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United reinstates Newark – Buenos Aires, increases Bogota frequencies

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United reinstates Newark – Buenos Aires, increases Bogota frequencies

United reinstates Newark – Buenos Aires, increases Bogota frequencies
May 03
15:30 2017

MIAMI – United Airlines will resume nonstop service between Newark and Buenos Aires on October 28, 2017, following a 4-year hiatus since serving the Argentina market from one of its East coast hubs.  The airline canceled the Newark – Buenos Aires nonstop flight, operated on a Boeing 767-300ER, on September 29, 2013.

The Buenos Aires flight will be flown from Newark on a daily, year-round basis, once again on a 767-300ER, which will offer 30 seats in United Polaris business class, 49 seats in Economy Plus and 135 seats in United Economy. UA will also increase frequencies from 1 to 2 daily between Newark and Bogota during the peak summer period, lasting from June 8, 2018, to August 14, 2018.

United has a longstanding history in serving the New York – Buenos Aires market. It was one of the original routes that the legacy United Airlines – which once had a hub at New York JFK airport – operated by South America, along with Miami to Buenos Aires. After United gradually reduced its global gateway hub at New York JFK and shut down its Miami hub in the early 2000’s, the carrier concentrated on service to Buenos Aires from Washington Dulles (IAD).

After United merged with Continental, the route moved from Dulles to Newark in order to serve the New York – Argentina market, which is much larger than Washington to Argentina. However, United was also competing against American Airlines and Aerolineas Argentinas in the more saturated NYC – BUE sector. The Argentine market has also had a history of financial instability.

When United canceled Newark – Buenos Aires in September 2013, it maintained a daily service from its Houston Intercontinental hub. Houston remains United’s primary Latin American gateway hub with regularly scheduled flights, in addition to Buenos Aires, to Santiago, Chile; Rio de Janeiro and Sao Paulo, Brazil; Lima, Peru; Quito, Ecuador; Bogota, Colombia, and Caracas, Venezuela.

Newark is the second largest United gateway hub to South America, with nonstop service to Sao Paulo, Lima, and Bogota. Washington Dulles is third with a single service to Sao Paulo.

The resumption of Buenos Aires from Newark and expanded frequencies to Bogota are indicative of the following:

  • Newark Liberty airport is no longer bound by slot restrictions, enabling faster go-to-market capabilities without having to withdraw capacity or slots from an existing route.
  • Star Alliance is absent between New York and Buenos Aires, which is an important market where SkyTeam and OneWorld are present.
  • American is the most dominant U.S. carrier between New York and South America, with nonstop service to Buenos Aires, Rio de Janeiro, and Sao Paulo. Combined with LATAM, which is in the process of formulating a Joint Venture with American, the carrier offers service to Quito, Lima, and Santiago in addition to the other three.
  • Delta is experimenting in New York – South America with a new nonstop flight from JFK to Rio de Janeiro. It presently offers nonstop service to Sao Paulo and Buenos Aires (via SkyTeam partner Aerolineas Argentinas).
  • The two-year economic downturn in Latin America is showing early signs of recovery, particularly in Brazil, and United remarked that the region was a “bright spot” for it during its most recent earnings call.
  • Bogota is where Avianca Holdings is headquartered, which United has expressed interest in formulating a deeper partnership. United’s plans for creating a joint venture agreement with Avianca has been held up due to shareholder infighting.

United remarked that its Passenger Revenue per Available Seat Mile (PRASM) grew 7.3% in Latin America during Q4 2016 (according to CAPA) meaning that it is earning more unit revenue per each passenger flew on a single mile on its Latin American routes.

While United does not have a local partner in Argentina, it is placing its wager on formulating deeper partnerships with Star Alliance carriers Avianca, Avianca Brasil, and Copa to strengthen its brand presence. American has always been the leading carrier between North and South America, particularly with its very strong Miami gateway hub and secondary hubs in New York, Dallas/Ft. Worth and Los Angeles.

Delta has also been beefing up its presence in Latin America thanks to the new joint venture with AeroMexico, a minority ownership in Gol Linhas Aereas and an enhanced partnership with Aerolineas Argentinas.

For United, resuming Buenos Aires is a bold, but strategic move gave the strengthening Argentine market and United’s ambitions to add accretive capacity through the latter half of 2017.

Furthermore, with the delivery of new 787-8s and 787-9s, and future deliveries of 787-10s and Airbus A350-1000s coming in 2018, United has more, “slack” in its fleet to devote 2x 767-300ER airframes for a long-haul route like this one.

Even though this will be a more capital-intensive route for United, and one that will be subjected to larger competitive forces than say, a new secondary Chinese route from San Francisco, it is a wise investment. Furthermore, United has enriched its customer experience through the Polaris product, and Star Alliance has opened up brand new lounge at Ezeiza airport to provide a better ground experience for customers departing from Buenos Aires.

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2 Comments

  1. Vinay.vasuki@rcn.com
    Vinay.vasuki@rcn.com May 04, 08:58

    “Furthermore, United has enriched its customer experience through the Polaris product, and Star Alliance has opened up brand new lounge at Ezeiza airport to provide a better ground experience for customers departing from Buenos Aires.”—this is only true of those flying at the front of the bus. Enriched product experience is sadly lacking for those flying in cattle class.

  2. Vinay.vasuki@rcn.com
    Vinay.vasuki@rcn.com May 04, 09:00

    “United has enriched its customer experience through the Polaris product, and Star Alliance has opened up brand new lounge at Ezeiza airport to provide a better ground experience for customers departing from Buenos Aires.”—this is only true of those flying in the front of the bus. Enriched product experience is sadly lacking for those flying in cattle class.

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