US Airways Dividend Miles (Pre-FlightFund Merger) - Southwest to Charlotte?

Southwest's first Pittsburgh flight is still four months away, but there is already talk the discount carrier may go on the warpath against US Airways by expanding into its Charlotte hub, says The Charlotte Observer (free registration)
https://registration.charlotte.com/reg/login.do?url=http%3A%2F%2Fwww.charlotte.com%2Fmld% 2Fcharlotte%2Fliving%2Ftravel%2F10623271.htm

...sharks smell blood in the water...

It seems like both WN and DL are doing everything they can to speed this patient's trip to the next world.

Southwest is smart, they are going after all the markets that could be considered fortress hubs for a carrier which tends to soak customers with excessively high fares when there is no competition. While something like that isn't rocket science, the way in which those guys manage it sure is impressive - they know exactly how to move into a market using advertising, promotions, etc., to build buzz among media and consumers. Think about it - Southwest coming into a market is exciting, "hot news" stuff, when was the last time US did anything positive that fell into that category?

Highly unlikely - let me justify that, if possible.

Southwest has never targeted hub airports in big cities. Their business model has always been the subtle attack - pick a nearby airport (where gate fees will be much less) and snipe at the majors from there. Midway instead of O'Hare, Providence instead of Boston, etc etc. Their initial plan in pennsylvania was to enter via Allentown, but the major cities made such sweet offers that they didn't refuse.

Given their history, I think attacking CLT directly is less likely than targeting Greensboro (GSO) which is within 60 miles and is a massive facility that would probably bend over backwards to get some business coming through.

There really isn't much place to grow at CLT. How many free gates are there at the moment?

[QUOTE=ginandtacos.com]Highly unlikely - let me justify that, if possible.

Southwest has never targeted hub airports in big cities.

What about DTW, LAS, LAX, MCO, BWI, STL, PHL, Phoenix

SW has been changing their stripes... They need to go where the people are (as Herb said about PHL...)

It would be foolish for US to not prepare for LUV's entry to CLT (or GSO). As surely as the sun rises in the East LUV will take an opportunity if they think they see one.

Really, it's that Southwest is running out of realistic options for small underserved airports where it can make big money. Yes, there are regions in which they are weak, and plenty of cities that they've been speculated to be entering (Richmond, Rochester, various Florida cities, etc.), but given the choice, why not start to go after the bigger boys? They don't make moves without being sure their business model can support them - if they can still effectively do (or come close to) a 20 minute turn in PHL, PIT, CLT, etc., why not move where o&d traffic is? They made it work at LAX. At this point, they are smart enough and have a strong enough work force that thinking of them as the "little out-of-the-way airline" is a bit mistaken. They play with the big boys now, just a slightly different game. Entering PHL and now PIT was not at all subtle.

Agreed that CLT will be tough because of gate space, but GSO and RDU are maybe 80 miles apart, pretty close for Southwest airports.

Southwest is eating US Airways alive.

No problem with the 20 minute turn in PIT Or CLT, if they went in. Heck, they make it work in PHL, just for the traffic they are getting.

Also, once LUV enters a market and becomes stable, they spend years "connecting the dots." That accounts for a lot of their recent growth. It's not like they go into 2 cities/year all that often anymore.

[QUOTE=ginandtacos.com]Highly unlikely - let me justify that, if possible.

Southwest has never targeted hub airports in big cities.

What about DTW, LAS, LAX, MCO, BWI, STL, PHL, Phoenix

I already accepted PHL as an exception, and MCO/LAX are as well. BWI is a backdoor into IAD to southwest, not service to Baltimore per se.

The airline was very, very close to using DET as an alternative to DTW before they began service there, and it was only when the NTSB determined that the DET facilities were inadequate to accept 737s in any significant quantity that they had to abandon the plan. PHX was one of their original cities, and (I may be wrong) but Phoenix was not the city it is today back when WN service there started.

It's not a perfect theory, and the airline is getting large enough to attack really big airports now so it may be moot. I'm just saying that, historically, GSO is the kind of place they would attack to get at CLT. Maybe times have changed, maybe not. There really isn't much available space at CLT right now, and there won't be unless US sells assets or folds.

Greensboro/High Point/Winston Salem is pretty far from CLT-why would the business people in CLT want to drive an hour to GSO for WN when they have US's convenience in CLT? Seems to me like although GSO is a nice choice, if they really wanted to hunt US, they'd go straight for CLT. Why didn't WN go to SFB instead of MCO? Is proximity to Disney important?
Anyway, I agree that WN's media buzz is worth a lot of money and sways the average traveller when they enter a market (see PHL and already/even more sooner PIT)

[QUOTE=ginandtacos.com]\ Their initial plan in pennsylvania was to enter via Allentown, but the major cities made such sweet offers that they didn't refuse.
\QUOTE]

That may be true but also ABE doesn't have enough parking for the volume that WN would create.

I don't think SW will come into CLT within the next 2-3 years, or at least until US gives up CLT as it's hub. This is the last place US will give up and will hold on to it until it goes under. SW's marketing plans for years have been to add no more than 3 cities per year and they still hold to that. I'm not really sure how big HKY is but it might be of there choice, if 737s can go through there. DL has begun service at HKY and US has cut back there so it makes since. GSO would also be a good logical choice if HKY is not doable and remember that SW does not target business people but more of the leisure market.

Highly unlikely - let me justify that, if possible.

Southwest has never targeted hub airports in big cities. Their business model has always been the subtle attack - pick a nearby airport (where gate fees will be much less) and snipe at the majors from there. Midway instead of O'Hare, Providence instead of Boston, etc etc. Their initial plan in pennsylvania was to enter via Allentown, but the major cities made such sweet offers that they didn't refuse.

Given their history, I think attacking CLT directly is less likely than targeting Greensboro (GSO) which is within 60 miles and is a massive facility that would probably bend over backwards to get some business coming through.

But they have also had success at Philadelphia. I wouldn't be surprised to see them go into Charlotte.

I see another airline entering the NYC-BOS, NYC-DCA, DCA-BOS, market. I don't care about Amtrak and busses. Those routes are and always will be profitable. If walk up fares are reduced, you would see many people leave the train and go back in the air.

I see another airline entering the NYC-BOS, NYC-DCA, DCA-BOS, market. I don't care about Amtrak and busses. Those routes are and always will be profitable. If walk up fares are reduced, you would see many people leave the train and go back in the air.

The "shuttle" markets you mentioned are already oversaturated, so I don't see an LCC entering anytime soon.

NYC-WAS: US, DL, AA, UA, CO, DH
NYC-BOS: US, DL, AA, CO
WAS-BOS: US, DL, AA, UA, DH

Way too much competition already, and fares at least on the Washington routes are pretty low (even from DCA) thanks to Independence Air's cost-cutting out of IAD.

GSO would also be a good logical choice if HKY is not doable and remember that SW does not target business people but more of the leisure market.

That's a popular misconception.

That's a popular misconception.

Indeed, the idea that only leisure travellers fly on Southwest is definitely a misconception. You think they need to schedule nine flights every weekday from San Jose to Burbank to accomodate leisure travellers?

Ed

Greensboro/High Point/Winston Salem is pretty far from CLT-why would the business people in CLT want to drive an hour to GSO for WN when they have US's convenience in CLT? Seems to me like although GSO is a nice choice, if they really wanted to hunt US, they'd go straight for CLT. Why didn't WN go to SFB instead of MCO? Is proximity to Disney important?
Anyway, I agree that WN's media buzz is worth a lot of money and sways the average traveller when they enter a market (see PHL and already/even more sooner PIT)

I talk with business travelers all the time who have driven from CLT to both GSO and RDU to take advantage of the lower fares. Given, that was before GO fares and DL's moves, but yes, people will drive and hour or two or three to sometimes save hundreds of dollars. Heck we drive from GSO to RDU all the time to take advantage of the even lower fares out of RDU due to the "Southwest Factor"

Yes I know many business travelers who fly SWA if they have last minute plans.

Also, there are many people who will drive one to two hours to save some money.

Even the people of NYC will take a cab ride to JFK which we all know costs 35 one way (and these are people who refuse to take the train) to save money taking Jet Blue. But yet after the drive in the cab they pretty much make up for it anyhow and probably have spent more than the person overall who bought a slightly higher flight on US out of LGA.

Me the roach that I am. I only spend my 1.50 on the subway line 7 and take the Q33 which is a free transfer. Takes me 40 minutes. About the same time it would take you to get to JFK. Heck JFK might even take longer depending on traffic.

SWA was eating US alive. US is holding its own in PHL. However, if everything falls into place (I am not sure what US' costs will be after the IAM vote.) they will be more competitive and hopefully much more aggressive.

I have also read that SWA hedging is ending soon. Anyone know when that will be?

If everything turns out well for US and I hope it does. This could be a huge turning point for them and a very interesting year.

If they can find someone to finance them and they come out of BK (yes they have a lot of hurtles to still make.) I hope they start taking back what was once theirs. Even though many were extremely upset over the meltdown at PHL. You would not believe how quickly people forget when they see a cheap fare. Yes some will avoid US all together however, if US starts to offer GO-FARES system wide soon and a simple fare structure. They are going to attract much more business.

This is all a wait and see what happens deal. Even I am shocked and yet happy that the ATSB has let US use the loan until June 30th. I think GECAS will be on board as well. Honestly if they did not think there was hope for US they would have said time to shut down. I am interested to see what the reorganization plan will look like by Feb 15th.

T

Of course SW will come to CLT. Don't believe for one minute that CLT officials haven't been in contact with them to discuss the possibility. If they haven't, then they aren't serving their public.

Whether US survives, or not, SW will be in CLT this year. GSO too!

The "shuttle" markets you mentioned are already oversaturated, so I don't see an LCC entering anytime soon.

NYC-WAS: US, DL, AA, UA, CO, DH
NYC-BOS: US, DL, AA, CO
WAS-BOS: US, DL, AA, UA, DH

Way too much competition already, and fares at least on the Washington routes are pretty low (even from DCA) thanks to Independence Air's cost-cutting out of IAD.

Jetblue and Air Tran have both stated that they would like to enter the market very soon. (More specifically Air Tran) I am not aware of the American shuttle. I think that it was 2 years ago when the first talk of liquidation began. I remember seeing that Jetblue, Airtran, and American were all interested in buying the shuttle. They said it was worth around 300 million.

BTW: Independence didn't really think that they could compete with the DCA shuttle, did they. I know they are dropping Newark flights down to 10 or 11, from the original 16.

SWA was eating US alive. US is holding its own in PHL. However, if everything falls into place (I am not sure what US' costs will be after the IAM vote.) they will be more competitive and hopefully much more aggressive.

LUV is claiming (for what that's worth) that PHL has been their most profitable city launch. Ever. When you consider how badly it mucks their operation (due to the fact that the airport layout sucks large rocks thru a small straw), that's not a good sign.

Even after beating the snot out of labor, US' CASM (excluding fuel) will still be higher than LUV's. Nevermind all the operational problems (the latter are really what makes LUV shine--they make money despite paying their labor force more than what the US labor force now makes).

I have also read that SWA hedging is ending soon. Anyone know when that will be?

They are something like 60-80% hedged (IIRC) all the way thru 2005. But let's assume for the second that the hedge ended today--nobody else can afford to hedge in any case, and they've got the biggest cash pile.

The "shuttle" markets you mentioned are already oversaturated, so I don't see an LCC entering anytime soon.

NYC-WAS: US, DL, AA, UA, CO, DH
NYC-BOS: US, DL, AA, CO
WAS-BOS: US, DL, AA, UA, DH

Way too much competition already, and fares at least on the Washington routes are pretty low (even from DCA) thanks to Independence Air's cost-cutting out of IAD.
A lot of competition in those broad markets, but not necessarily in the prime airports. DCA-LGA, DCA-BOS are different than IAD/BWI-LGA/JFK/EWR or BOS/MHT/PVD. On some of these, the competition is tighter, and the Shuttle routes are very profitable - this is why US has said that if they had to liquidate piece-by-piece, the Shuttle might be one of the valuable assets they'd have to sell if they were desperate.

Indeed, the idea that only leisure travellers fly on Southwest is definitely a misconception. You think they need to schedule nine flights every weekday from San Jose to Burbank to accomodate leisure travellers?

Ed
I've said this before, I think that this misconception in part comes from what market you live in. In the Northeast, SW seems to be much more of a leisure airline because they don't fly into the major business centers. DC? You have to travel to BWI, very inconvenient. Boston? Either Manchester or Providence. New York City? Give Islip a try. No center-city airports, which means they are less likely to get business travelers, whose time is more limited and who are looking for price and convenience. Compare that to California, where they seem to be everywhere, or key markets in the South or even Midwest.

If anyone knows how many free gates there are in CLT post it. It would be interesting to see.

T

If anyone knows how many free gates there are in CLT post it. It would be interesting to see.

T

Basically none.

US has a lock on B, C, D for mainline (D for international as well). And they use them all. D was a little quiet for a while but domestic creaped in and more carribean flights it's usually now full. E is strickly Express (the best express concourse in the nation in my opinion) but has no room. So it's down to A, a mini-concourse on the west side of the airport. 9 gates I think. Maybe 10. UA has two. So divide at most 8 between DL, CO, NW & AA. They still are going to serve CLT and can't give a gate up if they wish to maintain flights. US is expanding so will not give away gates (though they just did in PHL with Concourse D (D2, D4) but those gates were used for expansion pre-Concourse A-West and Concourse F). So now LCC has a chance to get a gate precense in CLT without taking over US gates which I can't see how it will happen. There is a lot of loyalty down there to US (far more than in the PHL area). Not saying there aren't people who hate the sky-high CLT fares and sat. night requirements but it's probably the best US loyal stronghold left.

Jerry Orr the manager at CLT has stated the airport is capable of adding gates in the A concourse. Also with ATA leaving that should free up gate space in A. US has a couple of gates in A but they will probably consolidate in to B,C,D,E. So there might be 3 or 4 gates free up fairly quickly.

Jerry Orr the manager at CLT has stated the airport is capable of adding gates in the A concourse. Also with ATA leaving that should free up gate space in A. US has a couple of gates in A but they will probably consolidate in to B,C,D,E. So there might be 3 or 4 gates free up fairly quickly.

I think ATA only had one gate. Didn't know US had A gates. None show up on the CLT airport may on the website. Either way it wouldn't be enough for a large-scale LCC presence. Far less O&D traffic than PHL and US has even more exsisting capacity. Just install go-fares and I think it would be really hard for WN to compete.

Agreed that CLT will be tough because of gate space, but GSO and RDU are maybe 80 miles apart, pretty close for Southwest airports.

If not Southwest in CLT, it will be another LCC.

GSO and RDU are too close, and Southwest already has thriving business in RDU