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United Optimistic About Profit and Dulles
United Airlines plans to expand operations at Dulles International Airport.
(By Dennis Brack -- Bloomberg News)
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United has hubs at its hometown airport, Chicago's O'Hare International, and in San Francisco, Los Angeles and Denver. Dulles was considered one of United's most expendable operations because the airport is close to two competing airports -- Reagan National Airport and Baltimore-Washington International Thurgood Marshall Airport. Low-cost carriers such as Southwest, JetBlue and AirTran have rapidly expanded in the Washington area and Dulles's archaic design -- with its motorized shuttles -- led many analysts to believe Dulles was too risky and costly for United to continue to operate there.
But United needs Dulles to connect its high-paying international travelers, said airline industry consultant Michael Boyd of the Denver-based Boyd Group. Otherwise, he said, Dulles wouldn't be as profitable.
"Where they make their money is feeding people in and out of Washington and to and from international flights. It's not the greatest place in the world for a hub, but for United, they need it," Boyd said.
In addition to increasing its connections to the West Coast and abroad, Tilton plans to grow Dulles as a hub for its regional express operations with flights to small- and mid-size cities with 70-seat regional planes.
Despite analyst warnings, United grew Dulles instead of backing out, Tilton said, adding the airport has been a "surprise upside" for the airline. Tilton said another attractive asset of Dulles is the rapidly expanding Northern Virginia traveling community.
"Part of the success of Dulles is Reston, Herndon and the Dulles corridor," he said.
Tilton said United also chose to invest in Dulles as a result of the Metropolitan Washington Airports Authority's decision to expand and modernize the airport -- key features of which are new runways and a train system to carry passengers between terminals, planned for a 2009 completion. The airport's modernization, Tilton said, will allow the carrier to attract additional foreign partners and destinations.
"Growth begets growth. As it succeeds, new opportunities present themselves," he said.
