Should UA develop new hubs/focus cities?
Jun 12, 2019, 8:38 am
#106
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What is the definition of a focus city? I guess that it serves O/D traffic from this city to nearby cities. With this said, AUS can be a focus city if it offers nonstop flights to nearby TX cities and a few cities around TX, even though IAH can offer a lot of more connecting flights to these same cities. AUS may become a focus city if UA can make money. With this definition, DCA is just a focus city for AA, as discussed previously.
Just my two cents.
Just my two cents.
I mean — what routes would you want them to fly? MAF-AUS is probably the largest intra-Texas market where they wouldn’t have head-to-head competition. OKC-AUS is available now that ViaAir stopped all flights.
I’d be thrilled with more nonstop options from AUS, but I just don’t see how it helps UA any to offer them.
Jun 12, 2019, 10:49 am
#108
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One a broader scale, UA's narrow focus to generate as much international traffic as possible ultimately left them as the #3 or often #4 carrier in the vast majority of their non-hub cities/airports. That presents quite an uphill climb if they want to markedly improve their position in any of these places.
Jun 12, 2019, 11:39 am
#109
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Umm, I don't think anyone was talking about the economics of the city or MSA, but rather the economics of the hub itself.
Specifically, SFO generates more, higher yielding O&D traffic. Therefore, it is economically superior as a hub to other hubs that have less O&D traffic or lower yields, e.g. DTW. Therefore, an airline would be stupid to not "trade" a hub in DTW for a hub in SFO. Of course, this is a dumb argument (that is becoming circular) because we're past a point where airlines would trade hubs.
Specifically, SFO generates more, higher yielding O&D traffic. Therefore, it is economically superior as a hub to other hubs that have less O&D traffic or lower yields, e.g. DTW. Therefore, an airline would be stupid to not "trade" a hub in DTW for a hub in SFO. Of course, this is a dumb argument (that is becoming circular) because we're past a point where airlines would trade hubs.
I am curious, do you have any data to show that SFO as a hub generates higher margins than DTW as a hub? Not trying to be sarcastic, genuinely curious. The source I have, which is slightly out of date shows otherwise in terms of O&D yield.
Jun 12, 2019, 11:58 am
#110
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I'm not an expert on airline financials, but shouldn't there be some kind of stage length adjustment? Short stage length has higher CASM.
Jun 12, 2019, 12:41 pm
#111
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Cost numbers by hub are much more difficult to calculate, that is why I asked if they had any information on margins specifically, since they said SFO was an economically superior hub.
Jun 12, 2019, 12:58 pm
#112
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Any airline management that would trade a superior economic airport / hub / focus for a inferior economic airport / hub / focus is going to have issues with its shareholders (unless it has a grant plan for changing that situation). Additionally such trades are not in the realm of possibilities or speculation.
The question in this thread is if and where should UA hubs (unlikely IMO) or focus city airports.
Jun 12, 2019, 1:03 pm
#113
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Trans States approached UA with a proposal to launch several nonstop markets from SAT. At that time there were a considerable amount of conventions being moved to SAT while MSY will still reeling from the effects of Hurricane Katrina. The nonstop routes were ones that at that time weren't served nonstop, but WN carried the majority of the traffic. The thought was that by offering 1-2 nonstop flights/day in these markets, people would pay a slight premium over WN for the convenience of a nonstop, it would capture the people who ordinarily flew UA for their larger network reach but were forced to fly OAL because UA lacked market presence, and it would be a low-risk opportunity for UA to gain a presence in a region they didn't already have coverage because Trans States would operate under an at-risk agreement where they be responsible for the costs of the operation (and subsequently collect the revenue) but UA would market and sell the tickets.
Despite the offer of nonstops, UA wasn't able to capture the market share from WN mainly because UA didn't advertise the operation well enough, some of the convention surge died off, and also the reality that WN connectivity didn't add a considerable amount of extra flying time and there were a larger number of flights into/out of MSY that people had an option of choosing.
Jun 12, 2019, 1:29 pm
#114
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This thread is about airports
Any airline management that would trade a superior economic airport / hub / focus for a inferior economic airport / hub / focus is going to have issues with its shareholders (unless it has a grant plan for changing that situation). Additionally such trades are not in the realm of possibilities or speculation.
The question in this thread is if and where should UA hubs (unlikely IMO) or focus city airports.
Any airline management that would trade a superior economic airport / hub / focus for a inferior economic airport / hub / focus is going to have issues with its shareholders (unless it has a grant plan for changing that situation). Additionally such trades are not in the realm of possibilities or speculation.
The question in this thread is if and where should UA hubs (unlikely IMO) or focus city airports.
A poster named spin88 originally said: "UA has the best hub locations by far of the US3, in larger cities than its competitors"
I refuted that claim and that is how this conversation involving cities started, and then you and a few other posters joined in not knowing the full context of what was being discussed.
To your next point, I don't know why you are lecturing me about "trading" airports? I was the one who said it was a terrible idea, in fact I had a multiple paragraph monologue about how it was a bad idea, after multiple posters disagreed with me.
Please read the discussion, so you are addressing your posts to the right people
Jun 12, 2019, 2:31 pm
#115
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You are confused because you joined this discussion mid-way through:
A poster named spin88 originally said: "UA has the best hub locations by far of the US3, in larger cities than its competitors"
I refuted that claim and that is how this conversation involving cities started, and then you and a few other posters joined in not knowing the full context of what was being discussed.
To your next point, I don't know why you are lecturing me about "trading" airports? I was the one who said it was a terrible idea, in fact I had a multiple paragraph monologue about how it was a bad idea, after multiple posters disagreed with me.
Please read the discussion, so you are addressing your posts to the right people
A poster named spin88 originally said: "UA has the best hub locations by far of the US3, in larger cities than its competitors"
I refuted that claim and that is how this conversation involving cities started, and then you and a few other posters joined in not knowing the full context of what was being discussed.
To your next point, I don't know why you are lecturing me about "trading" airports? I was the one who said it was a terrible idea, in fact I had a multiple paragraph monologue about how it was a bad idea, after multiple posters disagreed with me.
Please read the discussion, so you are addressing your posts to the right people
A low landing cost hub with large corporate O&D spend (auto in DTW's case) and little competition can be very attractive even if it's not a world money center with premium cabin demand. CLT and ATL are the extreme examples. Big coach yields make big profits this cycle at least.
Jun 12, 2019, 5:44 pm
#118
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Jun 12, 2019, 5:53 pm
#119
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Maybe not the be-all/end-all, but UA has less hubs/focus cities than DL or AA. While
Many of UA’s hubs are in prime cities, the lesser quantity surely means that their geographic reach isn’t as great or is suboptimal - clearly most evident with the hole in the Southeast. Additionally, their most prominent hubs (EWR and SFO) go sideways when the weather gets bad - and both are limited by geography from ever contemplating expansion.
Many of UA’s hubs are in prime cities, the lesser quantity surely means that their geographic reach isn’t as great or is suboptimal - clearly most evident with the hole in the Southeast. Additionally, their most prominent hubs (EWR and SFO) go sideways when the weather gets bad - and both are limited by geography from ever contemplating expansion.