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Are business travelers in Cleveland more price sensitive?

Are business travelers in Cleveland more price sensitive?

Old Apr 4, 2012, 5:08 pm
  #1  
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Are business travelers in Cleveland more price sensitive?

I am an MBA student at Case Western doing research for United Airlines on the profitability of the Cleveland hub. As part of our project, we are looking to test whether business travelers in the Cleveland area are more price sensitive than in other regions and whether that could be affecting the product mix and profitability for United. As a member of the Cleveland business community, do you believe that your emphasis in booking business travel is on departure time, number of layovers, price, loyalty, or some other factor? Is it also possible that there is just not enough volume of potential business travelers in Cleveland to help it maintain its hub status? Please let me know your thoughts.
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Old Apr 4, 2012, 5:10 pm
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I thought the main reason why is to consilidate hubs. I am from Cle
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Old Apr 4, 2012, 5:44 pm
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From the information we have received, United has said that it will be evaluating the profitability of the Cleveland hub(there is an agreement in place that keeps it here for at least a few more years). As far as consolidation, that would be a result of there not being enough traffic from CLE, so this is the area we are exploring. Looking around, it doesn't seem as if overall travel has decreased at all, the issue being that there is too high a percentage of leisure travelers compared to business travelers. While it is not necessarily bad for leisure travelers to not have a hub(generally it causes a decrease in prices), there would most likely be jobs lost as fewer flights are going through CLE as well as a decrease in non-stop flights. As just one piece of the puzzle, we are looking at price sensitivity of business travelers in CLE as compared to other cities/regions. There are most likely other factors involved as well.
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Old Apr 5, 2012, 12:49 pm
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Is this for your Mba project or are you part of consulting group that works with businneses thru CWRU?
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Old Apr 5, 2012, 8:49 pm
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This kind of analysis has been done 100 times or more. The airlines know exactly what parameters they need in order to make a hub successful. They know what % of O and D traffic they need and they know what the critical mass of flights they need.

It is extremely unlikely that, after analyzing this situation in dozens of cities across the country, north and south, east, midwest, and west, that Cleveland would somehow be unique. The river is no longer on fire in Cleveland, so that can't be cited.

When United says they are evaluating the profitability of Cleveland as a hub, they are simply going to put the actual figures of traffic into their formulas that have been tested over and over again. Why would you think that of all of the cities that have served as hubs, including nearby Detroit and Cincinnati, that Cleveland would be different? What reason(s) do you have for thinking that Cleveland business travelers would be any more or less fare-sensitive than travelers in Detroit or Cincinnati or St Louis or Memphis or Chicago?

Before committing oneself to a research project, one needs to offer a rationale for doing the project. I would be interested in yours. As I said above, what reasons do have for thinking Cleveland is any different from any of these other cities - what is so unique about Cleveland that the airline needs a new model to decide on whether a Cleveland hub is profitable?

If you were presenting this project to a funding agency for support, this is exactly what they would be asking. Before you ask people to spend time on this, it would be helpful if you could provide a basis and rationale for the project.

Rant over. Thank you.
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Old Apr 6, 2012, 2:31 pm
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Originally Posted by JerryFF
This kind of analysis has been done 100 times or more. The airlines know exactly what parameters they need in order to make a hub successful. They know what % of O and D traffic they need and they know what the critical mass of flights they need.

It is extremely unlikely that, after analyzing this situation in dozens of cities across the country, north and south, east, midwest, and west, that Cleveland would somehow be unique. The river is no longer on fire in Cleveland, so that can't be cited.

When United says they are evaluating the profitability of Cleveland as a hub, they are simply going to put the actual figures of traffic into their formulas that have been tested over and over again. Why would you think that of all of the cities that have served as hubs, including nearby Detroit and Cincinnati, that Cleveland would be different? What reason(s) do you have for thinking that Cleveland business travelers would be any more or less fare-sensitive than travelers in Detroit or Cincinnati or St Louis or Memphis or Chicago?

Before committing oneself to a research project, one needs to offer a rationale for doing the project. I would be interested in yours. As I said above, what reasons do have for thinking Cleveland is any different from any of these other cities - what is so unique about Cleveland that the airline needs a new model to decide on whether a Cleveland hub is profitable?

If you were presenting this project to a funding agency for support, this is exactly what they would be asking. Before you ask people to spend time on this, it would be helpful if you could provide a basis and rationale for the project.

Rant over. Thank you.
^ ^ Great rant Jerry. I would love to know the rationale as well.
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Old Apr 7, 2012, 9:16 pm
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Me? Price rarely is part of the decision on travel. Most of my trips are short notice so, I'm usually paying full fare.
What is important for me is getting to/from where I need to go. With more and more cutbacks on service, and United trying to force me to connect, DTW is starting to be a reasonable alternative. I would rather drive an extra couple of hours at each end of a trip than putting up with connections... especially during weather related irregular opps...
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