As the global health crisis continues to rock the aviation industry, several airlines are revamping their operations in a bid to limit the damage. With United continually preparing for the worst during these tough times, could the Chicago-based carrier eventually close down some of its hubs? According to comments made by the airline's president recently, it could be a possibility...
Nothing is sacred anymore
Skift reports that during a first-quarter earnings call on Friday, United president Scott Kirby shared that even though there are no current plans to close hubs, absolutely everything is on the table. To emphasize his point, he said there are "no sacred cows".
“If we get to the fourth quarter and demand is zero, we will have to make short-term sacrifices,” Kirby said, as reported by Skift.
“We will do that, and we will get our cash burn down to $20 million per day, which obviously gives us an extremely long runway to make sure that we come out on the other side and emerge a great United Airlines together."
Industry issues
United's management understands that demand won't pick up right away even if effective safety measures are placed, and travel restrictions are reduced. Tourist sites need to be open, and businesses need to be active before passengers start taking to the skies. With it being so hard to predict how long the health crisis will continue, it could be a while before this sort of activity resumes.
With this in mind, airlines could be forced to make tough decisions on the closure of hubs. Even bases that are usually important to carriers could be up for review during these uncertain times. Just this week, British Airways revealed that its operations at Gatwick are in question, despite the airport being a favorite for vacationers in the South East of England.
Therefore, United could also make the reluctant call to drop one or two of its hubs during the current downturn. Kirby added that decisions about hubs and routes will likely come after his firm decides how many staff members will be kept on following downsizing efforts.
The contenders
If the airline was forced to take action on which hubs to close, it has eight to choose from:
- Chicago O'Hare
- Denver
- Guam
- Houston
- Los Angeles
- Newark
- San Francisco
- Washington Dulles
Out of this list, there are some airports that would likely be safe from being axed. Newark is United's base for the area surrounding New York City. With the airport linking the United States' most populous city with the rest of the world, this site will likely be prioritized.
Additionally, Washington Dulles serves passengers to and from the capital of the US. So, there will always be some sort of regular activity happening at the airport. Moreover, United has been undergoing work to revamp its lounges at this hub. In fact, it has big plans to connect the country's two economic centers.
As United is headquartered in Chicago, there probably won't be any closures made at O'Hare. Furthermore, the airline recently announced its ambitious gate expansion at Denver after years of growth at the Colorado capital. Houston is also its only hub in the whole of Texas. Along with this, the airline is partnering with Apple on the redevelopment of its terminal at San Francisco International. Therefore, these four airports should remain open.
A tough call to make
Since United has seen positive results at San Francisco, perhaps its other West Coast hub at LAX could be more of a consideration for closure. The company's executives have been frustrated about how constraints at Los Angeles have been preventing the airline from growing in Southern California.
Over the last few years, the operator has fallen behind Delta Air Lines and American Airlines when it comes to holdings at LAX. Subsequently, this hub could come under scrutiny if the situation further worsens. Nonetheless, with Los Angeles being the country's second-most populous city, United will still maintain some sort of operations here.
Additionally, United only flies approximately 300,000 passengers through Guam each year. Therefore, there is not as much to lose compared with the hubs on the US mainland. However, this airport provides some useful connections across the Pacific Ocean. Additionally, since it is a smaller operation, the costs involved in keeping it running are less.
Time will tell
Ultimately, United will be hoping that it does not have to close any of its hubs. Once demand picks up again, it will be a great challenge to regain a strong presence at airports if closures are made. However, if these actions help ensure the survival of the carrier, they could prove to be essential.
What are your thoughts on United's plans over the next year? Do you feel the airline will eventually close some of its hubs? Let us know what you think of the prospects in the comment section.