5 questions for Kevin Knight, United Airlines' senior vice president of planning

Chris Walsh, Rocky Mountain News

Published May 19, 2007 at midnight

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CHICAGO - United Airlines announced this week that it will continue to shrink flights within the United States, continuing a long trend amid aggressive competition from low-cost carriers.

The news doesn't come as a surprise: United executives recently acknowledged the carrier might have been a little too aggressive in adding capacity to its system last year, when it emerged from a 38-month bankruptcy.

It's not that there isn't enough demand. United and other airlines are reporting record occupancy levels. Rather, the problem is that the domestic airfare environment is a bit weak because of heavy competition.

United, though, continues to find opportunities outside the country and will boost international capacity by up to 4 percent this year, including new flights to Hong Kong and Rio de Janeiro, Brazil. It's also boosting regional airline service by up to 5 percent.

Kevin Knight, United's senior vice president of planning, sat downwith Rocky Mountain News reporter Chris Walsh in Chicago this week to talk about the capacity reductions, the overall fare environment and United's presence in Denver.

1 What is United seeing in the domestic market?

Our bookings continue to look pretty good, but we're also seeing capacity increasing versus what we saw last year. That's putting pressure on yields, which is putting pressure on the revenue side. So we're responding to that with a little less capacity. It's pretty much across the board. I wouldn't necessarily say it's low-cost carriers or legacy carriers; it's pretty much industrywide.

2 How will the reductions affect your Denver hub?

The reductions are being spread across the system. We're not getting out of any markets or anything dramatic like that. We're trimming capacity, reducing the number of flights. But the international marketplace continues to look strong, both from a traffic and yield perspective.

3 The new open skies agreement between the United State and Europe opens the door for more flights between the countries. United recently told us it is considering new service between Denver and London. Any developments on that end?

The new agreement obviously creates some new opportunities. We're looking at a number of possibilities, and Denver- London is among them. It's premature to say whether or not we would be ready to launch that service, but it's clearly, clearly something that we're thinking about.

4 United executives recently said the company's Denver hub is not as profitable as it used to be. Have you changed your strategy in Denver since Southwest Airlines arrived last year?

Southwest's arrival really hasn't changed our strategy in any particular way. We're going to do what makes sense for us to do and what makes sense in the marketplace. We're currently operating just under 450 daily departures in Denver to over 100 cities.

In the last year I think we've added seven new cities. We're going to be very aggressive as we compete, no different in Denver then any place in our system. We're going to look for opportunities where they present themselves; we're going to protect ourselves in markets that we're established in.

We have a fantastic route network. Great products like economy plus, a terrific frequent flier program, and Ted.

5 Speaking of Ted, how is it doing?

Ted was developed very specifically for certain markets where our customers are traveling primarily for leisure. That's how we deployed Ted. In Denver currently it's nine markets. We think Ted's probably about the right size at the present time.

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