United's Plans for Transpacific Growth from San Francisco

• Five new routes from SFO, including the only direct United States-Singapore service
• Deeper partnerships with ANA, Air China and Air New Zealand
• Plans for Polaris-branded premium service

United Airlines began direct service between San Francisco and Singapore on June 1, reigniting the only nonstop flights between North America and Singapore since Singapore Airlines discontinued its U.S. flights in 2013. The new route is part of United's expansion in transpacific service from its San Francisco hub, vice president of Atlantic and Pacific sales Marcel Fuchs told BTN in Singapore following that inaugural flight.

BTN: What are United's immediate plans for expansion from San Francisco?

Fuchs: This is the third of five inaugurals this summer out of San Francisco. We started with Tel Aviv. We've flown that for two months and made the decision to go daily. It's had a terrific start and combines the two tech cities—Tel Aviv, which is strong in the IT sector, with Silicon Valley. We added Xi'an [in central China] earlier in May, which was really exciting to fly. We already had started Chengdu [in southwestern China] in May 2014. Now, we're on our third with Singapore, and we'll do Auckland [New Zealand] July 1 and Hangzhou [along the East China Sea] on July 13. All of these five show the importance of our San Francisco hub. It's our 12th [transpacific] route out of San Francisco, and seven of the 12 are on the Dreamliner, which shows you the workhorse the 787 has become. It's a phenomenal airplane for us, and we've never been able to do that before. With the mix in terms of 48 BusinessFirst [seats], 204 Economy and an Economy Plus section with 88, it's the right size airplane.

BTN: Is overcapacity on these routes a concern?

Fuchs: With the Singapore market, we're actually not adding capacity. We've been flying [there through] Hong Kong and Tokyo for many years. We're simply switching over one of the two one-stops. The market acceptance has been phenomenal, and we're really excited about the growth in San Francisco. Many of the corporate clients have told us it's the most-wanted next nonstop they had on the wish list from us. After years of planning, we get to do it. We are really excited about that portfolio.

BTN: Do you expect that the Singapore route will increase your marketshare?

Fuchs: There's no reason why Singapore nonstop shouldn't perform on the same level as other transpacific flights. About a third of the bookings come from Singapore—it's a relatively small market—and two-thirds are coming from the U.S. There are about 750 [American Chamber of Commerce] members here, which is a pretty good size, and about 3,500 American companies are registered in Singapore and many have regional offices here, as well. I'm very confident this market will do well, shaving off at least four hours and providing about 36 new one-stop cities.

BTN: Did United add the other new destinations you mentioned with corporate travel in mind?

Fuchs: Less so. The magic is the right mix. Xi'an is a more leisure-focused destination. Hangzhou: We expect a stronger corporate sector, and it complements nicely what we do out of Shanghai. Auckland is a tourist market, but of course it has some corporate segments, as well. We've recently announced the joint venture with Air New Zealand, starting July 1. They fly to Houston, which complements our offering and will help us quickly get market entry. We recently cemented our relationship with Air China, deepened it, and signed a multiyear agreement. At this point of time, it's codesharing and frequent-flyer [reciprocation] and many of the customer-facing portions. Together, we are well positioned to capture the alliance marketshare. Chinese carriers have been growing more than the U.S. carriers, mostly because U.S. carriers have maxed out the Tier One cities. There are also access issues, and we're working to try to resolve that.

BTN: Are low-cost carriers becoming more of a factor on these routes?

Fuchs: In terms of LCCs, we're seeing a very strong entry from carriers like Norwegian on the transatlantic portion. Transpacific: Frankly, we haven't seen that infiltration in terms that corporate business would be impacted. Transpacific is already a super-competitive market, and more Chinese carriers are flying it.

BTN: So how does Tokyo fit into your strategy, considering you pulled the Tokyo-Singapore connection?

Fuchs: When you look back, we initially had service beyond Tokyo in terms of flying to Singapore, to Bangkok, to Manila and to Jakarta, for which we can now use effectively ANA. If you look at the figures we used to carry, we've doubled that on ANA, and it becomes a much more efficient operation for us to leverage ANA's portfolio. Even so, Tokyo will remain important for us, just with the fact that we'll more often use the ANA relationship. We still have some, like Incheon in Seoul [South Korea], which we do in addition to the nonstop because the demand is so big.