I’ve been fascinated by what has been going on at United the past year or so. United’s stock is on fire (it has gone up about 50% over the past 12 months, in stark contrast to American’s stock), following what was no doubt a low point a couple of years ago.
I find it quite surprising how well United has been able to do, given what an odd couple Oscar Munoz and Scott Kirby are:
- Oscar Munoz doesn’t seem to have gotten the memo that United isn’t an airline known for customer service; that seems to be his sole focus, which is great, but I question whether fundamentally changing the corporate culture at United is possible
- Scott Kirby, at least until recently, still had an America West/US Airways attitude, so to see him focus at all on the premium product is shocking, to say the least; he really seems to be the one running the show at United
On one hand, United seems to be focused on the premium product. On the other hand, United has the most restrictive basic economy fares of the “big three,” and they’re not relenting. So their strategy is confusing, but seems to work.
With that in mind, United has just announced a huge push towards becoming a more premium airline, as they plan to install an additional 1,600 first and business class seats throughout their fleet.
Here are the changes we can expect, broken down by aircraft type:
United A319: four more first class seats
United’s fleet of 67 Airbus A319s will be reconfigured starting later this year, and all A319s should be reconfigured by the middle of 2020. With these changes, United is adding four first class seats. Here’s what this means for their overall seat count:
- First class will go from 8 seats to 12 seats
- Economy Plus will go from 42 seats to 36 seats
- Economy will maintain 78 seats
So as you can see, they’re adding four first class seats and removing six Economy Plus seats, meaning there’s a net decrease of only two seats per plane.
United A320s: four more first class seats
United’s fleet of 99 Airbus A320s will be reconfigured starting in early 2020, and all A320s should be reconfigured by the middle of 2020 (that’s a quick project). With these changes, United is adding four first class seats. Here’s what this means for their overall seat count:
- First class will go from 12 seats to 16 seats
- Economy Plus will go from 42 seats to 39 seats
- Economy will go from 96 seats to 95 seats
So as you can see they’re adding four first class seats and removing three Economy Plus seats and one regular economy seat, meaning the seat count remains unchanged.
United CRJ550: a very sparse configuration
United Airlines has 50 CRJ550s on order. If that aircraft type doesn’t sound familiar, it’s because it’s a new type of plane.
The CRJ550 is essentially based on the fuselage of the CRJ700, which is a plane that usually has about 76 seats. However, United is going for a really premium configuration on these planes.
The CRJ550s will feature 10 first class seats, 20 Economy Plus seats, and only 20 regular economy seats. Furthermore, there will allegedly be a snack bar in first class, whatever that means.
They’ll also have four closets on the plane, so many passengers will be able to bring their carry-on bags onboard.
Now, I suspect that part of the motivation here also involves United’s scope clause with pilots. United is limited in terms of the number of regional jets they can have with over 50 seats, so getting a 76 seat regional jet and only installing 50 seats on it is seems to me like a workaround. They’re intentionally not configuring these efficiently, it seems, but will make the most of them by using them in premium markets.
United 767-300s: lots more Polaris seats
United is in the process of installing Polaris seats throughout their longhaul fleet. When it comes to their 767-300s, they’ve been reconfiguring planes in two phases:
- First they reconfigured their 17 three cabin 767-300s, which featured first, business, and economy; they’re almost done reconfiguring these planes
- Then they’re reconfiguring their 21 two cabin 767-300s, which feature business and economy; they’re about to start the project of reconfiguring these planes
Those second set of planes are expected to debut shortly, and all 767s should be reconfigured by the end of 2020.
What’s surprising is how they’ll be reconfiguring these planes. Rather than choosing the same layout as the other 767-300s with Polaris seats (which feature 30 business class seats and 184 economy seats), they’re choosing a much more premium configuration.
United will reconfigure a subset of their 767-300s with 46 Polaris seats, 22 Premium Plus seats, 47 Economy Plus seats, and just 52 economy seats. Here’s how that represents a change over the old configuration:
- Business class will go from 30 to 46 seats
- Premium economy till go from 0 to 22 seats
- Economy Plus will go from 49 to 47 seats
- Economy will go from 135 to 52 seats
So net we’re seeing a capacity decrease of 47 seats, as they go from 214 seats to 167 seats. If these planes are used in the right markets, that could be pretty interesting.
My take on United’s premium direction
First let me say that I think it’s really exciting to see an airline with a strategy. United has a plan, whether good or bad, and they’re executing on it. That’s in stark contrast to American, which seems to have no strategy at all.
But beyond that, I actually think United’s strategy is really smart here:
- On the A319/A320 they’re increasing first class capacity significantly with only slight overall decreases in capacity, so they can pull that off
- The CRJ550 configuration should work well in certain markets, and it’s the best they could do given their pilot scope clause
- A premium 767-300 makes a lot of sense in certain markets (like Newark to London), so if they deploy them correctly, that’s a really smart strategy
Some might say “well good luck to United during the next economic downturn.” While they’ll no doubt be in trouble with those 767s if/when there’s a major downturn, the reality is they would be in trouble no matter what.
Even when times are good, we are seeing roundtrip economy fares from the US to Europe for $500 or less. That’s no way to make money. So they’re in trouble no matter what if there’s a big downturn, regardless of whether they have a lot of premium capacity, or a lot of economy capacity.
Well done, United! It’s refreshing to see an airline other than Delta leading the way for something for once.
What do you make of United’s new premium direction?