MIAMI— New CEO of United Airlines Oscar Munoz penned an email last week to his frequent fliers, a message centrally themed around one primary idea: “We can do better.” Two weeks into his tenure, Munoz also appears interested in spreading these promised improvements abroad and uniting more of the globe. On Tuesday, United Airlines unveiled plans to fly seasonally to Xi’an, China from its San Francisco hub, pending approval from the Department of Transportation (DOT).
If approved, United would offer service to Xi’an Xianyang International Airport (XIY) from May to October, Air Transport World reports. Additionally, the airline intends to operate the flights with one of its Boeing 787 aircraft. United’s entrance to Xi’an, the capital city of the Shaanxi province, makes it the only US carrier to serve the airport, and marks the first trans-Pacific service at the facility from any airline.
Jim Compton, vice chairman and chief revenue officer at United, expressed excitement at the prospect of new trans-Pacific flights to Xi’an: “We are excited by the prospect of adding the first trans-Pacific Xi’an service to United’s global route network,” he said. “Assuming our application is approved, United customers will have unique nonstop flights to one of China’s most vibrant cities, with fast and easy connections to destinations throughout the Americas from our San Francisco hub.”
United schedules the service from San Francisco International Airport (SFO) to Xi’an to depart at 1:25 pm on Tuesdays, Thursdays, and Sundays, arriving at 5:30 pm the following day. The return flights will leave Xi’an at 10:30 am on Tuesdays, Thursdays, and Saturdays, landing in San Francisco at 7:35 am on the same days (local times).
Its decision to launch the routes with the Dreamliner carries some particular significance. The aircraft’s fuel-efficiency broadens the number of non-stop routes an airline can fly in a profitable manner, making a route like this one a perfect match. It would appear that United intends to capitalize on this efficiency, connecting a city pair that would have probably been economically unfeasible with more traditional jets. Especially if United can attract enough demand terminating in San Francisco, housing one of the most populous Asian-American communities in the United States, the route could very well turn a decent profit aided by the 787’s economics.
The announcement also reflects more broadly on United’s strong presence in the Chinese market. Of the three major legacy airlines, United tends to focus most heavily on the East Asian region in an international sense, with Delta more geared toward Europe and American tailored toward Latin America in general (even though both Delta and American have been ramping up service to China recently). United probably sees expanding in China as a move designed to bolster its already existing strengths. It also forcefully counters the surge in the region by Delta, which recently bought a stake in China Eastern Airlines.
United currently boasts the largest amount of capacity of any airline between the US and China. Traffic between the two countries is trending upward collectively over the past several years as well. But with Air China on its tail, United is growing aggressively to maintain its dominant position. With its bases already covered in the most prominent Chinese cities, expanding to smaller airports seems like the next logical step for United.
Furthermore, it probably envisions that direct service to secondary markets (defined by CAPA as those other than Beijing, Shanghai, and Guangzhou) functions as a strong competitive weapon to undercut Air China, which routes customers through another regional hub. The lure of a possibly shorter trip could attract some fliers to United’s product.
Investing in China also serves a long-term purpose strategically. While some routes from China have historically been burdened in terms of profitability, the International Air Transport Association predicts it will be the largest passenger market by 2030. With demand for air travel burgeoning in China, United risks being left behind if it fails to supplement its service to the country, especially in secondary markets. Jim Compton with United believes a large amount of “the demand growth out of China over the next five years is going to be from secondary cities,” for which the “787 is the perfect aircraft.”
With delivery of six more 787’s due by the end of the year, United’s announcement may serve as at least a partial precursor for how it will choose to deploy the aircraft once they enter the fleet. Watch for United to potentially color in its Chinese map a little more in the near future.