United Airlines knows it has to rebuild and restructure its route network in the post-crisis world. One of the airline’s biggest goals, as domestic flying comes back stronger than international flying, is to increase its systemwide gauge. The airline has lagged a bit in terms of its domestic network, so the carrier wants to increase capacity and increase its usage of the premium CRJ550.
United’s gauge goals
One of the priorities for United is to increase its gauge. Andrew Nocella, Chief Commercial Officer at United, stated the following on the airline’s fourth-quarter earnings call:
“We also plan to get back on track with enhancing connectivity in our mid-con hubs and push aircraft gauge up as we retire our single-class 50-seat jets. While domestic margins may be under more pressure in the next cycle relative to the last, we intend to offset that pressure with changes to gauge and connectivity, a measurement we trail our key competitors on by a substantial margin.”
Gauge increases make sense for United out of its mid-continent hubs. Mr. Nocella specifically named Denver and Houston as two mid-continent hubs that outperformed other hubs in the fourth quarter, which does not come as a surprise.
In the midst of the ongoing crisis, most of United’s traffic is domestic. And, for domestic connections, Denver and Houston are important hubs for the carrier. At both of these hubs, United is the only full-service carrier with a massive hub operation, and they are ideally placed for East-West and some North-South connections. Chicago is another United hub that works well.
United Airlines has a large fleet of over 800 planes. However, in terms of seating configuration, United’s domestic fleet is skewed more toward smaller aircraft. This includes the Airbus A319, A320, Boeing 737-700, and 737-800. The airline also has Boeing 737 MAX planes that are expected to resume commercial flying in February.
Increasing CRJ550 usage
On the regional side, United Airlines is also skewed more toward small regional jets such as the CRJ200 and ERJ145. However, it has been moving away from those in recent years with plans to take on more Embraer E175 aircraft, and taking some CRJ700s and turning them into CRJ550s.
Adding more CRJ550s will not necessarily increase the airline’s gauge. Still, it will offer the airline, which is limited by its contract with pilots as to the number of larger regional jets it can fly, a chance to put 50-seaters in markets that require a premium cabin. The CRJ200s and ERJ145s did not offer a premium cabin onboard, making United less competitive in certain markets, such as Fayetteville/Bentonville in Arkansas, where retail giant Walmart is headquartered.
Mr. Nocella highlighted increasing CRJ550 use as one of the airline’s investment goals. The others included continuing Polaris cabin retrofits to standardize the airline’s products, enhance digital innovations, increase overhead bin space, and more.
Strengthening a domestic network
Ultimately, United Airlines has lagged behind its competitors when it comes to its domestic network. The airline has the most international exposure of any major US airline, and it is bullish on the return of international flying. However, it does know that it will need to rely on its domestic network to help make that return profitable sooner rather than later.
Structurally, United Airlines has three excellent domestic mid-continent hubs that work well for domestic connections and continue to outperform other system hubs.
ts coastal hubs in Newark, Dulles, San Francisco, and Los Angeles are better suited for providing passenger connections to the airline’s international long-haul operations. These airports will see some increased gauge to the scale of international growth but expect mid-continent hubs to increase gauge a little quicker.
The one wrench in United’s planning is the 737 MAX 10. The carrier knows that it will be an important plane for upgauging domestic flights, but that plane is not expected to enter United’s fleet until 2023