United Airlines is donning the gloves to protect its trans-Pacific market share, and vows it will not be the first to flinch in what is shaping up to be a tough fight. United vice-president Pacific Mark Schwab hit back this week at speculation by British billionaire Richard Branson that United might be forced to abandon the Australian market, saying the US carrier had been in the country 23 years "through thick and thin" and remained committed to its position. Mr Schwab said Australia was part of United’s DNA and it would use its experience in the highly competitive US aviation market to battle new competitors across the Pacific.

"We know how to hold our own and we’re certainly going to fight for our position in the Australian market," he said. "We feel very strongly about it, as I think our investment in the routes here over the years shows.
"We have a very large database of frequent flyers here whom we continue to serve, and we’re just delighted to bring them the best product we have at United Airlines, and put it here in this marketplace."

The comments came as Virgin Blue long-haul offshoot V Australia prepared to launch its first flight between Sydney and Los Angeles today. The Pacific has gone from being one of Australia’s more expensive routes to a low-fare battleground, with prices dropping to as low as $999 return in recent weeks. In addition to competition from V Australia, United also faces a challenge from fellow US juggernaut Delta Air Lines when it starts flying services from Los Angeles to Sydney mid-year. United was slow to adopt the business-class sleeper seats introduced by other airlines, but has been progressively rolling them out on services to Australia since November.

It now has 193cm-long lie-flat business-class seats on all 747-400 services across the Pacific, and has completely upgraded its first-class service. The 60cm seat comes with all the bells and whistles, including a 38cm video monitor, on-demand video, noise-cancelling headphones, iPod connectivity and laptop power. But it is pitted against similar products on V Australia and Delta, as well as a revamped business class on Qantas’s flagship A380 superjumbo.

Nonetheless, Mr Schwab believes the US airline’s upgraded product — which includes improved food services and faster ways of getting premium customers through airports — stacks up well against its competitors. The market response to the new product had been "absolutely terrific", and the airline expected strong results from its introduction to Australia. "The customer ratings are showings the results instantaneously — there’s very strong improvement in ratings from our customers," he said.

Mr Schwab said the first-class suite had been upgraded to the point where it could be a bedroom, office and dining room, and had the latest connectivity for devices such as iPods. Body: Business class had been completely revamped and the airline also had a unique "economy plus" product, which offered its most loyal customers 70 seats with 12.5cm of extra legroom at no extra charge.

"We feel that offering that product line with an unsurpassed network (compared to) any of the competitors will remain quite a strong offering," he said. "Our hubs in Los Angeles and San Francisco offer more daily services to more destinations across the US and North America (than others). So that gives you a range of choices that others, frankly, can’t offer."

Commenting on the cost of flying United’s older 747s versus V Australia’s new 777s and the Airbus A380, Mr Schwab said the jumbos had been refurbished inside and the ownership costs were low compared to new aircraft.

"So if you think about what that equation looks like in your profitability model, we can do quite well," he said. "(With) the 747, the seat density on the aircraft is reasonably efficient and we’ve been profitable with that here on the Australia route, and I don’t see why we wouldn’t continue to be in the future."

On the question of low fares and whether they were sustainable, Mr Schwab said United made 15,000 fare changes a day within its system as it adjusted to market conditions. It also looked to stay "toe-to-toe" with the competition.

"We are going to hold our share in this market, make no mistake about that," he said. "So if people are putting prices out there, we’re going to take a hard look at it. More likely than not we’re going to respond to it with quick fares into the market. "Frankly, our bread and butter of the business is serving frequent business flyers. So the premium cabins really drive the revenue of the airplane, which allows us a great deal of flexibility in what we do in the economy-class cabin."

However, the United executive admitted demand was down and the timing of the new capacity entering the trans-Pacific route was "awkward". He said lower fuel prices had been helpful to the airline’s profitability, but this had been counter-balanced by a drop in demand.

"We’ll have to see how that equation balances out," he said. "But we have been very disciplined as an airline about trying to put the right amount of capacity on the right markets with the right product offerings."

It had moderated capacity in markets where demand was off, such as between the US and China, but in Australia it was a case of putting the right product in the market at the right time. "I feel very good about our position here in Australia," he said.