LCC & AMR Market Action

[flyer63]

AMR also had a very strong interest in the shuttle way back when AAA took it over.. They and NWA wanted to buy but were not interested in the lease/purchase/managemnet deal with the banks.

I'm sure they still have a strong interest.

 

[robbedagain]

i figured if SWA wanted CLT by now then they would have gotten it in particular around the time they entered PHL If any one goes there Id say Jetblue may build up there but if AA wanted a better hub other than RDU CLT would be better business wise given the large number of banks there.

 

[FutureUScapt]

Make no mistake--AA thought so much of the east coast north/south operation that it closed not one, but two hubs. Just yanked another bunch of flights from RDU. How, exactly, does that square with wanting CLT?

There is a major disconnect in your logic. Just because AA was not able to succeed in building up RDU or BNA to the size of CLT or ATL does not mean that it would not love a ready-made hub in CLT. The importance of being able to have a presence up and down the east coast can not be understated.

Want to know what CLT and RDU and BNA all have in common? Poor O&D for hub airports and a lack of scale compared to ATL. There is no reason for AA to want that--it's no more costly to "build" RDU back up again that it would be to take over CLT.

Based on previous posts, I can tell it irks you that PIT was eliminated as a hub yet CLT remained, despite both having low O&D levels. The fact is that CLT is successful because it competes primarily only with ATL for most of the north/south traffic flows along the east coast while PIT competed with a multitude of hubs.

As previously stated, the size of RDU and BNA did not compare to CLT back then and certainly don't compare to CLT now. Sure, CLT is not ATL but nothing in the world compares to ATL and it certainly does not mean that CLT is not a valuable or coveted asset. CLT is the fourth largest single airline hub in the country in terms of flights and seats; if that doesn't count as having a large scale, might I suggest you reevaluate your criteria.

You are probably correct that it would be cheaper to build up RDU than to front the cash and purchase US in its entirety, but that doesn't necessarily mean that RDU (or a 3rd SE hub in general) would ever be able to compete effectively against CLT or ATL.

Hubs like CLT/CVG/CLE/MEM/SLC will all be in some degree of peril if the economy does not turn. CLT might be the best off, not because of the O&D of the metro area but because US has no other option and PHL cannot operationally handle being US' only hub east of PHX.

WN enters CLT and all bets are off--which AA also knows.

Oh please, I hope you aren't trying to insinuate that CLT exists only to handle "overflow" traffic from PHL.

If that were the case, it would be around the size of CLE, not US' LARGEST hub. Funny that very few share your view about CLT being in peril. So far, it has been affected the least by any of the recent cutbacks at US and was one of the few airports to grow in passenger traffic last year.

 

[Pacemaker]

According to 2008 data CLT is not on the list of the 30 highest domestic O & D airports in the USA. PDX, OAK, and HNL are among the airports with more domestic O & D than CLT. Whatever reasons the airline has had for hanging onto the hub, it must be admitted that it's a very small market and it's hard to imagine that it would survive any merger or fragmentation.

 

[usairways85]

According to 2008 data CLT is not on the list of the 30 highest domestic O & D airports in the USA. PDX, OAK, and HNL are among the airports with more domestic O & D than CLT. Whatever reasons the airline has had for hanging onto the hub, it must be admitted that it's a very small market and it's hard to imagine that it would survive any merger or fragmentation.

Not to undermine your point but you have to consider where these cities are located geographically. People start/end in these cities and connect else where, with the exception of some connections in HNL for transpacific flights. I don't fly ORD-PDX-LAX, or SEA-HNL-SAN.

 

[ClueByFour]

There is a major disconnect in your logic. Just because AA was not able to succeed in building up RDU or BNA to the size of CLT or ATL does not mean that it would not love a ready-made hub in CLT. The importance of being able to have a presence up and down the east coast can not be understated.

And because US has CLT does not beget that anyone else wants it. What is your evidence to suggest that "AA would love a North/South hub?"

Based on previous posts, I can tell it irks you that PIT was eliminated as a hub yet CLT remained, despite both having low O&D levels.

Junior, it would irk me but for the fact that I've not lived in PIT since about 2002. Well into hubville.

The fact is that CLT is successful because it competes primarily only with ATL for most of the north/south traffic flows along the east coast while PIT competed with a multitude of hubs.

CLT is successful because Jerry Orr is a whore to US and there is no competition. Eliminate either of those, and any airline but US would drop CLT like third period french. US can't do it because they are locked in.

BTW--this has nothing to do with PIT--AA still does not want CLT.

As previously stated, the size of RDU and BNA did not compare to CLT back then and certainly don't compare to CLT now.

Wrong and wrong again. For 2007, CLT was 36th in the US for R&D. RDU was 37th. The difference between the two? 88 thousand pax over 8 million + emplanements. It's a rounding error. RDU is doing that without a hub.

BNA was 38th. 7.8 million emplanements. I'll bet if I find the 2008 data that RDU is actually greater than CLT, if for no other reason than the growth percentages because unlike CLT, RDU did not have one of it's primary industries collapse in 2008.

As previously stated--you are wrong on the sizes of the markets. The RDU market achieves CLT's O&D numbers just by being there.

Sure, CLT is not ATL but nothing in the world compares to ATL and it certainly does not mean that CLT is not a valuable or coveted asset. CLT is the fourth largest single airline hub in the country in terms of flights and seats; if that doesn't count as having a large scale, might I suggest you reevaluate your criteria.

My criteria never included flights or seats. Yours did.

That does not make it "coveted." Anyone can build a hub airport anywhere. Making it work is something else. CLT works for US because US has a relative monopoly on the market and Jerry Orr would sell his mother to keep the hub. That does not mean it's particularly useful to anyone else.

You are probably correct that it would be cheaper to build up RDU than to front the cash and purchase US in its entirety, but that doesn't necessarily mean that RDU (or a 3rd SE hub in general) would ever be able to compete effectively against CLT or ATL.

Competing against CLT is a no-brainer. ATL is not.

Oh please, I hope you aren't trying to insinuate that CLT exists only to handle "overflow" traffic from PHL.

Actually, that's about it. And because US has no other choice. Given their choice of cities, they'd dump CLT like 3rd period french to get into ATL.

If that were the case, it would be around the size of CLE, not US' LARGEST hub.

The size has nothing to do with it. Ask the PIT people.

Funny that very few share your view about CLT being in peril. So far, it has been affected the least by any of the recent cutbacks at US and was one of the few airports to grow in passenger traffic last year.

*shrug* Believe what you want. CLT/CLE/CVG/MEM/SLC are all in trouble if the economy does not turn. None of them (particularly with low cost competition) have the O&D to support an airline hub.

 

[FrugalFlyerv2.0]

Just because AA was not able to succeed in building up RDU or BNA to the size of CLT or ATL does not mean that it would not love a ready-made hub in CLT. The importance of being able to have a presence up and down the east coast can not be understated.

I have a feeling that if AA were to purchase US, CLT would become another STL. Question is whether it would be a fast or slow transition.

IMHO, if an airline wants to be 'big' on the east coast, it has to be 'big' in BOS-New Yok-DC. The remaining US slots/gates/facilities at those airports is what AA would love to get their hands on. They would probably dump or significantly downsize everything else (including PHL & CLT & PHX & LAS).

 

[FWAAA]

BNA was 38th. 7.8 million emplanements. I'll bet if I find the 2008 data that RDU is actually greater than CLT, if for no other reason than the growth percentages because unlike CLT, RDU did not have one of it's primary industries collapse in 2008.

As previously stated--you are wrong on the sizes of the markets. The RDU market achieves CLT's O&D numbers just by being there.

Excellent point there. Here's an article from June of this year summarizing a Brookings Institution study that concluded that the RDU metro area was the strongest in NC:

http://triangle.bizjournals.com/triangle/s...15/daily31.html

As you have pointed out, if AA wanted a large hub in NC, all it had to do was add flights to RDU. The other day, however, AA announced substantial cuts to RDU.

 

[wings396]

I just can't understand why some of you over at AA have the blinders on when it comes to the failed attempt at a RDU hub. Sure you could add flights again, but why would you if it didn't work in a better economy?
Back a few years ago, AA couldn't hand the operation over to Midway fast enough in order to exit town without leaving the airport holding the bag. Face it, AA wants and needs a good southeastern hub if they want to compete with DL over in ATL. They tried to do it on their own, and it failed period. If AA wants to stay out of that region of the country, good for them. While I can't disagree that the CLT hub and area are not the same scale as ATL, it still is an asset to have. While AA has several stronghold areas of the country, this isn't one of them. The combined DL/NW are a force to be dealt with as they have it all now with ATL, LGA, DTW, MSP, SLC and JFK linked with Europe and Asia. If AA wants to play ball with the big boys, they need to do something. Like it or not, US does have something to offer that compliments the AA system. The Shuttle, PHL, DCA, and CLT are of some value if you like it or not. I would prefer to hook up with UA instead, as the US system compliments theirs just as well as it does AA. Most of what US has, is what AA doesn't. Like I said many times before, the boys sitting at the table at running the show could care less what you and I think they should or shouldn't do with the companies.

 

[CSA007]

RDU failed for AA because it competed with two hubs CLT and ATL. If there had only been two southeast hubs, Delta in (ATL) and American in either (CLT or RDU) it would have been a success.

US is the wild card for UA and AA, whoever hooks up with US has the advantage over the other and a chance at standing up to DL.

 

[wings396]

That sums it up pretty well. Not really enough room for more hubs in that area of the country. While it is very obvious that many posters here from AA fail to see the advantage of having the CLT hub, it will benefit either them or UA and hurt whom ever is the odd man out. Like it or not folks, AA has to do something if they want to keep pace with DL. If UA hooks up with CO, AA has very little choice other to to take action.

 

[NoMoreKoolAid]

That sums it up pretty well. Not really enough room for more hubs in that area of the country. While it is very obvious that many posters here from AA fail to see the advantage of having the CLT hub, it will benefit either them or UA and hurt whom ever is the odd man out. Like it or not folks, AA has to do something if they want to keep pace with DL. If UA hooks up with CO, AA has very little choice other to to take action.

Good Point Wings396. We will see who makes the first move soon im sure.

 

[JayBrian]

US Airways Group announces the sale of stock

 

[cltbwimob]

Hey everyone..First time poster.

Here is my 2 cents.

1. O&D is not the all important number that people who post here tend to think it is. Take for instance PHX. It has great O&D numbers yet it is a marginally profitable secondary hub for US Airways. Why is that if O&D is so great? It is because PHX tends to have less premium business traffic. This may be due to the business climate or the fact that WN has a major operation there or both. Another case study is BWI. BWI has decent O&D yet US pulled their hub in one of the premier metro areas (DC-Baltimore) in the country. If it was all about O&D and nothing else, surely these airports would have larger hubs than CLT...But they don't. PHX has on average approx 300 less US Airways flights/day than does CLT and BWI has approximately half of the flights CLT has for all airlines. CLT however has premium traffic. In the metro for CLT there are HQs for 12 fortune 1000 companies (13 if you count Hickory) . Of those, 8 are fortune 500 and 2 of those are Fortune 50 companies. Doug Parker even said last year during the fuel crisis that CLT could survive due to it's premium traffic. This is at a time when airlines were not just unprofitable...they were bleeding money. Charlotte's premium traffic is worth more than vacation traffic. Think of it this way. Business traffic will often pay the unrestricted fares that are typically about 4 times more expensive than regular tickets. This means that for every one business traveler booked, 4 vacationers would have to be booked to make the same amount of money. In other words, 10 million O&D business travelers per year would be worth about 40 million O&D vacation travelers supposing an identical route structure.

2. CLT is a primary hub. No it is not a reliever for PHL. CLE is a reliever for EWR, CLT is much bigger as a hub for US than PHL is. Relievers for PHL in the US system would more than likely be DCA and LGA. CLT is the largest hub in the system by 100+ flights. Not 10...100+. Just to reiterate for those who still think its a reliever for PHL, it's the P-R-I-M-A-R-Y domestic hub in the system. If you don't believe me, consult a US employee.

3. RDU and BNA failed in part because they were half-hearted attempts to establish secondary hubs in a land of major hubs. RDU not only competed with CLT and ATL. It was also close enough to DC to compete with DCA, IAD, and BWI (at the time RDU was an AA hub BWI was a US hub). BNA had to contend with MEM, STL(at the time it was virtually Ground Zero for all things TWA), CVG, ATL, and to some extent it's sister hub at ORD. Yes the landscape is different now, but at the time of their failure that was the competition.

4. RDU and BNA were for separate markets. They were not both created as SE hubs. RDU was the SE hub, BNA was more of a midwest hub. But even if they were both SE hubs, the 2 combined airports had 33% less flights than CLT alone. In fact, it would have taken a BNA and RDUx2 hub combined to equal the current amount of US flights out of Charlotte.

5. Finally, the idea of an organic buildup of RDU as a hub for AA would somehow be just as easy as starting out with a ready-made hub like CLT is preposterous. RDU does not have the infrastructure. When Concourse E is finished in CLT, CLT will have approx as many regional jet gates as the total amount of gates at RDU. That means that RDU would have to build an extra 50 gates or so just to handle the amount of flights that CLT currently handles. In addition, as of Feb 2010, CLT is going to be one of only 5 airports in the US that can land 3 planes simultaneously. RDU does not have 3 parallel runways...CLT will. What would an organic buildup of RDU cost AA. It would cost a lot. The extra terminal buildout and runway to handle the extra capacity would get more than likely get passed off to AA in the form of higher landing fees, not to mention the planes it would have to allocate/buy for that operation. If AA bought US the only thing that it would have to pay for in CLT is the paint costs in swithing the US scheme to the AA scheme and they would have a ready made SE hub.

Bottom line, CLT would serve AA well, much better than Raleigh or BNA.

 

[Al Legheny]

There is a major disconnect in your logic. Just because AA was not able to succeed in building up RDU or BNA to the size of CLT or ATL does not mean that it would not love a ready-made hub in CLT. The importance of being able to have a presence up and down the east coast can not be understated.



Based on previous posts, I can tell it irks you that PIT was eliminated as a hub yet CLT remained, despite both having low O&D levels. The fact is that CLT is successful because it competes primarily only with ATL for most of the north/south traffic flows along the east coast while PIT competed with a multitude of hubs.

As previously stated, the size of RDU and BNA did not compare to CLT back then and certainly don't compare to CLT now. Sure, CLT is not ATL but nothing in the world compares to ATL and it certainly does not mean that CLT is not a valuable or coveted asset. CLT is the fourth largest single airline hub in the country in terms of flights and seats; if that doesn't count as having a large scale, might I suggest you reevaluate your criteria.

You are probably correct that it would be cheaper to build up RDU than to front the cash and purchase US in its entirety, but that doesn't necessarily mean that RDU (or a 3rd SE hub in general) would ever be able to compete effectively against CLT or ATL.




Oh please, I hope you aren't trying to insinuate that CLT exists only to handle "overflow" traffic from PHL.

If that were the case, it would be around the size of CLE, not US' LARGEST hub. Funny that very few share your view about CLT being in peril. So far, it has been affected the least by any of the recent cutbacks at US and was one of the few airports to grow in passenger traffic last year.

PIT was closed because of its astronmical costs. The cost per emplaned passenger just recently hit north of $15 per pax. The same cost in CLT is in the neighborhood of $2.50. That is a major reason why Southwest is actually reducing capacity in PIT.

There is enough blame in the magagment of the old US Airways and the Allegheny County Airport Commission to go around. This airport was built in an era when the yield permium would support the infrastructure cost. It is not just airlines that have to become LCC's, airports do also.

Unless an airport has a strategic advantage like HNL the airport cost must be factored into the equation. PIT had to compete with CLE, and CVG. PIT, CLE and CVG are all in a bad way. If your costs are out of line the traffic will find somewhere else to park.