United Airlines wants to get bigger. The carrier has plans to expand its fleet in the coming years but it also wants to get more seats in the sky per flight. And it wants to accomplish that without adding more seats to the existing aircraft. It is a somewhat complicated challenge, but if things go right United expects 3% more seats per departure on average a year from now.
In today’s earnings call President Scott Kirby admitted “United is seven years to eight years behind our large competitors on gauge growth with approximately 13% fewer seats per domestic departure compared to Delta.” That is a significant gap to fill, especially with the company’s focus on keeping costs flat.
Looking at the United’s current operations the average seat count per departure is just over 106 (based on OAG filing for 1 June 2020). That far out the schedule will have some placeholders in it, but the number is reasonably close to historical trends as well. Getting that up to 110 might not seem like too much of a challenge, but with more than 5,000 daily departures (5,327 in the data analyzed) getting to the desired increase requires adding 20,000 daily seats flying the same number of departures. With the fleet growth anticipated the number of additional seats required roughly doubles.
We are not driving gauge growth by densifying our existing aircraft, but by adding new aircraft deliveries that are larger gauge.
The current fleet plan for 2020 anticipates 65 new aircraft joining the fleet. Seventeen of these are wide-body planes which help boost seat count per departure but which also generally average around two flights per day because they fly further. They only get a third to a half of the additional seats in the sky. The rest have to come from single-aisle increases.
United expects to put twenty new Embraer E175s into its regional fleet, bringing the average gauge down a bit. And those planes typically fly more segments per day. The Embraer growth is predicated on converting more CRJ700s to CRJ550s to remain compliant with scope clause requirements so that also brings the average down somewhat.
The rest of the growth is pinned on getting the 737 MAX back into service.
United expects 28 new 737 MAX deliveries in 2020. Plus the grounded fleet will return to service. Those planes seat 179 helping bring the average up as they rejoin the operation (only 21 MAX segments are currently filed for June 2020; that number will increase significantly as the planes resume operation).
Just switching some of the 500 planes currently filed as 738 placeholders to the 7M9 will help. The 8% increase in seats between those configurations helps bring the average up. But the real win appears to depend on the overall fleet growth and pushing more and larger planes into service. Even just adding more of the used A319s and 737-700s, small as they are, helps tick the average up.
And with the average gauge hovering right above the 100-seat mark – an size that could see a new type introduced to United’s fleet – why wouldn’t the carrier make that move? It seems that averages still are driving the numbers on that front. The average trip costs on the new type would be too high relative to the regional jets, mostly due to crew expenses. Sure, they’d help United quickly close that gauge gap that Kirby identified. But, for now, that option is not a viable consideration.
Oh, and Delta is also increasing its average gauge, so United playing it slow on this front won’t help it close that gap.