ANALYSIS: Business case exists for return of United’s Melbourne nonstop

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Melbourne, Australia, has long graced the route map of United Airlines, most recently as a one-stop service from Los Angeles via Sydney.

That changes on 26 October when the Chicago-based Star Alliance carrier resumes its nonstop Los Angeles-Melbourne flight on a 252-seat Boeing 787-9 – its first on the type.

“We felt that we have a good business case to serve Melbourne nonstop now,” says Andy Buchanan, managing director of planning at United who was instrumental in the decision to resume the nonstop flight. Demand for service to Melbourne has grown in recent years and provided a strong business case, he says.

Providing a nonstop flight also improves connections for Melbourne passengers from destinations throughout the USA, as well as from Canada and Mexico, via United’s hub at Los Angeles International airport, he says.

“We really feel that [the flight] will serve our existing customers well and allow us to win new customers,” says Buchanan.

The Melbourne-USA market is viewed as underserved in the southern Australian city. Conversations with various locals characterise it as a “leakage” market with the existing Qantas Airways and Virgin Australia flights to Los Angeles only capturing about a third of the total passenger traffic.

The balance typically connects over Auckland, Brisbane and Sydney, on Air New Zealand, Qantas, Virgin Australia and their respective partners.

Qantas and Virgin Australia will pose stiff competition for United, regardless of the size of the market. The former is likely its most formidable competitor offering a daily flight on a 484-seat Airbus A380 – the de facto flagship of its fleet – while the latter only offers three-times weekly service on a Boeing 777-300ER.

In addition, the Australian carriers can offer connectivity beyond Los Angeles to Canada, Mexico and the USA via their respective codeshares with American Airlines and Delta Air Lines.

In a discussion of United’s new Los Angeles-Melbourne flight on the website of local travel publication Australian Business Traveller, readers almost unanimously preferred Qantas, citing a better product and frequent flier loyalty.

“Everyone loves to criticise Qantas, particularly lately, but it still runs rings around United and Virgin between Melbourne and LA,” says a reader.

However, these passengers may not be United’s focus. Buchanan implies – though never says – that the carrier is targeting the US point-of-sale with the new Melbourne flight. These passengers are less likely to be loyal to either Qantas or Virgin Australia than those reading Australian Business Traveller.

Buchanan declines to compare United’s product to those of its competitors but does say that the offering on the 787-9 will be a “highly competitive [and] very good product” for customers.

The aircraft will be configured with 48 flat-bed business class seats, 63 economy plus seats and 141 economy seats, with audio video on demand (AVOD) personal entertainment at each seat. The 787 also benefits from lower cabin pressurisation and larger windows than other aircraft.

United flies Boeing 747-400 aircraft to Melbourne that lack personal in-flight entertainment in the economy cabin. A 777-200ER aircraft with updated entertainment options comparable to those on Qantas and Virgin Australia will operate the flight from 30 March.

The carrier does not expect an increase in unscheduled technical stops or weight restrictions on its existing flights from both Los Angeles and San Francisco to Sydney when it switches to the 777s from 747s, says Buchanan.

United’s selection of a 787 for the route seems almost coincidental. Buchanan says that the airline could have used either a 777-200ER or a 787 on the route but that the latter was the right choice from a scheduling and operations perspective.

United needs two aircraft to operate the Los Angeles-Melbourne round-trip, which would require either pulling 777s from other routes or taking advantage of two of the new 787-9s that it will take delivery of in 2014.

The carrier is scheduled to take three 787-9s from this September, Flightglobal’s Ascend Online database shows.

Los Angeles is also home to one of United’s two 787 pilot bases making an increased use of the type from the airport easier from a crew scheduling perspective.

The city of angels was selected as a gateway for the Melbourne flight due to its larger origin and destination (O&D) market and shorter flight path when compared to United’s primary Pacific gateway at San Francisco International airport.

“We really feel that the combination of the larger local market in LA and its geography for South Pacific really works pretty well,” says Buchanan.

United anticipates that a passenger from San Francisco would likely be willing to connect over Los Angeles to reach Melbourne – they have to connect somewhere to reach the city – but a passenger from Los Angeles likely would not connect over San Francisco due to the availability of nonstop flights, he says.

However, Buchanan emphasises the fact that the decision to launch the route from Los Angeles has no impact on its San Francisco hub, which remains its primary gateway to north Asia, he says.

United has served Melbourne since it acquired Pan Am’s Asia-Pacific route network in 1985. The flight has operated as both a one-stop via either Auckland or Sydney and as a nonstop during that period.

The carrier’s last nonstop flight between Los Angeles and Melbourne operated in December 2009, according to the website Airlineroute.net.