After decades of learning the hard way that having different aircraft in an airline’s inventory adds costs to the operations, the management geniuses at United have step forward with a split order for 25 Airbus 350s and 25 Boeing 787s. Perhaps the airline is hedging its bets about which plane will actually fly, or maybe they just haven’t learned a thing.
It seems that the main focus on this order was to get their foot in door with the minimum amount of money. Squeezing the last penny out of their workers and suppliers are lessons that United has learned well. Streamlining their fleet? Maybe not.
Though, large by current airline standards, this order is not particularly bullish for United Airlines. In fact, it seems to indicate little faith in the future for the airline.
Planes will not be delivered until 2016 and this order actually portends a smaller United six years from now with fewer seats and fewer planes than today’s airline. Strange.
Or, perhaps the airline can’t figure a way to make a larger down payment.
United made its last jet order in 1998, and hasn’t taken a delivery since 2002. It has been aggressively shrinking in recent years. The new jet order won’t change that, because the new planes have fewer seats than the ones they’re replacing. United said the new jets will average 19 percent fewer seats than the planes they replace. Overall its international fleet will have about 10 percent fewer seats once the new planes are flying, United said.
As for the mix of aircraft, United Airlines indicated that having the right mix of aircraft overwhelms any economies of scale from a larger order.
Regarding the reasoning behind ordering from both manufacturers rather than benefitting from the economies of scale that would accompany a larger commitment to a single type, UA said: “Neither manufacturer offers next-generation aircraft sized to optimally serve all of the current and future markets in United’s network. The mix. . .give[s] us the right range of aircraft sizes needed to replace both our Boeing 747 and 767 aircraft. The economic benefit of placing the right size aircraft into each market overwhelms any benefit from ordering from one manufacturer.”
Of course the airline is thinking with the same head that has gotten them into the perpetually-almost-bankrupt situation that it now finds itself in, with virtually the entire operation in hock right down to spare parts.
What about separate pilot training, different flight decks, doubled flight attendant training, dual inventory of spare parts, etc. Then after training what happens to more complicated scheduling efforts?
The industry has learned from Southwest that economies of scale do not only accrue at the purchase end of the transaction, but throughout the lifetime of the aircraft in an airline’s livery. That maintenance and personnel cost is where legacy carriers with myriad types of aircraft and even different flight deck configurations within aircraft from the same manufacturer make operating costs soar.
This is another basic management decision, that seems to have ignored the lessons learned of the importance of operational costs.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past 14 years with Congress, the Department of Transportation, and industry stakeholders on travel issues. He was the first consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018.
