United Airlines is strengthening its hubs and reaffirming its service innovations as it prepares to leave bankruptcy in February – more than three years after seeking protection from its creditors.
United chief executive Glenn Tilton insists the reorganisation process has taught the airline a valuable lesson: “Cost savings and efficiency improvements are a continual process, whether they’re done within the bankruptcy reorganisation context or afterwards. It is a way of doing business.”
The airline will build up its Washington Dulles hub starting this winter and has committed to increasing traffic through its Denver hub. The Denver build-up comes as part of an agreement between the airline and the city to settle a long-running dispute over a baggage-handling system that plagued the 11-year-old airport from its first months of service.
United’s build-up will come just as Southwest Airlines begins a Denver service. United is using Dulles for its response to increased East Coast competition from JetBlue and AirTran Airways.
Tilton says it will place a lot of emphasis on its “ps” (premium service) domestic transcontinental offering, which uses upgraded Boeing 757s in a three-class configuration with an enhanced economy product.
“It’s profitable in the aggregate and has shown that a differentiated service can outlast the price-driven competition that had saturated the cross-country markets at the time ps was conceived,” says Tilton.
United’s chief also stresses that the carrier remains committed to its low-fares Ted product and intends to expand Ted’s Caribbean and Latin offerings.
“Some people haven’t understood Ted,” says Tilton. “It is part of the portfolio of choices that we can offer the customer. The business executive will see several thousand dollars for a lie-flat bed on a ps transcontinental flight on business as a good investment, just as they’ll see a flight on Ted for several hundred dollars to take the family on vacation as the right product at the right price.”
Tilton says Ted is the airline’s experimental laboratory and concepts that work there can migrate to the airline as a whole. ■
Source: Airline Business
