United ups its ante in effort to woo high-fare passengers
United Airlines plans to retrofit many planes and add premium seats in a bid to win over high-fare passengers. It’s part of an industry trend to give more space and better service to customers who drive revenue. United’s chief commercial officer says the airline decided it didn’t have enough business-class seats on the most lucrative routes, “and this fixed that problem.”
United, Delta and American are engaged in an airlines arms race to grab the most affluent customers. Highly profitable after losing billions in the 2000s, they are plowing money into new planes, fancy seats with more legroom, airport lounges and other perks, many of which are aimed squarely at wellheeled travelers.
United raised the stakes Wednesday when it announced that it will retrofit more than 100 planes as part of a move to add 1,600 premium seats on nearly 250 jets.
The airline also plans to start using a new 50-seat jet with mostly premium seats on some routes popular with business travelers.
The decision is part of a larger industry trend to give more space and better service to high-paying passengers who account for a disproportionate share of airline revenue.
Andrew Nocella, United’s chief commercial officer, said executives decided the airline has “a shortage of business-class seats into the premium markets, and this fixed that problem.”
“It helps our customers and it helps our bottom line,” he said.
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.
“This is big news,” he said. “They are taking direct aim at Delta and its strength with premium travelers.”
Delta executives say they have increased premium seating from 9 percent to nearly 30 percent since 2011, and they’re selling more than 60 percent of those seats, up from 13 percent — not just giving them away in the form of upgrades. They say more corporate accounts are letting employees buy up to premium travel.
As a result, one-third of Delta’s revenue comes from premium services and less than half comes from economy seating, down from nearly twothirds in 2011, senior vice president of pricing Eric Phillips said in December.
American has added “premium economy” seats — often double the price of regular economy but less than business class — on many planes used for international flights.
Nocella dismissed the idea that sharply reducing the number of economy seats will result in higher fares for budget-conscious customers. He said the airline could add flights across the Atlantic to maintain the supply of economy seats, and vowed United would not surrender any group of customers to rival carriers.
Chicago-based United is the nation’s third-biggest airline by revenue, trailing American and Delta.