United Airlines Part 1: New management declares ambitions to usher in a new competitive era
For years United Airlines has operated at a competitive disadvantage to its large US network peers. The challenges that United never seemed to overcome were largely self-inflicted, and ranged from widespread employee discontent to consistent revenue shortfalls.
Now United finally appears to be charting a course to level the competitive playing field with its large global US network competitors, to close the long-standing revenue gap it has held with its rivals. The elements of United’s plan to shore up revenues include bolstering connections at its hubs, improved revenue management, and product segmentation that entails a new basic economy fare structure whose restrictions are more stringent than those of its peers.
United’s revenue transformation will not occur overnight, but for the first time since its 2010 merger with Continental the company seems laser-focused on shrinking the competitive challenges that have hindered its performance. It projects billions in improvement – to pre-tax profits by 2020 – as a result of its doubling down on efforts to shore up revenue. Obviously the measure of United’s success lies in its execution and its ability to navigate competitive responses to its revenue-generating strategies.
This is part one of a two part series examining United’s strategies to compete more effectively with its peers on revenue and costs.
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