United Continental Continues Its Small-City Expansion

Since joining airline giant United Continental (NYSE: UAL) last year, company president Scott Kirby and CFO Andrew Levy have pushed a strategy of expanding in smaller cities. The first big batch of new routes associated with this strategy started up in June. Since then, management has made it clear that additional small-city routes would be coming next year.

Sure enough, United Continental announced a new set of routes to small cities last week. However, while its interest in small cities makes sense, United may have trouble competing with Delta Air Lines (NYSE: DAL) and American Airlines (NASDAQ: AAL) in some of these markets, due to its reliance on 50-seat jets.

Price competition from budget carriers has made American, Delta, and United more reliant on travel to and from small cities in recent years. Routes between big cities have been prime targets for low-cost carriers, driving down fares and making it harder for high-cost airlines to earn good profit margins.

Source: Fool.com