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United Airlines' Apple-Flavored Airport Upgrade

By Casey Kelly-Barton - Sep 20, 2014 at 8:19AM

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United Airlines and partner OTG are renovating the airline's Newark terminal to include new eateries and 6,000 iPads.

United Continental Holdings (UAL -3.40%) announced plans this week that should make its passengers' time at Newark Liberty International Airport more efficient and appealing, while generating more sales for airport vendors. The key ingredient is lots of Apple (AAPL 0.00%) iPads.

OTG's overhaul of one of Delta's LaGuardia terminals. Image: OTG.

United and its remodeling partner, airport restaurant developer OTG, plan to install nearly 6,000 iPads in Newark's Terminal A as part of an overhaul that will add 10,000 charging outlets and bring in dozens of new eateries. The iPads will let travelers shop, track flights, order drinks and meals, or just surf the Web without incurring data charges or paying Wi-Fi access fees. The renovations are expected to take 18 months to complete, with the first new features, pop-up eateries, slated to appear in November.

OTG has already made a name for itself adding thousands of iPads to terminals in New York, Minneapolis-St. Paul, and Toronto, in what the company describes as "one of the largest consumer-facing deployments" of the technology. But the Newark project will involve more than twice as many tablets as OTG's largest project to date -- the 2,500 iPads installed in two terminals at Toronto Pearson Airport.

Easy-access iPads and more outlets and USB interfaces should make the terminal experience better for passengers in several ways.

Lighter loads
No more hauling carry-on bags from shop to shop. Travelers will be able to pick a seat, order food and other items on the iPad, and have them brought to the table.

Better dining
Less trundling around the terminal for stuff means more time to sit and savor a meal during a layover -- an important perk in an era when on-board meals are rare and dragging your bags through a fast-food line can be a hassle. As part of the terminal overhaul, OTC is planning some 55 eateries, including 20 chef-concept restaurants.

More convenient flight information
No more wandering the terminal looking for an update board. The iPads will have flight information at each seat or table.

Time to recharge
Thousands more outlets and USB interfaces will make it easier for passengers to let their own mobile devices charge up for the flight ahead.

Of course, the new iPad arrangement will offer benefits to United and OTG, as well.

One-upping the regional competition
With an eye to all the air traffic in and out of New York, United's upgrades will be bigger than recent OTG projects at JFK for JetBlue (JBLU 1.62%), with 420 iPads currently in service, and at LaGuardia for Delta (DAL -2.44%), where 1,500 iPads help travelers get what they need.

Ringing up more sales
According to travel industry news site Skift, OTG racked up a "double-digit increase in sales at LaGuardia Terminals C and D following the introduction of iPads and new food concepts." Outbound travelers now spend more per person at those LGA terminals than at any other major U.S. airport, Skift reported. Considering that the scale of the tech deployment at Newark is so much larger than the LaGuardia project, it's reasonable to expect that the redone Newark terminal will perform as well or better.

A sweet deal for Apple?
If the airport-installed iPads lead to better sales in United's Newark terminal, it could be encouraging news for Apple. Net and unit year-over-year sales for iPads declined during Apple's third quarter and for the first three quarters of fiscal 2014. Apple cited a decline in sales in mature markets for the overall drop. A demonstration of the iPad's benefits to retailers could score Apple more volume sales in mature markets to offset that decline.

The iPad upgrade at Newark is meant to be a splashy gesture at an important hub for United. But if the sales boost that OTG recorded after Delta's LaGuardia iPad deployment is any indicator, it could yield real benefits for terminal merchants, United, and perhaps Apple, as well.

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Stocks Mentioned

United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$37.20 (-3.40%) $-1.31
Apple Inc. Stock Quote
Apple Inc.
AAPL
$141.66 (0.00%) $0.00
JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
JBLU
$8.76 (1.62%) $0.14
Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$30.44 (-2.44%) $0.76

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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