United takes a cautious approach to selling Premium Economy; will not see full value of product until 2021

12 December, 2018

United Airlines is in the middle of a significant retrofit of its a large portion of its widebody fleet with its new Premium Economy class, and is taking a cautious approach to how it sells the product.

The airline recently began sales of the new product, and company EVP and chief commercial officer Andrew Nocella recently told investors United has a lot of aircraft to retrofit, and as new aircraft come online, they're delivered with the seats onboard. The airline recently took delivery of its first 787-10, and presently has two of the jets in its operating fleet.

"We are going through a process that will take us through the end of 2020 to get premium plus on board most of our wide body jets," said Mr Nocella.

He explained there are a small number of aircraft that are not being retrofitted due to their retirements. "...by the end of 2020 we'll be fully up to speed, which means the full value of this product will be in 2021 and the years '19 and '20 are kind of the phase-in", Mr Nocella concluded.

United wants to ensure when its sells the new premium economy product "it actually shows up in the aircraft our passengers are getting on", Mr Nocella stated. "We have to be really cautious not to sell it on every flight, even though we may have it on more aircraft than you think... so they'll be a lot of cases where it's kind of a surprise. Somebody gets on board and they wind up with this better seat they didn't pay for."

He believes the value from Premium economy for United in 2019 will be measurable, but not materials. The retrofits should be complete in 2021, which is likely when United can fully monetise its Premium economy offering when it is consistent across its widebody fleet. "It will be consistent and consistency I think is what matters most in terms of being able to monetise the product. So that's a 2021 good guide, " Mr Nocella stated.

United's Economy Plus cabin will feature around 21 to 24 seats, dependent upon widebodied aircraft type, and is similar in scale to the offering of rival American Airlines. Fellow US major, Delta Air Lines, has a different outlook on Premium Economy and has configured its A350s with 48 Premium Select seats.

The product will be available on select international flights starting 30-Mar-2019, growing to 21 routes by the end of May 2019. It will be available from the launch date on Boeing 777-300ERs flying from Newark to Hong Kong, Mumbai and Tel Aviv and from San Francisco to Frankfurt, Hong Kong, Taipei, Tel Aviv, Tokyo; on 777-200ER operated flights from Newark to Brussels and Paris and from San Francisco to Auckland, Beijing and Frankfurt and from Washington Dulles to Frankfurt. It will also be available on 787-10 services from Newark to Frankfurt and Tel Aviv.