United Airlines is well-known for its vast international route network. Flying larger schedules and to more destinations than its competitors in many different markets, the network team has worked hard to utilize all of its available widebodies to power international routes. Next summer, United is planning its largest transatlantic schedule ever, but doing so in a different fashion than it has previously. It is a careful calculus that United’s executives explained on the carrier’s third-quarter earnings call.
New kinds of transatlantic routes
United announced eight new international routes for 2022, including five new destinations, earlier this month. Along with the launch of previously announced routes that were put on pause due to the crisis and the return of many pre-crisis destinations, United will be flying the largest transatlantic schedule in its history.
It is first important to note the kinds of routes United is targeting. The recent adds have been focused on a primarily premium leisure bent, as Andrew Nocella, Chief Commercial Officer, explained:
“Consistent with our plan of international growth for 2022, last week we announced ten new Atlantic with a focus on premium leisure destinations such as Bergen, the Azores, and Italy. Most of our new routes have a common theme of premium leisure business as we continue to diversify our global revenue stream, which in the past were very business centered.”
Transatlantic business travel is still down. The recent hit airlines took with the rise of the delta variant has left even the most conservative outlooks on the return of business travel up in the air. As a result, United is turning to serve a more leisure-oriented slate of destinations, split between pure tourism travelers and those who fall under visiting friends and relatives (VFR) traffic. It will still continue to fly to the big business hubs of London, Zurich, Frankfurt, and more.
Another testament to United’s interest in serving these kinds of markets is the plan to roll out premium economy on more aircraft. The airline will be adding the cabin to more Boeing 767s – which fly heavy schedules to Europe – and will put the cabin on its future Airbus A321XLR aircraft, which will start arriving in 2024.
These new transatlantic pools extend beyond revenue streams and into geography. When most people think about transatlantic travel, it is usually along the lines of routes from North America to Europe. United, however, is now turning to more transatlantic destinations in the Middle East, Africa, and India, as Mr. Nocella further explained:
” A lot of our Atlantic capacity is not going to the traditional core European markets. We’ve gone aggressively into the Middle East and Africa as well. For example we have a new flight to Amman, our flight in Cape Town, and Johannesburg, Lagos and beyond. So our number is well up here and elevated across the Atlantic. We are going into new revenue pools that we feel very good about. We feel very good about pricing in those revenue pools, and we feel really good about the bounce back in those revenue pools and we’re seeing that data already today.”
Before the most recent expansion adding Johannesburg, Accra, and Lagos, United’s Africa presence began and ended with a seasonal flight to Cape Town. United is now well on its way to being the largest airline between the US and Africa, eclipsing Delta, which had historically has been the strongest airline in this market.
What about its partners?
United has some close partners in Europe. Naturally, given United’s significant expansion across the Atlantic, this led to the question of whether or not United was concerned about the impact of these routes on its partners. Mr. Nocella discussed the calculus around this as well:
“We work with our great alliance partners. We really do have the best alliance partners in the globe. What I’ll tell you about how we came to the conclusion about what city pairs to add for the summer, in many of these city pairs, United, and our Star Alliance partners had very low share. The traffic between the United States and those markets are carried by other alliances, not ours. That’s why these markets are great.”
Star Alliance has an enviable number of airlines in Europe. This includes Lufthansa and its associated airlines (Brussels Airlines, Swiss, Austrian, etc.), SAS, and TAP in Portugal. However, the itineraries United can sell to a city like Bergen or Tenerife are less than ideal. This would require passengers to connect in a city like Frankfurt or Lisbon, which adds time. Not to mention, many of those planes are also filled with passengers going to other destinations United does not serve. This includes traffic to places like Poland, Romania, Egypt, Saudi Arabia, and smaller destinations in Europe, like Hamburg, Palermo, Malaga, Malta, etc.
United will continue to serve its partner hubs and sell connections, but launching its own flights to Europe saves time for US travelers and opens up more connecting opportunities to destinations that United may not have on its radar to serve.
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United has the fleet
Most importantly, United Airlines has the fleet to serve these destinations. Unlike other major airlines, the carrier kept its widebody fleet intact. It even has marched forward with retrofitting existing widebodies to feature the airline’s new Polaris business class product and rolling out premium economy. Even with 52 Boeing 777s grounded as it awaits information from Pratt & Whitney and regulators on the engine fixes needed, it is keeping that fleet intact.
The Boeing 757s and 767s, which are mostly owned, allow United to be a little more opportunistic with these jets, given that they are relatively cheap. American Airlines had a similar story but retired those aircraft. Couple this with the anticipated return of the Boeing 777s and the large Dreamliner fleet, and United has all flavors of capacity and range to serve a truly extensive transatlantic market, which it fully plans on doing.