| April 19
April 19 Air travel demand for the prime summer
vacation season is strong, which supports higher fares, but
United Airlines aims to bolster other sources of revenue by
selling new products and services, the chief executive of the
airline's parent United Continental Holdings said on
Speaking to reporters after a speech in Chicago, Jeff Smisek
said the company is planning to unveil some new offerings now
that it has integrated its reservations system with that of its
2010 merger partner Continental Airlines.
The airline industry, battered for years by soaring fuel
costs and economic weakness that drained travel demand, has
relied more heavily in recent years on charges for services like
bag checks, food, entertainment, seat selection and other perks.
"We also, of course, are expanding the ancillary products
and services we will sell that customers will buy. We've held in
abeyance a lot of that," Smisek said, declining to say what the
company planned to offer next.
"I'm not allowed to talk about it, but they're going to be
good and they're going to be cool," he said.
When pressed on the nature of the offerings, Smisek pointed
to another United service called Fare Lock, that allows
customers to pay a fee to reserve a booking and lock in a fare
until they are ready to commit to it.
United Airlines is the world's largest airline. It was
formed from the merger of United Airlines and Continental
Airlines. The new company is based in Chicago and run by Smisek,
who was chief executive of Continental before the merger.
The U.S. airline industry has managed to pull itself out of
a steep downturn last decade by downsizing and selling fewer
seats, which enabled it to boost fares.
The mergers of United with Continental and Delta Air Lines
with Northwest Airlines to form a new Delta also helped
stabilize those carriers.
But the pricing power that airlines have enjoyed over the
past year could diminish this year if passengers, who are
already paying higher gasoline prices, resist paying more for
airline tickets. Airlines typically see their best revenue in
the busy summer leisure travel season.
On Wednesday, United matched a fare increase by rival Delta,
according to FareCompare.com. Smisek declined to comment
directly on the outlook for more fare hikes.
"I think we're seeing good demand," Smisek said. "I'm
comfortable with what we're seeing."
Last month, United adopted the reservation system of its
merger partner Continental Airlines last month, triggering
computer glitches that resulted in flight delays, faulty kiosks
and jammed phone lines.
The project coincided with changes to United's frequent
flier program, spurring a flood of phone calls, resulting in
waits to speak to customer service agents. United faced customer
backlash over these problems, but Smisek said wait times are
much shorter and those operations are returning to normal.
He said the trouble stemmed from attempting so many changes
to complex customer-facing processes at once.
"We decided to have one open-heart surgery, not five," he
United is set to report its first-quarter earnings next
week. Analysts expect airlines to be mostly unprofitable for the
quarter, but profitable for the year. Southwest Airlines
and bankrupt AMR Corp, the parent of American
Airlines, posted quarterly losses on Thursday.
Shares of United Continental were up 1.1 percent at $22.95
on the New York Stock Exchange.