FlyerTalk Forums - View Single Post - United (UA) To Eliminate NRT-BKK (UA837,UA838) [Now gone]
Old Jan 6, 2014 | 4:21 am
  #1154  
warakorn
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Join Date: Feb 2007
Location: PVG, FRA, SEA, HEL
Programs: UA Premier Gold
Posts: 4,783
On the JV routes, UA doesn't care which of the JV partners you're flying (aside from MM and PQD-related issues).
I dont think this is how these JVs are working.
If UA does cancel its route, it lowers its share of the pie, thus reducing revenues for UA.

Simplified Example (excluding miles flown):
JV between UA and NH includes 50 flights a day with a total daily revenue of USD 10.000.000.
NH does 30 flights a day (ticket sales of USD 6.500.000)
UA does 20 flights a day (ticket sales of USD 3.500.000)

NH gets 6.000.000 of that revenue, because they did 60% (30 of 50) of flying.
UA gets 4.000.000 of that revenue, because they did 40% (20 of 50) of flying.

It means that although UA has only sold tickets for 3.500.000, it gets 500.000 more from NH.


Alternative A:
UA decides now to cancel two flights (NRT-BKK; BKK-NRT).
The pie gets smaller:

JV between UA and NH includes 48 flights a day with a total daily revenue of USD 9.800.000.
NH does 30 flights a day (ticket sales of USD 6.500.000)
UA does 18 flights a day (ticket sales of USD 3.300.000)

NH gets 6.125.000 of that revenue, because they did 62,5% (30 of 48) of flying.
UA gets 3.675.000 of that revenue, because they did 37,5% (18 of 50) of flying.

It means that although UA has only sold tickets for 3.300.000, it gets 375.000 more from NH.
Its total revenue plunged by 200.000 (2% decrease). The payments from NH plunged by 125.000 (25% decrease).



Alternative B:
UA decides now to cancel two flights (NRT-BKK; BKK-NRT) and NH picks up the route.

JV between UA and NH includes 50 flights a day with a total daily revenue of USD 10.100.000.
NH does 32 flights a day (ticket sales of USD 6.800.000)
UA does 18 flights a day (ticket sales of USD 3.300.000)

NH gets 6.464.000 of that revenue, because they did 64% (32 of 50) of flying.
UA gets 3.636.000 of that revenue, because they did 36% (18 of 50) of flying.

It means that although UA has only sold tickets for 3.300.000, it gets 336.000 more from NH..
Its total revenue plunged by 200.000 (2% decrease). The payments from NH plunged by 125.000 (32,8% decrease).
warakorn is offline