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United Upgrades San Francisco Hub as Boeing 787 Chengdu Flight Looms

Stocks in this article: BA UAL AAL DAL

SAN FRANCISCO (TheStreet) -- The best Asian hub in the U.S. will get better next week, when United (UAL) opens a new boarding area in its dedicated terminal at San Francisco International Airport, where one of the most ambitious efforts in recent U.S. aviation history -- a San Francisco to Chengdu flight -- will take off in five months.

At San Francisco, United operates the largest hub on the West Coast with nearly 300 daily departures, including eight daily non-stops to seven cities in Asia -- making it the largest single airline Asia hub in the U.S. -- as well as 260 daily departures to 70 domestic cities. This year, the carrier will begin service to two more Asian cities, Taipei and Chengdu, in March and June, respectively.

The Chengdu flight is a symbol of the vast possibilities ahead for U.S. commercial aviation, using the Boeing (BA) 787, a new airplane with unique capabilities, serving a destination with no non-stop U.S. service, and taking advantage of a hub system that at its best aggregates passengers at levels that enable the opening of new air travel frontiers.

The boarding area improvements, which cost $138 million, will add a newly renovated Boarding Area E in Terminal 3, which is wholly dedicated to United flights. Boarding Area F has 21 gates; Boarding Area E, which will re-open on Jan. 28, will add 10 more. By May, United will have moved most of the operations it has in Terminal 1 to Terminal 3. The upgrade is part of a long-term $5 billion improvement project at SFO.

"The terminal and the new boarding area reinforce our commitment to the San Francisco market and to keeping SFO as the leading Pacific gateway in the U.S.," said Brian Znotins, United vice president for networks, in an interview.

Asian growth has been a focus of U.S. aviation for years, but the focus has intensified given two recent developments. The merger between US Airways and American (AAL) completed the post-deregulation consolidation into an industry with three global carriers, coinciding with three global alliances with three major European carriers.

Additionally, Delta (DAL) has begun a push to establish its Asia hub in Seattle, as the three carriers maneuver to stake out positions at the big three West Coast airports: LAX, SFO and Seattle. In this pursuit, United starts with a huge lead.

"If you take a clean sheet of paper and build hubs from scratch, and you want a Pacific gateway, it's hard to think of a better gateway than SFO," Znotins said. "It's geographically well-situated. It has a strong corporate presence, a lot of local travel, regional GDP growth and (multiple) demographic and economic factors" including a sizable Asian population."

Among the demographic advantages, he said, San Francisco leads all Western gateways in terms of its propensity for international travel. Each San Francisco resident makes 0.38 international trips annually; the rate in Los Angeles is two-thirds of that and the rate in Seattle is half of that.

In a sense, the competitive situation on the West Coast parallels the situation in the New York area. In both cases, United operates the best hub, although the carrier has been held back in recent years by repeated failures in its efforts to integrate United and Continental following a 2010 merger. Nearly every quarter since then, the airline has declared a turning point, but the hope has repeatedly dashed. United reported earnings on Thursday.

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