I think many of us were surprised this week when United announced it would shutter its New York/JFK operation, bring its transcon p.s. service to Newark, and swap slots with Delta at those airports. We’ll see if all pieces of this deal are allowed to go through, but I think we can all agree that it’s about time p.s. made its way to Newark. That being said, it’s a sad but predictable end to decades of United service at JFK.
United has been slowly whittling away at its JFK operation for years. Back at the turn of the millennium, United operated flights to far-flung places like London, Tokyo, and even Hong Kong. (That last one was a terrible idea.) Back in 2006, the last of the international flying disappeared when United sold its London authority to Delta and switched its Tokyo flight to Dulles. After years of trying, United simply wasn’t going to be a player in New York at all.
Despite all these cuts, there was one bright spot. The transcon routes to LA and San Francisco hadn’t done well, but in 2004 United tried something radical. It switched from 767s to smaller 757s. It put a more international-style First and Business Class cabin onboard and had just a few all-Economy Plus seats in coach. This upgraded service was called p.s. for “premium service” and it was an instant hit.
In the JFK to LA market, United’s average fare climbed more than 12 percent comparing 2005 to 2003. Thanks to the smaller coach cabin, the average coach fare climbed 30 percent. That may sound impressive on its own, but consider this. American’s average fare dropped nearly 23 percent during that same period. Delta’s average fare dropped 20 percent. For United, this was an unqualified success, but others took notice and United’s stellar product advantage eroded.
Virgin America launched in 2007 with lower fares and a better onboard experience. JetBlue entered the market in 2009, albeit with an all-coach product. Delta began getting serious and put a more international-style BusinessElite product onboard.
Then came United’s merger with Continental. Continental, of course, had stumbled into the old People Express Newark hub and turned it into the only true hub in the New York City area. Newark was a rock star, and there was no question that the new United would continue its focus west of the Hudson.
While LaGuardia continued to have service from most of United’s hubs, primarily to make sure United’s loyalists elsewhere could conveniently get to either side of New York City, the perimeter rule meant that neither LA nor San Francisco flights could operate there. The presumption was that to properly serve the transcon market, you had to be at JFK. And other airlines began fighting even harder.
American announced it would replace its old 767s with the new A321T. It was like the original p.s. on steroids with flat beds in Business and First as well as a nicer, smaller coach cabin. Delta eventually decided it would go fully-flat on its transcon flights as well. Last June, JetBlue upped its game with its own flat beds in Mint.
United, however, had chiseled away at the “p” in p.s., slowly eroding what made it unique. Coach lost free meals early on, and the all-Economy Plus cabin gave way to a more standard mixed offering as well. Then First Class was eliminated, but Business Class was upgraded with the standard international flat beds United had on the rest of its pre-merger Continental fleet. It effectively became just the implementation of United’s international product on a couple domestic routes. That product was competitive with other airlines, but the lead United had versus other carriers had disappeared. At the same time, primarily in LA, American had decided to increase frequencies dramatically, putting United at a further schedule disadvantage as well.
Meanwhile, United had other issues across the Hudson. In April 2013, Virgin America finally worked its way into Newark. United responded by flooding the Newark to LA and San Francisco market with nearly hourly flights. With so many flight options in Newark, United’s more paltry presence at JFK became even less attractive… except for the product. Most of the Newark flights still had a more traditional domestic product which wasn’t competitive at all with the options at JFK.
Meanwhile, on October 25 of last year, United ended its last non-p.s. flights from JFK, the Dulles route. How long would the status quo continue?
By this point, those who preferred JFK and LaGuardia were likely not United loyalists. Delta and JetBlue had built up strong hubs with big followings. And American had far more service than United as well. United couldn’t even come close to being competitive over there. But at Newark, its loyalty grew even stronger as the hub continued to grow. For those in New York who preferred United, the only reason to fly from JFK was because the onboard product was better than in Newark, and that seemed crazy.
So it should be no surprise that one year after the Dulles flights ended, United will now end all service at JFK. It will take those p.s. aircraft and relocate them to Newark. Then it will add a bunch of internationally-configured 757s (not much different than p.s airplanes, just fewer premium cabin seats) and put those on the LA and San Francisco routes as well, replacing the mix of aircraft already flying.
This will also allow United to more efficiently route these aircraft, and it will provide people in LA and San Francisco connecting to Europe in Newark a more consistent experience on all flights. In the end, United will now have a formidable presence with up to 15 flights to LA and 17 flights to San Francisco each day. And all will have p.s. service.
All of this makes perfect sense. In fact, it makes you wonder how p.s didn’t come to Newark earlier. That being said, did JFK have to disappear? For New Yorkers, it probably doesn’t matter. But what about those United loyalists in the LA and San Francisco hubs? Many of those people may prefer JFK and now they won’t have that option. In San Francisco it may not matter since United is the biggest game in town. People will go where United takes them. But in LA, it’s shakier since both Delta and American have bulked up there while United has cut back. This could push more important travelers in LA to choose someone else. But maybe that’s not enough to matter.
The last part of this deal is the slot swap. United no longer needs those coveted slots at JFK, so it’s giving them to Delta. In exchange, Delta will give United some slots at Newark. Both get stronger where they’re already strong. I’m not convinced, however, that the feds will like this one. Any other transaction that has involved getting stronger at New York airports has come with a price. The government may want some other airlines to have a shot at these. Knowing the feds, they’ll probably just want to give everything to their beloved Southwest.
That last part remains to be seen, but overall, this change plays to United’s strengths. While I think it’s probably a smart move, I do wonder how those in LA and San Francisco will take it. This could cost United some business on the West Coast, but having p.s. in Newark is going to be far more important for the airline in the end.
