C-5Crewdog

If UA was running a 100% cargo operation on SFO-CAN, it likely would be profitable at current oil prices.

kb1992

for June and part of July, yes.

But you can book August, Sept, OCt. etc

SFO_Runner

Incorrect with regard to the CAN award. The 2008 USA - China route allocation required that carriers provide non-stop service from the USA to CAN. UA was the only airline to apply for the 2008 USA - China route allocation. There was no competition.

UA also applied for the 2009 USA - China route allocation. There were no similar CAN-ish restrictions in the 2009 route allocation and UA competed (unsuccessfully) against a number of other airlines, including NW and DL.

jimmychang

This promo is no longer showing at .bomb.



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zabes64

For those of you who know someone with access to skynet, it is true:

United plans to contact customers soon to arrange other travel arrangements
and has applied to start San Francisco-Guangzhou service next year by June 30, 2009.

UNITED959

Maybe it's the 2009 application that's in my mind. A friend shared with me the Powerpoint that UA presented to the DOT/FAA/whomever, and I thought UA did a great job analyzing their competition and positioning themselves to be the clear winner for the route. IIRC, they were pushing for LAX-PEK/PVG.

daron4000

That's what I thought when I read this too. Because UA has so many frequencies to China already, I don't think the DOT would have given them one more for LAX-PVG in 2009 IF they hadn't shown the dedication to the China market by applying to CAN. This is evident IMO by the fact that they decided to go with IAD-PEK instead of SFO-CAN in 2006 for their application, which shows that CAN was not their top priority as it used to be. Now, with the failure to receive the LAX-PVG allocation (which IMO they should have for obvious reasons), a softening economy, high fuel prices, cabin refits, and a high-utilized fleet, CAN probably doesn't make much sense. In all honesty, even if you were planning a trip to Asia, how many of us on flyertalk were considering CAN over another Chinese city, HKG, BKK etc (excluding the bonus miles of course)? Probably not a lot. So while it is a business city, business is falling in the US and UA probably doesn't want the route to become all Chinese, not only for logistical purposes but also because the Chinese carriers who mostly carry Chinese passengers from PEK/PVG can barely make a profit on their North American flights, having publically said they wish they could capture teh more high-yielding American based traffic.

langleyoaker

If it was just filed yesterday it may not show up on regulations.gov until Monday.

jhayes_1780

SPECULATION ON/ If this is true this is a VERY bad sign. I would be interested to see what UA's spin on this would be because this route would be a "revenue machine" Here is why:

C-5 and kkjay77 are TOTALLY correct about the cargo.... that should support the route alone.

CAN is waaaayy underserved from North and South America. The premium traffic alone during the CECF in April and October would be HUGE$$$$, and UA would be the only *A carrier serving from the Americas. (As well as the only direct flight from the USA **IIRC NW only serves from NRT).

Here is where I am really speculating (and looking for other feedback).... .but WHY on earth would UA delay or defer this route?

IMO, the fuel price is a BS/phanton reason.... On INTL flights (especially ones with little competition) it may seem like over-simplifying.... but just raise the price.

Could UA have over estimated having an available aircraft for this route (maybe the "optimization" program is tapped out)?

Could this be the route that UA wanted to buy or lease a new plane (on investors day Jake Brace said they were starting to "look" at buying a few widebodies for intl routes)... but maybe UA is having trouble financing?

Again... this is ALL speculation, as I am always leery of threads based on anything that originates from: airliners or boyd.

Oh... one last thing if this is true, would this have a bearing on any future applications that UA makes to DOT?

C-5Crewdog

The CAN route is not profitable on cargo alone using UAs fleet of passenger airliners. Even the IAD-KWI route - which is extremely profitable based on cargo - required a 60-65% passenger load factor to break even (that number is likely higher with the increase in oil prices).

The delay is not speculation - as others have referenced, UA has filed a request with the DOT to delay the start of service to CAN. Its not a lack of aircraft driving this decision. Routes that once were profitable at $70-80/barrel may not be profitable at $100-100+.

jhayes_1780

Maybe it why I am not in charge of an airline.... but:

It is an EXCLUSIVE route (from the americas) shouldn't UA set the price?

Also, does ANYONE expect oil to go back to even 85.00?

glex50

Well, for one thing, it's not like a non-stop from SFO is the only way to get between the US and CAN. There are plenty of options that are only marginally less convenient. And even if there weren't, its not like demand for passengers would be inelastic on this route.

This was going to be an expensive route to begin with, because the 777 would have to sit in CAN overnight, IIRC. That may not be tied directly to the cost of fuel, but if the revenue from passengers+cargo (even at raised prices) would not cover the cost of fuel+lost revenue from keeping a plane on the ground for half a day, it seems perfectly reasonable to delay the route.

Regardless, I don't think there were necessarily C and full Y/B passengers lining up to take the flight.

cstead

What's also interesting, from an armchair-CEO PoV, is that this sort of disproves the notion that all China flights are automatic cash cows, especially when looking at the published UA fares for PEK and PVG.

Is this because of perfomrnace issues with the PW4092s (likely not because they also fly SFO-HKG with a 772, but don't rely so heavily on cargo for that)? Would a UA 747 become economical on this route? We speculate that a route can't be profitable because oil is expensive, but surely UA is still making money on its other longhaul routes. So many unanswered questions...

jhayes_1780

Marginally??.... that train ride from HKG sucks! Also I do not know officially how many other *A serve CAN, But IIRC its LH, ANA, and the intra China carriers. This flight would save many from 2 extra days (total) in HKG

Can't argue with you there... good points

Actually, I do believe there is. Maybe not as many as PVG... but quite a few (again, IME loads into HKG in late April/early May(golden week, CECF, etc).... lots of F0/C0/Y0)

SFO_Runner

China Southern flies LAX - CAN. Unless you live in LAX or SFO, you will connect to reach CAN from the USA.

Despite the expected stream of "China Southern and LAX sucks" replies, there's a cost point where enough people will break down and choose them and El Lay as a connection point to CAN versus SFO.

You can say the same about JAL / ANA via NRT, etc. etc.

Don't remember the early 80's do we? Inflation adjusted prices were just as high / higher back then and dropped through the floor for the next two decades or so.

http://www.inflationdata.com/inflati...ices_Chart.htm

History is no foreteller of the future, though it's hard sometimes to view the bigger picture in light of $150 YQ surcharges ..