United Struggles to Fill All Those Seats Down Under


United made a huge push into the Pacific this winter, and the numbers are somewhat staggering. With so many seats flooding the market, it’s perhaps not surprising that United has struggled to fill them all. Early results may not look good, but this doesn’t mean it’s a complete failure. There will be some improvement as markets mature, but there’s also going to be some tweaking needed.

In its Q1 results, United announced some pretty gruesome numbers. The average fare for the airline over the Pacific dropped by 2.8 percent year-over-year. Even with that decline in fare, its load factor plunged 7.6 points. The end result was unit revenue dropping a hefty 12.9 percent in the region.

United Load Factor Between Continental US and Asia/Oceania

Data via Cirium

That looks awful until you realize there is a reason for it. Q1 2024 had about 6.2 million available seat miles scheduled in the region. That is a 68.7 percent increase over Q1 2023. SIXTY EIGHT POINT SEVEN. It’s a lot.

With that background, this result is much more understandable. But I wanted to dig deeper. Fortunately, T-100 data was just released for January, so I was able to look at load factors by route during the two months that straddle the peak season down under. Take a look.

Dec 2023-Jan 2024 Load Factor by Pacific Destination

Data via Cirium

The darker blue is in Asia while the light blue is in Polynesia or Australia. The trend is pretty clear off the bat that it’s the latter that’s struggling.

Let’s start with the good news. Oh my, Manila. Remember, Manila only started recently, and it’s on United’s biggest airplane, the 777-300ER. We don’t know the fare on this route, but at least United has not had any issues filling the seats.

I’ll also point out Taipei which recently was given more capacity along with Hong Kong up at the top of the list. Some markets seem to have much less trouble absorbing extra capacity.

But then, take a look at the other end of the chart. The Papeete (Tahiti) flight is not doing well. I can’t imagine the fares are good enough to justify flying a half empty airplane. Woof.

The airline’s new add to Christchurch is also not going very well. That one might take more time to develop since it is a brand new route, but I don’t know how much time it gets before United decides it just won’t work.

Brisbane is awful, which would explain why United pulled back on the LAX flight very quickly. That should help bolster San Francisco, but there is still too much capacity in Brisbane across all carriers thanks to overly-generous subsidies.

Sydney, meanwhile, varies greatly. To Sydney from Houston, more than 72 percent of seats were filled. It’s still not great, but it’s a whole lot better than the 66 percent from LA or 57 percent (!) from San Francisco. Not to sound like a broken record, but… there is too much capacity in this market.

One other thing to note is those very low loads at Tokyo/Haneda. This is a tale of two worlds. The east coast is atrocious. Newark filled 59 percent of seats which is the winner, a good 5 points better than Dulles. On the west coast, SFO was at 69 percent with LA at a nearly-respectable 78 percent.

The good news for United is that this really is a Pacific issue for United, and it’s directly tied to the huge increase in capacity. Latin had softeness, but the other markets had great results.

Load Factor by Region for United Dec 2023-Jan 2024

Data via Cirium

It’s funny to see Atlantic at the bottom end. Its loads may not have been huge — as is normal in the winter quarter when demand is down — but the results were outstanding with unit revenue up more than 10 percent. It’s not all about load factors if revenue can do its job and improve profits.

This is only a small sample, but I wanted to wait for January so I could get a sense of how the whole holiday season went. I have little doubt that United will decide it needs to make changes after this weakness. I imagine next winter may very well be lower, but there is room to wiggle and still make a good living.

Get Cranky in Your Inbox!

The airline industry moves fast. Sign up and get every Cranky post in your inbox for free.

69 comments on “United Struggles to Fill All Those Seats Down Under

  1. There is simply too much capacity on US-Australia and US-New Zealand flights, particularly out of LAX and United only has itself to blame. The number of seats in the market is unrealistic and dependent almost exclusively on tourism, which has a fairly limited season running from December to March. BNE is over-served across the board, and that’s mostly due to incentives to attract carriers. In the long run, things probably will settle back to core markets for UA out of LAX (SYD daily, MEL 4 per week, and AKL daily in peak, and seasonal). BNE will be cut. As to DL, which has also dumped a lot of capacity out of LAX, watch for a pullback. Rumor has it, DL’s entire long haul network out of LAX is unprofitable.

    1. “Rumor has it, DL’s entire long haul network out of LAX is unprofitable.”

      How can that be! I thought Delta was the worlds perfect airline!/s

      1. When American admitted to the same thing for their international LAX network, it’s not hard to figure out it’s the same case for Delta

        1. Careful, it’s heresy to accuse Delta of unprofitable hubs.

          Punishable by 8 paragraphs of passport plum written drivel about the superiority of the A350 and those who refuse to accept the reality of Delta’s magical powers.

        2. AA gets a lot of grief from declining to be a “true global carrier,” but there is a very good reason not to focus on extensive Pacific flying. It’s simply unprofitable.

          United’s low load factors to the South Pacific don’t surprise me. There’s obviously way too many seats, and the odds that this ultra long haul capacity becomes profitable with current fuel prices seems low to me. Does anyone know the percentage of AU/NZ traffic that originates in those countries? That seems to be the future of those markets, which obviously gives the advantage to Qantas and Air NZ. Given the distance, these are pretty marginal destinations for Americans, once you exhaust “bucket list” leisure demand.

          I am a bit surprised by the very low load factors to Papeete. There are SO many flights to Hawaii from the West Coast, and Hawaii is among the most over-priced destinations on the planet. And the situation in Hawaii is almost certainly going to get worse with their housing crisis. As long as you do it smartly (like avoid the overpriced “overwater bungalow” gimmick), Tahiti offers a far better Polynesian experience than Hawaii at a fraction of the price (excluding airfare). Unsurprisingly, I’ve encountered many vacationing Californians at the PPT airport. But apparently not enough. Other than waiting for more word-of-mouth advertising, not sure the solution to UA’s PPT problem.

      2. It’s actually rather simple and the data backs up that Delta does a whole lot better than what “the internet” thinks.

        DOT data through the 3rd quarter of 2023 – as recent as has been released – shows that DL made more money on its international system flying 30% less capacity than UA. And, if you think those numbers aren’t accurate, DL’s domestic profit was even larger compared to its competitors so, to make other carrier int’l profits larger, you have to make their domestic system profits smaller; it all has to add up to the same total.

        And just a week ago, CF showed us that SEA is indeed the weakest DL hub on a stage length basis for revenue but his hub comparison shows that BOS and LGA are stronger than ATL on a unit revenue basis. LAX is right at the middle of the pack of DL hubs, slightly above JFK but JFK is ahead of MSP and SLC. That data pretty well eliminates the notion that DL makes so much money because it monopolizes its core interior US hubs.

        and while last week’s data doesn’t include int’l routes, it is hard to see how DL could make as much money as it does if it was carrying multiple money-losing int’l flights either from LAX or other hubs.

        and DL has pushed back the start of its 2nd daily LAX-SYD flight next winter while adding second daily ATL-SCL and EZE flights; it is targeting the addition of double daily int’l flights in major markets to a shorter period of time. DL clearly has to figure out how to keep those widebodies and their crews busy during a month or two that is not peak either for domestic or int’l but that seems to be a better alternative than to fly them when demand isn’t there.

        I suspect these numbers would look different for UA if they had targeted a smaller period of double daily 2nd flights from SFO to Asia and I suspect that is how they will cut back capacity in the 2024-25 winter.

        1. “That data pretty well eliminates the notion that DL makes so much money because it monopolizes its core interior US hubs.”

          ahhh, yes. Because rasm is the only metric that determines profitability except it isn’t. You conveniently forgot the cost of doing business in JFK, LAX, SEA, and LGA vs Delta’s interior hubs. Luckily for investors and those that read Delta investor day products, Delta has not forgotten nor lied about it.

          NYC is a high cost hub. Delta even says in its investor presentations that the core interior hubs are the most profitable because of low costs to operate combined with “strong local passenger share” and “High penetration of delta loyalists”. They’re loyal because they have to be. Much like CLT with AA, those core Delta hubs are dominated by Delta. There’s a reason Delta does so much in their core hubs to ensure another local airport isn’t opened, particularly in Atlanta where they’ve even made up and funded local citizen groups that are funded by Delta to prevent new competing airports.

          “Core Hubs Are Our Economic Engine Driving Industry-Leading Profitability”.
          Delta says their coastal hubs are enables of premium growth but does not talk about their profitability in the same way they do their core hubs.

          I’m not sure why you have a new game to pretend that Delta’s core hubs aren’t monopolies in their local markets for all intents and purposes. Even Delta says as much and acts in a monopolistic fashion to prevent new competition from nearby airports often in cahoots with the corrupt city of Atlanta and airport to buy property preventing competing airports.

          While it’s humorous to see you try to contradict Delta’s own investor presentations, it’s a bit futile when your own beloved airline contradicts you, Tim.

          1. If you want to consider costs, MAX, I can assure you that DL operates lower cost hubs overall and its cost per enplaned passenger is lower than AA or UA. Coastal hubs are expensive for everyone but DL’s core hubs are lower cost than AA or UA’s in total. It all comes out on the bottom line.

            DL’s core 4 hubs DO deliver the majority of their profits but that doesn’t make their coastal hubs unprofitable. DL’s hubs are not monopolies and DL competes very effectively in coastal hubs. And given that DL delivers higher bottom line profits than its competitors, they too obviously have some weak hubs, don’t they? Can you tell us how to rank profitability for AA and UA’s hubs?

            The root of this discussion about the Pacific is that UA is trying to maintain its dominance of the California to Asia/Pacific market. UA has shifted its Asia/Pacific focus even more to SFO and LAX than ever; I don’t think any other UA hub has service to any E. Asia city other than Tokyo.

            DL is trying to build its west coast to Asia presence. It already has 3 eastern US hubs with service to 2 or more cities in Asia and one – DTW – with service to 3 Asia cities.
            If DL manages to successfully set up a large LAX to Asia/Pacific network in addition to DL’s SEA hub (one of a very few US hubs that have service to 4 Asian destinations on the same carrier), UA’s west coast and Asia/Pacific dominance is eroded.

            And when you factor in that DL has already taken delivery of the first of its newest A350-900s, the longest range aircraft in the US carrier fleet but still with more total and premium (business plus premium econ) seats than UA’s 787-9s and just a few premium seats less than AA’s premium 789s but still with more seats. If Asia/Pacific matters to DL, they are well positioned to grow.

            UA has a formidable hub at SFO but cannot afford to keep adding capacity to both SFO and LAX to try to keep DL out of California since DL will be able to expand on DL’s larger presence from the eastern US to Asia. Factoring in the number of flights represented by CF’s graphs above, UA has a lot more underperforming TPAC flights (at least by load factor) than DL.

            The next 3 years will be pivotal as DL refocuses on rebuilding its TPAC network while UA pushes to get its financial performance to DL’s levels even as UA grows its domestic system.

            1. And yet Tim, Q1 2024 results reported by Delta and United for passenger revenue by geography:

              – Domestic: Delta: ~$7.98B; United: ~$6.92B
              – Europe: Delta: ~$1.31B; United: ~$1.41B
              – Pacific: Delta: ~$0.58B; United: ~$1.39B
              – LATAM: Delta: ~$1.27B; United: ~$1.33B

              Note United doesn’t count India and the Middle East (as well as Africa) in Europe or the Pacific – both are ~$0.27B in additional revenue in regions Delta doesn’t even compete in after Tel Aviv has been shuttered, so the difference in Asia is even larger.

              So Delta with its current Pacific setup was ~1/3 of United’s Pacific operation. That’s with its “LAX” Asia hub that has identical yields on Aus / NZ routes as United that Cranky notes (likely all losing $$$), 6 routes to Tokyo Haneda, 4 routes to Seoul Incheon, and 2 routes to Shanghai Pudong. I’m sure United is quaking in their boots (not).

            2. Jeremy,

              In the 1st quarter, UA carried $200 million more in passenger revenue than DL but DL had $1.2 billion more in non-transportation revenue – which is why DL consistently outperforms the rest of the industry in revenue; DL had $4 billion more total revenue than UA in 2023 which translated in $2 billion more profits. DL’s much larger domestic network than UA’s offset nearly all of the extra int’l psgr revenue at UA. Domestic revenue is more conducive to loyalty and credit card revenue than int’l revenue. Despite not inventing the loyalty or credit card partnership program; DL has built its network to maximize both relationships which generate better margins than transportation revenue. Add in the fuel cost advantage DL has because of the refinery and it really is not hard to see that DL’s revenue and profit advantage is hard for anyone to duplicate.

              CF actually showed that DL’s LF is higher than UA’s for AKL, PPT and SYD. It is easier for DL or any airline to fill one new flight to a destination than the multiple flights that UA is trying to fill from multiple hubs. Multiple flights other than to partner hubs don’t proportionately increase the amount of business revenue. DL just switched AKL for the next northern winter back to the high capacity A350; it sees volume as a better strategy than yield right now in that market. NZ just noted yield softness due to high capacity.

              It has been and will be easier for DL to grow its TPAC network than for UA to close its domestic revenue gap – which amounts to about $4 billion/year compared to AA and DL – considering that UA will have to take share from AA, DL and WN, all of whom are also looking to pick up traffic and revenue from smaller carriers.

              As for the Japan vs. S. Korea discussion, KE is a founding member of SkyTeam but DL and KE had a strained relationship because KE undercut DL when DL still had the NRT hub. DL tried to acquire a stake in JL but DL was already the largest US airline from the US to Japan so a deal w/ JL was rejected. JL did a deal w/ AA which has less than 25% of the US-Japan capacity in the JV so AA receives very little benefit compared to UA/NH. DL’s US-Japan routes are part of the DL-KE JV, DL is the largest US carrier from the US to HND, KE is the largest Asian TPAC carrier, and both are holding back on growing the relationship pending a conclusion of the KE/OZ merger. OZ cannot survive on its own and is of no value to any other non-Korean airline; the DL-KE JV has enormous growth potential as the recent A350-1000 orders from both prove; US approval might come with some carveouts or concessions but the deal will go through. Japan is a no-growth market due to treaty limitations and the dual Tokyo airport situation. There will be a growing shift in US-NE Asia traffic from Japan to S. Korea. Flights from the US to non-NE Asia destinations will become more competitive.

            3. As usual, no ability to back up your original claim that “That data pretty well eliminates the notion that DL makes so much money because it monopolizes its core interior US hubs.”

              Because Delta says that’s the case and makes no such claim about outsized profitability at its coastal hubs or any profitability at some of those coastal hubs.

              But, not the topic of this article but worth reminding others, not you, what Delta actually says about where they generate their profits since they do actually say it and don’t try to make up gimmicky stories about it.

              But I do always enjoy your attempts to take the topic in about six other directions when you can’t back up your original statements given what Delta itself says about the source of their profitability.

              As it pertains to UA, they’re slated to bring back a bulk of the non-West Coast non-TYO hub flying in late October. But… just like Delta and their neverending pushback of China flights, we’ll see. I don’t think anyone will be surprised to see some EWR or ORD – China Flying slide to the right.

            4. Max
              Delta really does not have any advantage that any other airline can’t duplicate other than being well run. The excitement at United is because it is being run better than it has been in decades. American and United have enormous assets and value and they are pursuing different strategies. Delta and United just happened to be going in the same direction with Delta starting more domestic and United starting more from an international perspective. United has weak hubs and routes just as Delta does. Those of us who love aviation are happy to see analysis like this and good interaction about what makes the industry better. We can only hope for a good report from American on Thursday.

            5. Holy cow!! Timmyboy pumping DL everywhere. I’m afraid I’ll see this guy pumping DL even on porno sites.

              Real and current numbers from Q1 24:

              Total revenue: DL 12.6 billion, UA 12.5 billion (just a 100-million difference despite the Max 9 grounding and Q1 being by far the weakest quarter for UA). The rest of the year UA will be much bigger than DL.

              Earnings Before Taxes: DL 380 million, UA -79 million. But UA EBT without the Max 9 grounding would have been 120 million, so the real difference is 260 million and DL has 350 million less in fuel expenses coming from the gimmick of owning a refinery. So, without the refinery games that DL plays, UA would have been more profitable than DL.

              Timmyboy, it’s ok to pump the stock you own, but it’s not ok to lie about the numbers.

            6. Marco
              Delta’s total revenue for 1Q2024 was $13.748 billion

              Based on investor guidance from both Delta and United for 2024, Delta is expected to earn a profit over $1 billion above United.

            7. Timmyboy you should know better than that.
              Have you heard of something called “consolidation of financial statements”?
              I’ll make it short for you. The 13.74 billion number includes the sales of the refinery to third parties. That has nothing to do with the airline business. DL clearly discloses it in their adjusted numbers. It’s very clear in their financials.
              I had always had doubts that you knew how to read financials. Now I’m sure you don’t.

          2. Marco
            The refinery IS part of Delta’s total revenue. They adjust it out for comparison to other airlines.
            I have consistently said that Delta and United’s transportation revenue and profits are comparable.
            You do realize that United tried to buy a refinery? It wouldn’t be a gimmick to you if they succeeded.
            United could also have won multiple MRO deals and have a much more profitable loyalty program but that hasn’t happened.
            It is the refinery plus the MRO plus the loyalty and credit card programs that provide higher revenue and profits and they are part of Delta’s business which is why they show up on the bottom line. United could and might get the same or more non-transportation revenue and profit as Delta but right now they don’t

        2. What does any of this have to do with United? What motivates you to troll every post by heaping praise on Delta?

    2. Isn’t the US-Australia cargo market huge? Even if the passenger cabins are fairly empty they can still fly lots of cargo, maybe more even.

      1. The cargo boom is over, rates have fallen dramatically from their sky high prices that were seen during the pandemic. It is one of the reasons why cargo carriers like FedEx and UPS now find themselves in a difficult position with FedEx at one point early last year telling pilot to go apply to fly at other carriers and have lead both airlines to temporarily suspend pilot hiring as they now have more pilots than they need.

        United is a passenger airline, cargo isn’t going to make up for all that lost revenue from all those empty seats.

        I do think comes next winter season United will trim/tweak its schedule to Australia and New Zealand.

        1. Exactly. The COVID-related boom in air cargo prices has been over for at least a year. Air cargo rates may not be back to “pre-COVID” levels, but they are closer to those levels in many lanes than they are to “peak-COVID” levels.

          Rates of $10+/kg were common for many lanes during COVID (as most international air cargo goes in the bellies of pax planes, and pax planes were taken out of the market during COVID). $10+/kg rates are fairly uncommon now, and even when they do exist, rates with those lanes tend to be for very lengthy & high priority journeys (else anyone with a spare cargo plane would flood the market and haul the cargo with a few fuel stops, at the cost of adding days to the transit time).

          For most passenger airlines, air cargo is in the low/mid single digits as a % of revenue, and thus is basically gravy.

  2. Great post, I’ve been worried about this. Thanks for bringing it to our attention.

    How is Delta doing? They doubled LAX-SYD and added LAX-AKL. And AA?

    As far as UA to HND from EWR and IAD… no surprise whatsoever. Those planes literally have NO connectivity at HND to southeast Asia. When those flights flew from NRT there was connectivity on partner NH to scores of destinations in Southeast Asia both ways with a reasonable connect time. Due to the slots situation at HND, that connectivity doesnt exist, and you absolutely need that connectivity to fill the plane at IAD and (to a lesser extent) EWR. Time will tell how that works out.

    1. Jason – Delta isn’t doing great. For Dec/Jan, Auckland had a 73.3% load, Papeete was at 68.3%, and Sydney was at 67.7%.

        1. Eric – Delta has much less frequency. All their flying is from LAX and during the peak they do 1x daily to Auckland, 2x daily to Sydney, and 3x weekly to Papeete. That’s it. United does 11x weekly to Auckland (1x SFO/4x weekly LAX), 4x daily to Sydney (1x IAH/1x LAX/2x SFO), 10x weekly to Brisbane (1x SFO, 3x weekly LAX), 3x weekly to Christchurch, 2x daily to Melbourne (1x LAX/1x SFO), and 5x weekly to Papeete.

  3. Not shocking, very much expected. Australia and New Zealand are the latest fad destinations by airlines.

    1. Both Melbourne & Sydney are rapidly growing cities right now & the influx of both tourists & new residents are bringing increases in air service. That said, so much has been added that it all can’t be absorbed & you end up with half empty planes & too many carriers on those routes. That is the plane truth.

  4. Speaking of markets with a bunch of extra capacity (though on a smaller scale), how did UA and DL’s JNB/CPT flights do?

        1. Interesting. Wonder if UA and DL add more flights next winter (looks like some of the UA and DL flights are less than daily). No nonstop competition, but long flights take a lot of airplane.

        2. Wow. Those Cape Town numbers are impressive. Other than some safety concerns, CPT is an extremely under-rated destination for Americans, and there are so few reasonable routings there from America. But I would think it’s almost all leisure demand, with JNB doing far better in upfront yield — unless enough leisure customers are willing to spend on comfort in this ultra long haul market.

  5. From what I understand, Virgin Australia wasn’t codesharing on UA’s LAX-BNE until mid-January. How much do you think the VA partnership is helping United on the Australia PoS compared to the AA/Qantas JV?

  6. Problem for United and delta, to a lesser extent, is what else are they going to do with all those widebodies.
    It’s a fun blog topic to make fun of AA for not having a sexy international network, but United doesn’t have anywhere else to put these planes during the northern winter

    1. Don’t understand how United cant find places for widebody flying at various seasons as they are a global carrier.

      1. You can fill a widebody to anywhere in Europe in summer. The smallest strip of concrete but during northern summer. The issue is filling those widebodies during the northern winter as Cranky’s article suggests.

        1. I get that, but still you cant tell me that there isn’t a place on earth where you cant send widebodies in northern winter & make bang despite labor costs.

          1. Sure there are. Australia, Hawaii, and South America included but when you have ~400 US-based widebodies that need a place to fly in the winter, you just tank yields trying to fill seats or end up with lower load factor while trying to maintain yields. The demand for long distance flying in winter pales in comparison with the demand in summer.

            Hawaii, Australia, and South America can only absorb so much capacity due to demand and, while carriers do it, it’s kind of a waste of a widebody cycle to send a widebody to Cancun and other close in Caribbean spots since the heavy checks on those planes are not cheap. so while some carriers do fly widebodies to places like Cancun, it’s much more common to see the narrowbodies, even in winter.

            But it’s a benefit vs cost analysis for maintaining so many widebodies. At this point, United and delta (for the most part) think they can make more money during northern summer than they lose (or breakeven) with those widebodies in the winter.

            1. But haven’t these planes been paid for a million years ago? It would be a competitive advantage on transcons.

              I always think back to United in the early 90s throwing dc-10s back and forth between O’Hare and Detroit – talk about empty- and the fairs were like $75. Can’t imagine what the rationale was back then.

            2. Certainly the UA 772s (as opposed to their 77E, 77w, and 787 fleets) are paid off (I assume) and you see them do more shorthaul or really Hawaii last I checked.
              Not sure the same paid off could be said of the 77W and 787 fleets at UA.
              But fair counter. The cost isn’t necessarily a paid off or depreciated plane (those are largely sunk costs), it’s the opportunity cost of using a widebody for shorthaul flights vs making more money on a longhaul flight given the limited number of cycles before the next heavy check which incurs a large expense.

              A Cycle is just up and down and you can either use one flying ORDMKE, ORDCUN or ORDHNL… theoretically, you’d get more bang for your buck on ORDHNL if the yields are there but that’s not always the case… Obviously, there’s a balance there of generating more fare off the plane doing 3-4 trips per day with any plane vs the one or two flights to HNL or CDG but you keep the plane out of heavy checks for longer when it’s doing long flights and fewer planes for longer.
              This is obviously a pretty simplistic version of the analysis a UA, DL, or AA team would do for this kind of analysis but it scrapes the surface. Agreed on those old widebody shorthaul analyses but… in fairness to some of our more senior folks on this website, you can do a lot more complex analysis with excel (and more advanced products) vs a couple sheets of paper and a calculator.

          2. Serious question… How much do US airlines use their widebodies in the northern winter to haul pasty white residents of Northern states down to beach destinations in FL & the Caribbean?

            Those north/south routes are huge overkill for the range of many widebodies, but they are the ones that come to mind for winter demand.

  7. At the same time, UA is still holding award inventory tight. I know award inventory does not boost load factor by much. But when your load factor is like <70%, why don’t they release more award seat (and earlier) to just fill the planes is beyond me. Looking at EWR-HND, plenty of availability (all Y buckets 9) for today and beyond, yet saver economy award is only available 15 days out. This does not even factor in the difficulty in finding domestic award flight for connection.

    1. @Cranky Is Haneda service at EWR doing lousy because it is competeing with JAL, ANA, and AA? Also, do you think AAwill contunue to offer service DFW-BNE next year if the yields are so poor this year? That is a lot of JetA to burn to lose money with lousy yields.

      1. Brian W – AA is not the issue, but AA is going to make it worse with that JFK flight that will lose tons of money. But I think it really is more of an issue of seasonality and the need to use those slots at Haneda or risk having the route authorities go elsewhere. It’s an investment.

        As for DFW-BNE, I expect that will be a big money loser as well. Question is, how long will subsidies keep it afloat.

  8. Funny that everyone dumps on AA for pulling back at LAX /SEA but looking at DL and UA, it was the right move. Using the OW partners makes more sense then trying to go it alone. The AA Asian partners especially Qantas and JAL really makes sense to lean in and run the JV without reducing loads to finge destinations. UA should lean into ANA more and DL, well Korean Air isn’t a choice for most (sorry). I think Kirby’s world domination strategy will find them with lots of empty widebodies with red ink.

    1. Not sure why you’re down on Korean. The network beyond ICN is far more extensive than what JAL or ANA offer beyond NRT or HND. And the Korean product is top notch.

      1. ^This. I think it’s a myth that UA and AA have much better TPAC partners than DL. Sure, the US-Japan O&D market is $$$$ and DL wanted JL but lost to AA. But KE is a very decent partner and for anything beyond Japan/Korea, KE offers a much much larger network and does not have the two-hub headache that NH and JL face (having both HND and NRT is really problematic for building a true connecting hub). Heck, KE even has a larger network on the US side than NH.

        But again, the Japan O&D market is likely just so premium that if you ask DL to freely pick a TPAC partner right now, it would probably still pick JL/NH over KE.

        On another note, AA’s future TPAC strategy is flying to Tokyo and leans on JL which I’m just doubtful. JL is just not a large airline and has always lagged NH quite a bit. AA’s TPAC operation is bound to be just boutique even with JL.

        1. Proof is in the pudding. AA and UA have never been in a bidding war for Korean. Delta offered hundreds of millions of dollars to JAL to leave AA even while KE was a skyteam partner. Korean is a good partner for Delta but it wasn’t due to it being their first choice. It’s all they could get.

  9. With Australia/New Zealand being one of the few markets that does better in northern winter you would think it’s a good place to send all those European Widebodies in the off-season right? Wrong

    Not get me wrong it’s a great market to be in with a lot going for it but the population here is closer to 30 million than it is 750 million. The demand simply isn’t there.

    I have serious concerns over those 150 Dreamliners United Airlines ordered. There’s no way all those planes can be flown profitability in winter.

    1. I cant believe that UA cant send widebody jets into countries such as Brazil & other similar places in South America in winter & not make a bundle of $$$. If that doesn’t work then partner up.

  10. Is Japan so low because it’s off season or is there overcapacity there too? Narita, Haneda, and (especially) Kansai are 3/4 of the lowest load factors of the Asia routes. At least fares tend to be high for O/D passengers, but I’d imagine that there are a good number of connecting passengers to ANA from Tokyo.

    1. Might be off season, or maybe just softening demand after the huge Japan tourist boom post-covid. Could also be an exchange rate issue, the Japan-US market tends to be more Japan point of sale which makes visiting the US more expensive for Japanese with the yen where it is.

      1. Ah, good to know (or confirm what I had guessed).

        Still, I’m a bit surprised that KIX-SFO operated during the winter, or maybe even that it resumed at all. Anecdotally, load factors and fares have been quite a bit lower than Tokyo flights for the times I’ve searched, but maybe they will improve.

    2. As someone who was trying to fly SFO-Japan last winter, the issue was fares, not capacity. UA was trying to charge around 1800 RT for a basic fare to NRT. They’re trying to pull the same BS this summer as well, and while there’s most definitely more demand to Japan during the spring and the summer, it’s still a very very hard sell. The game in Japan these days seems to be numbers-focussed, and that’s not the type of metal UA has shoved onto Japan flights. They’re all High-J aircraft, which most would assume is the right move, but with a weak Japanese yen, and SF/LA/NYC industries being a bit more conservative on spending right now, J is just not going to fill up.

      I ended up flying AC via YVR and my flight was completely full on a 450 seat 77W. Return was rerouted to HND-YYZ-SFO because the LF were so high, but I got a seat in J so I’m not complaining.

      1. I agree. I had family who’ve wanted to vacation in Japan this past year, and the astronomical airfares — especially on direct flights — convinced them to travel elsewhere.

  11. Specific to the data itself, even among East Asian cities, China and Japan’s load factor increases are lower than destinations in Southeast Asia. ICN is the only destination in NE Asia that did above average for the group.

    The inverse about Asia/Pacific is how well domestic and transatlantic did; according to UA’s 1st quarter earnings report, domestic RASM was up 6% while transatlantic was up 12%, both essentially on flat capacity, better than what its most direct US global competitor reported. UA’s Latin capacity and RASM decline was down on lots of capacity adds with UA’s competitor still in the process of implementing a major joint venture and it said it would use 2024 to allow that capacity to mature.

    The takeaways are clear:
    – Low growth rates provide opportunities to weed out and compensate for the ever-present underperforming markets while high growth rates inevitably result in yield and LF erosion.
    – In contrast, high growth rates esp. across multiple markets will result in adequately performing markets becoming underperforming
    – While adding capacity might help protect market share, low revenue performance is not sustainable esp. if two or more companies are chasing the same financial goals.

    UA noted decreased TATL RASM for 2023 so slowed capacity growth there in 2024 and the capacity they added in 2023 is maturing, post-covid demand recovery is stabilizing and demand growth is slowing.

    Well-run companies can invest in growing parts of their network but they can’t do it across the board and advance their financial goals. If there is opportunity to make money, other carriers will see it and grow too. If there is market weakness, other airlines will also see it and pull back.

    Even after their own planned widebody retirements, UA’s primary US global competitor is expected to put twice as many new widebodies in service as UA in 2024 with strong int’l growth likely coming in 2025. Given their financial strength, if they see opportunities to grow where UA is strong, the two will undoubtedly end up as stronger relative to foreign and other domestic competitors but UA will no longer be as dominant in the markets where it has been.

    As for the comments about LAX and esp. AA there, AA’s LAX route system was heavily focused on China and HKG. AA returned their LAX China frequencies, probably won’t get them back anytime soon, and has yet to return to HKG despite having an alliance partner there.

    As for Japan, NRT and HND are split airports serving the same metro area with HND preferred for local traffic but with no growth possible due to treaty and airport constraints. NRT is Open Skies for US carriers but the local market continues to shift to HND; it is too costly to operate NRT flights for connecting traffic and w/o a strong local market.

  12. It’s interesting how low those load factors to Australia and New Zealand are considering how long UA has been a player in the market.

  13. With UA’s SFO-MNL route doing so well I kinda wonder how a SFO-CEB run would do maybe 3 or 4 days a week. I know they’re gonna try NRT-CEB beginning in October but they just may be able to do it from SFO instead and skip the stop at NRT.

    1. If United is doing NRT-CEB it’s because they want to move Japanese traffic, not US. Otherwise they’d have launched GUM-CEB first before trying SFO-CEB.

      1. I think there are more Filipinos living in California than there are on Guam. Also, PAL had a CEB-LAX route pre-COVID, it seemed to work for them.

      2. United is doing NRT-CEB because a 737 is much easier to fill than a 787, and NRT has flights from every UA hub except IAD. UA does not care the slightest about boosting NRT numbers, 75% is still relatively respectable, especially for the winter, and this summer is already looking to be quite high, LF wise. It’s Haneda and more importantly KIX that are concerning.

        The issue with Japan flying isn’t capacity, its fare premium and premium service. No one is going to buy a basic ticket for 1800$ to Narita or even Haneda from SF, especially over the holidays for VFR/Tourism traffic (that’s what I was looking at paying last December). When you and your JV partner’s aircraft to Japan are nearly 75% premium focussed, you’re going to get ridiculous economy fares that are going to kill load factors, especially if J is empty, which it often is because of the weak Yen.

  14. I flew SFO-BNE in February to get some sun and warmth. The only part of the plane that was remotely full was Polaris, and if I hadn’t flown on points, I would have been in there too. As it was, I had my own row in Economy there and my own row in Economy Plus on the way back. These numbers don’t surprise me one bit.

  15. Another great analysis, Brett! Would be interesting to see how TPE unfolds with all the added capacity (from SEA specifically, but I imagine it would hurt UA’s SFO flight).

    PEK is a recent resumption, so it’s not shocking to see load factor being low. PVG is a surprise but I think fare has remained high which offset lower load. But it also tells you why US3 is lobbying to limit more China capacity. Still a long way for US-China market to recover fully.

    Surprised HKG is that high even in the winter, considering Cathay has also restored majority of its US services. But UA has not resumed EWR-HKG yet due to Russia overfly, which probably helped boost load on the SFO/LAX flights?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Cranky Flier