BTN's annual answer book for business travel managers everywhere. Added this year: travel risk management
United Airlines began direct service between San Francisco
and Singapore on June 1, reigniting the only nonstop flights between North
America and Singapore since Singapore Airlines discontinued its U.S. flights in
2013. The new route is part of United's expansion in transpacific service from
its San Francisco hub, vice president of Atlantic and Pacific sales Marcel
Fuchs told BTN in Singapore following
that inaugural flight.
BTN: What are United's
immediate plans for expansion from San Francisco?
Fuchs: This is
the third of five inaugurals this summer out of San Francisco. We started with
Tel Aviv. We've flown that for two months and made the decision to go daily. It's
had a terrific start and combines the two tech cities—Tel Aviv, which is strong
in the IT sector, with Silicon Valley. We added Xi'an [in central China] earlier
in May, which was really exciting to fly. We already had started Chengdu [in
southwestern China] in May 2014. Now, we're on our third with Singapore, and we'll
do Auckland [New Zealand] July 1 and Hangzhou [along the East China Sea] on
July 13. All of these five show the importance of our San Francisco hub. It's
our 12th [transpacific] route out of San Francisco, and seven of the 12 are on
the Dreamliner, which shows you the workhorse the 787 has become. It's a
phenomenal airplane for us, and we've never been able to do that before. With
the mix in terms of 48 BusinessFirst [seats], 204 Economy and an Economy Plus
section with 88, it's the right size airplane.
overcapacity on these routes a concern?
Fuchs: With the
Singapore market, we're actually not adding capacity. We've been flying [there
through] Hong Kong and Tokyo for many years. We're simply switching over one of
the two one-stops. The market acceptance has been phenomenal, and we're really
excited about the growth in San Francisco. Many of the corporate clients have
told us it's the most-wanted next nonstop they had on the wish list from us. After
years of planning, we get to do it. We are really excited about that portfolio.
Chinese carriers have been growing more than the U.S. carriers, mostly because U.S. carriers have maxed out the Tier One cities."
BTN: Do you
expect that the Singapore route will increase your marketshare?
Fuchs: There's no
reason why Singapore nonstop shouldn't perform on the same level as other
transpacific flights. About a third of the bookings come from Singapore—it's a
relatively small market—and two-thirds are coming from the U.S. There are about
750 [American Chamber of Commerce] members here, which is a pretty good size,
and about 3,500 American companies are registered in Singapore and many have
regional offices here, as well. I'm very confident this market will do well,
shaving off at least four hours and providing about 36 new one-stop cities.
BTN: Did United
add the other new destinations you mentioned with corporate travel in mind?
Fuchs: Less so.
The magic is the right mix. Xi'an is a more leisure-focused destination. Hangzhou:
We expect a stronger corporate sector, and it complements nicely what we do out
of Shanghai. Auckland is a tourist market, but of course it has some corporate
segments, as well. We've recently announced the joint venture with Air New
Zealand, starting July 1. They fly to Houston, which complements our offering
and will help us quickly get market entry. We recently cemented our
relationship with Air China, deepened it, and signed a multiyear agreement. At
this point of time, it's codesharing and frequent-flyer [reciprocation] and
many of the customer-facing portions. Together, we are well positioned to
capture the alliance marketshare. Chinese carriers have been growing more than
the U.S. carriers, mostly because U.S. carriers have maxed out the Tier One cities. There are also access issues, and we're working to try to resolve that.
BTN: Are low-cost
carriers becoming more of a factor on these routes?
Fuchs: In terms
of LCCs, we're seeing a very strong entry from carriers like Norwegian on the transatlantic
portion. Transpacific: Frankly, we haven't seen that infiltration in terms that
corporate business would be impacted. Transpacific is already a
super-competitive market, and more Chinese carriers are flying it.
BTN: So how does
Tokyo fit into your strategy, considering you pulled the Tokyo-Singapore
Fuchs: When you look back, we initially had service beyond
Tokyo in terms of flying to Singapore, to Bangkok, to Manila and to Jakarta, for
which we can now use effectively ANA. If you look at the figures we used to
carry, we've doubled that on ANA, and it becomes a much more efficient
operation for us to leverage ANA's portfolio. Even so, Tokyo will remain
important for us, just with the fact that we'll more often use the ANA
relationship. We still have some, like Incheon in Seoul [South Korea], which we do in addition
to the nonstop because the demand is so big.
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