Tilton believes that the major legacy carriers are safe on these routes where the LCC's will not be able to compete because their aircraft will not reach those ranges. Tilton said, Low-cost airlines will "never" fly long-distance routes to China nor short hops to smaller cities because those flights don't fit with their economic model. Even as he was saying this several international carriers continue forward with plans to bring the international LCC model to the US. Australian carrier, Virgin Blue, has received permission from the Australian government to fly from Sydney to LA. And Qantas off shoot LCC, JetStar Australia, has already begun serving New Zealand from Australia and will begin international destinations to south Asia next year if all goes according to plan. So what is Glenn Tilton talking about? Is he not worried that United is under pressure to show stellar performance in the profit sector? He is not worried that his company must still cut millions even after the most lengthy stay in bankructy protection? Is Tilton more worried about a merger than turning a profit?
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Southwest and other discount airlines use a single-type of plane to offer frequent flights to smaller airports in major cities, while United and other large carriers generally fly around the world using multiple types of planes.
Some in the aviation industry beg to differ with Tilton. They cite examples of low-cost carriers in other countries eyeing international routes.
Virgin Blue Airlines, partly owned by English billionaire Richard Branson, recently secured permission from the Australian government to introduce flights from Sydney to Los Angeles. The airline has said it could be ready to offer the flight by next year.
Australia's national carrier, Qantas, could be vulnerable if that occurs. The L.A.-Sydney route reportedly accounts for as much as 20 percent of the airline's profit.
On the heavily traveled New York-London route, two new airlines, Maxjet Airways and Eos Airlines, provide all-business-class flights at lower prices than British Airways.
"I think it's very misleading for anyone to assume that United has an advantage on long-haul routes over low-cost carriers," said Matthew Andersson, senior aviation consultant at CRA International in Chicago. "Their long-haul routes are not immune from more competition."
Southwest has said it may expand to international routes in a few years. The Dallas-based carrier gained knowledge about long-haul flights through a partnership with ATA Airlines, cemented in a 2004 deal to acquire gates at Midway Airport. ATA flies to Hawaii and Mexico.
Long-haul flights are more of a possibility for low-cost carriers thanks to new, more fuel-efficient aircraft expected to be arriving soon.
The Boeing 787 Dreamliner, which is scheduled to enter service in 2008, promises to fly across the oceans using 20 percent less fuel than similar midsize planes.
Chicago Tribune
United Airlines Corporation (UAUA) was down (-0.72) to $26.95 a share. Wall Street investors are loosing faith in United Airlines after a disappointing first quarter. If their second quarter is not stellar like the other airlines recently, UAUA stock could plummet even further.
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