I'm not sure what credit it is to say the airline got the fundamental strategy wrong.
A DL strategy that works on the strength of those super fortress hubs to redeploy into the kind of reliability and basic product level you need to pick off business in the high RASM, lower margin big cities means you need to do just a little better than AA and UA.
A UA strategy where you were betting on international being the profit center puts you in a position where you have to beat the Asian, Gulf, and European carriers on some metrics.
You can do it, and be profitable, but you're not going to enjoy DL financial returns in the process given 1) cost base of US carriers vs the competition, and 2) the state of so much capacity flooding the int'l market vs relative discipline among the now consolidated domestic players.
Kirby disagrees - thinks UA can be much higher profit and margin with this hand - but he relies more on doubling down on domestic.
And I don't think throwing around miles and improving product gets you all the way to where he wants to be given the structural advantage of those DL and to a lesser extend AA connecting hubs. His bet needs the runway of an economic cycle to throw frequency and reliability out there.
I'm not here to make the call on that, but this cycle is now going on 8 years.
Originally Posted by
spin88
I think you give way too much credit to Jeff and his crew. They were actually just reacting to their past experiences when CO had too little international capacity and now they got to play in the big leagues, yippy! They went on a binge and thought that they could leave SWA behind them. The fact that overseas carriers had lower labor rates and were IMPROVING their service and product dramatically, well that was just not something worth noting, because, well, people had to fly the merged UA+CO network due to how great they were. Had UA's management had even the smallest amount of common sense and even an iota less arrogence, they would have seen that the competition was comming at them overseas with better products and service. But alas, UA gutted its product and service.
I also think you are wrong re DL. DL never had an international presence to speak of. Yet they set about building the network they wanted (and had not gotten with the NW merger) this was a major presence in JFK, LAX, and SEA. Delta was laying the ground work for its current - and very profitable - push, not simply coasting on its domestic network.
Originally Posted by
spin88
There are analysts that have written on this and claimed DL was making money, but I've not seen a direct quote from DL on this. Anderson repeatedly said they were exceeding their goals, but did not claim a profit. I don't recall a different response since he left. Delta is actually very careful about avoiding answering questions on the profitability of individual hubs IMHE, the one aside about JFK aside.
I tend to agree on DEN, but United was really in a hole. The first tech bubble burst at the same time that they were getting hammered after the SFH. UA did not have the $$$ to focus on network synergies in the 2003-9 period, nor did they try to be a nationwide carrier. It was just a very different market than today.
But I also - as someone who used to connect in DEN a lot c2006-2013 - recall the capacity being cut yet further in 2012.
And this gets to the airline business. So much of it relies on hands dealt 10, 20 years prior - fleet and network decisions. UA is still handicaped by a labor issue from the late 90s (prompted by over aggressive widebody fleet expansion) by this narrative. DEN could have become the ATL of the west for UA.