NEWARK -- United has placed an order for 270 single-aisle mainline aircraft earlier this week, which will be delivered by 2026. This is a move that will allow it to expand its premium product offerings for domestic travel.United will have increased its domestic first and economy class seats by 75% when its fleet renewal is completed. This compares with the 2019 levels. United is hoping that business travelers will be more impressed by the addition of premium seats.Despite this, expansion is fraught with risks, as business travel remains a victim to the Covid-19 pandemic.Bob Mann, an analyst in the airline industry at R.W. Mann & Co. stated that United can find customers not only through market recovery, but also by stealing from its competitors.Mann stated, "I believe they are targeting Delta within the premium space."United is ready to compete again for high-end luxury traveler. Analyst/blogger Jason RabinowitzDuring an event at Nasdaq's stock exchange, Scott Kirby, United CEO, stated that product differentiation is indeed a key focus of the fleet upgrade.United will include seatback screens in every domestic mainline seatback, along with high-speed Wi-Fi, by 2025. The entertainment systems from Panasonic have 2,800 hours worth of content and Bluetooth connectivity. Viasat will provide high-speed WiFi. Each seat will have power outlets.Analyst Jason Rabinowitz, a blogger and industry analyst, sees United’s cabin improvement strategy also as an attack against Delta. Delta has worked for the past decade to be the best U.S. carrier. American has taken the seatback screens out of most of its single-aisle aircraft, while Delta has them on almost all its domestic mainline aircraft.Rabinowitz stated that United is ready to compete again for high-end premium travelers. They believe that passengers will enjoy everything onboard more if there are seatback entertainment screens.United's announcement of consistent, fully connected interior configurations for all narrowbody planes by 2020 represents the most significant initiative United has taken to distinguish itself from its competitors on product.Kirby stated, "The bet that we're making today doesn't concern business travel returning." "Business travel will return. We are betting that customers care about our product.United's largest ever order for aircraft includes 150 Boeing 737 Max 10s and 50 smaller 737 Max 8s. There are also 70 Airbus A321neos. Deliveries are scheduled for 2023-2026. These orders combined with the United order book prior to expansion means that the carrier expects to receive nearly 500 narrowbodies in 2026.Hub service with more seatsUnited will also retire 300 regional and narrowbody planes over the same time period. This includes 200 of the 300 single-cabin 50-seat aircraft that it currently operates in its United Express regional network. It will result in an airline with 30% more seats available in its U.S. network after the fleet renewal.Executives from the company stressed the many purposes of fleet expansion and renewal. They argued that United's seven hubs -- Newark and Washington Dulles and Chicago O'Hare and Houston Bush Intercontinental, Los Angeles and San Francisco, San Francisco, Denver, and Chicago O'Hare -- have the best combination cities of major U.S. carriers to capture premium passenger demand.Andrew Nocella, chief commercial officer, stated that United is not using these hubs well by flying too many 50-seat planes and not having strong enough connecting schedules.Nocella stated that United had an average of just 104 seats per North American departure as of July 2019. This compares to a combined average average of 114 for Delta or American. Only 10% of United's connecting bank (flight clusters airlines that schedule flights in and out at hubs multiple times per day to facilitate efficient connections), have 70 departures or more at its mid-continent hubs of Chicago, Houston, and Denver. This is the minimum Nocella believes is required to achieve critical mass.United will increase its fleet size and add 100 flights per hour to each airport over the next few years. This will allow it to connect 65% of connecting banks with 70 departures or more. United also estimates that 33% of domestic departures are made on 50-seat, one-class planes. However, that number will fall to 10% after the fleet renewal. United will then have stopped flying 50-seat planes between large cities. The remaining 50-seat single-class aircraft will only be used on the appropriate routes, Nocella stated. This includes between Denver and Cody, Wyoming, in the Mountain West.The company estimates that United will be able to reduce its costs per seat mile by 8 percent if it has a fleet of larger planes, excluding fuel.
