UA ends LAX to New Orleans daily flight [effective August, 2016]
May 26, 2016, 9:53 am
#61
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Everyone at LAX is "gate-limited," but AA has access to 33 of them (15 in T-4, 4 in T-6, 9 Eagle gates in the Dump and 5 in TBIT).
AA has re-gated T4 to add 2 new gates. Plus, AA has exclusive use of 5 gates at TBIT before 11am (shared use afterwards). They have added 20 new daily flights for the summer season.
I agree, expansion will be slow due to gate limitations. But AA is working very hard to add gates - including the T4-TBIT connector and a long term plan to have AA take the entirety of T4 and T5.
I agree, expansion will be slow due to gate limitations. But AA is working very hard to add gates - including the T4-TBIT connector and a long term plan to have AA take the entirety of T4 and T5.
LAX is too fragmented for any airline to grow to the ~300 daily departures United has at SFO. AA has a ceiling of about 200 daily flights at LAX, while DL's is slightly lower. Again, United cannot be all things to all people, and their apparent decision is to grow a more robust SFO operation, with an O&D-focused complex at LAX. Both AA and DL would likely trade their respective West Coast arrangements for United's in a second.
As many have posted, AA has no other choice for the west coast. I don't know if AA will "win," financially, at LAX, but I do predict that AA will continue to add flights and throw money at LAX until DL and/or UA downsize some more. UA has the much stronger position at SFO and DL has its 150 flight TPAC hub experiment at SEA. Being the biggest at LAX matters a whole lot more to AA than either DL or UA.
This is about a tiny money-losing route: LAX-MSY, and the reaction of some is similar to the "abandonment" of SEA when UA sensibly exited the SEA-NRT market ("the sky is falling!"). Same thing on the DL forum when DL made the rational choice to exit SFO-NRT. You'd think it was the end of the world.
May 26, 2016, 9:53 am
#62
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The weakness of *A is part of UA's problem at LAX.
AA gets a huge shot in the arm every morning, as Qantas deposits 1,000+ pax at LAX - many of whom are going beyond, mostly on AA metal. BA also feeds AA, for service to smaller cities (although BA's services to SAN, LAS, PHX, etc. take away many premium cabin connections). DL gets feed from Korean, and its Chinese partners.
At *A, though, ANA has service to enough other major US markets that the HVF is more likely on a nonstop ex-NRT, while SQ doesn't even put its code on most UA flights ex-hubs (just starting to happen in IAH, IIRC). NZ contributes feed, but then turns around and runs its own LAX-LHR to further cut in to *A options.
AA gets a huge shot in the arm every morning, as Qantas deposits 1,000+ pax at LAX - many of whom are going beyond, mostly on AA metal. BA also feeds AA, for service to smaller cities (although BA's services to SAN, LAS, PHX, etc. take away many premium cabin connections). DL gets feed from Korean, and its Chinese partners.
At *A, though, ANA has service to enough other major US markets that the HVF is more likely on a nonstop ex-NRT, while SQ doesn't even put its code on most UA flights ex-hubs (just starting to happen in IAH, IIRC). NZ contributes feed, but then turns around and runs its own LAX-LHR to further cut in to *A options.
UA must feel they have a better shot strengthening their position as SFO then compete at LAX.
May 26, 2016, 10:50 am
#63
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This is about a tiny money-losing route: LAX-MSY, and the reaction of some is similar to the "abandonment" of SEA when UA sensibly exited the SEA-NRT market ("the sky is falling!"). Same thing on the DL forum when DL made the rational choice to exit SFO-NRT. You'd think it was the end of the world.
May 26, 2016, 11:11 am
#64
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In an ideal world, UA would operate many more flights to LAX. But this isn't an ideal world. UA only has a limited number of planes, and every plane used in one place is not using it in another place. Every flight of out LAX is one less flight out of SFO. They make more money out of SFO, so cutting flights with too much competition or where capacity exceeds demand makes a lot of sense at LAX.
I can't figure out why they cut SFO-FLL, only because they do not fly SFO-MIA, which is a route they should start.
I can't figure out why they cut SFO-FLL, only because they do not fly SFO-MIA, which is a route they should start.
May 26, 2016, 11:54 am
#65
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The incredible shrinking airline. How UA has the gall to continue to market LAX as a hub is beyond me. When it comes to O&D I don't consider an airport to be a hub, when I must connect somewhere on the way to my final destination. DTW is a hub, ORD is a hub, ATL is a hub, IAH is a hub, SFO is a hub. LAX is only a hub if you combine ALL carriers, the closest it comes to being a hub for one carrier is AA or WN.
May 26, 2016, 12:14 pm
#66
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...that continues to have yoy ASM growth, larger overall gauge, yoy mainline fleet growth, yoy mainline departure growth. 
United can launch 6 new widebody longhaul SFO routes this year, add seasonal service in a bunch of Atlantic markets, grow at most of the domestic hubs (save IAD/IAH) and even add flights to LAX year-over-year, but make just one cut at LAX, and the sky is falling once again!!
United can launch 6 new widebody longhaul SFO routes this year, add seasonal service in a bunch of Atlantic markets, grow at most of the domestic hubs (save IAD/IAH) and even add flights to LAX year-over-year, but make just one cut at LAX, and the sky is falling once again!!
May 26, 2016, 2:42 pm
#67
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Shrinking absolutely or shrinking market share?
They can be growing in absolute terms while also losing ground/share to competitors.
They can be growing in absolute terms while also losing ground/share to competitors.
Last edited by goalie; May 26, 2016 at 7:36 pm Reason: removed quote of deleted psot
May 26, 2016, 2:48 pm
#68
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No question they are losing market share at LAX, but the question remains as to whether a) it was profitable for United to maintain a leadership position at LAX and b) United is losing market share at LAX against its will.
I don't think the answer is nearly as simple as, "United gutted its product and HVFs left." The negative impact of the Smisek era cannot be overstated, but there's obviously more to the picture. My view is, all else being equal, United would rather put its eggs in the SFO basket (and may well be generating a greater return ex-SFO) than LAX. This is instead of allocating resources more evenly, thereby leaving vulnerable one market (with a near-fortress position) and fighting multiple intense competitors on all fronts at the other.
Is it really retreating when you're doing so to bolster an unquestioned strength?
Last edited by EWR764; May 26, 2016 at 2:53 pm
May 26, 2016, 5:14 pm
#70
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This I can't reconcile. LAX is the largest O&D airport in the world, and has significant local demand to virtually every market. To the extent the West Coast functions as a logical connecting point on an itinerary, United would rather route that traffic over SFO to augment the Pacific hub. UA also (still) has comprehensive service intra-California, which can use LAX as a connecting complex, but again, more service is offered at United's preferred hub.
I don't think United needs or wants LAX traffic to be primarily flow-oriented. It wants local traffic, plus certain connecting flows for a handful of O&D-oriented routes it doesn't serve elsewhere (Hawaii, Australia, etc.). If a route is in a hyper-competitive market with depressed yields, or relies on connecting traffic to be sustained, I think it's easy to see what will happen. United clearly is not interested in remaining in a LAX city pair purely for market share purposes. The 'network effect' hub is at SFO.
The approach of splitting resources between SFO and LAX cost United opportunities at SFO, and I would argue that doing so (in concert with other factors) left the door wide open for VX to enter SFO and set up shop. Meanwhile, at LAX, UA may have been #1 in passengers, but AA was long the leader in local market share, and even at its peak, United's traffic advantage over competitors at LAX was in the single digits. No matter what, LAX was going to be more competitive than SFO, and United would never have the all-important dominance that is often discussed in other threads as a structural advantage of AA/DL hubs vis-a-vis United's.
At SFO, OTOH, United had a hub where it was effectively 'the only game in town', and IMO under-investment there cost it in terms of yield and market share with the growth of VX. Since the merger, United has clearly chosen to reallocate capacity from NRT/LAX to SFO, grow the transpacific franchise, and bolster the connecting flow feeding that operation. Not surprisingly, SFO has flourished.
LAX is too fragmented for any airline to grow to the ~300 daily departures United has at SFO. AA has a ceiling of about 200 daily flights at LAX, while DL's is slightly lower. Again, United cannot be all things to all people, and their apparent decision is to grow a more robust SFO operation, with an O&D-focused complex at LAX. Both AA and DL would likely trade their respective West Coast arrangements for United's in a second.
What's happening at LAX is United and American have essentially traded places, with Delta capturing a larger share of traffic as well. Historically, AA@LAX was mostly O&D-focused, supplemented by a smaller Eagle operation and comprehensive service in the major LAX local markets. Around the time of AA's bankruptcy, their 'cornerstone' strategy called for building out LAX as a connecting hub, and that approach has survived the merger and management change. AA has no other viable West Coast international gateway option, which is growing in strategic importance (DFW cannot support service to Asia growth markets yet), nor does it have a large Pacific footprint, so it has no choice but to 'win' LAX as a platform for organic growth and JV cooperation. It's quite interesting, to me, as AA should, by all means, have the largest LA operation by a significant margin, owing to its past acquisitions (AirCal, RenoAir) and those of its merger partner (PSA->US). Most of those positions were squandered to WN in the intervening years, so in some respects AA is just trying to reclaim territory it once held, albeit in a different form.
I don't think United needs or wants LAX traffic to be primarily flow-oriented. It wants local traffic, plus certain connecting flows for a handful of O&D-oriented routes it doesn't serve elsewhere (Hawaii, Australia, etc.). If a route is in a hyper-competitive market with depressed yields, or relies on connecting traffic to be sustained, I think it's easy to see what will happen. United clearly is not interested in remaining in a LAX city pair purely for market share purposes. The 'network effect' hub is at SFO.
The approach of splitting resources between SFO and LAX cost United opportunities at SFO, and I would argue that doing so (in concert with other factors) left the door wide open for VX to enter SFO and set up shop. Meanwhile, at LAX, UA may have been #1 in passengers, but AA was long the leader in local market share, and even at its peak, United's traffic advantage over competitors at LAX was in the single digits. No matter what, LAX was going to be more competitive than SFO, and United would never have the all-important dominance that is often discussed in other threads as a structural advantage of AA/DL hubs vis-a-vis United's.
At SFO, OTOH, United had a hub where it was effectively 'the only game in town', and IMO under-investment there cost it in terms of yield and market share with the growth of VX. Since the merger, United has clearly chosen to reallocate capacity from NRT/LAX to SFO, grow the transpacific franchise, and bolster the connecting flow feeding that operation. Not surprisingly, SFO has flourished.
LAX is too fragmented for any airline to grow to the ~300 daily departures United has at SFO. AA has a ceiling of about 200 daily flights at LAX, while DL's is slightly lower. Again, United cannot be all things to all people, and their apparent decision is to grow a more robust SFO operation, with an O&D-focused complex at LAX. Both AA and DL would likely trade their respective West Coast arrangements for United's in a second.
What's happening at LAX is United and American have essentially traded places, with Delta capturing a larger share of traffic as well. Historically, AA@LAX was mostly O&D-focused, supplemented by a smaller Eagle operation and comprehensive service in the major LAX local markets. Around the time of AA's bankruptcy, their 'cornerstone' strategy called for building out LAX as a connecting hub, and that approach has survived the merger and management change. AA has no other viable West Coast international gateway option, which is growing in strategic importance (DFW cannot support service to Asia growth markets yet), nor does it have a large Pacific footprint, so it has no choice but to 'win' LAX as a platform for organic growth and JV cooperation. It's quite interesting, to me, as AA should, by all means, have the largest LA operation by a significant margin, owing to its past acquisitions (AirCal, RenoAir) and those of its merger partner (PSA->US). Most of those positions were squandered to WN in the intervening years, so in some respects AA is just trying to reclaim territory it once held, albeit in a different form.
And I might add, we have had this debate about LA for now 4 years. UA cuts a flight/goes RJ (LAX-SEA, LAX-PDX, LAX-BOS, LAX-PHX, LAX-PHL, etc), giving up T6 gates, and we have the same discussion. People who say it has no further impacts, and those of us who say that as the network flatlines, UA will loose the O/D traffic, and that is what is happening.
(2) the attitude that created the problem is exemplified by this oldie, but still goodie, of a post (in fact the entire thread is a trip down memory lane.
http://www.flyertalk.com/forum/20924217-post223.htmlAs both DL and AA add flights, the difference will be more stark, and for any UA HVFer ex-LAX, AA or DL will look like better options, ditto corporate accounts that need Los Angeles service.
(3) Look, I live in SF, and it makes a great gateway, but it also has major weather issues, which create awful problem when it (a) rains, or (b) is foggy. As United retreats to SFO, it will maintain some of the O/D traffic (VX and DL have picked up a lot of it), but long term I don't think United is doing itself any favors as to overall High Value traffic in the West. Overtime people are just not going to connect in SFO from LAX. And as United loses its LAX based HVFers (as it did its Seattle and Portland based HVFers) it will eventually have impacts at the SFO side, as they will lose both the O/D traffic to UA hubs, but also the connecting traffic.
May 27, 2016, 4:34 am
#72
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May 27, 2016, 8:03 am
#73
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(1) In order to capture that O/D traffic, you have to be either (1) a better carrier (how VX has gotten a 4% share, or DL now a bigger share than UA), or (2) have the best local network. United's market share has fallen substantially ex-LAX and as it keeps falling, and sheds more destinations, it has gone form No.1 to No. 3. That is a fact. I posted the market share numbers, for the last three months: AA had a 20.13% market share, Delta had a 17.16% market share, UA was back at 14.69% market share. In 2012 UA had more destinations and a bigger network ex-LAX.
Airline Pax (000) Share
American 10,118 18.88%
Southwest 8,699 16.23%
Delta 8,578 16.00%
United 8,562 15.97%
SkyWest 3,455 6.45%
Other 14,194 26.48%
Airline Pax (000) Share
American 8,280 18.25%
Southwest 7,022 15.47%
United 6,824 15.04%
Delta 6,160 13.57%
SkyWest 3,709 8.17%
Airline Pax(000) Local share
American 7,854 19.38%
United 6,916 17.06%
Southwest 6,624 16.34%
Delta 4,119 10.16%
SkyWest 2,454 6.05%
Now, for SFO:
3/15-2/16
Airline Pax (000) Share
United 14,104 37.21%
American 4,005 10.57%
SkyWest 3,695 9.75%
Southwest 3,450 9.10%
Delta 3,412 9.00%
Other 9,240 24.38%
Airline Pax (000) Share
United 10,630 33.29%
SkyWest 3,402 10.66%
American 3,096 9.70%
Southwest 2,932 9.18%
Delta 2,688 8.42%
Other 9,181 28.75%
United 10,146 34.61%
American 3,228 11.01%
Southwest 2,875 9.81%
SkyWest 2,574 8.78%
Delta 1,673 5.71%
Other 8,820 30.09%
On one hand, we hear that United is too exposed to competition at its hubs, and needs truly dominant operations like AA (DFW/CLT) and DL (ATL/DTW/MSP) in order to match them on revenue performance. There's no doubt that some of the assets that were pulled out of the LAX market have gone to solidify SFO, and United's share and pax gains at SFO dwarf corresponding losses at LAX.
On the other, FT goes into a near-meltdown every time United cuts service at LAX (despite a net gain in departures over the previous schedule) which just happens to be the most fragmented, competitive hub in the country. Which is right?
And I might add, we have had this debate about LA for now 4 years. UA cuts a flight/goes RJ (LAX-SEA, LAX-PDX, LAX-BOS, LAX-PHX, LAX-PHL, etc), giving up T6 gates, and we have the same discussion. People who say it has no further impacts, and those of us who say that as the network flatlines, UA will loose the O/D traffic, and that is what is happening.
Things clearly aren't changing with respect to United's LA strategy. Why keep bellyaching about it?
(3) Look, I live in SF, and it makes a great gateway, but it also has major weather issues, which create awful problem when it (a) rains, or (b) is foggy. As United retreats to SFO, it will maintain some of the O/D traffic (VX and DL have picked up a lot of it), but long term I don't think United is doing itself any favors as to overall High Value traffic in the West. Overtime people are just not going to connect in SFO from LAX. And as United loses its LAX based HVFers (as it did its Seattle and Portland based HVFers) it will eventually have impacts at the SFO side, as they will lose both the O/D traffic to UA hubs, but also the connecting traffic.
Keep on bangin' that drum, though!
May 27, 2016, 9:56 am
#74
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PMUA had plenty of exposure to competition, and did not have a revenue problem.
What's changed since then is the product, service, and technology have degraded, and the loyalty program has deteriorated.
Without those draws, perhaps yes, UA needs to have dominant operations in order to maintain a strong revenue position. Every time I think about this, I go back to Kmart's predicament. Kmart does extremely well in isolated markets where they're the only game in town (Guam, USVI, etc.) or there is limited competition. The minute you offer competition to Kmart, they flounder (e.g., what's been happening nationwide and beginning in Hawaii with Target's recent entry).
That means, in order to be successful, Kmart needs to retreat to markets with little to no competition, OR they need to change their business model/reputation/perception to make themselves more attractive.
I don't think that UA's situation is as dire as Kmart's, but there are many parallels, and they are heading in that direction. Delta is perceived as the solid, full-service carrier. Virgin America is the "cool" carrier, and Southwest is a reliable, fair, discount carrier. UA is a carrier that people will book on, reluctantly, if there happens to be a good flight or cheap fare.
May 27, 2016, 10:31 am
#75
Join Date: May 2013
Posts: 3,361
United's generated an average stage-length adjusted yield premium of 103% over its network peers between 1999-2009. From 2010-14 (the latest period data is available), the average premium was 110%.
Delta is the one with a revenue problem. From 1999-2009, it generated 94% of the yields of its peers. That's improved to 95% from 2010-2014.
Delta is more profitable because it has lower costs and has higher load factors.
Trying to connect a general discussion on revenue to a network change at LAX is a stretch. Unless one regularly flew LAX-MSY, the general criticism of United seem off topic and generally meritless.
The data is sourced from the MIT Airline Data Project.