PS

Four years ago United launched PS service using 757s. At the time, the product's competitive advantage was the product itself: The reconfigured planes debuted with three cabins -- First, Business and Economy plus -- power outlets at every seats, and improved entertainment options. Since the launch, JetBlue has increased its New York - Los Angeles presence and Virgin America has come aboard with affordable business class with superb entertainment. Still, for the majority of business travelers flying on the company's dime and contracted price, United is the way to go.

Regardless, four years later, PS has developed a competitive advantage that stands stronger in today's climate than any product differentiation: fuel efficiency. Today's Wall Street Journal has an informative piece on the fuel's devastating impact to the bottom line. Essentially, the average airline ticket barely covers the fuel bill leaving little to cover other costs and no room for profits. The article contains a look at the New York-Los Angeles market and accompanying data table shows just how well PS might be doing for UAL. While AA using 72% of collected fares per filght to pay for the gas guzzling 767, UA is only paying 53% on its reconfigured 757s. It seems even its regular configuration out of EWR is also doing far better than AA's 767s.

Of course, United and all airlines would like to see this number much much lower. But, as fuel prices continue to rise, it is hard to imagine how AA will survive running key routes with such fuel inefficient planes. Even when they get rid of the MD-80s and A-300s, they still have to deal with the 767s.