Monday, August 21, 2017

United's Small Body Strategy

United has a plan, but it needs a validation from researching its regional market. Initially it had ordered 65 737-700's in a market filling move. Then it decided that move would be parleyed into a Max Order. United had moved towards new technology at the expense of right sizing its own passenger demand constraints. It is currently reviewing the 100 seat market as its 737 back-order mix consist of airplanes much larger than a 100 seats. United's resources are limited and it can not purchase every line of aircraft when filling its vast market place. 

United's current fleet dichotomy:

Plane spotter's 

Notice the absence of 100 seat aircraft in the above chart. United will have to reconfigure its operation over its whole fleet costing millions/ Billion's?

It needs every kind of aircraft currently offered by every manufacturer selling aircraft. The would include Embraer's, 737 family and Bombardier's using every seat category from 50 to 200 seats. 

It placed its capitol towards the 737 family of aircraft early on its strategic move for small body single aisle. It then converted those 737-700's into a wide array of single aisle orders. Now it is looking at the 100 seat category where the 737-700 would be too large to manage in its small market places. Flying to Kalispell, Mt would be ideal for a hundred seat aircraft with a network of Spokane Wa. Billing's Mt and a Seattle Wa.  This example would mix small towns with large towns with ease and affordability for its customers which a 737 aircraft may not fit its regional footprint for an efficient operation.

United is concerned with fitting a 100 seat aircraft into its fleet mix while having an affordable operations cost.  Control over costs of a non-conforming fleet aircraft is a fundamental concern after having a Boeing main fleet composition. By including a small body Bombardier would wear on the cost efficiency for its operations crew including its maintenance parts, and servicing. This introduction of a small body division could jeopardize the efficiency gained from having fleet commonality.

The airline has to find its way through the maze of options from other manufacturers such as Embraer or Bombardier. This conundrum had bothered the likes of Delta airlines and others as well. A careful path from what the other airlines have etched is a way through the market swamp assisting United's small body aspirations. It only has to figure out how to pay for a non conforming fleet from start to finish within its operational constraints.