UA Adds Second Daily Nonstop Service between SFO-HKG (back to daily till 28 Mar 2020)
#151
Join Date: Nov 2006
Location: DSM, BKK or anywhere with an airport
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A couple of weeks ago Oscar Munoz was on CNBC and stated their HKG book had been a disaster this year with loads down 25%. I can’t find the link but I’ll keep looking.
#152
Join Date: Jul 2011
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Posts: 2,262
Although to be fair, I haven't looked all the time.
#153
Join Date: Mar 2003
Location: Los Angeles, CA
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Posts: 6,956
#154
FlyerTalk Evangelist
Join Date: Apr 2003
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Posts: 12,336
The following is extracted from the United 2018 Annual Report. As you can tell, the HK routes were not performing as expected way before the protest took place.
Routes: The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. Accordingly, in the fourth quarter of 2018, the company recorded a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
Routes: The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. Accordingly, in the fourth quarter of 2018, the company recorded a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
#155
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
1. HK Airlines pulled out of SFO so low-cost competition is exiting
2. J loads look good on the existing SFO-HKG non-stop during this difficult period
3. There will be pressure on SQ to cancel the SFO-HKG 5th freedom flight once UA launches the evening SFO-HKG flight.
The following is extracted from the United 2018 Annual Report. As you can tell, the HK routes were not performing as expected way before the protest took place.
Routes: The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. Accordingly, in the fourth quarter of 2018, the company recorded a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
Routes: The company conducted its annual impairment review of intangible assets in the fourth quarter of 2018, which consisted of a comparison of the book value of specific assets to the fair value of those assets calculated using the discounted cash flow method. Due to increased costs without sufficient corresponding increases in revenue in the Hong Kong market, the company determined that the value of its Hong Kong routes had been impaired. Accordingly, in the fourth quarter of 2018, the company recorded a special non-cash impairment charge of $206 million ($160 million net of taxes) associated with its Hong Kong routes. The collateral pledged under the company's term loan, including the Hong Kong routes, continues to be sufficient to satisfy the loan covenants.
Also, the launch of the evening SFO-HKG flight should convince you HKG is doing fine. They wouldn't double-down if it wasn't profitable. Oscar smells blood and wants SQ out of the SFO-HKG market!
Last edited by WineCountryUA; Oct 8, 2019 at 9:08 am Reason: merged consecutive posts by same member
#156
Join Date: Feb 2008
Programs: 6 year GS, now 2MM Jeff-ugee, *wood LTPlt, SkyPeso PLT
Posts: 6,526
It is not surprising that people would avoid UA in Y on this type of very long (14 1/2+ hours going West) route given how abysmal UA's seats and service are.
#157
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
I agree. Y loads have taken the bigger hit. But there is good news there. HK Airlines was sucking away traffic with ultra-low fares. They're dead. Also, Cathay is killing the NYC-YVR stop on the way to HKG, so that will further reduce connecting options to HKG from east-coast.
#158
Join Date: May 2010
Location: AVP & PEK
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Posts: 6,355
Seems like a long term commitment based on an ill-conceived concept: more seats = more profit.
#159
Join Date: Jul 2005
Location: NYC
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Posts: 2,509
Gee, I wonder if it just might have something to do with United running 777s with 10x across seating in Y? Hmmm, I can fly an airline that has Y seats that are .6" narrower than on a 737 (their effective width, if you divide up the cabin width - aisles /10) and in addition have aisles that are 1" narrower than on other aircraft (18" vs 19" which is standard) or I can fly an airline (SQ) that has seats that are effectively 21.3" wide vs the 19.4" wide seats on UA, or an airline that has SQ's width or is flying a brand new A350 (CX) with more comfort and seats that are 20.3" wide. And oh, UA's food/service is subpart compared to either CX or SQ.
It is not surprising that people would avoid UA in Y on this type of very long (14 1/2+ hours going West) route given how abysmal UA's seats and service are.
It is not surprising that people would avoid UA in Y on this type of very long (14 1/2+ hours going West) route given how abysmal UA's seats and service are.
This comparison can be made anywhere UA flies to and is competing with another carrier. LAX-SYD UA 787 vs. QF A380/DL 772, SFO-ICN UA 787 vs. KE 77W, etc. But the fact is that most Y passengers don't care about seat width (or food quality or service) over price and schedule.
#160
Join Date: Jan 2018
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Posts: 1,250
The US is only 4% of the world's population and has an obesity issue. The fastest growing markets in the world (APAC, etc) don't have this obesity issue and are fine with the 10-across dimensions.
#161
Join Date: Feb 2008
Programs: 6 year GS, now 2MM Jeff-ugee, *wood LTPlt, SkyPeso PLT
Posts: 6,526
As I think most SFO and HKG based fliers will attest, the evening arrival into HKG is easiest (as you can go to your hotel/home go to sleep) if you can afford the extra day, while the night departure ex-HKG (getting in late afternoon/early evening in SFO) is also best. However, UA's flights are timed to be able to make connections in the US end, which is sub-optional for SFO and HKG (going to SFO) fliers. Only a double daily allows the scheduling flexibility that is probably needed for some travelers.
I'm not sure that UA can win back the traffic now going to CX and SQ, but I think two flights on this route are probably "table stakes" - that is assuming the Chinese don't destroy HKG as a business and financial center. This is why ORD-HKG went away while UA has stuck with the 2x day flights ex-SFO for now.
Whether UA goes ahead with the second flight - in the face of a total fall off in HKG traffic - is not something I can call. They will have to decide that losing more $$$ by adding a second flight now is needed to compete going forward, or they put the thing on hold for now to stop some of the bleeding. The easy answer is to fly it was a 789, but those planes lack both PE and decent J seats, and would be in no way competitive with what SQ and CX have on this route.
My guess is that Kirby is really POed that so many B879s are setting around at UA with no PE and outdated J seats....
I know the response on this board is "don't fly these planes in Y" and people are not dumb. They fly this once, and say "never again". I was on one of these planes (the UA HD 777) in E+, and spent 4.5 hours with my shoulder burred in the guy next to me, most uncomfortable I have EVER been on an airplane. I will never do it again. But the bigger problem for UA (and AA) is that most travelers will not do what I do and say "hmmm, its a UA 777 that is not retrofited, or a 767, so ok" they say "I have the worst flight on UA, seats were really narrow and 10x, no room, I am NOT flying them again."
Well they are flying to HKG with sCO 772 with 3-3-3 in Y. Granted as those will phase out and they will be swapped with reconfigured 772 with 3-4-3.
This comparison can be made anywhere UA flies to and is competing with another carrier. LAX-SYD UA 787 vs. QF A380/DL 772, SFO-ICN UA 787 vs. KE 77W, etc. But the fact is that most Y passengers don't care about seat width (or food quality or service) over price and schedule.
This comparison can be made anywhere UA flies to and is competing with another carrier. LAX-SYD UA 787 vs. QF A380/DL 772, SFO-ICN UA 787 vs. KE 77W, etc. But the fact is that most Y passengers don't care about seat width (or food quality or service) over price and schedule.
Basically anyone who is over about 5'6" and/or 150 lbs (or even at that size is seated next to someone who is much bigger) is going to walk off the UA flight going "hmmm, that was not so hot". What then happens is that people say "well lots of airlines, best not to fly UA again"
Yes, but the bulk of UA's traffic is from the US, unlike say the ME3 or AF. I think all western airlines that are trying these ultra-tight configurations are going to over time find their NPS scores and reputations suffer, with people not wanting to fly them again. See e.g. AC, UA, AA, KLM, Swiss.
Last edited by WineCountryUA; Oct 8, 2019 at 9:10 am Reason: merged consecutive posts by same member
#162
Join Date: May 2010
Location: AVP & PEK
Programs: UA 1K 1.9MM
Posts: 6,355
(And APAC includes the top ~10 countries with the most severe "obesity issues".)
But this is all besides the point; no person of any size would prefer a 10 across to a 9 across.
I predict an eventual UA reversal back to 9 across, but it will likely take 8 to 12 years....or once the current older 777s get a bit too old and will need replacing.
#164
Join Date: Feb 2001
Location: NYC
Programs: CO
Posts: 608
This doesn't mean the route is doing poorly. I'm not an accountant, but I think the accountants on FT would tell you, UA is opportunistically reducing the value of some of its intangible assets (like routes) because they don't need them to be that high to satisfy loan covenants. Reducing asset values allows you to improve your "Return on Assets" ratio which is Profit/Assets...
Also, the launch of the evening SFO-HKG flight should convince you HKG is doing fine. They wouldn't double-down if it wasn't profitable. Oscar smells blood and wants SQ out of the SFO-HKG market!
Also, the launch of the evening SFO-HKG flight should convince you HKG is doing fine. They wouldn't double-down if it wasn't profitable. Oscar smells blood and wants SQ out of the SFO-HKG market!
#165
FlyerTalk Evangelist
Join Date: Aug 2015
Posts: 11,462
I would sort of prefer they keep the PM departure if the route can't support two flights now.
As a side note, in my experience the problem with the 10 across 17" seats is more at the shoulders than the waist.
As a second side note, it's hilarious that UA publishes the seat width with two decimal places, as 17.05".
As a side note, in my experience the problem with the 10 across 17" seats is more at the shoulders than the waist.
As a second side note, it's hilarious that UA publishes the seat width with two decimal places, as 17.05".
Last edited by fumje; Oct 7, 2019 at 7:39 am Reason: picture