United Struggles to Fill All Those Seats Down Under

United made a huge push into the Pacific this winter, and the numbers are somewhat staggering. With so many seats flooding the market, it’s perhaps not surprising that United has struggled to fill them all. Early results may not look good, but this doesn’t mean it’s a complete failure. There will be some improvement as markets mature, but there’s also going to be some tweaking needed.

In its Q1 results, United announced some pretty gruesome numbers. The average fare for the airline over the Pacific dropped by 2.8 percent year-over-year. Even with that decline in fare, its load factor plunged 7.6 points. The end result was unit revenue dropping a hefty 12.9 percent in the region.

United Load Factor Between Continental US and Asia/Oceania

Data via Cirium

That looks awful until you realize there is a reason for it. Q1 2024 had about 6.2 million available seat miles scheduled in the region. That is a 68.7 percent increase over Q1 2023. SIXTY EIGHT POINT SEVEN. It’s a lot.

With that background, this result is much more understandable. But I wanted to dig deeper. Fortunately, T-100 data was just released for January, so I was able to look at load factors by route during the two months that straddle the peak season down under. Take a look.

Dec 2023-Jan 2024 Load Factor by Pacific Destination

Data via Cirium

The darker blue is in Asia while the light blue is in Polynesia or Australia. The trend is pretty clear off the bat that it’s the latter that’s struggling.

Let’s start with the good news. Oh my, Manila. Remember, Manila only started recently, and it’s on United’s biggest airplane, the 777-300ER. We don’t know the fare on this route, but at least United has not had any issues filling the seats.

I’ll also point out Taipei which recently was given more capacity along with Hong Kong up at the top of the list. Some markets seem to have much less trouble absorbing extra capacity.

But then, take a look at the other end of the chart. The Papeete (Tahiti) flight is not doing well. I can’t imagine the fares are good enough to justify flying a half empty airplane. Woof.

The airline’s new add to Christchurch is also not going very well. That one might take more time to develop since it is a brand new route, but I don’t know how much time it gets before United decides it just won’t work.

Brisbane is awful, which would explain why United pulled back on the LAX flight very quickly. That should help bolster San Francisco, but there is still too much capacity in Brisbane across all carriers thanks to overly-generous subsidies.

Sydney, meanwhile, varies greatly. To Sydney from Houston, more than 72 percent of seats were filled. It’s still not great, but it’s a whole lot better than the 66 percent from LA or 57 percent (!) from San Francisco. Not to sound like a broken record, but… there is too much capacity in this market.

One other thing to note is those very low loads at Tokyo/Haneda. This is a tale of two worlds. The east coast is atrocious. Newark filled 59 percent of seats which is the winner, a good 5 points better than Dulles. On the west coast, SFO was at 69 percent with LA at a nearly-respectable 78 percent.

The good news for United is that this really is a Pacific issue for United, and it’s directly tied to the huge increase in capacity. Latin had softeness, but the other markets had great results.

Load Factor by Region for United Dec 2023-Jan 2024

Data via Cirium

It’s funny to see Atlantic at the bottom end. Its loads may not have been huge — as is normal in the winter quarter when demand is down — but the results were outstanding with unit revenue up more than 10 percent. It’s not all about load factors if revenue can do its job and improve profits.

This is only a small sample, but I wanted to wait for January so I could get a sense of how the whole holiday season went. I have little doubt that United will decide it needs to make changes after this weakness. I imagine next winter may very well be lower, but there is room to wiggle and still make a good living.

United Struggles to Fill All Those Seats Down Under

United Struggles to Fill All Those Seats Down Under

United Struggles to Fill All Those Seats Down Under

United Struggles to Fill All Those Seats Down Under

United Struggles to Fill All Those Seats Down Under