Hub Closure Sweepstakes
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WorldTraveler
Corn Field
- Dec 5, 2003
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this topic is actually very much on track with what the OP originally asked.
Yes, new AA can choose to argue that the hubs aren't profitable and there is enough wiggle room in the agreements to allow AA to downsize etc etc.
but AA/US could have to be dealing with the same politicians again - and the "political family" isn't limited just to AZ.... they talk to each other. walking out of an agreement in one state could make it much much difficult in other states. Several of the southern state hubs are in states that lean in the same political direction.
Secondly, AA still has to deal with staffing issues. AA hasn't begun to deal with joint staffing but some of that will likely come before the end of the year. AA is overstaffed relative to other airlines. Closing hubs and reducing operations makes the job of integrating the operation ten times harder.
As long as the revenue environment in the US is strong, there is little immediate need to start trimming operations that involve thousands of employees as hubs do.
It may or may not be what another airline has in the same region, but as long as it is profitable for new AA, CLT will stay.
However, those who argue that AA's strength in the South and SE comes by having 3 large hubs surrounding ATL might want to consider whether 3 large hubs are better than one megahub. DL is the 2nd largest carrier in all of new AA's hubs and they are also the largest carrier in many of the citiesin the SE. By using 3 hubs, AA is dividing the market going in 3 directions. And remember that alot of DL's strength in the SE comes from its multiple hubs - ATL isn't the only hub that DL serves from the SE.
This doesn't mean that either AA or DL's strategies in the SE won't work... in fact they both will do fine. As I believe will happen in many markets, UA is the carrier that will find it harder and harder to compete outside of its own hubs since much of its domestic connecting presence is on 50 seat RJs and UA is already 3rd or smaller in many E. coast cities outside of its hubs. Whatever advantage AA and DL have is a disadvantage for UA.
UA's advantage is ORD and EWR and to a lesser degree Washington although the increase in low fare seats from DCA will absolutely put pressure on UA's domestic operation at IAD.
Further, AA knows that UA is in worse shape regarding fixing its network and so there is no hurry for AA to make any decisions until UA moves first.
ATC issues are a problem in the entire NE but US has figured out how to work within those constraints. With the increased competition that will come to DCA, more and more intra-NE traffic will flow over PHL as AA has to use its assets to compete for the DCA local market. Connecting traffic can be pushed over other hubs unless the extra flow traffic is necessary to help fill planes at higher yields. But connecting traffic is higher cost so AA has no choice to be aggressively compete in the DCA local market against whatever new flights the LCCs add.
We'll see how AA fares in NYC but they are still #3 overall and at JFK and as has been noted, they aren't pushing into some of the most competitive markets using the increased slots from LGA. Further, the CTB is going to be a complete zoo with the increased LCC flights. Further, AA has to figure out a way to consolidate its few remaining gates in terminal C from US - and there is no reason to believe any other carrier is going to help out unless they get something out of the deal.
New AA has challenges but they also have alot of advantages. It is doubtful that there will be any significant announcements regarding hub closures for at least six months to take effect no earlier than the winter. Even then, the focus is most likely going to focus on poor performing routes rather than entire hubs.
all of the talk of what hubs are go have to be considered within two very important realities - the agreements that AA/US made as part of the merger agreement and the employees that are involved.dash8roa said:
Yes, new AA can choose to argue that the hubs aren't profitable and there is enough wiggle room in the agreements to allow AA to downsize etc etc.
but AA/US could have to be dealing with the same politicians again - and the "political family" isn't limited just to AZ.... they talk to each other. walking out of an agreement in one state could make it much much difficult in other states. Several of the southern state hubs are in states that lean in the same political direction.
Secondly, AA still has to deal with staffing issues. AA hasn't begun to deal with joint staffing but some of that will likely come before the end of the year. AA is overstaffed relative to other airlines. Closing hubs and reducing operations makes the job of integrating the operation ten times harder.
As long as the revenue environment in the US is strong, there is little immediate need to start trimming operations that involve thousands of employees as hubs do.
CLT isn't going away. Period. As much as some may want to argue against it, CLT does work.Black Magic said:
It may or may not be what another airline has in the same region, but as long as it is profitable for new AA, CLT will stay.
However, those who argue that AA's strength in the South and SE comes by having 3 large hubs surrounding ATL might want to consider whether 3 large hubs are better than one megahub. DL is the 2nd largest carrier in all of new AA's hubs and they are also the largest carrier in many of the citiesin the SE. By using 3 hubs, AA is dividing the market going in 3 directions. And remember that alot of DL's strength in the SE comes from its multiple hubs - ATL isn't the only hub that DL serves from the SE.
This doesn't mean that either AA or DL's strategies in the SE won't work... in fact they both will do fine. As I believe will happen in many markets, UA is the carrier that will find it harder and harder to compete outside of its own hubs since much of its domestic connecting presence is on 50 seat RJs and UA is already 3rd or smaller in many E. coast cities outside of its hubs. Whatever advantage AA and DL have is a disadvantage for UA.
UA's advantage is ORD and EWR and to a lesser degree Washington although the increase in low fare seats from DCA will absolutely put pressure on UA's domestic operation at IAD.
Further, AA knows that UA is in worse shape regarding fixing its network and so there is no hurry for AA to make any decisions until UA moves first.
ATC issues are a problem in the entire NE but US has figured out how to work within those constraints. With the increased competition that will come to DCA, more and more intra-NE traffic will flow over PHL as AA has to use its assets to compete for the DCA local market. Connecting traffic can be pushed over other hubs unless the extra flow traffic is necessary to help fill planes at higher yields. But connecting traffic is higher cost so AA has no choice to be aggressively compete in the DCA local market against whatever new flights the LCCs add.
We'll see how AA fares in NYC but they are still #3 overall and at JFK and as has been noted, they aren't pushing into some of the most competitive markets using the increased slots from LGA. Further, the CTB is going to be a complete zoo with the increased LCC flights. Further, AA has to figure out a way to consolidate its few remaining gates in terminal C from US - and there is no reason to believe any other carrier is going to help out unless they get something out of the deal.
New AA has challenges but they also have alot of advantages. It is doubtful that there will be any significant announcements regarding hub closures for at least six months to take effect no earlier than the winter. Even then, the focus is most likely going to focus on poor performing routes rather than entire hubs.
wings396
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Without getting into a long debate, I do recall WT claiming that DL would go as far as a bidding war to obtain DFW and/or MIA from AA in the early stages of the US merger proposal. With that in mind, Why would DL need or want to have both of those AA hubs given that they already have the Mecca in ATL? I'm sure that if DL did indeed have any plans to obtain these hubs from AA, that they knew it would work profitably in their system. Given that, why they can't the combo of CLT/DFW/MIA give the new AA a powerhouse in the SE?
eolesen
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Trying to compare CLT and RDU ignores geography.
ATL is 200 miles further west and 100 miles further south, anyone located southeast of ATL heading west is going to have a longer backhaul via CLT.
That extra flying equates to time.
US has been able to make up for that disadvantage with pricing, but as FWAAA has noted many times, the ability to use pricing as a lever goes away when the US employees are brought up to AA book rates.
ATL is 200 miles further west and 100 miles further south, anyone located southeast of ATL heading west is going to have a longer backhaul via CLT.
That extra flying equates to time.
US has been able to make up for that disadvantage with pricing, but as FWAAA has noted many times, the ability to use pricing as a lever goes away when the US employees are brought up to AA book rates.
jimntx
Veteran
Wings, WT was not talking about a bidding war for DFW. He was talking about the two gates AA has at DAL (Love Field) should AA have to divest them in order for the merger to go through. Same with MIA if we had to give up any gates there (which we didn't).
WorldTraveler
Corn Field
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wings is probably referring to the early days of BK. I did say that DL would bid for AA assets including DFW and MIA IF the opportunity became available to do so, but it became early on that AA would restructure as a whole airline and not be sold for parts.
There were never any offers that involved carving up AA.
DL's greatest strategic weakness remains the south-central/SW where DL is the only one of the big 4 airlines that doesn't have a hub in the region.
It is probably easier for DL to develop a presence in MIA-Latin America than it is to build a significant presence in Texas competitive with other carriers.
Still, DFW is not in the SE. MIA and CLT are. If you want to say that DFW/MIA/CLT are a combination in the SE that DL can't match, then you have to include DL's twin hubs in NYC, DTW, and MSP, all of which have significant numbers of flights to the SE.
I've never said that AA doesn't have a strong presence in the east, including to the SE. But we still don't have any idea how strong AA will be until the slot divestitures are finished and other carriers publish their schedules, including reductions that UA may do, in part because of losing strength in the south/SE and in part because the DCA buildup will hurt IAD. Further, DL is very likely to announce a buildup of schedules in the SE. Pilot are indicating that the amount of hiring and the type of aircraft that DL is staffing for indicates significant growth in the east where DL has historical strength.
AA and DL will be tough competitors in the east and in the SE. It's too early to see how it all stacks up but I would hardly say either carrier or its fans is in any position to count the other out.
There were never any offers that involved carving up AA.
DL's greatest strategic weakness remains the south-central/SW where DL is the only one of the big 4 airlines that doesn't have a hub in the region.
It is probably easier for DL to develop a presence in MIA-Latin America than it is to build a significant presence in Texas competitive with other carriers.
Still, DFW is not in the SE. MIA and CLT are. If you want to say that DFW/MIA/CLT are a combination in the SE that DL can't match, then you have to include DL's twin hubs in NYC, DTW, and MSP, all of which have significant numbers of flights to the SE.
I've never said that AA doesn't have a strong presence in the east, including to the SE. But we still don't have any idea how strong AA will be until the slot divestitures are finished and other carriers publish their schedules, including reductions that UA may do, in part because of losing strength in the south/SE and in part because the DCA buildup will hurt IAD. Further, DL is very likely to announce a buildup of schedules in the SE. Pilot are indicating that the amount of hiring and the type of aircraft that DL is staffing for indicates significant growth in the east where DL has historical strength.
AA and DL will be tough competitors in the east and in the SE. It's too early to see how it all stacks up but I would hardly say either carrier or its fans is in any position to count the other out.
WorldTraveler
Corn Field
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kinda like you were salivating about stapling DL employees to the bottom of US' list.700UW said:
WorldTraveler
Corn Field
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if you are a Jew, it is the same book.
lies? every ten words you write has to include that word at least once, doesn't it?
lies? every ten words you write has to include that word at least once, doesn't it?
WorldTraveler
Corn Field
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so, Judaism is a religion, not a race, and you're a Jew but you don't practice it but it's ok for you to hold someone else to a standard when you aren't even willing to hold yourself to any standard?
If you say you weren't one of the US people that was salivating about stapling DL's non-union people to the bottom of US' list, I'll take your word. There were plenty of US people who did at the time of US' failed takeover of DL.
If you say you weren't one of the US people that was salivating about stapling DL's non-union people to the bottom of US' list, I'll take your word. There were plenty of US people who did at the time of US' failed takeover of DL.
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