UA ends LAX to New Orleans daily flight [effective August, 2016]
#46
Join Date: May 2014
Location: DMV
Posts: 2,092
You can't be a hub with only O/D traffic. It goes directly against the hub and spokes model. The whole idea for a hub is to have as large a network of connections as possible, once you reduce an airport to 'profitable' flights to significant markets you no longer view it as important to the logistics and efficiency of your airline and thus no longer a hub.
I think that point has passed some time ago with UA and LAX. I consider LAX a hub in name only. Given that LAX is a highly competitive market just for its O&D traffic, it probably doesn't make a lot of sense for any of the majors to make it a true hub. Makes more sense to zone in on their respective fortress hubs where margins can be higher.
I think that point has passed some time ago with UA and LAX. I consider LAX a hub in name only. Given that LAX is a highly competitive market just for its O&D traffic, it probably doesn't make a lot of sense for any of the majors to make it a true hub. Makes more sense to zone in on their respective fortress hubs where margins can be higher.
#47
Original Poster
Join Date: Apr 2012
Location: LAX
Posts: 556
This cut comes at the same time as a flurry of IAH-related schedule changes... IAH-ONT/YUL/LOS. SFO-FLL (also overflying IAH) has been seasonally reduced.
I wonder if UA is trying to kill two birds with one stone here... exit a saturated, low-yield market, and strengthen flow over IAH for any MSY-LAX pax who remain with United (as there will be some). IAH becomes the logical transfer point for both LAX-MSY and SFO-FLL.
Edit to add:
Based on the most recent schedule update, even with MSY cut, UA has increased daily departures at LAX for the fall schedule... just about all of the other remaining changes were added flights to spokes like FAT/TUS/LAS/ABQ/PSP/SAN/SMF, plus EWR went up to 15x.
I wonder if UA is trying to kill two birds with one stone here... exit a saturated, low-yield market, and strengthen flow over IAH for any MSY-LAX pax who remain with United (as there will be some). IAH becomes the logical transfer point for both LAX-MSY and SFO-FLL.
Edit to add:
Based on the most recent schedule update, even with MSY cut, UA has increased daily departures at LAX for the fall schedule... just about all of the other remaining changes were added flights to spokes like FAT/TUS/LAS/ABQ/PSP/SAN/SMF, plus EWR went up to 15x.
#48
Join Date: Sep 2015
Programs: UA Million Mile, Mileage Plus Premier 1K, SkyMiles Gold Medallion, AAdvantage Gold
Posts: 875
I flew from MSY to LAX on UA a few months ago (one way). I connected through IAH (MSY-IAH-LAX) because I wanted an early morning departure. UA has a problem where it has to either increase or eliminate MSY service because it doesn't offer this. It only offers one evening flight. DL has 3 daily (morning, afternoon, and evening), AA just started an evening flight, Spirit has an afternoon flight, and WN has two daily flights (morning and afternoon). This route has so much competition it is simply not worth it to UA to go after customers and add a second frequency to compete. (Same goes for the LAX-MSY flight, which only has a red-eye) So, it will eliminate it all together.
#50
Join Date: May 2013
Posts: 3,361
Of course the big difference is that LAX is the airport for the nation's second largest air market with 18.6 Million people. And not poor people with few high spending businesses (like BNA, LAS, PIT, STL) but a key market for large numbers of industries with premium traffic (finance, insurance, banking, entertainment, some tech).
Originally Posted by spin88
This model does not work. Passenger spends $30K/year in travel. UA offers 15 destinations, AA and DL offer 45. Unless United stands out with superior service. United looses this - and most other HVFer traffic. But to keep the designations going, you need connection traffic.
Maintenance of a network is most critical in hubs with 40%+ connecting traffic like CLE or any of Delta's legacy hubs.
Originally Posted by spin88
The cumulative cuts to LAX have taken UA from no 1 to no 3 since 2012. Last three months, AA had a 20.13% market share, Delta had a 17.16% market share, UA was back at 14.69% market share. http://www.lawa.org/uploadedfiles/LA...rrier-2016.pdf
I assume they are already past the tipping point of HVFers moving to DL or AA, hence another round of cuts to routes ex-LAX.
I assume they are already past the tipping point of HVFers moving to DL or AA, hence another round of cuts to routes ex-LAX.
#51
FlyerTalk Evangelist
Join Date: Oct 1999
Posts: 11,419
I do not believe I have never advocated for this. If you are unable to provide a source, I would kindly ask you edit your post to remove the misquoting.
So, you have ....
Perhaps you should look at the trend in passengers carried, consolidating the share of merged airlines pre-merger, rather than focusing on relative market size. You'd see a much smaller shift than implied.
So, you have ....
Perhaps you should look at the trend in passengers carried, consolidating the share of merged airlines pre-merger, rather than focusing on relative market size. You'd see a much smaller shift than implied.
#53
Join Date: Feb 2002
Location: NYC: UA 1K, DL Platinum, AAirpass, Avis PC
Posts: 4,599
This is the key.
If DL or AA had a transpacific hub at SFO they would not be as willing to spend on marginal routes to build a presence at LAX.
California is a bigger hole for them than it is UA.
Yes UA did this kind of route building in the late 90s, but what they were doing in the late 90s was not viable as the marketplace demonstrated with the shrinking of LAX and JFK by 2006.
AA was laughing all the way while UA spent like a drunken sailor at LAX in the 90s.
I'd like to see someone find ASMs out of LAX for UA in the fall schedule this year vs last year. My bet is it will see an increase in seats.
If DL or AA had a transpacific hub at SFO they would not be as willing to spend on marginal routes to build a presence at LAX.
California is a bigger hole for them than it is UA.
Yes UA did this kind of route building in the late 90s, but what they were doing in the late 90s was not viable as the marketplace demonstrated with the shrinking of LAX and JFK by 2006.
AA was laughing all the way while UA spent like a drunken sailor at LAX in the 90s.
I'd like to see someone find ASMs out of LAX for UA in the fall schedule this year vs last year. My bet is it will see an increase in seats.
UA @ LAX will see cuts when there is a recession and demand gets trashed. It's easy to operate everything now when oil is cheap.
The bottom line is that UA is its own worst enemy. All of its LA services can simply generate higher yields at SFO. The importance of LA is so much higher to AA especially (DL somewhat less so) than UA that it is naturally going to fall back.
When AA launches LAXMEL, UA will probably retreat to SFOMEL - simply because it will make them more money. AA doesn't have a choice. Doug and Co seem to be hellbent on making LAX a big hub - and rightfully so. They need it.
The bottom line is that UA is its own worst enemy. All of its LA services can simply generate higher yields at SFO. The importance of LA is so much higher to AA especially (DL somewhat less so) than UA that it is naturally going to fall back.
When AA launches LAXMEL, UA will probably retreat to SFOMEL - simply because it will make them more money. AA doesn't have a choice. Doug and Co seem to be hellbent on making LAX a big hub - and rightfully so. They need it.
#54
Join Date: Apr 2013
Posts: 88
Yes UA did this kind of route building in the late 90s, but what they were doing in the late 90s was not viable as the marketplace demonstrated with the shrinking of LAX and JFK by 2006.
AA was laughing all the way while UA spent like a drunken sailor at LAX in the 90s.
AA was laughing all the way while UA spent like a drunken sailor at LAX in the 90s.
#55
Join Date: Jul 2005
Location: ORD-LAS
Programs: UA MM 1K, Hyatt Globalist, Marriott Titanium Elite
Posts: 4,419
This cut comes at the same time as a flurry of IAH-related schedule changes... IAH-ONT/YUL/LOS. SFO-FLL (also overflying IAH) has been seasonally reduced.
I wonder if UA is trying to kill two birds with one stone here... exit a saturated, low-yield market, and strengthen flow over IAH for any MSY-LAX pax who remain with United (as there will be some). IAH becomes the logical transfer point for both LAX-MSY and SFO-FLL.
Edit to add:
Based on the most recent schedule update, even with MSY cut, UA has increased daily departures at LAX for the fall schedule... just about all of the other remaining changes were added flights to spokes like FAT/TUS/LAS/ABQ/PSP/SAN/SMF, plus EWR went up to 15x.
I wonder if UA is trying to kill two birds with one stone here... exit a saturated, low-yield market, and strengthen flow over IAH for any MSY-LAX pax who remain with United (as there will be some). IAH becomes the logical transfer point for both LAX-MSY and SFO-FLL.
Edit to add:
Based on the most recent schedule update, even with MSY cut, UA has increased daily departures at LAX for the fall schedule... just about all of the other remaining changes were added flights to spokes like FAT/TUS/LAS/ABQ/PSP/SAN/SMF, plus EWR went up to 15x.
How long will LAX-SEA, DFW lasts? With 2 Express flights each, they may be on the chopping block soon. How can UA compete with DFW and AA?
LAX is losing UA passengers, not gaining, and the frequent fliers are moving on from UA. Which again, I think UA may be right in this decision, since they do have SFO. I just don't see outside of hub flying and some Hawaii, how they maintain Hub status.
As people will think I'm bashing UA, I'm not, I'm agreeing with UA here. DL, AA, Alaska/Virgin, WN, have really come in strong at LAX, they smelled blood during the bankruptcy, and have moved in on UA. This is nothing new, it's been shrinking for a while, and it won't be long until all the International flights are gone.
#56
Join Date: Jan 2005
Location: New York, NY
Programs: UA, AA, DL, Hertz, Avis, National, Hyatt, Hilton, SPG, Marriott
Posts: 9,425
ex-LAX I can't think of a major market in the western part of the US that UA serves and DL and AA don't. And other than LAX-MSP (on a RJ on UA, AA flies it mainline) I can't think of a single flight that UA has ex-LA into a competitors hubs in the Eastern UA, and I can for DL and AA. (e.g. AA flies LAX-IAH, LAX-IAD, LAX-ATL, Dl flies LAX-MIA). Of course you see this in the market share numbers.
My point is that as UA pulls down, and AA/DL add ex-LAX, the lack of connecting traffic will eventually kill LAX other than as a spoke city. United is well on the way to this.
I don't think United needs or wants LAX traffic to be primarily flow-oriented. It wants local traffic, plus certain connecting flows for a handful of O&D-oriented routes it doesn't serve elsewhere (Hawaii, Australia, etc.). If a route is in a hyper-competitive market with depressed yields, or relies on connecting traffic to be sustained, I think it's easy to see what will happen. United clearly is not interested in remaining in a LAX city pair purely for market share purposes. The 'network effect' hub is at SFO.
And don't tell me this was a planned decision, everyone knew how important LAX was, and it was a city that United was No 1 in when Jeff took over
. . .
What happened was the former management team treated LAX like it treated IAH and EWR, and cut service quality and service and expected people to suck it up "they will fly United for price and schedule" I believe was the mantra.
. . .
What happened was the former management team treated LAX like it treated IAH and EWR, and cut service quality and service and expected people to suck it up "they will fly United for price and schedule" I believe was the mantra.
The approach of splitting resources between SFO and LAX cost United opportunities at SFO, and I would argue that doing so (in concert with other factors) left the door wide open for VX to enter SFO and set up shop. Meanwhile, at LAX, UA may have been #1 in passengers, but AA was long the leader in local market share, and even at its peak, United's traffic advantage over competitors at LAX was in the single digits. No matter what, LAX was going to be more competitive than SFO, and United would never have the all-important dominance that is often discussed in other threads as a structural advantage of AA/DL hubs vis-a-vis United's.
At SFO, OTOH, United had a hub where it was effectively 'the only game in town', and IMO under-investment there cost it in terms of yield and market share with the growth of VX. Since the merger, United has clearly chosen to reallocate capacity from NRT/LAX to SFO, grow the transpacific franchise, and bolster the connecting flow feeding that operation. Not surprisingly, SFO has flourished.
LAX is too fragmented for any airline to grow to the ~300 daily departures United has at SFO. AA has a ceiling of about 200 daily flights at LAX, while DL's is slightly lower. Again, United cannot be all things to all people, and their apparent decision is to grow a more robust SFO operation, with an O&D-focused complex at LAX. Both AA and DL would likely trade their respective West Coast arrangements for United's in a second.
What's happening at LAX is United and American have essentially traded places, with Delta capturing a larger share of traffic as well. Historically, AA@LAX was mostly O&D-focused, supplemented by a smaller Eagle operation and comprehensive service in the major LAX local markets. Around the time of AA's bankruptcy, their 'cornerstone' strategy called for building out LAX as a connecting hub, and that approach has survived the merger and management change. AA has no other viable West Coast international gateway option, which is growing in strategic importance (DFW cannot support service to Asia growth markets yet), nor does it have a large Pacific footprint, so it has no choice but to 'win' LAX as a platform for organic growth and JV cooperation. It's quite interesting, to me, as AA should, by all means, have the largest LA operation by a significant margin, owing to its past acquisitions (AirCal, RenoAir) and those of its merger partner (PSA->US). Most of those positions were squandered to WN in the intervening years, so in some respects AA is just trying to reclaim territory it once held, albeit in a different form.
Last edited by EWR764; May 26, 2016 at 9:18 am
#57
FlyerTalk Evangelist
Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,639
Maybe it can, maybe it can't; we on FT don't have the data to meaningfully determine that. All this means is that even if it CAN make money on the route, it has determined it can make even MORE money with those resources placed elsewhere.
There are probably lots of routes where UA CAN make money, but has decided not to serve because it can make more money elsewhere.
#58
FlyerTalk Evangelist
Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,639
+1. The cumulative cuts to LAX have taken UA from no 1 to no 3 since 2012. Last three months, AA had a 20.13% market share, Delta had a 17.16% market share, UA was back at 14.69% market share. http://www.lawa.org/uploadedfiles/LA...rrier-2016.pdf
I love how many threads on FT bemoan less competition in the industry because it leads to less choice and higher fares . . . and then we have this thread where people are moaning that one airline is not #1 in every market.
#59
Join Date: Mar 2005
Location: DEN
Programs: UA1K
Posts: 4,044
EWR764 hits the nail on the head.
i work in software sales. and what cracks me up is clients who say "i need a software that does EVERYTHING." i tell them to let me know when they find the unicorn solution because we have not see one yet.
same goes for UA. they can't make everyone happy. they need to allocate their resources to get the highest utilization they can. they clearly feel MSY is not the best utilization for that a/c. don't like it? fly NK or AA. there is no unicorn airline.
i work in software sales. and what cracks me up is clients who say "i need a software that does EVERYTHING." i tell them to let me know when they find the unicorn solution because we have not see one yet.
same goes for UA. they can't make everyone happy. they need to allocate their resources to get the highest utilization they can. they clearly feel MSY is not the best utilization for that a/c. don't like it? fly NK or AA. there is no unicorn airline.
#60
Join Date: Sep 1999
Location: Los Angeles
Programs: UA 1K, AA 2MM, Bonvoy LT Plt, Mets fan
Posts: 5,073
The weakness of *A is part of UA's problem at LAX.
AA gets a huge shot in the arm every morning, as Qantas deposits 1,000+ pax at LAX - many of whom are going beyond, mostly on AA metal. BA also feeds AA, for service to smaller cities (although BA's services to SAN, LAS, PHX, etc. take away many premium cabin connections). DL gets feed from Korean, and its Chinese partners.
At *A, though, ANA has service to enough other major US markets that the HVF is more likely on a nonstop ex-NRT, while SQ doesn't even put its code on most UA flights ex-hubs (just starting to happen in IAH, IIRC). NZ contributes feed, but then turns around and runs its own LAX-LHR to further cut in to *A options.
AA gets a huge shot in the arm every morning, as Qantas deposits 1,000+ pax at LAX - many of whom are going beyond, mostly on AA metal. BA also feeds AA, for service to smaller cities (although BA's services to SAN, LAS, PHX, etc. take away many premium cabin connections). DL gets feed from Korean, and its Chinese partners.
At *A, though, ANA has service to enough other major US markets that the HVF is more likely on a nonstop ex-NRT, while SQ doesn't even put its code on most UA flights ex-hubs (just starting to happen in IAH, IIRC). NZ contributes feed, but then turns around and runs its own LAX-LHR to further cut in to *A options.