“Demand for air travel has never been stronger,” particularly from white collar remote workers in big cities, United Airlines is saying.
Speaking at Barclays Industrials Select Conference on Feb. 23, United VP of Corporate Development and Investor Relations and President of United Airlines Ventures (UAV) Mike Leskinen said, “those customers now and I think permanently ... have remote work,” leading to greater propensity and flexibility for travel while working. “It’s the new normal,” he added. “The net gain in productivity we get from being able to work remote is too big to give up.”
Despite strong demand for air travel, the industry “won’t be able to grow as much as everyone thinks,” said Leskinen, calling the constraint a relatively healthy setup for the industry. Touching on “significant” supply constraints including pilot shortages, narrowbody aircraft production and spare parts availability, he nevertheless expressed confidence in United’s investments in pilot training and fleet maintenance, echoing CEO Scott Kirby’s stance on the company’s positioning during its Jan. 18 earnings call.
“The setup we have over the next three to five years is better than anything I’ve ever seen in my career,” Leskinen said, pointing to the “tremendous” demand he expects will exceed 2019 levels; constrained supply; and a cost curve he described as flattened out between low-cost and legacy carriers.
Leskinen reported a surge in March bookings, despite “Zoom travel” and other virtual business meetings. “The bookings have never been stronger, the travel pattern is changing because of these four-day weekends,” he said. “March bookings are back to October [2022] levels and exceeding. In fact, if you look at the tail end of 2022, you were looking at business demand at about 80% recovered to 2019 levels. We are now at 97% recovered over the last three weeks for business ... for leisure, which I think includes some of that business, we’re at 130% plus. March has some of the best booking trends we’ve seen.”
The carrier on Feb. 23 announced new transborder routes under its existing partnership with Air Canada, expanding the joint business arrangement announced in summer 2022. Beginning June 1, Air Canada will operate 5X-weekly Washington Dulles (IAD)-Vancouver service aboard a Boeing 737-8, while United will operate daily Calgary-IAD service beginning June 2 aboard an Airbus A319. The airlines will codeshare both flights and plan to operate more than 260 daily transborder departures in summer 2023, a year-over-year increase of approximately 20%.
Speaking to its recently launched $100 million UAV Sustainable Flight Fund with several corporate partners, Leskinen said investments of between $5-25 million would be made in sustainable aviation fuel startups, and encouraged broader industry participation. “We’re not competing on sustainability, so we’re hoping that many, many airlines around the world will join us,” he said. “We’re just getting started."
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