United's Premium Demand Play

Old Apr 14, 18, 5:28 pm
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United's Premium Demand Play

When Kirby joined United I thought he'd come in and "right size" the J cabin, but that's not happening. Here's where we stand today, United vs. other US carriers, where the configs differ substantially:

787-8, American 28 (to be reduced), United 36
787-9: American 30, United 49
772: Delta 28 (as reconfigs progress), American 37, United 50

With the new LOPAs released for the Premium Economy (PE) configured 772s and 773s, it's clear United continues to value it's premium cabin. PE was added at the expense of the economy cabin, not business.

And these new 76Ls with their high 46-seat J cabin, it strikes me as a premium demand play, and that's quite refreshing when other US carriers are either pulling out or opting for fewer business class seats on large subsets of their fleets.

To me, as a GS, I like seeing the commitment to a higher ratio of premium seats than other US carriers. I also like and appreciate the retention of a sizable number of E+ seats on the newly reconfigured aircraft (especially on the 76Ls), which respects Premier members in Economy.

Is this the beginning of a unique strategic play in the market? If so, that's exciting.
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Old Apr 14, 18, 5:34 pm
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United's focus hubs (SFO, LAX, EWR, IAH, ORD) have high premium cabin traffic. I'm surprised the others are so low, particularly DL on the 772. But looking at upgrade lists etc if doesn't look like demand is lacking.
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Old Apr 14, 18, 5:54 pm
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United has a lot of long-haul Pacific flights that the other domestics don't -- SFO/LAX->SIN. LAX->AKL, etc. The relative demand for Business is a lot higher on those 12+ hour flights.

I would consider taking an economy flight from ORD to FRA. I wouldn't dream of flying economy from SFO to SIN.
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Old Apr 14, 18, 10:28 pm
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I have been on flights ORD-NRT and back where Y is half full but F and J are completely full more than 24 hours before departure.
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Old Apr 15, 18, 12:27 am
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I hope I don't open a can of worms by saying this, but:

From the hard-product perspective, yes, United seems to be valuing its "Premium seats"; such as J, PE, E+. As a young flyer, I can't tell you how much this entices me to stay. A better seat, no matter what cabin I'm in (as long as it's not E-).

However, you will get those who say United needs to value its soft-product as well and that it would do well to improve this. Basically, the argument of quality not quantity.
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Old Apr 15, 18, 1:26 am
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Maybe UA has (or wants) more corporate contracts resulting in higher business class demand (?)

Originally Posted by acregal View Post
I have been on flights ORD-NRT and back where Y is half full but F and J are completely full more than 24 hours before departure.
I have seen this on the SFO-FRA citypair as well.

Originally Posted by boat9781 View Post
787-8, American 28 (to be reduced), United 36
787-9: American 30, United 49
772: Delta 28 (as reconfigs progress), American 37, United 50
Slight correction:UA's 789 has 48 J-seats.
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Last edited by WineCountryUA; Apr 15, 18 at 1:38 am Reason: merging consecutive posts by same member
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Old Apr 15, 18, 3:49 am
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It's important also to look at UA's overseas competitors. Speaking about TATL, the big ones are BA, LH and AF. Whilst specific aircraft vary obviously, all of those fly at least some, and in the case of BA and LH, most of their long-haul aircraft serving North America, in configurations with much more Business Class, and also First Class. BA and LH have quite a few aircraft with 80J and BA even goes up to 97 in its High J 747s, which principally serve NYC. So, I'm not sure that UA is all that high in the overall scheme of things - just as compared with other US carriers.
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Old Apr 15, 18, 6:00 am
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I think a lot of this is also how UA positions itself in the JV markets and probably trying to grab more revenue. A UA 77W still has less J seats than NH 77W which typically flies 68J (+8F) to North America. And on the TATL side, UA is probably confident on making more premium cabin revenue and leaving the cheap $500 Y fares to AC or SN (maybe future EW) with fleets of higher Y:C ratio.
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Old Apr 15, 18, 11:53 am
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Originally Posted by laxmillenial View Post
I hope I don't open a can of worms by saying this, but:



However, you will get those who say United needs to value its soft-product as well and that it would do well to improve this. Basically, the argument of quality not quantity.
I see your can of worms and raise you.
I would go for a LCC lie-flat J where you bring your own food and all of that. All the soft products are niceties but I weight a lie flat seat at 95% of my reason for booking I.
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Old Apr 15, 18, 12:01 pm
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Originally Posted by JVPhoto View Post


I see your can of worms and raise you.
I would go for a LCC lie-flat J where you bring your own food and all of that. All the soft products are niceties but I weight a lie flat seat at 95% of my reason for booking I.
If there were an economical LCC lie-flat, it would be an appealing proposition. However, a significant part of the advertised value proposition for J, which I would say is evidenced by the Polaris campaign, is the soft product. So when you buy a ticket and board thinking you'll get great service, but you get UA 'service' instead, I think that softens the 'Premium Demand Play'.

Are we up to a basket of adders now?
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Old Apr 15, 18, 1:20 pm
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I think part of the reason is the density of Polaris. In the same front section of a 772, UA fits 32 J seats, AA fits 21 J seats, and DL fits 26 J seats (maybe less in the future with the new seat). AA/DL have to sacrifice more PE/E+/E seats to get the same number of J seats. As for the new 763 configuration, it actually isn't that unreasonable if you think about it. The 77W has 60 J seats and the 772 has 50. Many cities have high J demand and low overall demand, so they are raising J and lowering E. On the other end of the spectrum, many cities have low J demand and high overall demand, so the 787-10s have a below average J and an above average E.

UA's high J count is only relative to the other US carriers. Look at ANA or BA (non-LGW) long-haul aircraft, or all the A380 operators with F/J for the entire upper deck.
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Old Apr 15, 18, 1:32 pm
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Originally Posted by laxmillenial View Post
I hope I don't open a can of worms by saying this, but:

From the hard-product perspective, yes, United seems to be valuing its "Premium seats"; such as J, PE, E+. As a young flyer, I can't tell you how much this entices me to stay. A better seat, no matter what cabin I'm in (as long as it's not E-).

However, you will get those who say United needs to value its soft-product as well and that it would do well to improve this. Basically, the argument of quality not quantity.
Along these lines, I see this as a "premium volume" play. There's a lot of different ways to attract business class travelers. First class upgrades like American, schedule reliability/completion like Delta, etc. You could take an approach to go lower on fares and make up the money in volume. The soft product matters a lot less when that's your "strength".

UA has underperformed on PRASM growth since the merger. The situation in coach is getting worse, not better, with the ULCC competition dragging the fares and product down to their levels. Use less of the plane to compete with them (where the $/sqft is miserable) and more on a discount premium product.

An incomplete thought, but just where your post took me.
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Old Apr 15, 18, 1:46 pm
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Originally Posted by DA201 View Post
I think part of the reason is the density of Polaris. In the same front section of a 772, UA fits 32 J seats, AA fits 21 J seats, and DL fits 26 J seats (maybe less in the future with the new seat). AA/DL have to sacrifice more PE/E+/E seats to get the same number of J seats.
I agree. There is a lot of complaining here about how the Polaris seat is "not industry-leading", but it has been reasonably well reviewed and given that it fits into almost the same space as the IPTE seat (losing half a row on the end) it seems like a fantastic win for everyone as long as premium seat count stays up so we get lower fares and more upgrades. I think this is really a situation where lower CASM up front will lead to lower fares, as UA will need to use their seat count advantage to undercut AA/DL.
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Old Apr 15, 18, 1:59 pm
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Originally Posted by fumje View Post
If there were an economical LCC lie-flat, it would be an appealing proposition. However, a significant part of the advertised value proposition for J, which I would say is evidenced by the Polaris campaign, is the soft product. So when you buy a ticket and board thinking you'll get great service, but you get UA 'service' instead, I think that softens the 'Premium Demand Play'.

Are we up to a basket of adders now?
La Compagnie has sub $2000 RT EWR-CDG fares.
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Old Apr 15, 18, 2:33 pm
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Originally Posted by findark View Post
I think this is really a situation where lower CASM up front will lead to lower fares, as UA will need to use their seat count advantage to undercut AA/DL.
RE: CASM - it depends what your baseline is.... however it's not a revenue metric it's a cost metric.
CASM really just reflects the capacity of the aircraft that you are flying.

Optimizing cost is important but is not the be all and end all
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