United they stand

Major United States (US) carrier, United, throws light on the $400-million worth of losses in the first quarter of this year and its long-term plan to save $2 billion by 2017. Jake Cefolia who joined the group earlier this year as vice-president, Atlantic and Pacific sales, speaks to TTN.

Is the United-Continental Airlines merger a success?

It is nearly four years since the merger of United and Continental Airlines and we have accomplished a tremendous amount since then and I think that the promise of the merger is largely being realised.

What we looked at before the merger is that we had two incredibly compelling networks and they were complementary with United historically being strong in the Pacific and Atlantic regions and Continental historically being strong in Southern US, Latin America and New York City, so when we put those two together, we nicely fit the gaps that each other had and ended up with an enormously valuable combined network, doing better in both the corporate and leisure segment. So now we are appealing to a global audience because we are a global airline with a global footprint.

We think it’s going well.

For the first quarter of 2014, total revenue was $8.7 billion, a decrease of 0.3 percent year-over-year. Can you tell us what this was attributed to?

Of course, this was disappointing to the extent that we lost $400 million plus, but $200 million of that we attribute to the bad weather. We had historically bad weather in the US in the first quarter of this year. With our hubs in Chicago, Cleveland and New York, we were disproportionately affected by the bad weather verses other airlines. We were right in the path of the snowbelt, so obviously had no choice but to cancel flights.

Obviously, these are disappointing results but we have a plan that we are going to stay the course on and that we feel that is the right strategic plan for us. We hope to achieve $2 billion worth of cost savings between now and 2017, with lots of efficiency initiatives and new revenue-generating opportunities.

One example of this is our Economy Plus. We can sell Economy Plus to customers that want more leg room; it really is a great service for this part of the world. We are going to extend this economy plus sales to all GDS distribution systems by end of this year so our travel agencies will be able to sell this service on our behalf. Currently we only sell Economy Plus through United.com.

So with these initiatives, the rest of the year is looking strong. We feel like we have the right long- term plan in place and we all feel a sense of urgency executing them as quickly as we possibly can to produce better results.

Are your connections with the Middle East going to expand anytime soon?

We are quite pleased with our tradition in the Middle East. We don’t just go to one, two or three gateway cities but we have a network of 300 cities beyond our gateway cities that we can get Middle Eastern travellers to.

What’s next for United?

One of the things we have been extensively focused on is just enhancing the customer service.

One of those enhancements is going to be wi-fi on board our aircraft. We are well on our way to have our entire mainline fleet equipped with satellite-based wi-fi. Why I make the distinction of satellite-based wi-fi is that it gives you coverage over the water, it also provides a higher level of bandwidth, so connections speeds are faster and the total data capacity of the connection is faster than a ground-based system, so more people can connect at a faster speed on board.

We are done with deploying this on our domestic Airbus fleet, all our 747 fleet except for one are done, our first 777, which we fly to the Middle East, has been completed. We will be 75 per cent done with our mainline fleet by the end of this year and completely done next year.

This is actually quite a big deal as we know once we have this across our entire fleet, the consistency of the expectation that the customer knows he is going to have this access, we think that will be a distractive advantage for us.

What segment is growing the fastest?

This is hard to say, I think a lot of it depends on seasonality as well as other factors. We do very well both in the leisure and the corporate markets here in the Middle East.

We initially built our Middle East business on the corporate market with some of the strong industries like oil and energy, and defence. We have done well with many other industries that either sell to the Middle East or are building a presence in the region. We have found that there are a lot of leisure possibilities as well so that is always a good way to fill in load factor or to fill in any seasonal dips in corporate demand.

On the leisure side, however, we are finding some growing niche markets such as medical tourism and student travel. Medical tourism generates high-end business and even the student travel, although you would think is low yield, but from this part of the world it actually is quite high. We’re looking to tap into these niche markets.