After a year of robust “easy” growth, now United will try a riskier growth strategy: small-city growth from its hubs.
United’s domestic growth last year was predicated on “low hanging fruit”. The Chicago-based airline increased service to Hawaii and many larger U.S. cities and was able to sustain that growth through improved operational reliability and customer service.
But now comes a more difficult challenge as United seeks to continue its growth. With larger cities now covered, United is turning back to funneling connections through its hubs. More flight banking will occur, a move in which flight arrivals and departures are grouped around similar times to maximize the ease and minimize the time required for connections. United President Scott Kirby calls the move an effort for United to regain its “natural share” of the market it lost during the Smisek era.
In comparison analysis, the Chicago Tribune notes that Delta operates 1,000 flights per day from its fortress hub and Atlanta while American operates up to 900 flights per day from Dallas-Fort Worth. Meanwhile, United only operates 600 flights per day from its biggest hub, Chicago O’Hare.
I’m not sure that is a helpful metric, considering United’s overall route map and how weather-prone Chicago is. But it does make the point that United may be missing out on opportunities to better connect small-city passengers through its hubs. And Scott Kirby has said just as much in asking why a passenger flying from one city to another requiring a connection should fly American or Delta over United if they have to connect anyway.
> Read More: United Considers Significant Expansion To Washington Dulles Hub
Fare War?
The biggest risk is that by expanding service to smaller airports United could trigger a fare war. While legacy airlines, including Southwest, are more likely to fight expansion from low-cost-carriers, American or Delta won’t just stand by and let United take “their” customers. As United adds more regional jets to its fleet and increases small-city expansion, look for a drop in fares. If American and Delta retaliate, expect a further drop in fares. By how much remains to be seen, but barring an unexpected rise in oil prices it will be in the consumer’s favor.
Already, United has announced increased service to cities like Grand Junction, Panama City Beach, Eugene, Durango, Ontario, Stockton, and Traverse City. Look for more strategic growth of this nature, which will push connecting traffic through more United hubs.
> Read More: United Announces 11 New Routes From Four Hubs
CONCLUSION
It was only a matter time of before United started focusing on winning back domestic traffic. By focusing on smaller cities that traditionally command higher fares, United not only seeks to regain lost market share, but win permanent customers through its onboard innovations. My advice is simple, though: worry more about departing on-time and arriving on-time. At the end of the day, that is all most people care about. The free satellite TV? Less so.
image: United
Oakland, Burbank, OC. Cut delays and increase convenience for millions with well timed flights.
Focus on arriving on-time. Ask AA pax how much they like the focus on on-time departures .
Operationally, they need to focus on IAH and DEN. These are also reasonably good hubs from a customer perspective which distances them from the grim IAD. I avoid ORD like the plague for connections due to delay/cancellation concerns. EWR point-to-point is being emphasized, which I do think is the right thing to do. Also, happy to see continued refinement of SFO and LAX, particularly with recent Midwest additions.
IAH and DEN have a lot of muscle to flex.
Adding back a to their fleet a bunch of CRJ-200’s isn’t good for any customer…