United Airlines 777-222(ER) (30215/259) N209UA arrives at Los Angeles International Airport (LAX/KLAX) on January 20/2013.
(Photo by Michael Carter)
United Airlines intends to supersize its rides at O'Hare and create multiple rush hours during the day — moves it says will benefit passengers and make the airline more money at the same time.
The transition to flying fewer but larger aircraft out of Chicago's biggest airport, a strategy called upgauging, has already begun. Meanwhile, changing United's flight schedule to group departures during the day, called rebanking, will begin in earnest with March flights.
"We think it's good for everybody involved," said Brian Znotins, United vice president of network. "Rebanking and upgauging really go hand in hand."
For United's customers, there are pros and cons to the moves, which are emerging trends not only for United but also for American Airlines at O'Hare and other airlines nationwide.
While the changes are largely behind the scenes, they could affect everything from fares, flight choices and connections to airport crowds, on-time departures and congestion on the tarmac and in the airspace over Chicago.
Perhaps the most obvious benefit for Chicago passengers will be flying newer, larger aircraft. And for fliers connecting at O'Hare, it means shorter connections and less downtime between flights. For Chicago-based United, the changes could mean higher revenue and lower costs, although officials declined to quantify what the changes at O'Hare would mean for the airline's bottom line.
The greatest peril for United might be its on-time departure rate, as the airline crams flights into tighter time windows at O'Hare, which in recent months has had the worst on-time departure rates in the country among large airports. During some months, one-third of flights leave late, on average.
United itself already has poor on-time rates compared with competitors, ranking ninth among 12 airlines that report to the U.S. Department of Transportation, according to the most recent report.
"I hope this does not lead to unforeseen delays, especially in light of American's decision to also tighten its O'Hare hub banks," said Henry Harteveldt, a travel industry analyst with Atmosphere Research Group. He said he is concerned about a "potential increase in congestion on United's tarmacs, and the taxiways and runways its aircraft use during peak hub periods."
Znotins contends cutting the number of planes United flies out of O'Hare more than compensates for scheduling flights closer to one another. "I think this actually helps our on-time performance," he said.
With the moves, United will be adding to its service overall at O'Hare, unusual in an era when carriers are trying to hold the line on additional capacity. While the number of United departures at O'Hare will drop 8 percent next year, larger planes will carry up to 10 percent more seats during some months, according to Jim Compton, United's chief revenue officer.
"Our actual peak capacity in Chicago will be up as a result of this exercise even though departures will be down," Znotins said.
More seats flying out of O'Hare "may translate into better access to some of United's less expensive fares as well as the potential of additional fare promotions, depending on market conditions," Harteveldt said.
However, Znotins said that the changes were not about fares.
"There's no way to make any assumptions about fares," he said. "It's about building better and more appealing connections for our passengers and offering a better product."
United's acquisition of newer, larger 76-seat Embraer 175 jets will mean the airline, via its United Express partners, can replace 10 or 11 of its older, fuel-inefficient 50-seaters with about seven new ones.
"For each 50-seat aircraft an E175 is replacing, we expect to generate over $1 million of annual improved profitability," Compton said in an earnings call last month.
United already flies 18 E175's from O'Hare. By next summer, the airline will be using about 50, Znotins said.
For passengers, that means wider seats, wider aisles, bigger overhead bins, onboard Wi-Fi and inclusion of first-class. The new planes beat the old ones in customer satisfaction, Znotins said.
In addition, United will be using more narrow-body mainline aircraft, such as the Boeing 737 that holds in the neighborhood of 150 passengers.
If upgauging is such a great idea, why didn't United move to larger planes earlier?
The airline couldn't use such planes because of restrictions in its agreement with the pilots union, restrictions that were loosened when it sealed a new deal with pilots after its merger with Continental. After that, it took time to get the new planes.
"Planes don't show up right away. We've just starting to induct them into the fleet over the course of the last few months," Znotins said.
For United, fewer departures means lower costs, cutting labor and fuel expenses. Again, Znotins declined to place a dollar figure on the cost savings of upgauging.
Znotins said fewer planes could help United's flights be on time more often during the winter with fewer planes to de-ice, for example. Meanwhile, fewer aircraft also could help ease congestion in the airspace around O'Hare.
United today runs 14 loosely defined banks of flights at O'Hare, but somewhat spread out through the day. With rebanking, it has taken those flights and consolidated them into 10 banks that are directional, with morning flights arriving from the east, reloading at O'Hare and heading to a destination further west. Then the route will reverse.
"That will repeat throughout the day," Znotins said. "When we talk about repeaking Chicago ... we're concentrating those banks so that connecting passengers have better connections."
For example, it might mean more one-hour layovers but fewer that last three hours.
Shorter connecting times could create a competitive advantage and an opportunity to charge more for a shorter flight. Compton told stock analysts last month the move "drives efficiency-related (profit) margin improvement."
United's flight peaking in March — along with American Airlines' same move — is likely to affect O'Hare Airport itself.
United will create peak periods, every hour to 90 minutes, meaning its gates during the day will be either bustling or desolate.
"Basically, you wipe the gate slate clean," Znotins said. "It's like starting a new day every 90 minutes."
Grouped flights can create problems at the airport, with periods of jammed TSA security lines and hordes of passengers waiting at departure gates, not to mention longer lines at restaurants and retail stores in the airport.
"By tightening its hub banks, we may see some increased congestion in the terminal at check-in, security, gates, the various United Clubs and airport concessions," Harteveldt said.
Znotins said the rebanking strategy has worked in Houston and Denver.
"Having that day reset every bank does provide operational benefits, and it does put a little bit of pressure on the airport by having the peaks there all at one time. But it's no more pressure than we see at certain times of day in the existing schedule we have at O'Hare now," he said.
(Gregory Karp - Chicago Tribune)
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