United Explains How it Can Improve: Fewer Discounts, Fixed-Up 747s

Today was another United Airlines mea culpa day for its various executives, including CEO Jeff Smisek, who said the airline’s third quarter financial performance fell “far short” of expectations.

In addition to the airline’s well-publicized weak performance in China in the face of increased competition, another factor was that United’s revenue management system was using year-old projections and was “biased” toward accepting low-yielding fares early in the booking window, Smisek said.

That has been corrected, and the airline will now put greater emphasis on higher-yielding fares closer to the day/time of travel by using more recent projections.

In other words, United’s discounting penchant has been retired to a great extent for the time being, at least.

The airline has also been making big and also subtle improvements that should improve customer satisfaction and improve the bottom line, Smisek said during the airline’s third quarter call with analysts and the press.

747 Maintenance

The “old United,” said Smisek, who formerly headed the Continental Airlines portion of the merger duo, under-invested in maintenance of its 747 fleet.

The new United recently rotated many of the 747s and took them out of service for preventive maintenance, he said, adding that Chicago has been added to the 747’s route network.

Smisek said the preventive maintenance should improve the 747’s performance and reduce the possibility of breakdowns, which sometimes occurred in foreign destinations where there was a paucity of United maintenance personnel and parts.

Faster Jet Turns 

United is also focusing on small, tactical elements that can improve operations and customer satisfaction, Smisek said.

One of them is trying to provide faster turnaround of jets after they arrive at the gate, including ensuring that the jet bridge shows up within 120 seconds, United’s requirement, Smisek said.

This provides “more maintenance touch time,” and helps ensure that customers don’t miss connections, and the airline doesn’t have to pay for overnight accommodations.

United has “materially improved” its gate turnaround time, and overall customer satisfaction scores, Smisek said.

In other developments:

• United says it has equipped 115 aircraft with its satellite-based Wi-Fi, and is installing nearly one aircraft per day with the new system.
• United plans to introduce onboard streaming video during the fourth quarter.
• The airline experience a 1.5 point negative impact to PRASM (Passenger Revenue per Available Seat Mile) in the third quarter from the U.S. federal government shutdown.
• Ancillary revenue, primarily from the airline’s Economy Plus seating, climbed 16% in the third quarter year over year to an average of around $20 per passenger.