United Airlines has taken an aggressive stance towardVirgin America’s entry into the San Francisco-Denver market, adding five additional flights on weekdays beginning in March 2016.
When Virgin America begins its 3X-daily flights on March 15, United will be flying as much as 14 times between the two cities on weekdays.
The approach is similar to what United tried in the past when Virgin America entered its hub-to-hub routes from San Francisco to Chicago and Newark-Liberty (EWR). While Chicago has been tricky for Virgin America from both Los Angeles and San Francisco,CEO David Cush recently said Newark eventually became “a very profitable market for us.” At first, though, Cush said the Newark competition was “damaging” to Virgin America’s bottom line.
“We’re no stranger to competition—in fact, we’re quite used to it,” Virgin America spokesman Dave Arnold said this week. He noted that when Virgin America started flying San Francisco-Newark in 2013, United “nearly doubled” its frequencies, while the average fares in the market decreased by as much as 30%. “As is the case in EWR and other markets, we believe that our superior, consistent and tech-forward product and service will resonate with travelers in the Denver area,” Arnold added.
Analyst Henry Harteveldt said it makes sense that United seeks to protect its hub-to-hub routes, but he suggested going to 14 daily flights on a mature route is an “alarming increase.” Southwest Airlines flies the route four times most days, while Frontier has three daily flights. In addition, Southwest flies four times per day between Oakland and Denver.
‘Scorched Earth’
All of United’s flights will continue to be on mainline, with the airline planning to use a mix of Boeing 737-800s, Boeing 757-300s and Airbus A320s in the spring.
The current weekday schedule is flown mainly by Boeing 737-800s, 737-900s, 757-200s and Airbus A320s.
“Going from nine flights to 14 seems like a ‘scorched earth’ response,” Harteveldt said. “United is not growing the Denver hub, and they are not growing San Francisco outside of some international flights. In adding these five additional flights, will United end up putting in so much capacity in that yields and load factors suffer?”
Though Virgin America probably knew it would provoke a response from United, the airline may have had no choice. Denver is the only one of the most-popular 10 destinations from San Francisco that the airline does not serve. Arnold also called it “one of the most-requested destinations by our high-tech corporate accounts.”
But Hartevedlt said Virgin America may have trouble in the crowded market.
“The problem is that they will be going in with three flights a day against United and Southwest,” he said. “Virgin is really going to have to compete exclusively for the local San Francisco-Denver travelers.
United adds five more San Francisco-Denver flights | Airports & Routes content from ATWOnline
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