At the APEX Expo in September, United CEO Scott Kirby talked about how he likes to enter fights when he has the high ground. Otherwise, he’s not interested. Well, San Francisco is one of those places where United has the high ground, and it now smells blood in the water as Alaska shifts its resources elsewhere. It is going for the kill by adding a ton of new frequencies in the domestic market to a variety of existing destinations… and one new one.
United’s increase follows Alaska’s decrease. Alaska has had to pull resources from elsewhere in order to fund its growth in both Portland (OR) and San Diego. It’s Los Angeles and San Francisco which suffer the most. In Los Angeles, airlines are always beating each other over the head trying to get a leg up, but there are gate constraints for United there.
But in San Francisco, it’s a different story. Alaska remains the number two airline behind United, but it will now end service to Austin, Boston, Burbank, and Newark with Orlando becoming seasonal. This redirection of resources has triggered United to pay very close attention to what it is doing at SFO. It must be thinking if it plays its cards right, it can make Alaska irrelevant to the key local travelers.
United will increase flying in Boston and Orlando, but this isn’t about chasing Alaska out of individual markets. Instead, United is thinking about San Francisco on the whole as it figures out what it can do to further cement its leadership in the region and create more distance between it and everyone else.
This is the S-curve in action right here. The airlines with the highest share of capacity will get an even higher market share because of their utility. United is already by far the largest carrier there, but it sees a chance to accelerate that process even further. This isn’t a new strategy, but it’s like trying to put the final nail in the coffin.
United and its joint venture partners have seen their seat share rise from the 46-47 percent range a decade ago to the 53-55 percent range this year. Alaska, which had reached as high as around 15 percent in 2018, is now back in the single digits consistently for the first time since 2010. Simple math tells you that United isn’t just taking share from Alaska, and that’s not a surprise. It’s also taken a big chunk of share away from American and its joint venture partners. And ULCCs remain a rounding error at the airport.
With this shift in seat share, United has seized its hold on the local market even more. Just take a look.
SFO Local Domestic Passenger Share Over Time
Data via Cirium, includes HA/VX for Alaska and CO for United
EDIT: The chart above and numbers immediately below have been corrected
United was carrying just shy of 40 percent of local domestic passengers to and from SFO until the pandemic. Since then, it has steadily climbed to the 42-43 percent range. The last three quarters have seen United top 46 percent for the first time. Alaska? Well, like its capacity, its share of local passengers peaked near 25 percent in 2018. It’s now between 16 and 18 percent.
In other words, Alaska has seen fluctuations, but United has seen outsized growth in its local share. There can be noise here — airlines can always tweak revenue management systems if they want to take more local or more connecting traffic — but even if there is some of that in here, United is clearly growing its local share through network strength as well.
Looking forward, the airline will grow even further in the market. There are six markets that will get two additional daily frequencies. Then there are another 14 markets that will get one extra. And lastly we have a new market down in Carlsbad which will start with 2x daily.
New United SFO Frequencies
Naturally United will add more flights to hubs and help build connectivity. But it will also increase intra-West flying and Hawaiʻi, the two most important local markets where Alaska still has a strong presence.
In the end, this will make United more appealing to local travelers, and it will make it harder for Alaska. Thatʻs not to say I fault Alaska for what itʻs doing focusing on other markets where it either is a clear number one or has a chance to fight for that. Itʻs just that Iʻm sure Alaska would rather United didnʻt see such a good opportunity to keep growing at SFO.
