“Our industry is changing and acting like real businesses to return value for shareholders.”
It’s a remarkable statement when you think about it. But this is how Jim Compton, vice chairman of United Airlines, led off at the World Routes conference this week in Chicago.
The US airline industry for years seemed to be operated more for market share than for profit. At least this is how many chief executive officers often characterized things until after 9/11, when US carriers wrenched through the aftermath of that horrible day. Even so, CEOs often complained there was too much capacity to allow for profitable operations. It wasn’t until after the global financial collapse of 2008 that US airlines began to consolidate, reduce flights and take capacity out of the system. Profits began to return.
Hence Compton’s declaration. But today’s United, the result of the merger between Continental and United airlines and managed by the Continental executives (even though Compton is a UAL holdover), has struggled through its merger.
“United faces challenges,” Compton said. “We’re not yet ‘there,’ and we’re not where we want to be. We’re committed to improving customer experience at every level.”
Compton said UAL is spending more than $1bn to improve the product, ground experience (such as kiosk check-in), adding ground charging stations for computers, iPads and cell phones, upgrading first class meal service, adding WiFi throughout the mainline fleet and adding lie-flat seats on its international airplanes. WiFi will be on all mainline aircraft by the end of next year, Compton said.
“Now more than ever technology plays a role for passenger experience,” he said.
Compton also said that while airlines can compete on clubs, flights, price and even airplanes, “loyalty has to be earned.”
Although airlines have removed capacity, Compton said United is adding capacity as it retires 50-passenger jets in favor of larger Embraer E-175 jets. Seasonal flying will be up 25% next July vs 2012 as United uses larger airplanes and optimizes its schedule.
United is simultaneously reducing the number of regional partners service its hubs, reducing complexity.