Commentary

United Luring Well-Heeled To Fly Its First- And Business-Class Skies

United is going where the unlimited expense accounts are. The Chicago-based airline announced yesterday that it's adding more than 1,600 business and first-class seats to its routes by reconfiguring more than 250 of its aircraft. It is also adding 50 Bombardier jets with first-class seats to serve short-hop fliers  by the end of the year.

“Andrew Nocella, the airline’s chief commercial officer, said executives decided that United has ‘a shortage of business-class seats in the premium markets, and this fixed that problem,’” writes the AP’s David Koenig.

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“Henry Harteveldt, an airline analyst at Atmosphere Research, said United’s announcement was a bold challenge to Delta Air Lines, the acknowledged front-runner among the nation’s top three carriers for its on-time performance and strong profit margins,” he adds.

“This is big news. They are taking direct aim at Delta and its strength with premium travelers,” Harteveldt tells Keonig.

“With the changes, United will be able to offer first-class seating to someone flying from Bentonville -- headquarters of Walmart -- to Hong Kong after connecting to an international flight at O’Hare, Nocella said. Until now, that lack of an end-to-end first-class seat availability has put United at a competitive disadvantage, he said,” reports Bob Goetz for the Chicago Tribune.

“Perhaps the most dramatic change will be seen on United’s fleet of 767s, which currently have 214 seats. After the reconfiguration, 21 of the Boeing 767-300ER will have 167 seats, including 46 premium cabin seats. More than two-thirds of the cabin will be devoted to those premium seats, Nocella said,” Goetz continues.

For shorter hops, “subject to government certification, United said, it should be introducing the new 50-passenger Bombardier CRJ 550 aircraft on regional routes (mostly out of Chicago) later this year, with a total of 50 on order. United said the new plane will be ‘the only 50-seat aircraft in the world to offer true first-class seating.’ In United’s version, the CRJ 550 will have 10 seats in United First, 20 in Economy Plus and 20 in regular economy,” Chris McGinnis writes for SF Gate.

“Nocella says that upgrade is a critical part of United rebuilding its service in small markets. That strategy helped United post strong passenger revenue results last year, a key factor behind the company's shares outpacing the stock returns of its biggest competitors,” CNBC’s Phil LeBeau writes.

The CRJ 550 “was developed specifically for United. It is expected to join the fleet of United Express affiliate GoJet by year’s end. United would be the launch customer of the aircraft,” reports Ben Mutzabaugh for USA Today. That model “will feature perks not often associated with 50-seat regional jets, almost universally disliked by frequent fliers.”

For example, there will be a self-serve beverage and snack station for first-class customers, in-flight Wi-Fi and four storage closets to help accommodate flyers’ roll-aboard bags, “virtually eliminating the need to gate-check luggage,” Nocella said.

“Airlines are betting that many of their customers are willing to spend more for a more pleasant trip. They have created stepped-up offerings that come with extras like free drinks and heartier meals, which are unavailable to passengers who pay standard coach fare. Even the order in which passengers board a plane can be part of the sales pitch,” observe Alison Sider and Andrew Tangel for the Wall Street Journal.

“Delta Air Lines Inc. has said about a third of its revenue now comes from premium products -- double the share in 2011. The airline has been devoting more space on its planes to these pricier passengers: 30% of its seats were in the premium category last year, up from 9% in 2011. American Airlines Group Inc. now has premium-economy seating, which generally costs twice as much as a coach fare but still less than first or business class, on 109 aircraft of a planned 124,” they add.

Indeed, as “Jo” points out on the Simple Flying blog, United CEO Oscar Munoz previously recognized that business class is the way to go, saying: “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.”

And above it, too, it seems.

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