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Soaring fuel prices earlier in the year and the worsening financial crisis has hit the aviation industry hard in the pocket. Despite its parent company UAL recording a third-quarter net loss of $779m, United Airlines launched on October 27 a non-stop service between Washington Dulles and Dubai, its second route in the Middle East after Kuwait City.
Is this the right time to be launching a new international service, with the world on the brink of recession?
We think it is but we have to be vigorous about where we are flying and wouldn't fly or enter into a new market unless we thought there was a very solid business case for a valuable return on that asset.
We believe that this is the case here and early evidence suggests we should be encouraged.
How have your pre-bookings been for the Dubai service?
We don't release specific figures for specific routes but thus far we are encouraged. We are a little ahead of track of what we planned when we decided to do this route. It's somewhat comparable to what we would see across all our transatlantic flights.
We have very good experience here with our Kuwait flight.
We have been flying Kuwait three times a week until December 2007 when we went to seven days a week and we've performed very well there, and it has been a contributing factor to our modelling and estimations about what would expect to see for Dubai.
How much of an impact has the economic downturn had on your operations?
In a broad sense, we, as has everyone else, certainly noticed the economic challenges but it is somewhat region-specific about what the implications would be.
If you look at the United States alone, there has been a lot of capacity taken out of the marketplace in the past 12 months. Many airlines have taken seats out of the marketplace and that has better aligned supply with the demand in the marketplace.
Demand did go down but it's also allowing us to operate, if we are sensible and reasonable. International travel still continues to be relatively strong for most carriers depending on the market.
The decline in demand particularly for premium cabins - first and business class - has been more or less severe depending on the market. But we are aware of that and make capacity decisions and frequency decisions and aircraft decisions based on that.
With the price of fuel softening to $70 a barrel, do you have plans to reduce fuel surcharges any further?
The fuel impact has been very material over the last 18 months and even at the current levels compared to the historic norms they seem relatively high. One of the reasons fuel prices have actually declined recently is because of demand destruction in the marketplace.
Demand pressure has gone down therefore the need for that raw material has gone down with it, so you have to take that into the economic equation. The other thing we have to be cautious about is that fuel is quite volatile at the moment.
Does United Airlines intend to invest in new aircraft this year?
At the moment we haven't announced anything. We are under evaluation as we have been here for some time now. We look at capacity on a worldwide basis. Have we looked? Of course, but are we ready to announce anything publicly at this time now?
