United Airlines Parent Plans To Cut Costs By $2 Billion A Year

Nov. 19--United Continental Holdings said Tuesday it has launched efforts to cut costs by $2 billion a year by 2017 to improve financial results that have been largely disappointing in recent quarters.

The United Airlines parent said it will reduce fuel use, increase productivity and improve maintenance processes, among other methods.

It also plans to increase the revenue it gets through extra fees by $700 million, with a goal of collecting more than $3.5 billion a year through fees by 2017. United said it expects to accomplish this by "giving customers new options, optimizing pricing on existing products and expanding availability of ancillary products through additional distribution channels."

Airlines have moved beyond fees customers hate, like those for checked bags, in recent years and are now focusing on growing revenue through perks that they believe improve the travel experience. That includes fees for priority boarding, or a seat with extra legroom.

But United recently retooled the seating arrangement of some of its smaller planes, taking out rows of economy plus seats, for which customers have to pay extra. That suggests that as many customers are not forking over extra money for the roomier seats as United expected, at least on small planes that tend to fly shorter routes.

Customers can only currently purchase extras or roomier seats during the booking process on the airlines' own site, not on outside travel sites like Orbitz or Expedia. Those two sites account for a large percentage of overall tickets sold.

In addition to expanding where it can up-sell, United said it revamped its website and last week unveiled a new mobile app, aimed at making it easier for customers to book.

The Chicago airline is also making changes to its network to conserve and grow cash.

It said it will eliminate flights between Seattle and Tokyo. United also will eliminate Tokyo-Bangkok flying with the Boeing 747 start using a smaller plane between Tokyo and Seoul, reallocating those aircraft to more profitable routes. United customers will now be able to connect on those routes through United's partner, ANA.

United said it will take the planes it was using on flights in Asia and redeploy them on flights across the Atlantic, such as on its new service from Houston to Munich and new seasonal routes from Washington/Dulles to Madrid and Chicago to Edinburgh.

Copyright 2013 - Chicago Tribune

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