United is describing it’s new Florida service as “aggressive” and “opportunistic” as it sheds its traditional hub-and-spoke model to add 17 new Florida routes this winter. But is that what is really going on beneath the surface? Does United have a cohesive strategy behind its new Florida routes?
Florida Strategy? Straight From The Mouth Of United
Let’s start with what United is saying about its new Florida routes, which Live and Let’s Fly outlined in detail earlier this week.
Publicly, Ankit Gupta, United’s Vice President of Domestic Network Planning, said:
“The addition of these new flights represents United’s largest expansion of point-to-point, non-hub flying and reflects our data driven approach to add capacity where customers are telling us they want to go. We look forward to offering customers in the Midwest and Northeast more options to fly nonstop to Florida this winter.”
Key word: data-driven. United noticed two things. One, demand to Florida, despite being a COVID-19 hotspot, remains strong. Two, its competitors were offering more direct service or convenient connecting options than United.
Speaking exclusively to employees, Gupta further explained the rationale:
“Today, outside our hub cities our customers can only access leisure destinations on United via a connecting flight. But we face competition from other airlines that offer non-stop options or more efficient customer connections via other hubs.”
That’s hardly a problem unique to United. But Gupta continued:
“So why Florida? We know customers, particularly in the Midwest, have a strong affinity to visit southwest Florida. These customers are second-home owners, have vacation rentals, or are just visiting friends and relatives. Likewise, customers in the Northeast have a strong affinity to South Florida and Orlando. Especially as we hit the colder winter months, this is a great opportunity to give customers more non-stop options to Florida from the Midwest and the Northeast. The new nonstop flights reflect United’s continuing entrepreneurial spirit to aggressively and opportunistically manage the impact of COVID-19 by increasing service to destinations where customers most want to fly.”
There’s no doubt people love escaping to Florida in the winter. The question, of course, is whether people will gravitate to United over the competition. United battles Frontier, JetBlue, and Spirit on many routes. It challenges Delta and Southwest on others. Will everyone just be fighting for cheap leisure travelers?
When United talks about “second-home owners” or those with “vacation rentals” it is clear United hopes that it can command a premium for its service. Why take Spirit or Frontier when you can fly United mainline and even fly in first class if you’d like? Onboard service is fairly standard across the board during the pandemic (non-existent) but United at least offers wi-fi, streaming IFE, and even seat-back monitors on some of the 737-800s it will use for its new routes. Frontier doesn’t offer anything and Spirit was supposed to begin offering wi-fi this summer but the pandemic has changed everything.
A Battle Against JetBlue?
Is this really all about punishing JetBlue for invading its Newark hub? Some have suggested this is clearly the case, but it is not clear to me. Yes, its new service from New York La Guardia and Boston directly challenges JetBlue. In that sense, this is certainly at least a token response to JetBlue’s latest expansion.
But to say this is a tit-for-tat fails to account for the unprecedented era in which we live. This isn’t a normal time in which carriers engage in turf wars with one another. This is a fight for survival with the odd addition of government mandates that compel a certain level of service and employment (I’m expecting a second payroll support package has already left the station).
Will It Work?
These flights should fill up. There’s limited in capacity and come during the high-season. In that sense, the risk is not nearly as great as trying to restart international service in an era of travel ban. But can United command a premium? It’s currently offering $14 one-way fares between Newark and Ft. Lauderdale…that’s hardly a sustainable business model.
We’ll monitor how fares progress, but I view this as a low-risk experiment to see if it can command a sufficient premium over budget carriers to avoid losing money on every seat and hoping to make up for it on volume.
To see so many new point-to-point routes to Florida on United is a barometer of the odd time in which we live. It’s too early to tell whether the plan will work, but United can always cancel flights if necessary and this limited service represents more of probationary approach than any substantive change in policy.
Finally, Florida remains a COVID-19 hotspot and that may not change by this winter. United hopes people will still visit their families, rentals, and second homes, but even looking toward November seems a bit foolish considering how the pandemic has transpired over the preceding few months. But faced with sitting by and doing nothing or trying a new experiment with otherwise unused aircraft, United has chosen to experiment.