Originally Posted by
goodeats21
I didn't get to listen to the entire call, but what I heard about the 50 seaters and "small" markets was a hoot.
They just decimated my DAY service, removing all 2 cabin planes that were standard on ORD, and had been increasing to other hubs. All 50 seaters now. And AA and Delta both have multiple mainline ops every day. Hardly competetive.
I started flying out of CVG to avoid the CR2s, and now my costs have gone down as I am seeing lower fares.
I fear they are going to be disappointed by their plan to have the Devil's Chariot be the solution to their yield issues.
I will try to listen to the entire call later tonight to see if I missed anything, though.
I was was also struck by "natural share" discussion, which sounded a lot like "we don't need to compete for business".
Originally Posted by
3Cforme
The remarks about 50-seaters I do not understand. They already use far more 50-seaters than DL even though total domestic RPMs are smaller. Running CR2/E145 against DL CR9/E75 is tough to win.
And all these CR2s entering United service are being scooped up as they are exiting the AA fleet, so United is pretty much at the bottom of the comfort barrel here.
Originally Posted by
EWR764
I think they recognize that (Kirby said as much several times) but it is clear right now that domestic growth, especially to small "connectivity" markets is more important than waiting for any of the following:
- a new pilot agreement with revised scope to permit the operation of more 76-seaters, including larger/heavier variants
- a new small narrowbody (NSNB) for mainline
- more deliveries of new/used A32x/737
The CRJ flying can be spun up and drawn down quickly, as necessary. It's subpotimal from a passenger perspective, and I think they realize that, as the move is being billed as "temporary". Time is clearly of the essence, which is why UA was willing to come back to the negotiating table with ALPA earlier than the amendable date. Whatever agreement United secures with its pilots will give us a clearer picture of what kind platform(s) UA's long-term domestic capacity growth will be built on.
I am not sure I buy the "connectivity" argument, especially with the dramatic increase in CR2 flying. I always heard that direct flights provide the bigger yields, as passengers are willing to pay a premium to not connect. So now they are saying that the yield solution lies with increasing connectivity from small markets, making connections through hubs. But that means all routes are exposed to competition. Kirby was quite explicit about the connection competition, where each of the 3 majors is a viable option But they are throwing CR2s at the competition after admitting they are not competitive aircraft and caused book-away in the past. Why would a person choose to be not comfortable, when other option is available?
The whole thing is a circular gibberish. If someone can explain the logic I am missing, it would be appreciated.
Oh, and how many times is re-banking hubs going to be presented as a solution. Haven't we been hearing this for years now?
And I admit being cynical, but when United says they want to increase "asset utilization", I would be willing to bet they are not going to be able to maintain their recent operational gains. As they tighten up turns and keep less slack in the schedule, something is going to give out.
Originally Posted by
prestonh
How is PRASM going to grow when they are going to dump 2000 seats of CR2 on the market? Does UA really expect to get to DL yield from E- in literally the worst aircraft to fly?
"Smaller gauge increases exposure to high yield/small markets"
There is an obvious disconnect in the plan, investors see that and the expansion of a fare war with Sprint, maybe with OAL.
I think we are on the same track here. Doesn't really make sense.
Originally Posted by
EWR764
Part of the issue was operating those aircraft in prime markets (Kirby always cites ORD-DFW and EWR-ATL) with inferior schedules that drove pax elsewhere. If the aircraft are staying in either short-haul (<500mi), smaller markets where the competition is largely comprised of 50-seaters, or competition is nonexistent, I don't see a problem with it. Kirby acknowledges that UA is not offering a competitive product where other carriers have mainline or two-cabin regional service.
They went to great lengths to characterize this as 'temporary', and I have no reason not to believe this is the case... with fuel back on the rise, maintenance costs increasing (for older aircraft) and limited revenue generating potential, 50-seaters are not a long-term solution. This is the lowest-hanging fruit for UA to spool up some cheap capacity.
Again, I am not following this. Maybe I am dense (very possible), but how is a definition of a "prime market" different then connection traffic? If someone needs to connect from a valuable small market, and they have the choice of each of the 3 majors, why would they choose the crappy, 1 cabin, no E+, Devil's Chariot?
I will again mentioned DAY (no matter how much it annoys United). When I need to get anywhere other than a hub, I connect. When that means Mainline out of Dayton on DL and AA, why would I choose to take a United CR2? It really feels like United is talking out of 2 sides at the same time.