DIA and CO - Class Project
Dec 1, 2007 | 12:50 pm
#1
Original Poster
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Posts: 6,368
DIA and CO - Class Project
I am currently working on a strategic management project about DIA. I was looking at several posible ideas of what DIA could do to help itself improve its bottom line. The first thing that came to mind was the re-hubing of DIA by CO. CO has the facilities in place as they committed to the new airport when they were still hubbing in Denver. They have the support facilities there and with CO's bottom line improving and with the airport reducing some fees it seems like it would be a good time and place for CO to think about building a hub there again.
I have the following questions for my fellow CO FTs:
1 - Do you think CO would ever Hub at DIA again?
2 - Would you fly CO in/out of DIA?
3 - Do you feel that this would be western enough to be built out as a hub for CO again?
4 - Potential benefits of a CO Hub at DIA?
5 - Potential negatives of a CO Hub at DIA?
Answer any questions that you wish. Thanks in advance for your thoughts as yall play the airline game a lot better than me.
I have the following questions for my fellow CO FTs:
1 - Do you think CO would ever Hub at DIA again?
2 - Would you fly CO in/out of DIA?
3 - Do you feel that this would be western enough to be built out as a hub for CO again?
4 - Potential benefits of a CO Hub at DIA?
5 - Potential negatives of a CO Hub at DIA?
Answer any questions that you wish. Thanks in advance for your thoughts as yall play the airline game a lot better than me.
Dec 1, 2007 | 1:03 pm
#2
Join Date: Apr 2007
Location: nyc
Programs: CO Plat & MP 1K
Posts: 870
Although I should have known my airport codes, having been reading about the end of Peter Max I thought this might be about a partnership between the DIA art museum which I recently visited, http://www.diacenter.org/bindex.html, and CO.
But related to the real questions here are my answers to the some:
1 -- Of course the answer is yes (or no depending on your preference), as there is no way to prove me wrong since EVER could be a long time. The question should be IMHO, will CO do this in the next 5 years or so :-)
2 -- maybe ... but I rarely go to Denver, so probably only in the rare event I end up going there, so given that conditional probability, there is some positive probability I'd fly CO.
3 -- If CO merges with UA ...
At this point I began to feel that this was too much like homework and not fun, so I will pass on 4 and 5, but others probably have some ideas!
But related to the real questions here are my answers to the some:
1 -- Of course the answer is yes (or no depending on your preference), as there is no way to prove me wrong since EVER could be a long time. The question should be IMHO, will CO do this in the next 5 years or so :-)
2 -- maybe ... but I rarely go to Denver, so probably only in the rare event I end up going there, so given that conditional probability, there is some positive probability I'd fly CO.
3 -- If CO merges with UA ...
At this point I began to feel that this was too much like homework and not fun, so I will pass on 4 and 5, but others probably have some ideas!
Dec 1, 2007 | 1:07 pm
#3
Join Date: Apr 2007
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1- I do not think CO would ever hub again at DIA unless there was a CO/UA merger. Is there even enough space at DIA for CO to have hub operations? As it stands DIA is already a hub for Frontier and United.
2- I would most certainly fly CO into DIA as I already do.
3- Yes and No. For anyone on the western coast, I fell that DIA is too far out of the way to go on to connecting cities within the western area. For anyone north, south, or east of DIA, DIA would be an ok connecting point for those traveling to the west. Also, if you are on the western coast and connecting to places east of DIA, then DIA would be an OK connecting airport.
2- I would most certainly fly CO into DIA as I already do.
3- Yes and No. For anyone on the western coast, I fell that DIA is too far out of the way to go on to connecting cities within the western area. For anyone north, south, or east of DIA, DIA would be an ok connecting point for those traveling to the west. Also, if you are on the western coast and connecting to places east of DIA, then DIA would be an OK connecting airport.
Dec 1, 2007 | 1:13 pm
#4
Join Date: Apr 2006
Posts: 3,540
In addition to the capital CO would need to commit to a DEN hub, there will inevitably be a fare war between CO and UA. And I have the feeling it will be bitter, vicious and far more extensive than the UA/WN campaign. At least WN was not threatening United's international routes.
While it's more west than anything else CO currently has it's not "west" enough. For the same reason that everyone still stays in the crowded NE corridor airspace if you want a western hub you'll have to put it on the west coast. That's where the people are and that's where the money is.
Also, without more planes where will CO pull service to accomodate a new hub? With the inevitable 787 delays and unless they're hiding plans to acquire many new widebodies the existing fleet is already stretched pretty thin between the new PVG and LHR slots.
As for would I fly them out of DEN? Sure, if the fare was cheap and the timing worked. Based out of BOS, I'll connect in IAH if I want the miles and in EWR if the fare is cheaper (usually is) and I can add in enough time to account for the need to switch terminals plus ATC delays.
While it's more west than anything else CO currently has it's not "west" enough. For the same reason that everyone still stays in the crowded NE corridor airspace if you want a western hub you'll have to put it on the west coast. That's where the people are and that's where the money is.
Also, without more planes where will CO pull service to accomodate a new hub? With the inevitable 787 delays and unless they're hiding plans to acquire many new widebodies the existing fleet is already stretched pretty thin between the new PVG and LHR slots.
As for would I fly them out of DEN? Sure, if the fare was cheap and the timing worked. Based out of BOS, I'll connect in IAH if I want the miles and in EWR if the fare is cheaper (usually is) and I can add in enough time to account for the need to switch terminals plus ATC delays.
Dec 1, 2007 | 1:22 pm
#5
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I am currently working on a strategic management project about DIA. I was looking at several posible ideas of what DIA could do to help itself improve its bottom line. The first thing that came to mind was the re-hubing of DIA by CO. CO has the facilities in place as they committed to the new airport when they were still hubbing in Denver. They have the support facilities there and with CO's bottom line improving and with the airport reducing some fees it seems like it would be a good time and place for CO to think about building a hub there again.
I have the following questions for my fellow CO FTs:
1 - Do you think CO would ever Hub at DIA again?
Only if there was a UA-CO merger.
2 - Would you fly CO in/out of DIA?
Probably not.
3 - Do you feel that this would be western enough to be built out as a hub for CO again?
Probably not, the places that I would be flying to I can get flights out IAH, or ATL. DIA would be a hub to the smaller western cities that do not get mainline service out of IAH/EWR, so it would be more like a CLE hub (Barbie Jet hub) then IAH/EWR. The problem with that is DL already has a well established western RJ hub at SLC. So of the 90 people that would be using the hub 85 are already on DL.
4 - Potential benefits of a CO Hub at DIA?
1) Expansion in to smaller western markets most efficiently served by Barbie jets. 2) slight improvement in aircraft utilization as east-west transcons can make a r/t to Denver before making the red-eye west-east transcon.
5 - Potential negatives of a CO Hub at DIA?
1) mainline competing with UA and LCC Frontier
2) Regional jet competition with DL
3) CO would be more vulnerable to cold weather disruptions.
Answer any questions that you wish. Thanks in advance for your thoughts as yall play the airline game a lot better than me.
I have the following questions for my fellow CO FTs:
1 - Do you think CO would ever Hub at DIA again?
Only if there was a UA-CO merger.
2 - Would you fly CO in/out of DIA?
Probably not.
3 - Do you feel that this would be western enough to be built out as a hub for CO again?
Probably not, the places that I would be flying to I can get flights out IAH, or ATL. DIA would be a hub to the smaller western cities that do not get mainline service out of IAH/EWR, so it would be more like a CLE hub (Barbie Jet hub) then IAH/EWR. The problem with that is DL already has a well established western RJ hub at SLC. So of the 90 people that would be using the hub 85 are already on DL.
4 - Potential benefits of a CO Hub at DIA?
1) Expansion in to smaller western markets most efficiently served by Barbie jets. 2) slight improvement in aircraft utilization as east-west transcons can make a r/t to Denver before making the red-eye west-east transcon.
5 - Potential negatives of a CO Hub at DIA?
1) mainline competing with UA and LCC Frontier
2) Regional jet competition with DL
3) CO would be more vulnerable to cold weather disruptions.
Answer any questions that you wish. Thanks in advance for your thoughts as yall play the airline game a lot better than me.
Dec 1, 2007 | 2:45 pm
#6
Join Date: Oct 1999
Location: New York, NY, USA
Posts: 1,439
Short of a major strategic change (like de-hubbing Cleveland), it is not going to happen.
Reasons:
- Not enough aircraft to support a new hub without de-hubbing CLE and/or significantly down-sizing EWR or IAH, which do not seem likely.
- Too much competition (mainly UA and Frontier)
- DEN is a good hub for domestic traffic in the west, but doesn't fit their strategy of focusing on international travel. DEN is not far enough west to serve as an Asian gateway, for example.
- Not enough O/D traffic. While better than CLE, CO has definitely found CLE to underperform EWR and IAH, due in large part to the lack of O/D. US had the same issue at PIT. DEN would be better than CLE if it weren't for the competition with the existing incumbants. There just isnt enough pie to profitably split another way.
I think if they had not made the decision to scale back the Barbie-jets, they might be able to make DEN a western ERJ mini-hub. But since they cut those back, there aren't enough aircraft to make it work.
Once the 787 comes, there could be a desire for a western hub as an Asia/Australia gateway. But it would most likely be SEA, or possibly an LA or SF-bay area airport.
Reasons:
- Not enough aircraft to support a new hub without de-hubbing CLE and/or significantly down-sizing EWR or IAH, which do not seem likely.
- Too much competition (mainly UA and Frontier)
- DEN is a good hub for domestic traffic in the west, but doesn't fit their strategy of focusing on international travel. DEN is not far enough west to serve as an Asian gateway, for example.
- Not enough O/D traffic. While better than CLE, CO has definitely found CLE to underperform EWR and IAH, due in large part to the lack of O/D. US had the same issue at PIT. DEN would be better than CLE if it weren't for the competition with the existing incumbants. There just isnt enough pie to profitably split another way.
I think if they had not made the decision to scale back the Barbie-jets, they might be able to make DEN a western ERJ mini-hub. But since they cut those back, there aren't enough aircraft to make it work.
Once the 787 comes, there could be a desire for a western hub as an Asia/Australia gateway. But it would most likely be SEA, or possibly an LA or SF-bay area airport.
Dec 1, 2007 | 4:38 pm
#7
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1 - I doubt CO will ever hub there again. The stranglehold by UA and F9 is too great.
2 - Yes.
3 - Most certainly not. CO would be better off looking at PDX or something for western airports.
4 - Fantastic profit center pretty much all year round. Major headquarters for an energy company, etc.
5 - Winter logistics (though CO has a ton of de-icing equipment already there), the overcrowding that is already occurring, etc.
Who is your Strat Management professor? My last year there they abandoned the airline game and went with something completely different. I guess they brought it back?
2 - Yes.
3 - Most certainly not. CO would be better off looking at PDX or something for western airports.
4 - Fantastic profit center pretty much all year round. Major headquarters for an energy company, etc.
5 - Winter logistics (though CO has a ton of de-icing equipment already there), the overcrowding that is already occurring, etc.
Who is your Strat Management professor? My last year there they abandoned the airline game and went with something completely different. I guess they brought it back?
Dec 2, 2007 | 12:47 am
#8
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CO should not build a hub in DEN, there is too much competition now that F9 has grown into a big animal and UA is dedicated to existing in DEN. Although, if CO needs a Western hub where else is there?
SEA--has AS, only way it would work is if CO has an exstensive codeshare agreement with AS and only opperates long haul flights. AS would bassicly be a CO feeder airline
PDX--has AS, not as big of a market as SEA
SFO--UA, enough written
OAK--WN for domestic, CO does not want to compete against them
SJC--failed for the other Texan carrier, why would it work for CO?
SMF--WN for domestic, not big market
LAX--UA, AA, and DL is expanding, domestic held by WN
BUR/SNA/LGB--slot restrictions and domestic
ONT--too far away from ZLA main traveling points to be a meaningful Western hub, also in terrible connecting position to go to Asia
PHX--HP reincarnated as US, WN, too far south
LAS--see above PHX description
SLC--DL, enough written
GEG--no market
BOI--no market
DEN--UA, F9, WN expanding, too far east
GUM--too far west (east?) for most connecting, needs nonstop flight to mainland
YVR--AC and in Canada, possibly most likely of all possibilities
The next hub in the west will be QX with A380's flying BLI-MWH and trunk routes such as PDX-EUG and ACV-PDX 
Mark my electrons, QX WILL happen
SEA--has AS, only way it would work is if CO has an exstensive codeshare agreement with AS and only opperates long haul flights. AS would bassicly be a CO feeder airline
PDX--has AS, not as big of a market as SEA
SFO--UA, enough written
OAK--WN for domestic, CO does not want to compete against them
SJC--failed for the other Texan carrier, why would it work for CO?
SMF--WN for domestic, not big market
LAX--UA, AA, and DL is expanding, domestic held by WN
BUR/SNA/LGB--slot restrictions and domestic
ONT--too far away from ZLA main traveling points to be a meaningful Western hub, also in terrible connecting position to go to Asia
PHX--HP reincarnated as US, WN, too far south
LAS--see above PHX description
SLC--DL, enough written
GEG--no market
BOI--no market
DEN--UA, F9, WN expanding, too far east
GUM--too far west (east?) for most connecting, needs nonstop flight to mainland
YVR--AC and in Canada, possibly most likely of all possibilities
The next hub in the west will be QX with A380's flying BLI-MWH and trunk routes such as PDX-EUG and ACV-PDX
Mark my electrons, QX WILL happen
Dec 2, 2007 | 9:48 am
#9
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CO should not build a hub in DEN, there is too much competition now that F9 has grown into a big animal and UA is dedicated to existing in DEN. Although, if CO needs a Western hub where else is there?
SEA--has AS, only way it would work is if CO has an exstensive codeshare agreement with AS and only opperates long haul flights. AS would bassicly be a CO feeder airline
PDX--has AS, not as big of a market as SEA
SFO--UA, enough written
OAK--WN for domestic, CO does not want to compete against them
SJC--failed for the other Texan carrier, why would it work for CO?
SMF--WN for domestic, not big market
LAX--UA, AA, and DL is expanding, domestic held by WN
BUR/SNA/LGB--slot restrictions and domestic
ONT--too far away from ZLA main traveling points to be a meaningful Western hub, also in terrible connecting position to go to Asia
PHX--HP reincarnated as US, WN, too far south
LAS--see above PHX description
SLC--DL, enough written
GEG--no market
BOI--no market
DEN--UA, F9, WN expanding, too far east
GUM--too far west (east?) for most connecting, needs nonstop flight to mainland
YVR--AC and in Canada, possibly most likely of all possibilities
SEA--has AS, only way it would work is if CO has an exstensive codeshare agreement with AS and only opperates long haul flights. AS would bassicly be a CO feeder airline
PDX--has AS, not as big of a market as SEA
SFO--UA, enough written
OAK--WN for domestic, CO does not want to compete against them
SJC--failed for the other Texan carrier, why would it work for CO?
SMF--WN for domestic, not big market
LAX--UA, AA, and DL is expanding, domestic held by WN
BUR/SNA/LGB--slot restrictions and domestic
ONT--too far away from ZLA main traveling points to be a meaningful Western hub, also in terrible connecting position to go to Asia
PHX--HP reincarnated as US, WN, too far south
LAS--see above PHX description
SLC--DL, enough written
GEG--no market
BOI--no market
DEN--UA, F9, WN expanding, too far east
GUM--too far west (east?) for most connecting, needs nonstop flight to mainland
YVR--AC and in Canada, possibly most likely of all possibilities
What's worked for other carriers is breaking from the true hub-and-spoke model to a focus city model for areas where they can't get in with a full-blown hub:
LAX -- UA and AA are the only two carriers that really have LAX hubs, but DL and AS have service to many non-hub cities.
SFO -- UA is the hub carrier, but AA and AS have service to non-hub cities.
I know CO tried something in LAX to Mexico not too long ago, but they really didn't have the connecting or codeshare service to support it. There is a market LAX-Mexico, but CO's service was only available to O/D traffic.
If CO could have simply codeshared something on the West Coast for SFO-LAX, SEA-LAX, LAS-LAX, PDX-LAX, with a schedule that connected up with their Mexico flights, that would have provided access to more than 15 million additional people.
Dec 2, 2007 | 10:02 am
#10
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1 - I doubt CO will ever hub there again. The stranglehold by UA and F9 is too great.
2 - Yes.
3 - Most certainly not. CO would be better off looking at PDX or something for western airports.
4 - Fantastic profit center pretty much all year round. Major headquarters for an energy company, etc.
5 - Winter logistics (though CO has a ton of de-icing equipment already there), the overcrowding that is already occurring, etc.
Who is your Strat Management professor? My last year there they abandoned the airline game and went with something completely different. I guess they brought it back?
2 - Yes.
3 - Most certainly not. CO would be better off looking at PDX or something for western airports.
4 - Fantastic profit center pretty much all year round. Major headquarters for an energy company, etc.
5 - Winter logistics (though CO has a ton of de-icing equipment already there), the overcrowding that is already occurring, etc.
Who is your Strat Management professor? My last year there they abandoned the airline game and went with something completely different. I guess they brought it back?
Dec 2, 2007 | 2:45 pm
#11
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Posts: 69,232
I'm not sure which cities CO could get in to on non-hub routes out west as focus cities and/or point-to-point runs, especially ones where there is very little competition and lots of passengers travelling, of which I think there are probably very few. AA runs the AUS-SFO route and pulls decent loads, but I'm not sure that there are sufficient loads to have CO share the benefits that AA does on that route. But how many other similar routes are out there that CO could possibly cherry-pick?
Dec 2, 2007 | 4:33 pm
#12
Join Date: Apr 2001
Location: Denver
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Without answering each question directly, I have thought for a number of years that CO could work DEN as a focus city and do quite well. There are still a lot of CO FF left here in Denver; and, IIRC CO carried about 10% more passengers into and out of Denver this year as opposed to last (there was a story in one of the Denver papers showing traffic for all airlines). Thus, they have some brand recognition without a bit of advertising.
The routes that they would need to fly inlcude DEN-LAX (and maybe DEN-SFO and DEN-SEA) and more lift to EWR basically catering to the buisness traveler. Many of us who live in Denver and fly CO regularly use CO to fly east and someone else for flights west.
The routes that they would need to fly inlcude DEN-LAX (and maybe DEN-SFO and DEN-SEA) and more lift to EWR basically catering to the buisness traveler. Many of us who live in Denver and fly CO regularly use CO to fly east and someone else for flights west.
Dec 2, 2007 | 4:51 pm
#13
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1 - Do you think CO would ever Hub at DIA again? NO
2 - Would you fly CO in/out of DIA? Unlikely, unless it's local
3 - Do you feel that this would be western enough to be built out as a hub for CO again? Not on the west coast. Needs to be in greater LA
4 - Potential benefits of a CO Hub at DIA? Big new airport, lots of runways.
5 - Potential negatives of a CO Hub at DIA? Snow. Not far enough west.
2 - Would you fly CO in/out of DIA? Unlikely, unless it's local
3 - Do you feel that this would be western enough to be built out as a hub for CO again? Not on the west coast. Needs to be in greater LA
4 - Potential benefits of a CO Hub at DIA? Big new airport, lots of runways.
5 - Potential negatives of a CO Hub at DIA? Snow. Not far enough west.
Dec 2, 2007 | 4:52 pm
#14
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1 - Do you think CO would ever Hub at DIA again?
Possibly - but I'd guess such an event would only come about through M&A's.
2 - Would you fly CO in/out of DIA?
Trick question -- Colorado and I do not mix so I find my potential travel options there limited...but that's just me.
On a more serious note UA has launched very aggressive marketing campaings to retain the grip on DEN and I suspect they will continue to do so in order to protect their market share there.
Again if there's a M&A event than the game changes.
3 - Do you feel that this would be western enough to be built out as a hub for CO again?I don't know enough about the O/D of DEN to comment on 'hubability' but DEN seems to do well for UA and I would suspect the catchment area of DEN is impressive too.
As for a connecting hub...not sure. Maybe for regional markets but I would think DEN to be too far east to be a player on North/South West Coast traffic.
4 - Potential benefits of a CO Hub at DIA?
The ability to capture a market with a presumably large amount of O/D/
5 - Potential negatives of a CO Hub at DIA?
Weather.
Also I would think CO would be better to focus their resources else where than building up another CLE (not that there's anything wrong with CLE!). What I mean by this is for CO to build a hub just for the sake of connecting domestic traffic through it seems like an expensive proposal -- especially when they already have IAH and CLE to help with this.
Should Larry & Co. wake up one morning and decide to build up a hub somewhere I'd think it would take more than just the possibility of connecting domestic traffic. I'd guess you'd need a strong mix of O/D, international and prime location to make it work...and while DEN by all means might have all that...one wonders are they any other potential cities out there who fit the bill better?
Possibly - but I'd guess such an event would only come about through M&A's.
2 - Would you fly CO in/out of DIA?
Trick question -- Colorado and I do not mix so I find my potential travel options there limited...but that's just me.
On a more serious note UA has launched very aggressive marketing campaings to retain the grip on DEN and I suspect they will continue to do so in order to protect their market share there.
Again if there's a M&A event than the game changes.
3 - Do you feel that this would be western enough to be built out as a hub for CO again?I don't know enough about the O/D of DEN to comment on 'hubability' but DEN seems to do well for UA and I would suspect the catchment area of DEN is impressive too.
As for a connecting hub...not sure. Maybe for regional markets but I would think DEN to be too far east to be a player on North/South West Coast traffic.
4 - Potential benefits of a CO Hub at DIA?
The ability to capture a market with a presumably large amount of O/D/
5 - Potential negatives of a CO Hub at DIA?
Weather.
Also I would think CO would be better to focus their resources else where than building up another CLE (not that there's anything wrong with CLE!). What I mean by this is for CO to build a hub just for the sake of connecting domestic traffic through it seems like an expensive proposal -- especially when they already have IAH and CLE to help with this.
Should Larry & Co. wake up one morning and decide to build up a hub somewhere I'd think it would take more than just the possibility of connecting domestic traffic. I'd guess you'd need a strong mix of O/D, international and prime location to make it work...and while DEN by all means might have all that...one wonders are they any other potential cities out there who fit the bill better?
Last edited by J.Edward; Dec 3, 2007 at 5:49 am
Dec 2, 2007 | 6:16 pm
#15
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2. I'd love to go to Denver, never been. I have no reason not to think of flying CO.
3. No. Milecalc says it's 862 miles from DIA to LAX. Too much ground to make up with concurrently higher fares. Asian gateway possibility limited to nil.
4. See #3.
5. Been answered plenty.
Has anyone further considered the M&A idea? AS and F9 can likely be had for the right deal. No one is speculating that, at least that I've seen. Everyone is wondering about CO/UA. Plus, AS is 16 airframes shy of being all-Boeing, at least until Q4 08. F9 is all Airbii and Embraer.
http://en.wikipedia.org/wiki/Alaska_Airlines#Fleet
Is talk of mergers specifically outlawed in preparation of your project?