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Market HOT Spots

Financial facts and competition comparisons

by Ruth Venning and Christine Cedusky 

Our Times, December 1999
In 1999, United seized the opportunity to expand in several key U.S. markets.  The company significantly expanded service at both Washington Dulles and Los Angeles airports.  A few other cities are catching United's eye as well.

Several years ago, the company earmarked Los Angeles as a star city - a city with potential to be a United hub. The company realized this goal in April when it officially designated Los Angeles as a hub.  United also added 30 new daily nonstop flights to business destinations and beefed up United Shuttle service.

With a strong presence in Chicago, Denver, San Francisco and Los Angeles, the company turned its attention to the U.S. East Coast, expanding service at Washington Dulles by 62 percent. In April and May, daily departures jumped from 73 flights to 117. A booming business community and a high percentage of Mileage Plus members make the Dulles area a key market for United, and the company continues to add flights there.

The community of San Jose, CA, located just south of San Francisco, is one of the fastest growing technology job markets in the United States. As a result, convenient air travel is in demand, and competition is heating up. Both American Airlines and Southwest Airlines serve this burgeoning market, and United is strengthening its foothold. United's departures at San Jose International airport have increased bv 64.7 percent January through September 1999 compared to the same period last year.

In recent years, Atlanta has earned a reputation as one of the "hottest" business cities in the United States. Atlanta also gained worldwide attention hosting the 1996 Olympic Games. As the city continues to flourish, so does the need  for air service. Both Delta Airlines and USAirways are adding service in Atlanta. United has increased service  there by 15 percent with new service from Los Angeles  and seven Washington Dulles frequencies. As the company develops its strategies, it watches competitors' growth patterns. During 1998 and 1999, United's top two U.S. competitors - American and Delta also have been targeting specific areas of the country. To regain lost market share on the West Coast, American acquired West region carrier, Reno Air. On the East Coast, American is building a new $1.3 billion, 59-gate terminal at New York Kennedy Airport. Delta is expanding flights at its Atlanta hub, with the largest increases to East Coast business markets. Delta also recently acquired two of its regional commuters Atlantic Southeast Airlines and ComAir.

As Pacific region economies show signs of recovery, United continues to watch markets in these parts of the world for opportunities to inaugurate new flights and reinstate suspended service.

China's growing middle class population is boosting the country's air traffic levels to an all-time high. According to United's International Planning Department, the company is well-positioned to take advantage of this opportunity. However, competition among U.S. carriers to serve China is intense. A new U.S.-China aviation agreement makes 27 flight frequencies available between 1999 and 2001. United was awarded five weekly nonstop flights between San Francisco and Shanghai that take effect April 2000; daily nonstop flights between San Francisco and Beijing starting June 2000; and daily nonstop service between Chicago and Shanghai beginning April 2001. Other U.S. airlines competing for service to China include Northwest, American, Delta, Federal Express and United Parcel Service.

With the economic picture in Asia improving, United will resume its daily service between Hong Kong and Singapore effective Feb. 16, 2000. United had discontinued this service December 1998, replacing it with service between Hong Kong and Bangkok. Under the U.S.-Hong Kong bilateral, United may only operate to either Singapore or Bangkok daily beyond Hong Kong. Flights between Hong Kong and Singapore are timed to give United a competitive advantage in that business market.

Tourist travel between the United States and Australia is on the rise, and customers are demanding more non- stop service. United's response is new daily nonstop service between Los Angeles and Melbourne that began Dec. 4, 1999, and a re-timed flight between Auckland and Los Angeles for more convenient connections to points in the United States.

United also is lobbying for new routes between Los Angeles and points in South America. The company recently filed a proposal with the U.S. Department of Transportation for daily, nonstop service between Los Angeles and Buenos Aires. Los Angeles is the third largest market for airline traffic between the United States and Argentina.