United Airlines – the wholly owned subsidiary of United Continental Holdings Inc. (UAL - Analyst Report) – announced its plan to expand its service from its home base, Chicago. Elmira, Topeka and States College will be added to United Airlines’ route from the beginning of next year.
United Airlines will add two daily round trip flights from Chicago’s O’Hare International airport to Elmira, NY, State College, PA and Topeka, KS.
United Airlines’ affiliate airline Express Jet will use a 50 seat regional aircraft and take approximately 2 hours 45 minutes and 2 hours 30 minutes to reach Elmira and State College respectively. However, the return flights will take around 1 hour to reach Chicago. Notably, in Apr 2013, United Airlines along with its airline partner SkyWest Inc. (SKYW - Snapshot Report) agreed to buy 30 Embraer SA’s (ERJ - Analyst Report) E-175 regional jets in a deal worth $4 billion.
The State College and Topeka flights are expected to start from Jan 7, 2014, while the Elmira flight will begin from Feb 13, 2014. Both Elmira and Topeka are new destinations for United Airlines while the company connects States College from Washington’s Dulles International Airport.
This domestic expansion comes quick on the heels of the addition of another domestic route within United Airliones’ network. Recently, the company declared a new daily nonstop flight from Indianapolis to San Francisco from Jan 7, 2013 using Airbus A-319. The nonstop flight will connect one of the fastest growing metropolitan with United Airlines’ largest Pacific hub, thus aiding customers to fly across to North America, Asia and Australia.
In addition to domestic expansion, the company is also expanding its service internationally and has recently received approval from the U.S. Department of Transportation to offer nonstop flights from San Francisco to Chengdu in China.
United Airlines declared soft operating performance for the month of Aug, where both domestic airline traffic (measured by RPM) and domestic capacity (measured by ASM) reported a decline of 2.6% and 2.8%, respectively.
We believe the new routes will increase both capacity and traffic for United Airlines as these are expected to attract business travellers of this locality with better connectivity to Chicago – one of the largest business destinations in Eastern U.S.
United Airlines, which operates with JetBlue Airways Corp. (JBLU - Analyst Report) currently carries a Zacks Rank #3 (Hold).