Thanks to UAL744Flagship for the Press Information.
If you have read my posts on this subject, one of the things that I have consistently said that United (and other legacy carriers) are not going to get people to pay $2000-3000 transcon when they can fly JetBlue for $295.00 one way maximum.
With this said, this new aircraft configuration is going to be a work of stellar genius on the part of United, or just another misguided attempt to attract the 5% of the market that pay higher fares. However, it is still my contention that US businesses will not pay the high fares domestically on the legacy carriers when JetBlue offers the same O&D services to more convenient airports in the Bay Area and LA
There can be no mistaking that this is a VERY bold move on the part of United.
At least, one cannot say they are not thinking outside of the box.
Let's examine the salient features of this aircraft, then the market deployment:
First, the 757 has a pretty long range (up to 3500nm with full 200 seat payload). With a 110 pax load, I wonder how much further the aircraft can fly, for sure 4000mi, perhaps close to 5000mi?
The major change in this aircraft is the type of First Class seat being installed in this aircraft. The seat product looks very similar to the SQ
space bed, or the seat that is currently installed in the Privatair 737NG that flies transatlantic for LH
. That aircraft operates EWR
nonstop, which is about 3800mi, with 48 seats on board. This is a new generation Business Class seat.
At the moment, United is far behind the competition in Business Class, and I would imagine they are looking for a Business Class seat. This is a very smart way of testing this seat product, since if this bed product works in the 757, then it could be the seat replacement for Business Class on the 777 fleet. It could also be solution for the 767, as there is a single seat unit that can be installed in the 767.
The existing Business Class seat is being put in C class, as is the existing 757 Economy Seat. All they are doing is changing the pitch to 34".
This is a perfect mix for transatlantic markets where UA
is operating a 767-300. This aircraft could easily make any point in Western Europe, and possibly open up other markets in which the high yield traffic exists, but the routes are so thin that a 767-300 would not be viable. Since the payload is reduced, there is so much more flexibility that can be offered with this aircraft.
In essence, they have taken the LH
concept of an all Business Class aircraft and created an "Executive Flyer" which allows for additional comfort in all cabins while gaining the operational efficiencies of the 757 for long haul.
Additionally, I have stated that UA
should do away with First Class, especially on Europe. If the new F class seat product becomes very popular, then they may go the way of SQ
, removing F class on all the 777s and going with a upgraded J class service. With a 777, 767 and 757 aircraft mix flying long haul, they would have the ability of offering the same Premium product across all aircraft types. VERY SMART! You may say, well, what about the 747?
Sell them to the highest bidder. With a two cabin product, they could take the 777 practically anywhere, and if they lease a few 777LRs when the come out, then they can offer the same product on ultra long haul flights. Offering a consistent product across all the international markets, being short, medium, long or ultra long haul is part of the key to success. The other part is really making sure the customer is comfortable, the travel is efficient and cost effective. Now they have a real opportunity to do that.
So, in this respect, I congratulate United for coming up with a solution for transatlantic flights. Taking a 110 seat aircraft from their IAD
hub (or ORD
) for that matter to business points in Europe, this could be a very very effective product. The key is going to be getting people to accept flying a narrow body aircraft on long flights instead and tweaking the product to meet the customer demand before deploying it in place of the larger aircraft.
This may be WHY they are placing the aircraft on the top premium transcon routes. This would give them the opportunity to test market this aircraft on a route which provides feed from JFK
to its Asian routes, and from the west coast via JFK
and deep South America over JFK
With six trips per day, this has to be what they are doing. They currently run 6-8 trips per day in the JFK
premium transcon markets. Only one of the aircraft is operated 300ER international aircraft. The others are flown by the only remaining 762s in United's fleet. These aircraft are old and worn and while United has done a great job of keeping those aircraft in good working order, they are getting more and more maintenance intensive. Taking them down now is a good cost cutting move and the relative cost of refitting 13 aircraft is going to be much less than the maintenance and operating costs of the current 762s for the next year.
So,to recap: They are testing: a) if a 757 with this type of configuration is a viable alternative for long haul thin routes b) a new seat for Business Class and c) changes in their Premium market amenities to be more competitive on international routes. Where better to test it on the current premium transcon flights? If the intention is to put this aircraft on international routes, and remove F class, change the F cabin to C and increase the number of seats, take the existing C class seats and make them a premium Economy product and leave the 34'' for Economy, this could work and work well.
Now, here is my fear:
They are positioning this aircraft on JFK
, and replacing the 767 fleet entirely. This means that UA
will lose between 50-70 seats per flight (762, 763). That translates to a net loss of between 300-350 seats per day.
There has to be a second tier of service to replace some of the seats on that route. If not, then another competitor will come in and put a larger aircraft (763) on the route and siphon off the lower price pointed Economy Class traffic.
Another fear is that they are using this special aircraft to capture the high yield business strictly between the JFK
markets. If this is true, then United is diluting themselves. I have said it before and it bears repeating: Noone will pay the high fares that United will have to charge to make that aircraft profitable. JetBlue will add additional capacity to LGB
and kill United dead.
Those of you who are familiar with the JetBlue product already know the advantages of their product: A320=wider seat, bigger cabin feel.
Also, they have taken seats out of the aircraft and make the back of the aircraft 34 inches. The front half is 32 inches. The rationale is simple: If you need to get off fast, you can sit up front and live with the 32in pitch. If you are not in a hurry, you can sit in the back, which with a 34 in pitch, an 18in wide seat and Direct TV
is not a bad way to fly from JFK
and without the congestion that you would have both at LAX
In addition, Delta will put the 767 back on SFO
with Business Elite. This gives them the capacity to carry 42 J class passengers and 150 in Economy. Two trips per day in each direction would be sufficient to connect to their banks at JFK
. This plus the limited O&D traffic would keep them in the game, especially with a lack of United capacity.
American will simply put the 767s they have not reconfigured back to high density on the route and will offer another wide body product.
United needs to add capacity. So here is a radical idea: Why not put TED on JFK
as an alternative for the Economy market. Adding 350 seats back to the route is about 2.3 trips per day with a TED A320. Start with two strategically timed flights in each direction, then bump it up to three if it is successful. Then United will have not taken anything away from the market; far from it. They would have added frequencies, alternative products, one for the through connecting international passenger and the occasional domestic high yield passenger, the other for everyone else, at fare levels competitive with JetBlue. Add purchased meals on the TED portion and you will have a winning combination.
Remember in another one of my posts that this business is cyclical? Well, back in the 50s, United offered two types of product on transcon: Mainliner service and their normal product, both operated with DC6 or DC7 equipment.
This is why I say that this is either a stroke of genius or the height of stupidity. I would like to think the former and that the current transcon is a test. Additionally, this aircraft is a PERFECT fit for east coast to Asia flying feeding flights from the west coast to Asia. London is not so big a market as all the Asia flying; however if UA
were to put that aircraft on Seattle/Portland as well as LAX
, then there is a potential to take traffic away from BA
up north. If the concept works, then it could be extended to the IAD
flights, which would make the transcon connecting product more consistent with the International Service. That is down the road.
Time will tell. At least we can't say that United isn't doing something. That is a good thing.
David L. Lamb, fmr Area Mgr Alitalia SFO 1998-2002, fmr Regional Analyst SFO-UAL 1992-1998