Winter (Q1 2015) schedule cuts coming
Sep 23, 2014, 10:16 am
#31
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There are basically three types of routes, ones that have a large amount of business travel year round, ones that have some business travel and some leisure, and routes that are strictly leisure (and sometimes cyclical).
Airlines have always trimmed the third type of flights back (strictly leisure, seasonal) lots of capacity to Alaska, or flights to winder vacation spots are good examples.
What Delta started to do a few years ago was to ADD flights in the summer, and they did so by having lots of planes that they owned outright (many old) and so could just park in the slow months. They would add cycles or just flat out add planes, increase the fleet utilization. It has worked well for them. For example, MSP-SFO Wed 11/5/14 (mid week, not a vacation time) and its 4xA320, 1x752. (784 seats) Then Looking at Wed 6/24 (summer season) and its 763 x2, 753 x1, 757 x2, 739ER x1, MD-90. (1454 seat) Twice the capacity.
It hard to see what United is actually going to do. They have dumped many of the airplanes they could have used as "swing load" (the 757s) and with new aircraft, or leased aircraft, can't have them sitting around. Their fleet is just not set up to add flying in the summer. I just don't believe that scheduling (with UAL's fleet anyway) will free up a lot of extra airframes.
What I think will actually happen is that what little "swing load" they do have (their owned 757s, perhaps a few of their 763s) will fly less in the winter, and a full scheduled in the summer. This suggests (as this article suggests) and in particular to mainline. Further routes will go RJ from mainline and frequencies will be cut. But I don't think we will see this just on leisure routes, I think we will see it on business routes.
And at some point, as frequencies go away or go small RJ, people began to look at other airlines, and those folks are business travel.
Part of the reason why Airlines did not do this in the past (and Delta is not doing it now) is that you don't want to trim your network so that business travelers look elsewhere, and if they do, they might like elsewhere. Its a particularly risky move for UAL, which is so substandard in every way to other carriers. My guess is that Delta (and AA) will keep up their usual flying in the winter, and UAL will lose more passengers, and in particular more elite High Value Fliers.
Airlines have always trimmed the third type of flights back (strictly leisure, seasonal) lots of capacity to Alaska, or flights to winder vacation spots are good examples.
What Delta started to do a few years ago was to ADD flights in the summer, and they did so by having lots of planes that they owned outright (many old) and so could just park in the slow months. They would add cycles or just flat out add planes, increase the fleet utilization. It has worked well for them. For example, MSP-SFO Wed 11/5/14 (mid week, not a vacation time) and its 4xA320, 1x752. (784 seats) Then Looking at Wed 6/24 (summer season) and its 763 x2, 753 x1, 757 x2, 739ER x1, MD-90. (1454 seat) Twice the capacity.
It hard to see what United is actually going to do. They have dumped many of the airplanes they could have used as "swing load" (the 757s) and with new aircraft, or leased aircraft, can't have them sitting around. Their fleet is just not set up to add flying in the summer. I just don't believe that scheduling (with UAL's fleet anyway) will free up a lot of extra airframes.
What I think will actually happen is that what little "swing load" they do have (their owned 757s, perhaps a few of their 763s) will fly less in the winter, and a full scheduled in the summer. This suggests (as this article suggests) and in particular to mainline. Further routes will go RJ from mainline and frequencies will be cut. But I don't think we will see this just on leisure routes, I think we will see it on business routes.
And at some point, as frequencies go away or go small RJ, people began to look at other airlines, and those folks are business travel.
Part of the reason why Airlines did not do this in the past (and Delta is not doing it now) is that you don't want to trim your network so that business travelers look elsewhere, and if they do, they might like elsewhere. Its a particularly risky move for UAL, which is so substandard in every way to other carriers. My guess is that Delta (and AA) will keep up their usual flying in the winter, and UAL will lose more passengers, and in particular more elite High Value Fliers.
BTW, I agree with your synopsis.
I can't fault UA for doing what DL does, as the "Delta Way" works. Current management tried for about three years to do things differently (e.g. merger of equals) and the results lagged the industry in a big way during a major upswing. If you can't beat 'em, join 'em... or at least copy 'em.
The only thing UA has consistently shown is that they know how to cut, regardless of the ramifications of doing so, which they don't even seem to consider.
UA will be doing a fair amount of fleet mods and upgrades this winter, in addition to the normal maintenance intervals, which are also being scheduled to favor the northern winter season. For example, UA will have a number of 747s and 777s out of service this winter at any given time for in-seat power installs. The wifi and power installs also accelerate over the rest of the fleet, with a project completion target of May/June 2015. Finally, all 737s are getting split scimitar winglet kits installed and 737-800 slimline mods will be commencing soon. A lot of work to be done...
Sep 23, 2014, 10:49 am
#32
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As to converting some 3 class 763s to two class birds (I am assuming with a domestic configuration) that would be very funny, with CO having made such a big deal of how UAL was not using those aircraft correctly before the merger, and having spent a lot of $$$ to convert them to international three class aircraft. I've posted for several years that with the 788/789s coming that it was silly to convert those birds, UAL should have just refreshed them some as domestic lift, if UAL adopts this view, its I guess better late than never, but they will have blown $200M or more of CAP-x on their bad decisions to make them international birds, then switch them back.
With a fuel burn disadvantage to the 67E, the 67I needs those 5 F seats to generate such a premium that it not only covers the potential revenue of the 3 additional J seats of the 67E configuration, but also the revenue of 33 Y seats. In view of that, it is not surprising to see the wisdom of the 67E reconfiguration.
The rumor consists of a plan to do a less capital-intensive reconfiguration of certain 67I ships, likely using existing sUA Business seats and removing GF. Of course, no official confirmation of that scheme whatsoever, but it would probably be a good move in this revenue environment with little capital expenditure.
It is intriguing as the aircraft which would presumably be converted are otherwise slated to be retired in the next 2-4 years. Of course, this is nothing more than a rumor.
Seems like UA's fault for being so late to the party and trying to play catch-up, although admittedly AA has a lot of lay-flat seating to install.
Sep 23, 2014, 11:12 am
#33
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The rumor consists of a plan to do a less capital-intensive reconfiguration of certain 67I ships, likely using existing sUA Business seats and removing GF. Of course, no official confirmation of that scheme whatsoever, but it would probably be a good move in this revenue environment with little capital expenditure.
Sep 23, 2014, 11:22 am
#34
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Seasonal lift reductions should not repel core customers.
Delta partially parks (fewer cycles) its MD-88 fleet and its 763 domestic configuration fleet in the winter, and probably flies its owned 757s less around the edges. But what they don't do is cut back business routes so that they no longer provide the lift/frequency that business travelers want. So MSP-SFO is 5 flights a day, not 9. But what you will not see Delta doing is taking a business route subject to competition and reducing it to once or twice a day (see e.g. IAD-SEA cited earlier).
Sep 23, 2014, 11:31 am
#35
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Just curious if there's been any hint or vague indication on what current management believes that the "right size" is, for the network? DL has already taken over the #2-largest airline title, as of last month, and seems poised based on current numbers to officially steal that slot for the year. So we can already assume that the "right size" for DL is larger than UA.
ASM additions from long-thin routes like SFO-CTU notwithstanding, the overall trend in UA flying has been significantly downward. One would assume, perhaps improperly, that there's a method to the madness, and there's a "right size" that UA is headed for?
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
ASM additions from long-thin routes like SFO-CTU notwithstanding, the overall trend in UA flying has been significantly downward. One would assume, perhaps improperly, that there's a method to the madness, and there's a "right size" that UA is headed for?
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
Sep 23, 2014, 11:37 am
#36
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Sep 23, 2014, 11:41 am
#37
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When UA cuts IAD-SEA down to 1X/day it accomplishes the opposite, e.g. invites habitual UA flyers to shop around. You better believe AS will pick up business because of that IAD-SEA cut and some of it will stick.
Seasonal lift reductions should not repel core customers.
Seasonal lift reductions should not repel core customers.
Sep 23, 2014, 11:44 am
#38
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It is intriguing as the aircraft which would presumably be converted are otherwise slated to be retired in the next 2-4 years. Of course, this is nothing more than a rumor.
I would suspect that they would take the IPTE versions and ,if they are serious about keeping them around, adding winglets, stripping out F, and adding more Y- seating.
Sep 23, 2014, 12:03 pm
#39
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Just curious if there's been any hint or vague indication on what current management believes that the "right size" is, for the network? DL has already taken over the #2-largest airline title, as of last month, and seems poised based on current numbers to officially steal that slot for the year. So we can already assume that the "right size" for DL is larger than UA.
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
No airline has a perfect forecast of macro demand or fuel prices. (A run up of oil prices to $150/barrel would see DL park MD-88s by the dozens.) With mainline fleets of over 700 aircraft, a change of 20-25 frame really isn't a big deal for UA or DL.
This all isn't to say that I high confidence that UA will get all the moving parts right, with optimal frequency on business routes and profit maximization given fixed costs and substantially-fixed costs (like pilot and FA wages and benefits). In principle, though, seasonal and day-of-week demand consideration makes good sense.
Sep 23, 2014, 12:18 pm
#40
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That's a fair point, and there are strong indications that management is coming around to see the merit in that strategy. To wit, in the last week I have heard more once that UA is strongly considering retaining some or all ETOPS-rated domestic 757-222s and that the 767-300ER retirements may be deferred. Even more intriguing is the internet rumor that some of the 3-cabin 763ERs may be reconfigured to a more dense 2-class layout.
Take that for what it's worth...
Take that for what it's worth...
And with regards to the 3-class 763, it's a pipe dream that they can retire them right now. Much of the Euro routes out of IAD, ORD, and EWR rely on them to which there aren't enough 787 coming online over the next year to take over. They are basically stuck with them, unless they want order more 787 to compensate.
Tough luck, UA. I've been watching this trainwreck of a merger for years and all I can say is good riddance.
Sep 23, 2014, 12:36 pm
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ASM additions from long-thin routes like SFO-CTU notwithstanding, the overall trend in UA flying has been significantly downward. One would assume, perhaps improperly, that there's a method to the madness, and there's a "right size" that UA is headed for?
When they began this round of consolidation, CO was #4. (after AA, UA, and DL in that order), overall. They're now 4th domestically (WN).
I don't think its inconceivable that VX and B6 wouldn't form some sort of partnership, and become a significant pain in the butt for the majors, particularly UA, slurping up the most heavily trafficked domestic corridors (BOS/NYC-> West Coast, ORD and Florida), where people want and expect a modern, high quality product.
Sep 23, 2014, 12:46 pm
#42
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And with regards to the 3-class 763, it's a pipe dream that they can retire them right now. Much of the Euro routes out of IAD, ORD, and EWR rely on them to which there aren't enough 787 coming online over the next year to take over. They are basically stuck with them, unless they want order more 787 to compensate.
Sep 23, 2014, 1:03 pm
#43
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I wouldn't be so sure. A domestic configuration gets a lot more seats in there, and would probably the the right move if they need the domestic lift.
It is? DL has their whole 2-cabin RJ fleet outfitted with WiFi. UA hasn't started on the RJs yet, though they've committed on the 175s, I believe.
It is? DL has their whole 2-cabin RJ fleet outfitted with WiFi. UA hasn't started on the RJs yet, though they've committed on the 175s, I believe.
Sep 23, 2014, 1:26 pm
#44
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Just curious if there's been any hint or vague indication on what current management believes that the "right size" is, for the network?
<snip>
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
<snip>
So, what is it? Because some of these reductions, seasonal or otherwise, seem to make no sense whatsoever -- either in isolation or competitively.
The right size for UA seems to be flying 739s between IAD, IAH, ORD, EWR, and SFO and charging exorbitant prices for these legs. Everything else is an annoyance to the current management.
Sep 23, 2014, 1:35 pm
#45
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The domestic system is growing by way of additional seats on existing airplanes and upgauging regional. I don't think reintroducing a dedicated domestic fleet of heavy, longhaul-capable airplanes is a wise use of the asset. They are effectively limited to certain type of service for which the airframes are 'overqualified' , in terms of range, weight, capacity (certainly for cargo) and operating costs. Even Delta is withdrawing their domestic 767-300s and replacing with 737-900ERs and high-density A321s.
While we are on the subject of reconfiguration, more likely, IMO, is that UA decides it wants to hang on to its ETOPS 757-222 fleet (perhaps some others) and 'slims' those airplanes into a ~199-seat configuration.
But who knows... all this is pure conjecture on my part.
It is? DL has their whole 2-cabin RJ fleet outfitted with WiFi. UA hasn't started on the RJs yet, though they've committed on the 175s, I believe.