United Airlines is following through on a network strategy that the company laid out a year ago – placing an emphasis on domestic operations to close margin gaps with its competitors. Part of that strategy entailed an uncomfortable hike in the airline’s domestic capacity, which spooked markets.
The airline has added several small markets from its hubs in 2017 in order to maximise levels of higher-yielding connecting passengers, and plans a new push in 1H2018. On those routes United faces a mix of competitors that, in some cases, are operating larger gauge aircraft in a dual class configuration, which could create a product disadvantage for United as it works to gain traction in those markets.
Overall, United still faces an uphill climb in regaining investor confidence, since its ambitious margin goals have seemed to fade throughout 2017 as short term metrics have continued to move in the wrong direction.
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