New Competition to China

[Busdrvr]

I didn't say (or imply) that it couldn't. With the proper hub and proper connections, maybe UA could make it work with even an A380. But I'm talking about whether AA could make it work without any 747s.
Who's talking about "fairness." Spreading the authorities around might cause greater competition than granting them to dominant incumbents. We'll see what the DOT says when presented with competing applications.

How does awarding the only authority to one destination to one company and then the one authority to another destination to another company promote fairness? EACH COMPANY STILL HAS A MONOPOLY ON THE ROUTE THEY GOT. It seems to me the public would be best served by awarding the route with the route structure and equipment that best supports the route.

If we REALLY want fairness, lets give it to Airtran. they can buy a G-V and serve it...

 

[Cosmo]

COSMO.......Would you like your spare ribs with ..bone-in, or boneless???

Actually, I'd prefer General Tso's Chicken!

Back to the subject ...

I find it hard to believe that the DOT would award a China route for nonstop SFO-CAN service to a carrier (American) without a full-fledged hub in SFO. And then there's the issue of aircraft size -- United's 747 vs. American's 777 -- that argues in favor of United based on recent DOT precedent. (So yes, boys and girls, size really does matter! )

I also did some checking of the DOT O&D numbers for the overall U.S.-CAN market for calendar year 2006. While I can't divulge specific numbers, I can tell you that the local SFO-CAN market is MUCH, MUCH larger than other potential gateways like EWR, DTW, ATL, IAH, JFK, DFW or ORD. This factor is another important DOT decision criterion in route cases these days. And although the O&D numbers do not include foreign carrier traffic, such as on China Southern's LAX-CAN nonstops or other Asian carrier connections at NRT, ICN or TPE, for example, these are the numbers that the DOT nonetheless relies upon in its decision-making process.

So, IMHO, the above arguments are likely to convince the DOT to award the 2008 CAN route to United.

 

[FWAAA]

So, IMHO, the above arguments are likely to convince the DOT to award the 2008 CAN route to United.

I agree with you. UA is likely to get it.

But just to be argumentative, if the local SFO-CAN O&D is so huge (compared to other potential gateways), wouldn't that permit any airline to successfully fly it, regardless of hub status or connectivity at SFO? Who needs a full-fledged hub if the O&D is so strong?

 

[Cosmo]

But just to be argumentative, if the local SFO-CAN O&D is so huge (compared to other potential gateways), wouldn't that permit any airline to successfully fly it, regardless of hub status or connectivity at SFO? Who needs a full-fledged hub if the O&D is so strong?

I would respond that the DOT would look at which carrier would serve the most passengers, not just local passengers. So while either carrier (American or United) might make money on the SFO-CAN route with similar load factors, financial results are not a decisional criterion in DOT route cases these days. In the end, United would benefit the most travelers, assuming that United actually proposes a 747 operation (which I believe they will). This was one of the main factors behind the DOT's selection of United's IAD-PEK proposal a few months ago, and I believe that it would be a deciding factor in United's favor in the upcoming CAN route case. JMHO, of course.

 

[UAL_TECH]

I didn't say (or imply) that it couldn't. With the proper hub and proper connections, maybe UA could make it work with even an A380. But I'm talking about whether AA could make it work without any 747s.
Who's talking about "fairness." Spreading the authorities around might cause greater competition than granting them to dominant incumbents. We'll see what the DOT says when presented with competing applications.

But we have been 'deregulated' for decades and now have 'open sky's'. Why the interference on commerce from the DOT?

 

[Cosmo]

But we have been 'deregulated' for decades and now have 'open sky's'. Why the interference on commerce from the DOT?

The "'deregulated' for decades" applies only to the domestic arena, and "open skies" isn't universally in force yet. And China is one of the places where "open skies" does not yet exist for air service to the U.S. Thus, the need for DOT route cases to pick a "winner".

 

[FWAAA]

I would respond that the DOT would look at which carrier would serve the most passengers, not just local passengers. So while either carrier (American or United) might make money on the SFO-CAN route with similar load factors, financial results are not a decisional criterion in DOT route cases these days. In the end, United would benefit the most travelers, assuming that United actually proposes a 747 operation (which I believe they will). This was one of the main factors behind the DOT's selection of United's IAD-PEK proposal a few months ago, and I believe that it would be a deciding factor in United's favor in the upcoming CAN route case. JMHO, of course.

Sounds reasonable to me. So we're back to "size matters." DL, CO and AA better order some 747-8s or A380s if they want to get any more awards. B)

Of course, now that numerous additional routes are gonna be available beyond what was forecast earlier this year, the DOT may change its "Bigger is Better" tune. But UA will probably get the 2008 award.

 

[UAL_TECH]

The "'deregulated' for decades" applies only to the domestic arena, and "open skies" isn't universally in force yet. And China is one of the places where "open skies" does not yet exist for air service to the U.S. Thus, the need for DOT route cases to pick a "winner".

Cosmo,

Thanks, but it was more of a rhetorical question.

This industry is one of the most regulated (considering it is deregulated) products in the world today. Was it not recently that UA and AA gave up slots in ORD due to congested landing/TO slots and then these same slots were not dropped but were awarded to other carriers?

Was it in fact congested or simply congested by UA and AA?

Thanks,
B) UT