How long until United drop one of their Australian flights?

[NickN]

I was reading that United managed a very small profit last quarter however load factor continued to fall and they have advised they will decrease International capacity by a further 7%.

How long will it be before they either kill one of the B744 services or downgrade to a 777 variant on at least one of the routes?

[Ellis Taylor]

It has been interesting that UA have been the first to trash their yields by trying to undercut everybody else on the route.

I think we'll see them drop one of their services before they downgrade to a 772ER because, as I understand it, the aircraft would have to be payload limited to make it to SYD. I think Delta and V Australia are hoping to push UA into a corner where they may decide to drop their LA flights and instead pass more pax through SFO, where UA has a decent sized hub. Having said that, I think that UA will be holding out for a while, probably more on principle than profit.

[NickN]

Here is a story on MH that might interest you.

Malaysia Airlines (MAS) posted a 876 million ringgit ($250 million) net profit in the second fiscal quarter due to fuel hedging profits.

It actually made an operating loss of 421 million ringgit for the three months ending 30 June but a 1.38 billion ringgit gain from fuel hedging contracts pushed it into the black, MAS says to the Malaysian stock exchange.

This meant it made a net profit of 876 million ringgit compared a 62 million ringgit net profit for the corresponding period last year, it says.

MAS' operating revenue in the period fell 32% to 2.5 billion ringgit from 3.7 billion ringgit.

This is below operating expenses which came in at 3.0 billion ringgit, down 19% year-on-year from 3.7 billion ringgit.

"The group recorded an operating loss of 421 million ringgit for the second quarter ended 30 June 2009 mainly due to lower operating revenue in line with the declining trend in global travel and cargo movements resulting from the current economic downturn," it says.

Airline operating revenue fell 52% to 2.3 billion ringgit from 4.8 billion ringgit and cargo operating revenue fell 49% to 380 million ringgit from 739 million ringgit, it adds.

MAS says: "The outlook for the third quarter of 2009 is expected to remain soft."

"While there are some signs of improving economic climate, the airline industry is still faced with weak demand and downward pressure on yields. The operating environment remains volatile with the H1N1 pandemic impacting travellers' confidence."

It says: "To overcome the soft demand and adverse competitive environment, MAS continues to fast track the implementation of its

business transformation plan."

MAS also says it "has aggressively pushed sales by offering various fare promotions."

The airline's CEO, Idris Jala, says: "We are managing well in this crisis."

"While the operating environment remains tough, the load factors have increased due to our aggressive strategies to boost sales." "On the domestic front, more passengers are travelling with us [and] on the international routes, we have performed better than the industry average as we are less dependent on the front end".

He says: "We expect the economy to recover next year and are looking forward to take delivery of our new Boeing 737-800s in 2010 to capture the expected growth."

Jala says: "We will increase our frequencies into key ASEAN capitals, South Asia, China and offer more flights to certain points in Australia."

"In the Middle East, we are looking at expanding our services into at least three new destinations," he adds.

[Andrew M]

I have thought for years that UA would pull out of Australia, especially after the closure of the RCC in SYD. Yet the MEL one still operates.....

With the pressures from the A380, VA and DL I am even more surprised they are still flying down here.

Loads are still very good from what I am hearing.

[Mike W]

Loads are still very good from what I am hearing.

I suspect it's the connections that are making the difference. I've spoken with a few Americans recently who admit UA isn't the best but they proclaim it as "Their Airline" and will continue to use it

[Andrew P]

What I would like to know the breakdown of American using the 4 services and the split between the 4 (i.e. tickets sold in the USA)

UA & Delta/Northwest have a natural American profile, QF has built up a US profile over years, but I expect 99.8% of Americans have never heard of V Australia.

This must hurt V Australia ticket sales.

Banjo

[NickN]

For some reasons Americans have a fascination and love for Qantas.

One of my family members just booked a flight with UA, Sydney-LA-Denver return for AU$1100 return in Premium Economy. I almost choked when I heard how cheap that was.

[Adam G]

I suspect it's the connections that are making the difference. I've spoken with a few Americans recently who admit UA isn't the best but they proclaim it as "Their Airline" and will continue to use it

It's also frequent flyer miles - american's can be very loyal to particular airlines even if they aren't great to get or redeem miles.

[Andrew M]

One of my family members just booked a flight with UA, Sydney-LA-Denver return for AU$1100 return in Premium Economy.

If you call UA's Y+ much better than standard Y then yes it is cheap

Nothing more than a bit of legroom, I would rather VA or QF A380

[NickN]

I don't have any knowledge of what UA's Premium Economy product is like but hey is you get a little more legroom for that price then so be it.

[Gerald A]

I am not technically mineded when it comes to working out a flight route by Speed and ETOPS Time Setting, so maybe someone can put me straight, could this be done

I cant understand why United have never extended one of there HNL B772 flights to SYD. I worked out that a B772 could have the range to do the flight 4403nm with 832nm in reserve.

LAX - SYD B772ER range 6507nm with 1193nm in reserve. can it be done. If it can, why use B744s.

Links for working it out
Boeing B772 http://www.boeing.com/commercial/777family/pf/pf_200product.html
Great Circle Mapper http://gc.kls2.com/

[Andrew McLaughlin]

I cant understand why United have never extended one of there HNL B772 flights to SYD...

Probably because they'd be flying empty between HNL and SYD. Everyone on their flights to HNL want to go to HNL. There would be few pax wanting to fly HNL-SYD, and those that do are already catered for by Hawaiian and Qantas.

I interviewed UA's local CEO, Alison Espley a couple of months ago (July issue), and she said the airline is holding its own on the Pacific and there are no plans to change services or equipment.

[NickN]

I interviewed UA's local CEO, Alison Espley a couple of months ago (July issue), and she said the airline is holding its own on the Pacific and there are no plans to change services or equipment.

If that's the case it'd be good to know who isn't holding their own. If V Australia is increasing their load factor and Delta is confident enough to step in then does that mean Qantas is suffering the most by default or are passenger numbers improving enough on the route that they are all making it by.

[Rhys Xanthis]

Qantas is suffering the most

I think the old saying "If you've got more to start with, you've just got more to lose" applies here.

However, saying that, QF would be in an ok position if a price war started...in a far better position than VA at least (I feel bad for VA, but at the same time I don't want to see QF go down too much on the pacific either....)

[Andrew McLaughlin]

V Australia only has a few flights a week so far and Delta is five times per week, so neither would be eating into UA or QF's markets too much. Plus, the market is not a finite size - the new competition and the GFC has meant lower airfares which in turn means new markets have been opened up to passengers who may not previously have been able to afford to fly.

A personal experience I can relate - I went to the US in early July on a work trip, and arranged for my family to join me in LA at the end of that trip for 10 days in the US. For four of them, it cost me about $4500 return on Delta (and would've been cheaper on VA had I been quick enough), about half the usual fare. There's no way we could have afforded to do it if there weren't heavy discounts on the route.

[Adam G]

V Australia only has a few flights a week so far and Delta is five times per week

V is daily from SYD

[Gerald A]

Andrew, Delta is daily.

[Andrew M]

Delta is actually 6 times a week between Sep 6 and Dec 6 due to "maintenance" :rolleyes:

[Lukas M]

I have lost count how many times UA have come out and said they are willing to accept losses, we have good feeds, the route is their investment etc, we are not leaving the route...

Drop a flight? Mabye not. I think more along the lines of "temporary suspending" some flights, like this coming Feb, aka Dead season.

[D Chan]

I don't have any knowledge of what UA's Premium Economy product is like but hey is you get a little more legroom for that price then so be it.

exactly same as standard economy, the ONLY difference is the extra seatpitch ;)..

as for who's hurting, all airlines in the market are hurting. But the real losers out of the dramatic fall in ticket prices (and yield) are airlines that offer one-stop services to the US. With fares so cheap there is now very little incentive for travellers to do a one-stop unless they want to visit an extra destination with a stopover etc. Essentially the numbers I think would have dropped quite significantly.

UA will hang on for a number of reasons: 1) due to the amount of feeds they have, 2) mileage plus / frequent flyer program. Don't underestimate their network in the US which gives pax a lot of options and destinations - it also gives pax the option to fly with just one carrier all the way through from SYD or MEL to a point in the US. From memory around 60-70% of pax are americans or greencard holders. Pax might not necessarily enjoy the service but it is probably the most direct and easiest way home for some americans.
I am telling you it is easier for UA to fill a seat than VAustralia which I suspect would find the volume of feed traffic from other points in US a problem.

quite a large number of UA pax don't stop at LAX, meaning they are not just O-D traffic. They connect to other points in the states.

I think the inherent problem with UA operating the 777 to Australia is that it just won't compete payloadwise or as an equipment with Delta's 777-200LR. If they were to downgrade from a 744 then this begs the question whether the aircraft is capable of delivering the goods in comparison with Delta. I think UA, QF and DL can weather the storm. Remains to be seen how VA will last in the long term. I personally don't think VA will survive if they only focus on the US market, they have to fly somewhere else and explore options to ride through the storm which is why they are tossing up the ideas of BNE-HKG etc.