United’s third quarter earnings call did not go over well with Wall Street, and last week’s fourth quarter call? Well that didn’t go well either. This time, the airline ran it as an investor update, and President Scott Kirby used the time to school everyone on the rationale behind the airline’s strategy for growth. This was a fascinating discussion, and it’s a complex issue. Wall Street still wasn’t impressed, but I keep going back and forth on it. In fact, I ended up effectively having a conversation with myself trying to decide whether I liked the plan or not. So, I figured I’d just clean my mental ramblings up and put them here for all to see.
Let’s start with the easy part: what this isn’t about. It’s not about international and it’s not about the coastal hubs at all.
Right. United has spent years growing and refining its international network, building joint ventures, and strengthening coastal hubs. According to United, its international gateways outperform those of its peers. (That’s not a surprise when you have Newark and San Francisco, two of the best possible international hubs in the country.) It’s also not about those coastal hubs on domestic flights, apparently. Here’s the telling stat from the presentation.
So it’s really about the middle and it’s about domestic flying.
Yeah, the three hubs to focus on appear to be Chicago, Denver, and Houston. According to Scott, this whole thing is about geography and “natural share.” An airline should be able to achieve a certain market share just by existing in its hubs, all else being equal. So if someone is flying from Des Moines to Dayton, United should get a naturally-large share thanks to its Chicago hub. That, of course, requires there being enough seats and flights to serve those passengers, and that’s one place where United is falling down.
“Falling down” is probably an understatement. This is a self-inflicted wound.
Scott definitely ripped into his predecessors’ strategies, that’s for sure. He says the airline was so focused on shrinking to profitability over the last several years that it can no longer get its natural share. This is a function of several different issues.
- It doesn’t serve as many small cities as it should and as its competitors do. (“Breadth” according to page 17 of the presentation.)
- It doesn’t have enough daily flights to its spokes from each hub. (“Depth”)
- The connectivity of the hubs hasn’t been set up properly, so opportunities were lost just by scheduling poorly. (“Connectivity”)
- It serves bigger markets with aircraft that are too small. He loves using Newark-Atlanta as an example of a market that Delta had mainline on while United used 50-seaters. And Delta crushed United.
People have been talking about United’s underperformance for years. Most people have shaken their heads considering how good United’s hubs are generally considered to be.
United Has THE BEST Hubs (said in a Trumpian voice)
Scott looks at United’s domestic hubs and sees the best possible hubs in the US, but I’m not as convinced. Yes, United has hubs in the cities that have the most local traffic demand, and they are geographically-positioned well for connections. (Let’s not talk about the lack of ability to serve the Southeast. The rest of the country is well-served by United’s hubs.) The problem here is that these hubs may have the most local traffic, but that’s why low cost carriers flock to them when they can get gates/slots. So United finds increasingly that nonstop routes are taking a beating on fare levels. Delta doesn’t have that problem nearly as much in places like Minneapolis and Detroit. Same goes for American in Charlotte. More local demand is a double-edged sword.
And if the low cost carriers are making fares low on the biggest nonstop routes, then that means United is looking to escape to markets without that competition. And that means…
…connections are more desirable. Scott said awhile ago that connections were becoming much more attractive than nonstops for airlines. That’s strange to get used to that idea, but the reasoning is sound. Smaller connecting markets are the least likely to see low fare competition. They don’t have a ton of volume, but that’s why United wants to supersize the hubs. The more connectivity you have, the more seats you can fill in small markets. So you can support Rochester, Minnesota (Scott’s favorite example in the presentation) if you can get people from there to a ton of places frequently. It’s all about connectivity. That also, by the way, means doing a better job of banking the hubs to maximize connectivity to these small markets.
This is different than when a low fare carrier enters a market. It’s not a stimulation play.
Correct. When you think of an airline going into a new market, it usually goes in with the idea of bringing low fares and stimulating traffic. That is absolutely not what United wants. United wants to go in with the same fares that are in those markets today, but because of this whole idea of “natural share” that Scott likes, he thinks that United will then naturally start taking its allotted share of traffic. This won’t stimulate markets. This is just about stealing share from Delta and American.
But American and Delta are going to fight back, right?
This to me seems to be the biggest flaw in the plan. United can get its natural share if Delta and American don’t respond. But Delta and American will respond to defend their turf, and this could turn into a fare and capacity war. That’s what’s scaring Wall Street right now. They think this could be a sign that things aren’t really different this time around. This could hurt revenues depending upon how the big three all react.
But this time it’s about more than just fare revenue.
That is true. There isn’t likely to be a war on checked bag charges or any other ancillary fees, so the revenue is more stable than it used to be. The biggest pot of all when it comes to ancillaries, however, might be in the credit card world. Scott thinks that people pick their airline credit cards based on the airlines that have the most utility. If you live in, say, Lynchburg, Virginia, you’ll be most likely to get the American card because there is no other game in town. If you live in Columbia, South Carolina, you may choose between American and Delta. But United won’t really be in your consideration set. This is a big concern, because credit cards mint money for the airlines that hawk them. And United thinks it can really boost credit card signups in smaller markets if it offers better service.
It’s easier to get a new signup than to switch someone from an existing card.
That’s definitely one of my concerns here. American and Delta have probably snapped up most of the people in Columbia, SC who want an airline credit card by now. For United to get people to switch, that’s a tougher battle. I’m sure it will result in more signups for United, but I’m not sure how bullish to be on this.
So now United is talking about 4 to 6 percent growth annually over the next three years which is a lot. How is the airline going to fund all this flying?
There are two key ways to grow here. One way is pretty simple – United is going to just fly its airplanes harder. Scott had a great graph showing how much United backs off in off-peak seasons.
This is why we’ve seen load factors go through the roof — airlines have just stopped flying when planes aren’t full of good revenue. But the way Scott looks at it, these airplanes and all the airport infrastructure are cheap to fly from a marginal cost perspective. In other words, if you think of most of the costs as being fixed, the only additional cost incurred by flying the airplane is fuel, crews, and maybe a little bit of other stuff sprinkled in like snacks and all that. Talk to a casual observer and they’d say “sounds pretty obvious to me.” So-called “utilization flying” isn’t a new idea by any stretch. This feels like just another swing of the pendulum.
This should mean more consistent schedules seasonally (and maybe there’s even hope that the airline will stop changing departure times and flight numbers every day), but it also means that connectivity will be better for people in small cities all year long instead of just during the peak season.
That’s not going to fund all this growth.
Truth. The other part is an influx of small airplanes, and that sounds bat-shit crazy. Remember how hard the airlines worked to shed 50-seat regional jets? Well, United is bringing ’em back, baby. To be fair, this is temporary, I think. United stole Air Wisconsin away from American as a regional feeder, and with that comes a fleet of 50-seaters. United can’t grow in the 70- to 76-seat range now due to pilot scope restrictions, and the airline has nothing on order in the 100-seat range either. So 50-seaters it is. Nobody likes flying those airplanes, but these will be going into small markets where the option is 50-seater or no United service. This strategy will have to evolve in the next couple of years because it’s just not competitive.
Fleet is a huge piece of this.
Yeah, and United is not well-equipped. It is maxed out on 70/76-seaters unless it orders something to be flown by mainline in the 100-seat range. There was a plan to order a bunch of 737-700s, but when Scott arrived, he killed that bad plan quickly and moved to bigger airplanes. Meanwhile, Delta has a fleet of 717s and an incoming fleet of C-Series aircraft that really help the airline turbocharge the hubs. United has none of that, and it’s going to have to do something.
So is this going to work?
It all sounds well and good on paper, but there is risk. American and Delta won’t just sit there and let United take its “natural share.” This could result in pricing and capacity wars which would not be good for any airline. (The public will gladly take it, however.) I also don’t think it’ll be as easy to woo new credit card holders as Scott made it sound. And then there’s the fleet problem. I can certainly see where the strategy came from, and why the airline is giving it a shot, but I’m not convinced it’s going to end well. That being said, I’m also not convinced it’ll end poorly, so… this internal conversation hasn’t helped one bit.
52 comments on “A Conversation With Myself About United’s Domestic Growth Plan”
Where does it say in the presentation that UA will devote resources to Customer Service? Re: http://www.foxnews.com/travel/2018/01/28/united-removed-woman-from-flight-to-see-her-dying-mother-nobody-flies-for-free.html
Wild Bill – I think it’s hard to fault United in that scenario. The travel agent voided the ticket (and I put most of the blame there). Why should United just decide to fly someone when a ticket isn’t valid?
Speaking as somebody totally outside the industry, there’s something that bothers me about an airline making a co-branded credit card a major part of the profit plan. As the majors have devalued their FF miles, and made it harder for credit-card holders to leverage that into elite status, 2% cash-back cards start to look awful tempting as an alternative.
These cards are cash-generators now, but how long can that continue? And I agree there have to be a limited number of signups left; rarely a week goes by when I don’t get at least a couple airline credit card offers in the mail, and all of those mailers go directly in the garbage… smacks of desperation to me.
I moved from a branded credit card to a 2% cash back card and have no regrets. I no longer fly enough to get status based on segments or miles, and the last few times I’d redeemed miles I’d averaged around $0.02 of value per mile anyways.
In exchange, I was limited to only one airline (and its partners, but still), to the flights that had available rewards, and was paying $95 a year for the privilege.
This way, I don’t pay $95, I earn the $0.02 in cash (every month), and when I do travel I can just chose the “best” flight in terms of schedule, price and trip convenience and don’t have to worry about the rest.
As far as I know, the only airline credit card that doesn’t levy an annual fee is Jet Blue’s. But I don’t fly B6 very often… and even if I did, cash-back is still a better deal.
SirWired – It’s a great point. Credit card revenue is a piece of the ancillary puzzle for airlines now, but it can’t last forever. There will be a time when regulatory change or something else stops this gravy train.
It’s an interesting United story.
A week from today we’re taking United, TPA to Houston to Sydney, business class. No other fares in the industry came close to United’s business class fare to Sydney.
This will be our 2nd time to Sydney utilizing United. The 1st trip was not bad so we’re trying United again.
RE: Fare war. It’s not like they’re focusing on bulking up capacity on trunk routes like ORD-LAX – which is what used to spark big fare wars. Could it temper industry yield growth? Sure. But different turf than what we used to see.
Good analysis as always.
I realize I’m in the minority here, but as a pax I’m disappointed that UA isn’t looking to Dash-8s instead of RJs. For smaller cities reasonably close to the hubs (e.g., Des Moines to ORD) the block time would be similar.
I’m a fan of turboprops, too, but whenever I go to a small city, the locals always seem to make a big deal about whether or not they get to fly on a jet. My bet is that there’s some marketing benefit to an RJ, plus, there’s tons of 50 seaters around that can be had for a song, and that isn’t true of turboprops.
I agree with all of the above. As much as I love turboprops and argue that for appropriate flight lengths (say, < 700 miles) they are more comfortable than RJs, I'm sure there's a marketing benefit from offering service on RJs. With fuel being relatively cheap and not terribly volatile the past year or two (and forecast to continue that way through 2018), the fuel savings from turboprops isn't very significant.
Surprised Delta or one of its regional affiliates hasn't snapped up a bunch of RJs on the cheap. I know there are union work rules etc, but one would imagine that at a certain acquisition or lease price it would make sense to run more RJs these days.
The most efficient aircraft are mainline aircraft – not just for fuel but for labor costs as well. It takes two pilots to fly a US commercial aircraft; the incremental cost of pilots to fly mainline aircraft holding 2 times or more the number of passengers is small compared to the increased revenue.
Delta is shifting more of its flying from regional carriers to small mainline jets because it is more economical to do so. Nearly 5 years of 717 operations have confirmed it and the C Series will further accelerate the process.
Indeed. And holding distance constant, you should get better fuel burn with larger gauge as well compared to a 50 seat jet.
For flight lengths under ~500-750 miles, the difference in gate to gate time between turboprops is minimal, especially when you are flying in or out of major hub airports. Assuming labor is about the same (not sure what Dash 8 pilots & FAs get paid compared to 50-seat RJ pilots & FAs), the operating economics would certainly appear to favor turboprops, though the capital cost of RJs may be so cheap these days to negate that cost advantage. Also, fuel has been holding fairly steady and has been (relatively) cheap the past year or two, and is predicted to do more of the same in 2018, so the fuel savings may not be huge.
My big complaint with RJs is that during their period of peak usage RJs were used for flight lengths that they really shouldn’t have been used for. An RJ/turboprop from a small city to a hub < 500 miles away is one thing. An RJ/turboprop from a small city to a destination 1,500 miles away is another thing altogether.
As a resident of Columbia, SC, United is too little too late on capturing our market. And more flights probably won’t change that. Cranky’s right on point that folks who fly a lot have already made their decision – both in terms of credit cards and airline loyalty. About the only reason I’d have to switch is for Star Alliance when I have to travel internationally.
When United and Continental merged, it was a marriage of two disfunctional problem children who mistakenly believed they could solve each other’s problems (kind of like my parents). Instead we have a larger, more problematic and underperforming carrier that can’t quite swing its arms without slapping itself in the face. There is absolutely nothing in United’s “Plan” that would make me choose their airline or their credit cards over American.
Several years ago I flew a lot more for work and easily made gold tier on UA. Back then, status actually meant something so I had an incentive to stay with UA. Have to fly DEN-YUL? I’d take UA through ORD. Now, I don’t fly as much (~30k-35k instead of 55k-60k) and the FF program really only rewards 100k fliers. So when I fly now I just choose any airline. Going DEN-BRU next month and I’m on BA because they were the least expensive.
If UA wants to attract fliers they need to give us something for our dime. Safe and on-time is the least I expect. If I’m going to pay a bit more than the lowest fare in market (excluding Spirit and Frontier.. because screw them) then UA needs to earn that business by providing something the others can’t. Right now domestically DL eats their lunch domestically and just about all the foreign carriers beat them internationally.
To me it isn’t just about breadth and depth, it’s about the value proposition that UA has. To me, it just isn’t there.
No one likes being on a CRJ for any flight that is over an hour in the air. I would do anything to book away from that. I’m on one tomorrow, but it’s for a 38 minute intrastate flight to a regional airport that can not support traffic in anything larger. That’s what those planes were meant to do.
Also, going into any small market form ORD that AA already serves such as CMI means that UA will have to lose money to break into that market. CMI has had a monopoly at CMI for years and since UA is offering nothing new, why would people switch?
In the end though, I really think DL is the one that is best positioned with this strategy with the 717 and the C-Series orders as opposed to both AA and UA.
Southwest is gonna be in trouble. Chicago, Houston, Denver are 3 of their biggest hubs, and with additional costs rising there, I think your going to see LUV fading faster than the big 3
Is this being said tongue and cheek? I wouldn’t count WN out. Also, they fly from MDW not ORD. I seriously doubt we will see WN “fading faster” than the big 3, assuming that the big 3 even fade at all.
Name – If anything, this strategy helps Southwest. This is about United looking to fill its airplanes in markets that don’t compete with Southwest or the other guys. Southwest should love this strategy.
The youngest CRJ-200 is 12 years old, has a 40,000 cycle limit, and is flying about 2500 flights per year. There’s not much life left in them before they’re all gone.
Does anyone know if there is a chance that the cycle limits for RJs will be extended/upped? Any programs in the works to that effect?
I was told the main gear struts aren’t doing well enough in late-life NDT to warrant an extension. But that was scuttlebutt from the line years ago. It’s telling that operators are pulling younger frames from the desert while parking their own. The 200 is basically a Challenger and so an awful lot of it was never built for this much service and now have a miserable high failure rate. The 7/9/10 have a lot of new internals designed for airline service and have held up better.
Very interesting. Appreciate the information, thanks.
What a dilemma for United, and your comment about fleet is huge. I think one major problem United faced after the merger was its gauge in medium-sized cities (CMH, BNA, GRR, even MSP). Way too many 50-seaters were deployed on these routes and that harmed both margins and market share everywhere in the middle of the country. I believe at one (brief) point in 2013 BNA was 100% ERJ-145s to every hub. They’ve solved that glaring issue in most places, but the absence of a 100-seater type aircraft at United, as well as the proportional increase in CR2s is going to make margins worse before they get better. Take a peek at the spokes served from ORD and I think you’ll find a big flock of Delta 717s going up against United’s Express portfolio. ATW. GRB. FSD. DLH. FAR. GRR. DSM. It’s better than it used to be, for sure, but United’s ability to match mainline product — or even two-class Connection/Express product — is severely limited. And once the CSeries comes on board, Delta is going to keep scooping up market share, either directly with the CS100 or with the redeployment of the E175s that the CS1s will be displacing.
This is already beginning to happen at GRB. Last fall, UA started flying CRJ7s and E175s to ORD. DL has started to respond with 717s, MD88s, MD90s, A319s and A320s to ATL, DTW and MSP. I am looking forward to DL flying the new CS100s to GRB. This new UA strategy can only be good news for GRB and other like-sized airports.
I have to expect that UA will do something in the 100 seat market sooner rather than later, they’re probably just not ready to announce it..
Maybe they’ll get E2-175s or E2-190s at a good mainline rate? Or perhaps they’ll go the CS100 route?
Or you know they could go buy up a bunch of MD-80s and the like, I hear DL and AA have a few to sell.
Delta tried to and has a few modded but most MD-88 can’t fly past 2020, they don’t meet the requirements for next-gen ATC.
Great article and great job of looking at the all the sides, using UAL’s own data that shows why American and Delta do better in the parts of the country that United wants to target.
United’s problem is lack of strategic consistency. I’m not sure anyone knows whether UA will succeed at its restructuring but it counts on the rest of the industry letting United regain what it lost.
You accurately note that UAL’s plan involves a lot of costly 50 seaters because of scope limits. Also worth noting is that UAL is still not generating enough cash to fund their operation including expected pay raises by employees, buy new aircraft, and buyback stock without taking on debt so fixing the small plane problem will only add more debt if UA decides to get the right aircraft – which likely will have to be flown by mainline pilots.
You can give Kirby credit for trying hard to persuade Wall Street that his strategy is right but he is working off of a very messed up deck that was handed to him and a relentlessly competitive argument.
After United Express stopped serving Carlsbad almost 3 years ago our travel on United went from both of us being 1k’s to one or two round trips on them a year. Small markets do matter!
How much of the problem comes down to the higher costs of UA’s hub airports? Cost per Enplanement (CPE) is relatively low at ATL for DL (along with many of their other hubs) versus what you see for UA hubs. Seems like an extra problem on top of the LCC exposure.
Mattnrsa – I don’t think the higher costs are really that much of an issue in these three airports. Denver has done a gone job of getting a handle on its costs since the airport opened 20 years ago. The bigger cost offenders are the ones on the cost, like Dulles and LAX. Sure, nothing can beat Charlotte and it’s incredibly low cost structure, but that’s just a very unique spot.
All this “natural share” talk is frankly hilarious at this point. I respect Kirby, but this is a flailing attempt at finding a politically correct way to say “share war” in a way that won’t spook the markets. Spoiler: It never worked.
Honestly, you’ve gone over most of the other flaws in this well, Cranky. The only other thing I’d mention is that when you look at creeping fuel prices and the fact that the world’s 50-seaters are growing longer and longer in the tooth, UA will be hard pressed to execute this plan in a way that doesn’t balloon their unit costs.
It’s tragic because they had some legitimately good ideas in their presentation. Optimizing hub schedules and upgrading yield management tech is Good with a capital G but Kirby and Co. can’t help but center their calls on too many rosy assumptions and end up asking for more faith from investors than they honestly deserve at this point.
United likely got a steal on the Air Wisconsin contract and can easily use them as the old “throw it at the wall and see what sticks” strategy until new RJ’s show up and can be deployed on the winning routes while the underperforming routes go away. They could also grow capacity by putting in new, nice, consumer-friendly seats that happen to take up less space on mainline aircraft.
Adding capacity in these types of markets is an easier way to tell wall street that they replaced the cheap ULCC stimulated traffic with higher yielding RST people and that their yields aren’t suffering on ORD-LAX, etc.
United won the contract to supply service outside of summer at a our local airport in Wyoming; previously it was Delta. I stopped flying UA several years ago because of the unreliability and went to a much larger city where there are mainline flights. But that comes with a penalty in terms of staying overnight at the beginning and end of multiflights overseas, as well as dodgy driving in the winter. If the CRJ service ends up being more reliable I might go with UA from the local airport. For me, it’s all about reliability and less about have to sit in a small cramped jet for an hour or so.
Start with branding, when you hear United, what do you think of? Quality? Not anymore.
Aircraft you can’t stand up in, certainly not what you’d choose if you had a choice, and hours and hours in those cramped planes. Fares, cheap, unbundled, like $40 OW DC to Vegas, or $205 regular, normal economy. Does this pricing make sense? Service to every which place, like I’m going to every little city every day. Someday, we’ll have someone called Allegheny making the milk runs to handle the spokes United is running now. United to me, has become “Spirit by United,” “Mesa by United,” and I don’t like the feel. Sure, I have choices. I would like back the United I used to enjoy.
AFAIK, you do branding last. Instead of putting lipstick on a pig, you replace the pig with a wonderful friendly and well behaved canine, then you introduce everyone to the canine that has replaced the pig.
If you put a new brand on a crappy product, you soil the new brand, and have the same problem again.
Cranky, any reason why the focus is on 50-seaters? I think under the scope clause United Express could also add 66-seat CRJ-700s and E175s. The 175s are rather nice for an RJ.
I suppose they might be able to get Republic to bring back the Q400s. They actually weren’t that bad compared to the Q200.
Chicago Chris – As far as I know, the 70/76 seater category (CRJ-700/900, Embraer 170/175) is maxed out under the scope clause.
It’s interesting that UA hasn’t pursued the 100-seater strategy yet, because IIRC Kirby (while at US) was THE first in the industry to get a handful of 99-seat E-190s and have them flown by mainline crews. That experience must’ve left a really bad taste in his mouth, considering nothing like it has been done yet at UA. And considering getting some 100-seaters would allow them to get more 70-seaters per the scope clause. It’s kind of a no-brainer, so I’m curious why he hasn’t done it yet. Is having a smallish sub-fleet THAT inefficient? Seems like the benefits would outweigh the lack of efficiency at this point.
For all the Wall Street criticism of this approach from UA, I’m not sure what else they think UA should be doing. They tried shrinking, and that sure didn’t work. So they’re gonna try growing.
The approach seems sound to me, if a bit risky and hard to pull off. But I’m not sure what other choice they have? Particularly one that Wall Street analysts would find more palatable?
Alex B – I think they’d probably prefer if UA just reorganized what it had without adding that much capacity. Of course, I can’t speak for them, but the key thing that scares them is added capacity leading to others trying to get into the fight as well.Then it becomes a war.
I’m Seattle based and I’m Alaska MVP Gold, so I don’t care too much now. But eventually my home airport will be Denver, and that’s going to make AS much trickier, since to go anywhere, I’ll have to go to Seattle first. Frontier is hopeless and I won’t fly Southwest, so I suspect I’ll be looking more at United. I hope they get their act together.
Would there be any point to building back one or two smaller city fortress hubs just for the sake of connecting these newly served city pairs? Cleveland could have remained for this role, for instance.
AC – No. The point of the plan is to provide greater connectivity and any small city hub would just overlap what the big one can already provide. It also would never be able to get to the same scale, so it would hurt connectivity, not improve it.
You’ve not commented on UNITED’S labor relations. One cranky (no pun intended)…OK, bitchy…FA ended our family’s flying anywhere/anytime on United Air Lines fifteen (15) years ago. Dr. Norman L. Wherrett, Jr.Round-The-World Traveller
Ironically I flew into Columbia, SC 6 days ago and back on Friday. Here’s my thoughts…..I live near Santa Barbara, CA and up until 9 months ago I decided that the drive to and from LAX tiresome. So I’ve been trying UA/AA for my flights out of SBA to where I need to go for business. Here’s the verdict, I’ve had more longer delayed flights than LAX based flights.
Now regarding Columbia, SC – Nice vibrant downtown with technology companies, military and college presence.
Getting there on paper was good, really getting there was rough on UA from SBA. First flight to SFO was delayed leading to 10 hour wait at the SFO Centurion Lounge for red eye to IAD to a 4 hour wait for a Columbia flight. I was able to readjust my business schedule to make things work. Just tired and grumpy when I got there.
Arrive Friday morning at 5:00 AM to a corner of Columbia’s airport where AA was sending flights to Phil and CLT. In my case my UA flight to IAH and they had another going to EWR. In fact it was funny that the intercoms between them all where conflicting.
Got on to an E-145 to IAH, and it was tired.One bathroom, it was used. But a smooth flight.
A year ago I took Delta, LAX-ATL-CAE and back the same route. On time and good. With United last week, 25 hours to get there and 2 hours delayed on way back. Not weather related.
I’m a day late to the discussion but it seems kind of absurd to me that UAL thinks their non-coastal hubs are better than DL or AA. While ORD has a huge O/D demand it’s the butt of jokes only bested by the mess that is JFK or LGA. For the hypothetical customer at RST unless your destination is ORD there is no reason I can imagine outside of pure fare price that would make someone desire a connection at ORD over MSP…which is literally so close that there are shuttle buses between the two cities. Besides, they have to compete with AA at ORD and I wouldn’t discount WN at MDW. Too much competition to really monopolize on the Chicagoland market. Haven’t seen the #’s but DL basically owns the market in MSP and DTW. Combined I’d guess it’s more profitable than UA’s share of ORD.
IAH is again a good O/D market and huge city. Great gateway to Latin America and South America but domestic US? It’s no ATL in terms of proximity to domestic population. Again they have WN competing with them in the market. DEN is the biggest rocky mountain market but they are isolated out there and there is tons of competition. When I think of true fortress hubs I think of ATL, CLT, MIA, MSP, DTW, SLC…EWR and IAD are closest I can name for UA.
Simple flaw in the strategy. Since essentially all frequent flyer perks have been unbundled why not get more than one airline credit card? It makes zero sense that credit card holders get Group 2 boarding. They would be just as happy with Group 3. But that frequent flyer who actually spent major money to fly and earn that 50K status is pretty miffed. I used to be a very loyal frequent flyer with United. But not anymore. As my income is growing I’m paying for the best, typically premium, ticket and could care less about the frequent flyer program as a result. Unfortunately for United that has meant thousands of dollars a year going to competitors and different alliances. If the economy goes south United is really in for a hurting as their loyal frequent flyers won’t come back quickly.
Yeah, I have the United card simply for Group 2 boarding. I fly enough for status on miles and segments, but not usually w/the weird way they calculate spend, so I got tired of boarding 3-5 so often. The card’s annual fee was worth it vs. paying for Premier Access each time, but I never use it to purchase anything (except sometimes I’ll buy vacation itineraries on it so the family can get free bags).
For once I would love to hear what people think UA should do instead of the obvious criticism of the the previous mistakes management team.If you dont think they should grow market share at their hubs, then what?