A Deeper Look at United’s CRJ-550 Rollout
United has been talking about this for some time, but last week the airline finally loaded flights operated by the CRJ-550. Initial markets will focus on Chicago with Newark to follow. From what I can see so far, this isn’t just about being able to compete with American. It’s about surpassing the airline.
The Genesis of the 550
The CRJ-550 is United’s attempt to get around its pilot scope clause while improving options for travelers. United, like all US airlines, has a limit on the number of large regional jets that its partners can operate. As of now, it has maxed out that number. It doesn’t, however, have a meaningful limit on those small 50-seat regional jets, so it ends up serving more cities with those airplanes than it would like.
While United might like to fly airplanes with more seats in them on these routes, that’s not the most pressing issue. The big issue is that those 50-seaters (the Embraer 145s and Bombardier CRJ-200s) are all-coach. Couldn’t United put First Class and Economy Plus on these airplanes? It would be rough. These already aren’t the most economical airplanes around, and reducing seat count just won’t make sense. So these airplanes fly around with only coach seating, and that creates problems.
Most notably, as mentioned, frequent fliers can’t get access to Economy Plus or have a shot at an upgrade, because those don’t exist on these airplanes. While this may be a problem in general, the issue is magnified in Chicago where American is able to compete head-to-head with bigger airplanes thanks to fewer restrictions.
United doesn’t want to add small mainline airplanes, something that would trigger additional regional capacity. It also doesn’t think it can get to an agreement with pilots in any meaningful timeframe. So it embarked on this new adventure.
What United has done is have its regional partners take CRJ-700s — which normally seat 70 in a First/Economy Plus/Economy configuration — and put only 50 seats on them. Instead of a 6 First/16 Economy Plus/48 Economy configuration, these airplanes will have 10 First/20 Economy Plus/20 Economy onboard. This gives people a ton of room, and creates opportunities for closets in First Class so the small bins aren’t a problem for those travelers. The end result is pretty fantastic from a customer point of view:
From the airline viewpoint, well, it’s murky. United has to find a way to generate enough revenue from First and Economy Plus to justify the cost of flying that bigger airplane with the same amount of seats as the smaller one. I imagine this will work now, but when the economy turns… all bets are off.
Examining the Rollout
Of course, we know nothing about revenue generation yet, because this hasn’t even begun flying. Now that the markets are out, however, we can get a sense of how United wants to roll this out. The initial batch of markets has United effectively throwing a lasso around any city with moderate business within 600nm of Chicago.
- Beginning October 27, 2019 from Chicago/O’Hare to Allentown, Cedar Rapids, Cincinnati, Columbus, Des Moines, Grand Rapids, Greensboro, Harrisburg, Indianapolis, Madison, Northwest Arkansas, Oklahoma City, Richmond, St Louis, and Tulsa
- Beginning December 4, 2019 from Chicago/O’Hare to Sioux Falls and Wichita
- Beginning December 18, 2019 from Chicago/O’Hare to Greenville
- Beginning December 19, 2019 from Chicago/O’Hare to Green Bay and Syracuse
- Beginning January 6, 2020 from Chicago/O’Hare to Akron/Canton
What can we glean from these? Well, they fall into a couple of camps, but I think the best way to look at this is at a higher level. For all of these markets combined, here are the the percentage of flights that are on all-coach airplanes versus the percentage that are on planes with First and Economy Plus.
Previously in these markets, United had well over half of its flights without premium cabins. Now, it’ll be less than 20 percent. American, meanwhile, used to have a big advantage. Now it is left deciding how to approach its pending deficit.
Looking on a more granular level, not all of these markets have the same characteristics. There are some like St Louis where American has six flights, all with premium cabins. United has no flight with a premium seat today. All four of United’s flights will switch to make the airline more competitive.
At the other end of the spectrum is something like Wichita. Nobody is flying an airplane with a premium cabin on that route today. Soon enough, all four of United’s flights will have one, and that will give United a clear leg up on American.
There are also markets like Syracuse which had premium cabins on all flights before, and now will have the same after the switch. But remember, every CRJ-550 that takes over a flight means there is more free time for a larger regional jet to move to another route. The ripple effect is real.
What’s Next
After this early rollout, the next phase begins. On February 13, 2020, United extends this from Chicago into Knoxville, Lexington, and Little Rock. But then it goes to Newark for the first time with Cincinnati, Columbus, Greensboro, and Richmond.
Newark to Cincinnati falls into the same category as the rest. Delta flies that route today with premium cabins on all three of its flights. But the rest of Newark is something of a different play than Chicago. These routes have no direct nonstop competition. Yes, they compete with LaGuardia, and that is important. Delta flies nonstop with premium cabins on all these routes. (American is an afterthought with 50-seaters.) But to me this looks like more of a play for premium cabin connections, especially to Europe.
From Richmond, you can easily connect on American through Charlotte to Europe and get premium cabin the whole way. Same goes for Delta through JFK or Atlanta. With United, you don’t have that option today through any hub. This will solve that problem. I’m sure we’ll see more routes coming to Newark soon enough.
I’ve warmed up to this idea since it was first announced, and the way United is deploying this airplane, it looks like quite the coup. This is most definitely a company using out-of-the-box thinking to fix its problems and gain a leg up.
