Mystery Solved: How Do Airlines Choose New Routes?

Mystery Solved: How Do Airlines Choose New Routes?

There's serious science behind each new destination decision.

By Karen Gardiner
Digital Original
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When airlines launch new routes, it can mean that bucket-list destinations become more reachable and, often, more affordable. Think about the budget European airlines that expanded into the U.S. in the last few years, bringing prices down and apparently sending everyone you know on travels to Iceland. But how do airlines choose routes?

Few new routes have garnered as much attention as that of United's LAX to Singapore nonstop route — the longest flight out of the U.S. — so Jet Set caught up with Patrick Quayle, the airline's vice president of international network, to find out more.

Why launch LAX to SIN so soon after launching SFO to SIN?

Patrick Quayle: We’ve always seen LAX to SIN as a very attractive market.  Previously, the only way to serve Singapore from the U.S. was via one or two connection points in Asia. However, the introduction of the Boeing 787-9 aircraft has allowed us to take advantage of its long-range capabilities. While United previously served Singapore from Hong Kong, we began service directly from the U.S. in 2016 when we started our San Francisco to Singapore route. We saw strong financial and operational success from this new nonstop flight, which suggested high demand. We reviewed that demand and found that a nonstop flight between Los Angeles and Singapore would add value for our customers, and to our network.

How do you predict demand for a new destination?

When we evaluate serving a new destination we review all the economic factors that affect the overall financial performance of a new route to better understand if this is a market that our customers will value. When specifically evaluating demand, we look at historical passenger booking data to evaluate trends in passenger travel. Reviewing this data allows us to accurately forecast the total number of potential customers flying to a new destination, and determine if a new route will be successful or not.

If a route is already flown by another carrier, how do you assess the level of competition and whether or not it is worthwhile?

As airlines have grown to become global carriers, the world has become a much smaller place. United alone connects customers to nearly 350 destinations around the world. When carriers enter new markets, there is almost always stiff competition. There are two main factors that affect the performance of a route: total customer demand and the ticket fare. When evaluating new markets, we look at the number of available seats against the demand for a given route, which helps us determine if the new route will be profitable.  

Where do the extra airplanes come from?

Airlines can increase the number of aircraft available to schedule by either buying new aircraft, operating a more efficient schedule or by exiting existing routes.

If no new airplanes, do you need to alter or cancel a route? How do you choose which?

One way to add additional aircraft to the schedule is by leaving existing routes. Our decision to leave a certain market is based on the financial performance of that route. We ask ourselves: Is the demand for this route enough that it is profitable? Will the demand for this route over time be enough to be profitable? Do our customers find value in us serving this market, or are there other benefits?

What additional costs in the destination city do you look at?

When we’re adding new routes, we look at what the costs for operating the new route may be. Adding a flight to a market we have never previously served is often more costly than adding an additional flight to a destination we serve from a different city. Serving a brand new destination includes introducing a new team to help facilitate the operation of our new flight to make sure that the flight is successful. 

If the new route is likely to have travelers making connections at a hub, how do you get the timing right?

United is a hub-and-spoke airline, meaning we rely heavily on our ability to connect passenger through our hubs (Newark/N.Y., Los Angeles, Chicago, San Francisco, Houston, Dulles/D.C., and Denver) from various airports around the country and around the world. For instance, a customer traveling from Austin may connect through Denver to get to Tokyo. Each hub has a unique purpose that adds value to our network, such as our Newark (EWR) and San Francisco (SFO) hubs which serve as gateway to the European and Asian markets respectfully. We optimize our schedule by operating flights in banks, or periods of times where a large number of flights depart from our hubs. These banks are scheduled so that customers coming in on arriving flights have enough time to connect before the next bank of departures. Scheduling our flights in banks allows us to offer our customers more flights at the most convenient times.  

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