United sees room for fare hikes next year, even with a 737 MAX return

United sees room for higher US fares next year, even with greater seat capacity when the grounded Boeing 737 MAX returns to the market, President Scott Kirby said at a conference on Thursday. The global grounding of Boeing’s 737 MAX in mid-March forced airlines to cancel thousands of flights, triggering higher fares during the peak northern hemisphere summer travel season and helping lift airlines’ unit revenue growth. Once the MAX is certified to fly again following software fixes by Boeing, some investors fear that airlines will have to lower fares to fill a potential surplus in domestic air travel capacity. Kirby played down those concerns. “This is an industry that prices below the point where you would expect supply and demand to intercept today, which means there’s room to raise fares,” he said. US domestic capacity is seen growing by 6% or 7% over the next 12 months, versus around 2% or 2.5% growth currently, according to analysts. United shocked investors when it unveiled a three-year plan in early 2018 to grow its own capacity by an annual 4% to 6%, a faster rate than its competitors, but so far its strategy of running more flights out of its hubs has paid off. Now United is more likely to turn its focus on improving earnings or margins, Kirby said, noting that all of its growth is in places where it has the best competitive position.<br/>