Today, United's rationale makes sense. Premium demand in many markets is robust, and United could probably make more money with more seats to sell. But what happens if business class demand drops at some point?
With demand for transatlantic business class and premium economy rising faster than economy class, United Airlines will shrink coach and add more premium seats on some Boeing 767-300s so it can fly them to key business markets, CEO Oscar Munoz told Skift on Thursday in Los Angeles.
“I won’t say exactly where we are headed,” Munoz said. “But business-to-business markets are going to be the ones that we are going to fly those airplanes to. New York-London is probably an obvious one. I can’t tell you how many people are flying that every day. High [business class] makes all the difference in the world.”
United has been secretive about plans for this premium-heavy sub-fleet, and neither Munoz nor an airline spokesman would confirm the configuration or say how many aircraft will receive it. But a source familiar with United’s planning said the special airplanes could have 46 seats in business class, 22 in premium economy, and 99 in economy class. The first airplanes in the new configuration should fly soon, though Munoz did not give a date.
Since United’s merger with Continental, United’s 767-300s typically have had between 30 and 34 premium cabin seats, with no international-style premium economy section. This has allowed United to put more than 180 economy class seats in some planes.
The configuration that worked eight years ago makes less sense now on some routes, as low-cost-carriers have eaten into economy class margins. However, as big transatlantic discount carriers don’t have business class, and with the global economy still strong, most legacy airlines are generating major profits from flatbed seats. United sees a revenue opportunity in extra-large premium cabins, Munoz said.
“We find that investment in that product makes huge difference for a lot of folks, which why we are doing it,” Munoz said at the opening of United’s new premium lounge at Los Angeles International Airport.
Non-business markets should still receive the standard configuration of United’s Boeing 767-300, with a smaller business class cabin and roughly 180 economy class seats.
Unusual Plan for U.S. Airline
Outside of the United States, what United proposes is not unusual, and both Lufthansa and British Airways fly aircraft with more premium seats to important business markets.
But with one major exception — United and American Airlines have special premium-heavy sub-fleets they generally fly from Los Angeles and San Francisco to New York and Boston —U.S. carriers usually prefer a standard offering.
American President Robert Isom often says he prefers to have a standard configuration for each fleet type to avoid complexity, and American is now shrinking business class cabins on some planes to ensure all have the same seating.
For American, this has some benefit. The airline, for example, can schedule all of its Boeing 767s to fly any route, giving it more flexibility than United will have. Plus, if one 767 has a mechanical problem, American can sub another without worrying it may have a different configuration.
But Munoz said it will not be challenging to manage United’s premium-heavy airplanes.
“With regards to complexity and standardization, there really isn’t a whole lot in that regard,” he said. “You adjust the flight attendants and move things around. We don’t find that complex. Complexity is more important for different aircraft types, for managing parts and things like that. But as far as the configuration? We find that pretty easy to manage.”
In recent earnings calls and at investor events, United executives have said demand is as robust as at any time in recent history. Munoz said Thursday it’s a little early to know how 2019 is shaping up, but said the airline will have a better idea by next week.
“We will wait for that answer, because last Monday and Tuesday and this coming Monday are the three busiest booking days of the year,” he said. “We are watching that very closely. It gives us a good sense for the year.”
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Photo Credit: United soon will introduce a new subfleet with more business class seats than usual. Pictured is a Polaris business class seat. United Airlines
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