WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #16
While it may be convenient, if not downright economically correct, to talk up the importance of every city served carrying its own weight, the reality is that the hub and spoke airlines are struggling with how or if to serve many of these smaller cities. Yes, the LCCs do siphon off the largest markets – the ones that can be served on a point to point basis but there is a very real need for at least a couple nationwide network carriers to serve the hundreds of medium and small cities in the U.S.A. that will never generate enough traffic to anyone city to justify LCC service. Remember that the revenue a legacy carrier gets from carrying a connecting passenger brought into their network by a regional carrier is less than what the legacy carrier could make if they carried a local passenger and didn’t have to share the revenue with another carrier, even if it is a partner.
We are probably on the verge of seeing US and UA lead the charge in pulling out of a number of smaller cities – for UA because ORD is geographically their best hub to serve small cities but RJs are a very poor use of limiting airspace at ORD while none of the other UA hubs are big enough or geographically positioned to serve the majority of the small cities that are dependent on a major hub for service. US’ network has dozens of small cities that cannot support service either to PIT (because of the high enplaned passenger costs) or to PHL (because of the scare airspace which like UA at ORD is better suited for serving mainline flights which can compete with LCCs. That leaves CLT as the best hope US has for operating a large regional airline operation that can serve many of the cities in US’ network. Unfortunately, CLT is not a particularly large hub and doesn’t have the level of mainline flights necessary to support a large regional airline operation. To make matters worse, US is having to use their new RJs to compete against other majors like NW and DL which serve many cities in the East from hubs like ATL and DTW that are much stronger than CLT.
As with many things in life, there will probably be a wholesale pullout of service to a lot of small communities just because the economics are very unfavorable for them to be served by even the regional affiliates of the legacy/hub and spoke airlines. As airlines drop many smaller destinations, there will be calls to protect the legacies in some way from the unfavorable economics of being “burdened†to serve small and medium cities with more costly connecting service via their hubs. If we look at the telecommunications industry, there are steps now being taken to protect the investment the baby Bells made in developing their network; the government is now saying they don’t have to lease their lines at very low rates just to spur additional competition. The analogy with the airlines is obvious. Unfortunately, one or two companies are going to take the lead in withdrawing regional service and I expect it will be US and UA who will go first. There will be only a few hubs in the country that will serve a number of small communities and I predict those cities will include ATL, DFW, DTW, IAH, MSP and possibly DEN, CLT, and CVG. DEN is high cost while CVG and CLT are small cities although relatively inexpensive to operate in. The first set of cities has relatively accessible airspace, are fairly large cities, AND are relatively inexpensive hubs to operate.
We are probably on the verge of seeing US and UA lead the charge in pulling out of a number of smaller cities – for UA because ORD is geographically their best hub to serve small cities but RJs are a very poor use of limiting airspace at ORD while none of the other UA hubs are big enough or geographically positioned to serve the majority of the small cities that are dependent on a major hub for service. US’ network has dozens of small cities that cannot support service either to PIT (because of the high enplaned passenger costs) or to PHL (because of the scare airspace which like UA at ORD is better suited for serving mainline flights which can compete with LCCs. That leaves CLT as the best hope US has for operating a large regional airline operation that can serve many of the cities in US’ network. Unfortunately, CLT is not a particularly large hub and doesn’t have the level of mainline flights necessary to support a large regional airline operation. To make matters worse, US is having to use their new RJs to compete against other majors like NW and DL which serve many cities in the East from hubs like ATL and DTW that are much stronger than CLT.
As with many things in life, there will probably be a wholesale pullout of service to a lot of small communities just because the economics are very unfavorable for them to be served by even the regional affiliates of the legacy/hub and spoke airlines. As airlines drop many smaller destinations, there will be calls to protect the legacies in some way from the unfavorable economics of being “burdened†to serve small and medium cities with more costly connecting service via their hubs. If we look at the telecommunications industry, there are steps now being taken to protect the investment the baby Bells made in developing their network; the government is now saying they don’t have to lease their lines at very low rates just to spur additional competition. The analogy with the airlines is obvious. Unfortunately, one or two companies are going to take the lead in withdrawing regional service and I expect it will be US and UA who will go first. There will be only a few hubs in the country that will serve a number of small communities and I predict those cities will include ATL, DFW, DTW, IAH, MSP and possibly DEN, CLT, and CVG. DEN is high cost while CVG and CLT are small cities although relatively inexpensive to operate in. The first set of cities has relatively accessible airspace, are fairly large cities, AND are relatively inexpensive hubs to operate.
