Bowing to increased competition in the United States, United Airlines announced yesterday plans to sharply reduce its domestic flights and increase its international operations.
The airline, a unit of UAL Corp., said it plans to pare its domestic service by 12 percent and expand its international flights by 14 percent by the end of 2005.
United will reduce its service in the United States by flying smaller planes with fewer seats. Overall, its domestic departures will decline by only 1 percent, according to Glenn F. Tilton, United's chief executive.
The changes will boost the number of international flights out of United's hub at Washington Dulles International Airport, said John P. Tague, United's executive vice president of marketing, sales and revenue.
"Dulles is working very, very well for us," Tague said. "Dulles is the first place we look for additional transatlantic opportunities."
Tague declined to say for competitive reasons how much the airline plans to increase flights out of Dulles.
When United filed for bankruptcy protection nearly two years ago, many industry observers thought Dulles was the weakest of United's five domestic hub airports and the one most likely to be closed as part of the airline's cost cutting. United also has hubs at its home airport, Chicago O'Hare, and in Los Angeles, San Francisco and Denver.
As low-cost carriers extend their reach in the United States, many of the traditional carriers are being forced to find other, more profitable niches. US Airways, which is also operating under bankruptcy protection, has been forced to trim many of its domestic flights and step up its focus on flights to the Caribbean and Latin America.
United said record-high fuel prices and an inability to raise fares has forced it to find new options for revenue growth.
The changes are to boost its international operation to 41 percent capacity, up from 35 percent. About 45 percent of the airline's revenue comes from overseas flights. The carrier expects to increase that to 50 percent by the end of 2005.
The bulk of the increase will be across the Pacific to China, Japan and Vietnam. The airline also plans to increase its flights to Europe and Mexico. Since 2002, United has launched 30 international routes, 70 percent of which began this year.
As part of its downsizing, the airline will reduce the number of its large jets, replacing them with 70-seat regional aircraft. The number of wide-body jets will shrink to 455 in March, down from 523. Many of the airline's older planes it can no longer afford to operate could wind up parked out of service, helping to reduce costs. United has been scrambling to lower its costs and attract enough outside financing to emerge from Chapter 11 bankruptcy protection.
The airline also plans to shift some of its mainline operations to one of its regional jet partners that fly under the United Express banner.
In a recorded message to employees yesterday, Tilton said the airline's low-cost operation, Ted, which also flies out of Dulles, would be used to expand into Mexico and the Caribbean.
Tague said the domestic downsizing would cause a "minimal" number of job furloughs, as some employees will be shifted to jobs related to international flights.
Industry analyst Mike Boyd of the Boyd Group said that increasing its international presence makes sense for United but that it's taking a risk by trimming its domestic flights.
"Getting rid of 68 planes and replacing them with regional jets could be a problem with travelers," Boyd said. "It's hard to make money on regional jets because travelers often prefer the larger planes."