United Aims for First Place Airline
Jennifer Billock January 31, 2018
Frankfurt, Germany - July 17, 2014: United Airlines aircraft logo at an aircraft in Frankfurt. United Airlines is headquartered in Chicago, Illinois.
United is taking a play from the aviation handbook of the 1990s in order to expand the airline and strengthen its hubs throughout the Midwest. The ultimate goal? To get back to the number-one spot in the major airline rankings, passing over Delta and American.
Back in 2010, when United took over Continental, the airline began having some trouble. It was forced to shrink, and caved to investor demands that capacity lessened in order to hopefully improve fares and profits. But it was a bad choice, United’s president Scott Kirby told Bloomberg Pursuits. Domestic seat growth shrank by 8 percent through 2016 while its rivals continued to grow.
Now, Kirby wants to reverse that trend.
“Our growth – and strengthening our hubs – is absolutely the critical, essential element to driving higher … margins at United,” Kirby told analysts. “I’m absolutely certain about it.”
His plan is to increase growth at a large rate, expanding capacity annually by up to 6 percent through 2021—which JP Morgan analyst told Bloomberg is about the size of Spirit Airlines. The strategy is something that last happened in the 1990s and is now considered less-than-polite to do in the modern aviation business.
“United is, to some degree, ripping up the airline economics playbook from the past decade,” Seth Kaplan, managing partner of Airline Weekly, told Bloomberg.
In the meantime, the airline industry continues to add capacity overall. Analysts expect a 5 percent increase this year, even though oil prices are getting higher. And while that may mean more profits for the airlines themselves, it also means the customers might benefit from lower fares as a result.
[Photo: Shutterstock]
Number One by what metric? Clearly not passenger satisfaction, cabin quality, FA quality, GA quality, seat pitch nor width ... in fact, from the tone of the article it seems number one only by margins
United is playing to their strength - hub captives - and they want more of them. If you live in one of their hubs, like San Francisco, people are more likely to fly UA, collect MileagePlus miles, get their credit card, put up with poor service and crappy seats - and still pay top dollars for the pleasure.... On point-to-point flights they can't compete with LCC on price and other full-service airlines on quality, so this is their best play...
United is good at redemptions. They are dead last in virtually every other category. The reason they are so good at redemptions is because they can't sell their seats for money.
It doesn't take a rocket scientist understand this. when give customers excellent service they will loyal to you. if they want to grow fast, change should start from the top. when I see united has changed to customer friendly company, I will also reconsider to come to them. Are they willing to compete with some of the top rated airlines such as Singapore Airlines, and all 3 top rated UAE Airlines? Alexander
I agree with afCAMEO. Yes United has a lot to catch up but for award receptions it's the best among all big 3 in US.