An internal message obtained by media reveals that United Airlines has implemented a sophisticated algorithm that will cancel flights within seven days of departure when load factors fall below a certain threshold. This news is a clear indication of the airline’s drive to reduce its cash burn and cut costs wherever possible.
The situation at United Airlines
In the internal memo seen by Skift, United Airlines told its employees that there would be proactive mainline cancelations when a load factor falls below 30%, citing the “frequently shifting COVID-19 environment” and the difficulties in “predicting customer demand when building schedules.” The message goes on to say that this approach will help the airline to preserve cash.
Responding to an inquiry from Simple Flying, a United Airlines spokesperson offered this statement:
“In the interest of operating as efficiently as possible with the least amount of disruption to our customers, we are proactively canceling flights that have few customers on board but have multiple departure opportunities available. Since we began doing so, less than one percent of flights have been cancelled. When a cancellation occurs, we are proactively notifying impacted customers 18-24 hours ahead of their scheduled departure and automatically booking them on a new flight the same day or they may select an alternate flight that works best for them.”
A sensible approach?
Even someone with zero business training would be able to understand that operating a flight 30% full (or even less) is a surefire recipe for bankruptcy. As Skift points out, this is something most airlines would be able to endure during standard, non-pandemic times.
Under ‘normal’ conditions, a full-service airline will endure the loss, preferring to keep their schedule intact, keeping high-value customers happy. Of course, under normal conditions, there are enough profitable flights operating across the network that the loss generated by an empty flight would be offset.
Few passengers actually affected
As United’s statement also pointed out, cancelations are made only on flights that also have multiple departure opportunities available, hypothetically resulting in minimal disruption for affected passengers. And on the note of affected passengers, United notes that less than one percent of flights have been canceled for these reasons.
According to Skift, United claims 77% of affected customers have arrived within four hours of their originally scheduled time, with one-third even arriving early.
Thus it does indeed seem like the benefits greatly outweigh the downsides. This is even mentioned in United’s message to employees, with the airline saying: “Although this process does impact our reliability, it helps us preserve cash for the long run.”
What do you think of this new approach? Do you think being notified 18-24 hours in advance of your flight cancelation is enough time? Let us know your thoughts in the comments.
