.
I checked a few UA flights on the SFO-PVG route for a month out and they were running two 787-9s, with round-trip prices of ~$3800 for Polaris (which the 789 *does* appear to have, at least as business class). So that's 96 seats in each direction. Of course, a month later business class was over $6k for the same route, so it looks like for $35MM you can lock in off-peak travel prices for the entire year.
Interestingly, you used a picture of the UA 787-8 parked at PPT. Just back from my annual month-long trip to the South Pacific and so refreshing to bypass LAX.
Now, I can see why Greater China is the second most market for Apple outside of the U.S.A. The top three cities all belong to Greater China. It is also fascinating to see that seven of the top ten cities are all based in the Asia-Pacific region.
I used to be a Commercial Sales Executive with Ansett Australia back in the day - my biggest account was just over AU$2 million (US$1450000), and I wasn't even a Major Account Manager. So no - these figures, adjusted for what is now almost 18 years ago - are about what I would expect, with the 10 million group being the only surprises (a little lower than I would expect).
@Dom is right - beside the vol discount and the respective company's adherence to, there are a multitude of other compelling elements that a sales proposal can offer. There are always matrixes and guidelines for your run of the mill accounts, but to get the top groupings over the line, carriers will do virtually ANYTHING to get the business...trust me.
A tech company that make his (third party) employees work so much that they kill themselves with a airline that beat the cr*p out of his passengers and kill dogs.
Yeah, they are soulmates.
I’m not surprised by this. I’m am however completely surprised that United shared this information and in banners to boot. From my dealings with Apple, they are one of the most secretive companies, even within their own organization. I really can’t imagine anyone at Apple approved this. For what, a bigger discount?
Companies in NYC usually signed contract with AA/Delta because traveler prefer JFK
I think one exception is Goldman Sachs, lots of people work there actually prefer EWR given most of GS’s operation is in NJ/Downtown
Not surprising. Just the US operations of our manufacturing firm spends $3MM+ annually on air travel with main destinations being Shanghai, Sao Paolo, Frankfurt, Seoul, Tokyo, Singapore and Mumbai. The difference is that we are not tied to a single airline since schedule flexibility is priority for us. Our policies are F for intercontinental travel and business for within NA. We only employ 7500 workers globally while Apple has ~120000+.
Fascinating info. Great post and comments from readers.
As one of the posters said - God bless
AAPL.
Former public accountant here. It does not surprise me that Deloitte and PWC are on the list. They send so many auditors to do many places, I’m more surprised the amount is not higher.
I would have loved to see the Apple's head of Corporate Travel face when they saw this on Twitter! The figures are not too shocking, but the fact United PRINTED it on stand-up Banners is just hilarious.
Great article Lucky. The comments are equally fascinating. GOD BLESS THE USA!!!
I run a multi million contract with Apple as a vendor and we are never allowed to use Apple's names even in our internal company presentation. We call it Cupertino Fruit company. I am a regular reader and commenter on this blog but will use an anonymous name for this post. I can be pretty controversial in my posts but I am not going to mess with Apple privacy .Apple is pretty secretive and protects the brand ruthlessly. They are going to be pissed at United for this and Air Travel is actually the most commodity of vendors. Its more difficult to replace janitors and bus drivers than replace Airlines. I wonder which airline is going to get the Apple corporate contract.
I used to manage global business travel including airline and hotel agreements. Usually the discount is city pairs or segments or when i first started (eons ago) a % rebate at different spend levels.
I’d think that 50 seats a day is segments so 25 roundtrips total a day (or the agreement averages out to that and they don’t really fly those but price it on that level) but surprised bc for risk management my travelers rarely flew together if reporting line or same dept. Disclosing those figures should violate the confidentiality clauses IMO
Here in PHL, legend has it that BA created a daily flight to london with first class cabin for corporate pharma clients like GSK etc. Now decades later the biz class is almost always full but first isn’t so you can find award seats.
Not surprising. I used to work for a large German multinational company with 350K+ employees worldwide. We had flat rate business class fares with two different airline alliances in the $2K-$3K range (depending on the city pair) between several major airports in the US and a few airports in Germany. There were also flat rate biz fares in the $4K-$5K range for a few US and Asia city pairs. The cool thing was that you could often book that fare on 24 hours notice if the allocation was still available. I'm guessing that the way it worked is X number of seats per flight were reserved in a certain fare class and Y number were reserved in the next highest fare class. A company that large with that much spend will have airlines knocking on their door for business.
@Tom: I guess this is why my Oracle license fees are so high. What a stupid policy. I hate your company and despise doing business with them.
I want to find a job at Apple, should I just fly UA SFO-PVG in biz? Good idea!
I rarely fly to PVG or mainland China at all but I regularly fly SFO - HKG/SIN and on these routes it is basically an Apple executive club in the front cabin. They are not like Google employees who seem to love wearing their corporate branded clothing but you can generally tell the Apple employees by how they acknowledge other front cabin passengers as colleagues/friends.
As others have said above, it's mostly procurement folks.
A rare peak inside Apple and United. Shows the magnitude of their (AAPL) operations compared to the other companies...
On a some-what related note - regd my 'sleepy' hometown Pune, India (PNQ). - Lufthansa has for years, run a 737-800 Privatair service from FRA to PNQ. Lots of biz-seats. The flight has been cancelled a few times but soon re-instated - load factors in biz aren't great...
Just hearsay from locals - the flight is mainly to support Mercedes-Benz operations in India. Allows execs from Germany (Stuttgart?) to get to Pune, and back in relative comfort.
Also, those are still discounted biz fares. A friend works for Pfizer and he always plays the best routes for the best price and incorporates work events with leisure travel. He knows the "sweet spot" for approvals and always manages to fly in biz for substantial discounts.
@Ssd :
i guess you're extremely geographically challenged then. On top of GS, the global headquarters for Morgan Stanley, Citigroup, American Express, just to name a tiny list, are all physically closer (by both straight line and by driving distance) to EWR over JFK.
As for everything on 6th Ave, from UBS to BofA to Verizon to the media firms to the more niche operations like HSBC or BOC, their distances are roughly equi-distant to either airport.
Only the media market has this obsession with JFK, and that's just for going to LAX. AA is the best case study on how being #1 on JFK-LAX isn't gonna save their ass for a piss poor showing from NYC to just about everywhere else that doesn't involve LHR GRU EZE or their own hubs.
AA is now, and has been for quite some time, #4 ranked in NYC in a 4-way race.
Apple, United in Early Discussions to Upgrade SFO Terminal https://www.bloomberg.com/news/articles/2019-10-25/apple-united-in-early-discussions-to-upgrade-sfo-terminal