If one big domino falls :(

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On 10/14/2002 9:49:35 PM UAL777flyer wrote:

busdrvr,

If we had their CASM than it would be a better comparison. But when our costs are substantially higher than theirs, how can we compete?
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Our CASM on that leg would be LOWER than Jetblus. One more time, The jet is paid for, the crew is paid for, The gate is paid for, the infrastructer is paid for, the ground crew at IAH is paid for.
 
busdrvr,

Unfortunately, it's not that simple. Avek is correct. Launching a service like that in a competitor's hub would be economic suicide. Who has the stronger point of sale strength? The hubbing carrier. Comparing Jetblue's point to point service to a regular major is pointless. If we had their CASM than it would be a better comparison. But when our costs are substantially higher than theirs, how can we compete? And on top of that, we'd have to rely on almost 100% O & D. I can only imagine what the break-even LF would be on something like that.
 
I think that there are very, very few non-hub routes that UA could serve that would be profitable in today's environment. While UA shouldn't have aircraft sitting on the ground for 14-16 hours, it seems to me that UA would better utilize its equipment by increasing the number of flights to its own hubs. In the case of IAH, UA doesn't have any daily nonstops to either LAX or IAD, and only one daily nonstop to SFO. But even these UA hub routes, with all of the feed traffic that the hubs could provide, might not be viable right now. So it doesn't take a great deal of imagination to see how poorly a non-hub route like IAH-MEX would perform for UA, competing against both CO and AM.
 
Cosmo,
Valid point, but in adding flights to ORD, for example, UAL would be competing against UAL. Not smart. Maybe a couple flights a day to IAD would be good for the connections to Europe, but the jets may not make it there in time for them (the jets seem to start parking at about 4 pm). I'd want a destination with typically high O&D traffic. Nothing would prevent UAL from connecting a few pax from other UAL hubs on one flight on down south. Might put more folks on the flight to IAH
 
I can tell you this the lowest r/t fares to mexico city are in the $450-500 dollar range where most of are other line station to hubs, they begin at $200 lets see $500-200=$300 thats a big differnce.I think these ideas have merit maybe we dont do IAH , maybe we look at other stations with more profit potential , but we need new ideas on top of the daily lets cut labor 1.2 bil a year for 6 years talk.PS the load factor from IAH-MEX (all flights all airlines) is probably 95% I think 2 or 3 United flights might mean we all go down to 85%
 
Here is another idea from a plain old joe
Change all current A-319/320 orders to A318s and have front line UAL pilots flying for slightly above UAX salarys taking back some of our routes from UAX , because we all know that will be part of ALPAs deal so lets get back some of the marginal UAX routes to mainline
 
Busdrvr,

The crew costs are not already paid for when you factor in pricing out a new market or new service. The crew costs are carried forward in the priceout. You also must add in things like the cost of fuel, landing fees, aircraft servicing fees, passenger demand, segment fare, O & D fare, etc. And what about manpower? Depending on the time of day the flight is arriving/departing the station, will they need to hire more people? These are just some of the things that go into pricing out new service. How many other major airlines do you see launching point to point service outside their own hubs and in a competitor's hub? Not too many. So unless you can stimulate a high level of demand paying a decent fare, it simply will not be profitable.
 
I can't give you hard numbers because that type of information is not for public consumption. But suffice it to say that we've looked at many opportunities like you suggest and continue to look at them all the time. It's a never-ending process. There are reasons for why we fly where we do, as well as numerous factors that must be analyzed and priced-out. Those factors are often lost on those that do not do it for a living. I am all for suggestions, believe me. We need more of them from everyone. But your telling me that my attitude is what's wrong with UA is like me telling you that the way you fly your airplane is what's wrong with UA. It wouldn't be a fair or accurate statement. You're a pilot. By the nature of that, you're not privy to all the information and analysis that goes into making decisions like that. Maybe there are perfectly sound reasons for why we're not flying in those markets that are not always apparent to those that aren't involved.

P.S. We already serve IAD-MEX nonstop.
 
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On 10/15/2002 10:37:40 AM UAL777flyer wrote:

Busdrvr,

How many other major airlines do you see launching point to point service outside their own hubs and in a competitor's hub?

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Just the profitable ones. But your take is IMHO one of the reasons we aren't moving foward. you are speaking in generalities about why it wouldn't work. Give me some hard numbers. UAL has ONE daily flight to MEX from ORD, LAX and SFO. There is 0 from MIA, IAD and DEN. Why wouldn't it make sense to call it connecting service? Let folks from IAD, MIA, DEN and even extras from the consistantly oversold ORD flight fly down to IAH and connect on one guppy on down to MEX. It may not work. We may actually lose as little money on it (as opposed to the money we're losing on all the other flights). But it may even WORK! Why not service down south from SAT? Think of all the Maquiladoras on the Texas border who may need service down south. Ask someone at WHQ about the perecentage of very high level FFs we have in TX. Do you think none of these guys have business down South? What's the worst that could happen?
 
Actually, UA already has one daily nonstop from IAD to MEX, and has flown it since at least the mid-1990s.

As to your main point, all of the cities that you mention have MX flights on which UA codeshares. So while, for example, UA itself has only one daily LAX-MEX nonstop, it codeshares on five other daily MX nonstops in the market. The same is true (at lower MX frequency levels) at ORD and SFO as well. And UA also codeshares on daily MX nonstops to MEX from DEN (eff. 11/1), MIA and SAT. Thus, from a passenger's perspective, there already are lots of United flights to MEX from UA hubs and other major U.S. cities, even though less than half of the flights are flown on UA metal.

In a better economic climate for the airlines, it would not be unreasonable to expect that at least some additional UA flights would be operated to MEX, certainly from UA's hubs. But this is far from a better economic climate that the airlines face today.
 
Well, UAL777flyer, you beat me to the punch on the IAD-MEX comment. I guess I'll have to learn to type faster!
 
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On 10/10/2002 10:26:49 AM UAL777flyer wrote:

UnitedChicago,

You're absolutely right. But it wouldn't be AA that got hurt by a UA banruptcy, it would be the industry. DL, NW, and CO would also be damaged. None of them want to see UA file for Ch.11 because there UA could obtain dramatically lower costs, shed debt and inefficiency and emerge a highly competitive carrier that puts considerable pressure on the other majors to do the same to remain competitive. That's also why I think that if UA files for Ch.11, there is going to be a lot of lobbying behind the scenes by the other majors to see UA fragmented and liquidated. If they were to be unsuccessful in that effort, I think that more carriers would follow into Ch.11, unless they could somehow dramatically lower their costs.
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So your argument is to have the Federal govt. subsidize UAL (and its inefficiencies) so the other major airlines wouldn't have to compete against an efficient carrier.

I don't think GW could care one bit what is in the best interests of AA. He's got enough problems on his plate (Iraq, nation's economy, sniper in DC and brother losing in Fla. governor race)
 
With the way this Industry's being run, I think that suicide fares in a dominant carrier's backyard makes sense. The idiots will match your cheap fare on their 10-12 planes compared to your one plane. Call it revenue killing fares! I know that someone'll be scratchin' their chin on this one. I think the Industry as a whole is looking at things 'economically backwards'. What I mean is that cost cutting makes total sense when it doesn't affect revenue. Revenue has been chased away, and now....revenue killing fares...I'll go back into my pit now.
 
AirplaneFan,

Please explain your logic for why you think the federal government is subsidizing UAL and its inefficiencies.
 
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