WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #136
If US had to choose between PHL and PIT in order to create a single viable hub in the NE, then the strategic thinking that went into that decision has to be questioned. And, now years later, you can’t help but see why US needs a merger partner when it felt that its only choice was a NE hub at the expense of a Midwest hub.
Why not PIT AND PHL? Why could US not have supported a hub in both cities, esp. in light of their pull down at BWI and their historic strength in the NE. AA, CO, DL, and UA all had hubs in both regions.
Sounds to a lot of us that US got too happy closing hubs without thinking thru the long-term strategic implications.
Actually, LAX is not a hub anywhere near the way EWR or JFK is on the east coast. LAX does not have the room for any carrier except perhaps UA to operate a hub – and they have thrown their west coast weight behind SFO. I don’t know of any LAX mainline market on any carrier that is more than 1/3 connections except for perhaps Hawaii and international flights. Hubs have far more connecting passengers than LAX.
Coastal cities like NYC, LAX, BOS, and WAS were largely non-hubs while hubs existed in the interior of the country – going all the way back to the early days of aviation. UA managed to build IAD into a hub; CO and its predecessors did it at EWR; UA did it at SFO as did US at PHL but BOS and LAX have remained non-hub airports and part of that is geographically driven. No carrier at BOS or LAX has the share advantage that carriers at EWR, JFK, SFO, IAD, or PHL have.
JFK and now LGA are now hubs for one or more airlines, making all three NYC airports as hubs for one or more carriers. It is clear from looking at every interior hub that the hub operator has a significant passenger and revenue share relative to non-hub carriers at the same airport. It is precisely because of the revenue and market share premium that CO had at EWR that drove DL to gain the resources necessary to make LGA and JFK hubs larger than its competitors.
NYC does not belong singularly to DL. Right now, DL and UA have very similar levels of service with DL larger domestically and UA larger internationally giving UA right now the advantage in terms of revenue. Since the slot swap is still new and revenue data isn’t available, we can’t know w/ certainty – but there is every reason to believe that DL will achieve the revenue premiums based on size that exist for other carriers in other hubs.
List the number of NYC markets in which AA is the market leader and the cities on the list amount primarily to the Cornerstone cities plus LHR, GRU, and EZE. Most of AA’s capacity out of NYC is to markets where it is the #3 carrier for the city or smaller. I don’t know of any other airport where a carrier is the largest carrier in as few markets as AA is in NYC but where they have managed to hold onto their overall city revenue. I also don’t know of any other cities where 3 hub carriers have viably existed long term. If you can give me an example, I’d love to hear it.
Growing in AA’s core markets might be what they need –but I have yet to see how they are going to do that in their key competitive markets of NYC and ORD against other competitors who aren’t about to roll over. Further, there is no evidence of a network carrier regaining share it once lost.
Perhaps AA can grow DFW and MIA…. But even LAX has little growth potential based on facilities – perhaps the TBIT can help – but it still is a divided market that I don’t see anyone being willing to divide their share with AA.
As for DEN, it is far from a viable operation for any of the 3 hub carriers as evidenced by average fares that are far lower than from other large markets in the region.
We can certainly throw in PHX, ATL, or other network-LFC competitive hubs – but the jury is still out regarding US’ ability to exist alongside WN at PHX or WN’s ability to hub side by side at ATL with DL. All the indications are that WN continues to convert ATL to point to point operation.
Ironically, UA was forced into its current much smaller role at JFK by AA, who also all but pushed UA out of the MIA market and DL out of DFW as a hub. It is more than just wishful thinking to believe that AA is exempt from the same market principles it used against other competitors.
Whether AA can make it long term in NYC has significant implications for the future of AA as a standalone or even with US. Holding onto hope that things MIGHT be ok in the future is exactly why AA is in the strategic position it is in today after 10 years of not focusing on – or succeeding at protecting its network from competitors.
Why not PIT AND PHL? Why could US not have supported a hub in both cities, esp. in light of their pull down at BWI and their historic strength in the NE. AA, CO, DL, and UA all had hubs in both regions.
Sounds to a lot of us that US got too happy closing hubs without thinking thru the long-term strategic implications.
Actually, LAX is not a hub anywhere near the way EWR or JFK is on the east coast. LAX does not have the room for any carrier except perhaps UA to operate a hub – and they have thrown their west coast weight behind SFO. I don’t know of any LAX mainline market on any carrier that is more than 1/3 connections except for perhaps Hawaii and international flights. Hubs have far more connecting passengers than LAX.
Coastal cities like NYC, LAX, BOS, and WAS were largely non-hubs while hubs existed in the interior of the country – going all the way back to the early days of aviation. UA managed to build IAD into a hub; CO and its predecessors did it at EWR; UA did it at SFO as did US at PHL but BOS and LAX have remained non-hub airports and part of that is geographically driven. No carrier at BOS or LAX has the share advantage that carriers at EWR, JFK, SFO, IAD, or PHL have.
JFK and now LGA are now hubs for one or more airlines, making all three NYC airports as hubs for one or more carriers. It is clear from looking at every interior hub that the hub operator has a significant passenger and revenue share relative to non-hub carriers at the same airport. It is precisely because of the revenue and market share premium that CO had at EWR that drove DL to gain the resources necessary to make LGA and JFK hubs larger than its competitors.
NYC does not belong singularly to DL. Right now, DL and UA have very similar levels of service with DL larger domestically and UA larger internationally giving UA right now the advantage in terms of revenue. Since the slot swap is still new and revenue data isn’t available, we can’t know w/ certainty – but there is every reason to believe that DL will achieve the revenue premiums based on size that exist for other carriers in other hubs.
List the number of NYC markets in which AA is the market leader and the cities on the list amount primarily to the Cornerstone cities plus LHR, GRU, and EZE. Most of AA’s capacity out of NYC is to markets where it is the #3 carrier for the city or smaller. I don’t know of any other airport where a carrier is the largest carrier in as few markets as AA is in NYC but where they have managed to hold onto their overall city revenue. I also don’t know of any other cities where 3 hub carriers have viably existed long term. If you can give me an example, I’d love to hear it.
Growing in AA’s core markets might be what they need –but I have yet to see how they are going to do that in their key competitive markets of NYC and ORD against other competitors who aren’t about to roll over. Further, there is no evidence of a network carrier regaining share it once lost.
Perhaps AA can grow DFW and MIA…. But even LAX has little growth potential based on facilities – perhaps the TBIT can help – but it still is a divided market that I don’t see anyone being willing to divide their share with AA.
As for DEN, it is far from a viable operation for any of the 3 hub carriers as evidenced by average fares that are far lower than from other large markets in the region.
We can certainly throw in PHX, ATL, or other network-LFC competitive hubs – but the jury is still out regarding US’ ability to exist alongside WN at PHX or WN’s ability to hub side by side at ATL with DL. All the indications are that WN continues to convert ATL to point to point operation.
Ironically, UA was forced into its current much smaller role at JFK by AA, who also all but pushed UA out of the MIA market and DL out of DFW as a hub. It is more than just wishful thinking to believe that AA is exempt from the same market principles it used against other competitors.
Whether AA can make it long term in NYC has significant implications for the future of AA as a standalone or even with US. Holding onto hope that things MIGHT be ok in the future is exactly why AA is in the strategic position it is in today after 10 years of not focusing on – or succeeding at protecting its network from competitors.
