United Airlines expects to drive down development in operating expenses beginning next year by replacing smaller aircraft with larger ones, totally on domestic routes.
The company reported Oct. 15, Third-quarter cost for per available seat mile, excluding fuel and non-core expenses, elevated 2.1% year to 9.8 cents. The airline set a goal of flat CASM Two years ago, through 2020, and now expects the compounded 3-year growth rate for non-fuel unit costs to be just 0.3%, even with plans to raise worker compensation and invest in products to enhance the customer experience.
The cost-management plan is heavily dependent on getting better economies of scale, and the best way to do this is to drive more passengers through United’s hubs with gigantic planes, President Scott Kirby mentioned on United’s earnings call with analysts the next day.
United anticipates to have about 3% more seats available per flight by the end of 2020 and continue to swap in extensive plans in the middle of the next ten years, he added.
Larger planes will further mean more space for cargo customers.
United is scheduled to receive delivery of 65 more new aircraft next year, together with 28 Boeing 737 MAXs, 20 70-seat Embraer 175LLs, and 15 Boeing 787 twin-aisle planes. Wide-body planes generally are used on international routes; however, United does operate some 777s and 787s on domestic routes, akin to Newark, New Jersey, to Los Angeles.
The 737 MAX deliveries are contingent on the Federal Aviation Administration recertifying the planes for commercial service after Boeing completes software fixes to its flight control system to prevent faulty pilot overrides’ that led to two lethal crashes in the past year.
Next year’s up gauging will mostly take place within the last quarter, Chief Commercial Officer Andrew Nocella mentioned. United has hubs in Chicago, Denver, Houston, Newark, San Francisco, Los Angeles and Washington, D.C. When a wide-body plane is put on a domestic route, it helps airlines feed and pull, international cargo at their hubs.