Aviation watchdog JonNYC shares fascinating internal slides from United Airlines outlining how their premium business is doing. They are excited about how their seat fees, premium economy, and business class are doing – especially notable is performance to what’s generally seen as the most premium market, London Heathrow – and how demand has shifted from traditional business travelers to premium leisure.
UA stuff
— JonNYC (@xjonnyc.bsky.social) March 17, 2025 at 6:14 PM
— JonNYC (@xjonnyc.bsky.social) March 17, 2025 at 6:14 PM
Basic Economy Gets Customers To Pay More
Airlines used to use Saturday night stays and 14-day (or 21-day) advance purchase requirements to get the cheapest tickets. That’s how they differentiated business and leisure travelers, offering the cheapest fares to price-sensitive customers while charging orders of magnitude more to those who would pay. However that model began breaking down about 20 years ago, with low cost carriers not imposing those same restrictions.
That meant airlines started charging lower fares to avoid losing ticket sales, and in the process charging passengers less than they were willing to pay. Their solution is basic economy – they impose draconian restrictions on the cheapest tickets, so that price sensitive customers buy those while those willing to pay more (and those traveling on someone else’s dime) pay up to avoid the restriction.
United’s are the worst – a basic economy passenger isn’t permitted to bring a regular carry-on bag onto the aircraft, which of course also means they’re charged more in checked bag fees too. Until recently, a United basic economy passenger who wasn’t checking a bag was still forced to check in in person (and wait in line, paying in time rather than money) and couldn’t use online or mobile app check-in.
Since United flies larger planes with more seats, which keeps their cost per seat low, they have extra seats to sell that don’t go out at a premium. That’s where their basic economy inventory comes in, which they say represents 15% of ticket sales.
At the same time, a larger percentage buy up out of these restrictions because they’re miserable. And customers increasingly pay for seat assignments, too – a customer preference and a sign that United has gotten better at merchandising. Between upgrades and economy seat fees, United reports “$1.2 billion in paid seat growth” which is up 90% versus pre-pandemic.
And, I’d note, that on domestic flights, selling seat assignments and upgrades separately from the fare is saving the airline from paying 7.5% tax on the revenue (just as it does with checked bag fees on domestic flights). United, like the other large carriers, is engaging in a nine-figure tax dodge.
Premium Economy Is Highly Profitable
Ignore that United’s premium economy revenue has increased ‘almost 700%’ since launch. That’s off of a base of basically zero. Instead, what matters is United’s non-bolded claim that it generates double the revenue per seat mile of coach – while break even (given the larger seat footprint, and slightly greater soft product investment) is 1.6x.
United says the cabin is more profitable than coach in about 95% of long haul markets. On long haul flights people will pay a modest multiple (of at least 1.6x economy) to get out of economy, and I’d note in particular to get out of United economy with its limited space and hard seat. Many foreign carriers offer more comfortable coach products with up to 34 inches of pitch, more padded seats, and things like foot bars and cup holders at the seat and friendlier service.
Premium Leisure Replaced Business Travel As Revenue Driver
United acknowledges that business travel is down versus pre-pandemic. Travel executives usually wave their hands a bit at this. The traditional consultant out Monday back Thursday, spending the week at client offices, is largely dead. That’s because there’s no reason to sit in a client’s office where the client’s own return to work means that not everyone is in their office every day. And the vagaries of in-office means that visiting people in offices is less frequent, too, and more challenging to coordinate.
Nonetheless, premium leisure has taken off and United reports that their business clsas revenue is up 37% (no one ever notes the effect of inflation here, which accounts for over half of this). Domestic first class revenue has spiked 49% in nominal terms, noting that premium leisure in first and business has “more than doubled since 2019” picking up the slack from managed business.
United Says It’s Winning London Heathrow Thanks To Premium
United says that they are more profitable than both Delta and American at London Heathrow, despite not having a joint venture partner there the way both carriers do. They say this is because they’re flying proportionately more premium seats, and Heathrow is still a premium-heavy market.
Back in 2018 Vasu Raja complained that he didn’t have enough premium seats on planes, as the airline was removing premium seats from its widebody aircraft. US Airways management didn’t have a vision to be a premium carrier, and in their experience long haul business class could only be sold at a discount which turns out to be wrong.
The wrong aircraft configuration is something American is trying to fix on narrowbodies (adding first class seats, albeit not addressing too few extra legroom coach seats) and on their new delivery Boeing 787-9s. But so far there are no plans announced to retrofit their workhorse widebodies crossing the Atlantic.
Meanwhile, I’d argue that United’s point about outperforming despite lack of a joint venture partner is a bit underdeveloped. Delta partners with (and owns 49% of) Virgin Atlantic, which gives them to schedule aircraft more efficiently across routes which means it’s a bit misleading to look at performance only of Delta’s own metal. Moreover, the joint venture with Virgin doesn’t give Delta much in the way of connecting traffic or options for travelers given Virgin’s limited slot portfolio (that doesn’t allow scheduling for connections). Of course, connecting traffic over Heathrow is likely in most cases to be lower yield than non-stop.
United Is A Premium-Heavy Airline, Rather Than A Premium Airline
While United and Delta are lumped together as the two ‘premium airlines’ in the United States, that is a bit of a misnomer. Most passengers fly coach, and the extent of United’s premium focus in the back cabin is seat back screens and snacks a food for sale, but those are really differentiators in the domestic market rather than international.
For long haul, United offers a lot of premium seats and a consistent product. Their long haul business class bedding is very good. But the seat is not spacious – in fact the opposite. The Polaris seat was signed off on a decade ago precisely because it was a way to get lie flat direct aisle access into planes in the densest format possible. The seat stopped the bleeding, as their extant 2-2-2 seating meant customers booked away from the carrier. American’s seats are better, and Delta’s seats outside of the Boeing 767 are better.
Polaris lounges are better than American Flagship lounges, but lag the (couple of) Delta One lounges. United’s meals don’t differentiate, though they’ve recently leaped forward with their business class wine program.
Unquestionably, Air France and KLM offer better products across the Atlantic. British Airways probably does as well, leaning into its better seat. But there’s no question that United has performed better financially, and improved its product, versus the cost-cutting Smisek era.
And yet they decided to remove an incentive for premium leisure spend from 1 Million Milers by removing the companion status inheritance above Gold.
Kirby bux are really coming in now aren’t they?
Vasu wasn’t perfect but it is rather interesting how right he seems to have been about premium leisure vs corporate traffic
How long is the party going to last? Don’t celebrate too early…
@Tony — That premature…celebration… is often a surprise, isn’t it.
Now, where’s regular commenters @Dick and @Erect to help me finish this joke. Fellas??
as usual, UA cherrypicks data to do all it can to make itself look superior but ignores actual known facts that correct its narrative.
DOT data shows through the 3rd quarter of 2024 (as far as has been released) shows that UA makes less flying the Atlantic than DL while AA lost money. If UA’s strategy is so great, how come they only get 70% of the profits DL gets even though UA is larger – and loves to tout that as well?
For those that want to argue that DOT data is all wrong, I will say the same thing I have said all along which is that, if you don’t like the accounting that UA or other airlines use, then restate the data to show the numbers where they should but if you make one region more profitable, then something else has to be less profitable because the total under your restated numbers can’t be greater than what UA or any airline reported. AA likely does make money to LHR; it is continental Europe that is the problem for them.
As for the high J UA 767-300ER, it is the most expensive airplane in the US carrier widebody fleet on a CASM basis. Since UA is convinced it has insight into profitability about everyone else’s operation, why can’t they show profit per seat mile and don’t forget to note that LHR has some of the most costly landing and handling fees for US carriers. I mean, there had to be a reason why AA makes BOS-LHR work on a 772 and DL makes it work on a 332 while UA tried and quickly pulled BOS-LHR – on a 763.
AA and UA and their partners both use far more efficient aircraft on NYC-LHR and fly far more capacity and that is true across their entire networks.
UA’s arrogance and inability to admit that competitors really do some things better than UA is constantly on full display and it is stuff like this that proves it is a culture of bragging that won’t end as long as the current exec team at UA is removed; they daily live that they were passed over to take the helm at AA and, despite 7 years of stating they will overtake DL in financial metrics, they have not despite having a $1 billion labor cost advantage because they are the only one of the big 4 that has yet to settle w/ their FAs – as well as other mainline labor groups.
Says Tim Dunn, Queen of the cherry pickers..
A couple of things. Most of these sources of revenue are near pure profit for the airline. What do you think the actual handling cost of a bag is for an airline? 50 cents, maybe $1 at tops. Airlines for 20 years now have tried to get people to buy ancillary services. The entire ULCC business model founded by Spirit was based upon ancillary services and you see where Spirit is today. Now to be fair United has a far better reputation and has avoided becoming it’s own Youtube channel with seemingly daily meltdowns. Spirit should find a way to monetize it’s customer meltdowns.
Second, I’m still heavily connected to large software implementation projects. I get a call a week from recruiters testing my interest to go back into IT software consulting. Twenty years ago it was a near 100% onsite project. Today it’s maybe 30%. Businesses are finding what does or doesn’t work on a Zoom/Teams call. There was an overreach with the “Meta mentality” that being on a Zoom call was no different than being in person whether it’s a complex requirements gathering or seeing Grandma. That silliness has passed and now businesses are finding the right mix and it won’t be 100% onsite.
Nice to see that people still respect NDAs for “internal” presentations.
Good to see people with money up front nowadays that pay for their premium seats, and less OPM flyers (mostly upgraders) cheapening premium cabins
Just fly all three…AA is, well crap. DL is a has been with surly FAs that rest on the fake laurels of ancestors, while UA is most attentive and growing.
I will believe it when I see it. Catering in Polaris/business class is terrible: cheap wines and lousy food – no, thanks
@ Bob — Yeah, and the business suits have been traded in for sweat pants.
United Airlines talks a big game but they still can’t and won’t overtake Delta Airlines in customer satisfaction. United can play dress up but it is still putting lipstick on a pig. Polaris is just hype and is not nearly as good as they proudly proclaim. United, you still have a ways to go before you boast about how great you are.
More sloppy reporting from our resident slop content creator. Delta has 3 Delta One lounges (LAX, JFK, and BOS).
Tim Dunn needs to start his own points/miles/travel blog.
You know, it is possible to point out an error without being a jerk about it.
Thanks for reading Bluesky for us. 🙂
What I think is most interesting is that UA insists on not giving their domestic Basic Economy passengers a free carry on bag. I can’t tell you how many times I’ve had a friend or family book away from UA because of this policy. Heck, I’m a UA 1K and I sometimes book away from them because they diminish my benefits if I book a Basic Economy ticket — and they even do this on some of their international routes. I’m skeptical that UA’s policy is financially beneficial to them.
Definitely prefer UA over AA for our transatlantic flying, but we also try to avoid LHR like the plague unless London is our destination. And for domestic flying, UA is better than AA except that I tend to do better with AA lounges than with UA lounges.
Do we pay UA much of a premium over the other airlines? Definitely not. And I fortunately have managed to get Delta/Skyteam for cheaper in business class for our TATL leisure trips not destined to LHR than UA and AA for those trips.
first, the second post using my name is not something I wrote.
clearly, the noose is being tightened on the fake mockers that want to sabotage what I write on airline social media and VFTW doesn’t have the software to pick up that a username is being used by another email account. I may disagree w/ Gary on content but I don’t
second, as others note, UA loves to brag including its own products even though Polaris is as old as Delta One Suites which DL has had on A350s for just about as long. OMAAT says that Delta One Suites and Delta One lounges are better than what UA offers so the UA PR machine is out in full force. There are multiple other sources that rate DL’s service levels higher. It is worth noting that UA ended 2024 near the bottom of the industry in cancellations and misplaced bags.
Finally, cherrypicking is using individual pieces of data that do not support a larger narrative. Having UA tell us how great they do at LHR on their high J 767s is cherrypicking when they don’t lead the industry in overall profits across the Atlantic or across their system. And if the deck is about premium leisure and economy fees, how does a high J 767 fit that narrative? A high J 767 works best when there is high J demand – which, by UA’s own admission, LHR is not seeing right now.