United Airlines to Extend Latin and Central American Network
United Airlines – the wholly owned subsidiary of United Continental Holdings Inc. (UAL) – has announced its plans to introduce a daily service between Santiago, Chile and George Bush International Airport in Houston from Dec 7, 2014. The carrier also expects to begin services to Dominican Republic and Belize from Dec 20. All of the new route launches are subject to regulatory approvals.
United Airlines will use The Boeing Co.’s (BA) 767-300 wide bodied jets on the route which boast 30 flat-bed seats in the business class and 184 seats in United Economy, of which 49 seats have additional legroom.
The Saturday service between Houston and Punta Cana, Dominican Republic will run throughout the year, and will be provided additional Sunday flights during high demand periods. Likewise, the Belize City-Chicago service will also run on Saturdays and will remain operational through early May, 2015. Notably, United Airlines already flies to Belize from Chicago, Washington D.C. and Newark, while to Punta Cana, it flies from Houston and Newark.
The carrier has similar plans to augment its Saturday service between Houston and Aruba from Dec 20 till May 2015 and introduce Sunday flights during periods of higher demand.
United Airlines’ extension into the Latin American market does not come as a surprise as the carrier continues to face solid demand from the region. Meanwhile, Central America and the Caribbean have also become important destinations where U.S. carriers like Southwest Airlines Co. (LUV) and JetBlue Airways Corp. (JBLU) have already decided to expand their footprint.
The Chicago-based carrier currently operates to 62 cities in 28 different Latin American destinations from its 7 different U.S. hubs, with Houston being the principal one. According to United Airlines, the flight to Chile is conveniently timed to provide passengers access between Houston and different destinations throughout the U.S. and the world.
We believe launch of these new routes will provide United Airlines the impetus to improve its traffic and capacity, and thus cater to the increasing demand within these markets. However, political unrest in Iraq and its subsequent effect on fuel price remains an immediate concern for the carrier.
United Continental currently carries a Zacks Rank #3 (Hold).
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