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United Airlines CFO John Rainey said today allegations that the airline engaged in anticompetitive behavior last month when Virgin America debuted San Francisco and Los Angeles service from Newark Airport were “absolutely false.”
Answering questions after making a presentation at the 2013 Bank of America Merrill Lynch Global Transportation Conference in Boston, Rainey said United lowered its fares and added supply in Newark because New York-San Francisco is an important market for the airline. He didn’t mention Virgin America by name.
Importantly, Rainey said United reallocated capacity from other routes without increasing overall capacity because the airline did not want to “upset the applecart.”
Maintaining so-called “capacity discipline” is key for many airlines as they want to keep airfares high.
In fact, Rainey indicated that United expects its fleet count to remain relatively flat over the next five years, and long-term capacity growth would be almost undetectable at less than 1%.
On other issues, Rainey said:
- Well over two years after the United-Continental merger closed, the two airlines’ maintenance systems, as well as some collective bargaining contracts, have not been integrated.
- United will tweak its frequent flyer program to enable members to use their miles on additional non-air offerings, and the airline plans to more sharply differentiate classes of service.
- The airline likes its competitive position in relation to the American Airlines-US Airways merger. Despite “overlaps” in Chicago, Dallas, Houston, Los Angeles and New York, when you consider United’s product offerings and the breadth of its network in the Pacific, Europe and Latin America, “we like where we stand in that game,” Rainey said.