Ual For Sale

[mweiss]

In 2000 per capita income

Ahh, much better. Now you're showing something potentially useful.

Of course, the problem with per capita income is that regional disparities among family size (i.e., number of children) can sway the numbers significantly. For example, the per-household income of Hartford is higher than Denver, but the per-capita income is lower.

In any case, I won't dispute that Denver and Minneapolis, both of which have higher EQs than Phoenix, have higher per household and per capita incomes. Is it because of the hub, or because of a more educated population? Which comes first?

What is the cost? There isn't one.

Absolutely false. There have been dozens of studies on this very topic, the most famous of them being Severin Borenstein's 1989 study. Hub premiums averaged 18.7%. Denver's hub premium peaked in 2000, and began to drop as UA's market share began to fall relative to F9. Similarly, PHL's hub premium went from 17% in 2003 to 2% in 2004. Hmmm...what happened in PHL in 2004?

So, yes, there is absolutely a cost.

You cited the median age in PHX as "proof" of a lack of reliance on near-deads in the economy.

That would be "evidence," not "proof."

In your making this case, I'm left assuming one of two things, that you were intentionally trying to mislead, or even worse, you don't understand the basic statistical notion that the median age in no way determines the distribution.

Neither. You noted that Phoenix had a higher percentage of citizens under 18. I doubt that these people over 62 are having children. All your response has illustrated is that, while Phoenix does, indeed, have a higher percentage of retirees than does Denver (gee, that's a surprise), Phoenix also has families with more children than the corresponding families in Denver.

So, let's see what you've suggested with your additional demographic analysis. Phoenix has more retirees (most likely without salaries) per capita than Denver. Phoenix has families with more children than their Denver counterparts. It shouldn't come as a surprise that the per-capita income is lower in Phoenix. Are the people who are employed in Phoenix earning more or less than their counterparts in Denver? (FWIW, I think they're still earning less, but I'm just pointing out how little your numbers really told us.)

In PHX 4.6% of all homes were vacant because they were 'vacation' or seasonal homes vs 0.6% for DEN. See a trend?

Sure. There are more vacationers and retirees in Phoenix than in Denver. However, it's a far cry to go from that statement to

People go there to golf and to die, not to close a business deal.

Most folks in my neighborhood MOVED here for jobs, NOT the other way around. Matter of fact, I'm having trouble thinking of a single "native" I know.

[post="252172"][/post]​

Not knowing the circles in which you live, it's hard to tell if that's a relevant sampling. I have heard from many in technology that Denver's a good place to be because of the educated population.

 

[Busdrvr]

Not knowing the circles in which you live, it's hard to tell if that's a relevant sampling. I have heard from many in technology that Denver's a good place to be because of the educated population.

PHX has ASU, DEN has CU and Ward Churchill..... I'll take ASU. and PHX.

Demographically, at the risk of sounding like Avek, PHX has a much larger Mexican population, which statistically tends to be more Catholic and have more children.

There have been dozens of studies on this very topic, the most famous of them being Severin Borenstein's 1989 study. Hub premiums averaged 18.7%. Denver's hub premium peaked in 2000, and began to drop as UA's market share began to fall relative to F9. Similarly, PHL's hub premium went from 17% in 2003 to 2% in 2004. Hmmm...what happened in PHL in 2004?

I'd like to see that study so that I can pick it apart, I'll even devote 5 minutes to the undertaking. So that I can catch being inconsistant, explain the mechanism by which a "hub airline" is able to force higher fares. Wouldn't someone just come in and lower prices?

 

[usairways_vote_NO]

"And, apparently, busdrvr has decided he cannot speak about anything more with me.  Anyway..."

Sorry, i don't have the time or inclination to do here what you were willing to do over on the AMR board, and that's to continue to explain over and over again to someone unwilling to understand a very basic concept to the toon of around 20 pages in one string....

[post="252079"][/post]​

And on the USAirways board too. The ole can't agree to disagree or agree to agree just go on and on and on... It's the Mweissbunny it is always off topic too or at least ends up there.

 

[mweiss]

I'd like to see that study so that I can pick it apart, I'll even devote 5 minutes to the undertaking.

Google "Borenstein hub ticket prices" and read.

So that I can catch being inconsistant, explain the mechanism by which a "hub airline" is able to force higher fares. Wouldn't someone just come in and lower prices?

[post="252283"][/post]​

One would think, except that airports have a couple of scarce commodities (defined economically, not in layman's terms). One has to be able to park at a gate, and one has to be able to use a runway twice, for every flight.

It's one of the reasons that the hub premium has begun to deteriorate more recently. If you look at DEN and ATL, which were both airports essentially tuned to be hubs for two airlines, you can see an interesting pattern. In both cases, one of the hub airlines ceased to hub there (in ATL's case, ceased to hub anywhere at all). In both cases, the capacity remained too high for a single airline to lock out competitors. In both cases, LCCs started up shortly after the departure of the legacy carrier. In both cases, as the LCC gained traction, the hub premiums fell.

 

[jimntx]

Just to be ornery (I'm entitled. I'll be 60 on the 27th), let me throw this piece of information into the chicken-or-the-egg argument (aka, which came first, the hub or the city.)

DFW is the primary hub of the world's largest airline (AA, for those who haven't been paying attention). Yet, Dallas is (and has been) sorta, kinda on its financial uppers since the tech bust. Downtown Dallas (and the Dallas metro area, for that matter) has the highest office vacancy rate of any major city in the U.S. (+20%).

Houston which is the 4th largest city in the U.S. had 2 new skyscrapers built downtown in the past year because of a shortage of office space. Houston is the home of CO which is on its last legs according to some on this board who work for UAL and U.

Could it be that cities became hubs for no other reason than some airline noticed that no one else had hubbed that city? Don't get me wrong. If there hadn't been a vibrant business community in most of these places (Dallas, Houston), or the city was a vacation destination (PHX or MCO), or both (NYC,LAX), the city would not have been anyone's "first" choice, but...

Why are CLE, CLT, MEM (just to pick 3) hubs for major airlines? Can anyone truthfully say that CLT would have all that Caribbean service if U didn't have a hub there? In any of those cities, I would venture to guess that if the hub airline closed up shop, the volume of air service to any of these cities would drop precipitously and not be replaced by LCCs or anyone else.

For that matter, I wonder what air service would look like at DFW if AA were to go to the great maintenance base in the sky?

 

[mweiss]

Could it be that cities became hubs for no other reason than some airline noticed that no one else had hubbed that city?

In a sense, yes. Of course, there was a brief period of time, during the mid-80s, during which some people considered the geographical location to be more important than O&D. This was part of the impetus for EA's hub at MCI.

Can anyone truthfully say that CLT would have all that Caribbean service if U didn't have a hub there?

Of course not. But this begs another question. Would fewer residents of CLT go to the Caribbean if there weren't so many nonstops?

In any of those cities, I would venture to guess that if the hub airline closed up shop, the volume of air service to any of these cities would drop precipitously and not be replaced by LCCs or anyone else.

That would be true for any city, not just the ones you listed (except in the few cases where multiple airlines hub at the same airport, such as ORD).

 

[casual rat]

Just to be ornery (I'm entitled. I'll be 60 on the 27th), let me throw this piece of information into the chicken-or-the-egg argument (aka, which came first, the hub or the city.)

DFW is the primary hub of the world's largest airline (AA, for those who haven't been paying attention). Yet, Dallas is (and has been) sorta, kinda on its financial uppers since the tech bust. Downtown Dallas (and the Dallas metro area, for that matter) has the highest office vacancy rate of any major city in the U.S. (+20%).

Houston which is the 4th largest city in the U.S. had 2 new skyscrapers built downtown in the past year because of a shortage of office space. Houston is the home of CO which is on its last legs according to some on this board who work for UAL and U.

Could it be that cities became hubs for no other reason than some airline noticed that no one else had hubbed that city? Don't get me wrong. If there hadn't been a vibrant business community in most of these places (Dallas, Houston), or the city was a vacation destination (PHX or MCO), or both (NYC,LAX), the city would not have been anyone's "first" choice, but...

Why are CLE, CLT, MEM (just to pick 3) hubs for major airlines? Can anyone truthfully say that CLT would have all that Caribbean service if U didn't have a hub there? In any of those cities, I would venture to guess that if the hub airline closed up shop, the volume of air service to any of these cities would drop precipitously and not be replaced by LCCs or anyone else.

For that matter, I wonder what air service would look like at DFW if AA were to go to the great maintenance base in the sky?

[post="252393"][/post]​

I think you've got it! CAL 'owns' CLE because UAL 'traded' it to them for landing slots at IAD and ORD. CLE used to be a fairly large HUB (114 flights per day), for UA (as were PIT and ATL), now UA has 6 flights at CLE (last time I checked). Airlines look for Airports that have the ability to support a HUB operation, then do what they can to keep others out after they set up shop. Unfortunately, some Airlines get a 'monopolistic' mentality about their fortresses and provide less than adequate service to their customers. DEN is a case in point. UA did what it could to alienate its customers with unsatisfactory service, and voila, Frontier makes its appearance. No longer the fortress it once was, UA finds itself competing in DEN for business. USAir faces the same thing at PIT with SWA coming in. HUBs are a destination provider, that's for sure--giving the 'locals' more destination choices than point to point operations do. AA beat DL at DFW, with DL reducing service, but usually a void creates a vacuum as an Airline will rush in to replace that void. Fortunately for AA, the economy isn't ripe for another Airline (unless it's JetBlu) to move in. SWA is big across town, otherwise they're the only other outfit that could invest there. Good Post!

 

[Corinth2103]

Jim, you're absolutely right concerning the DFW area and its high office vacancy rate. I don't think this region ever learns..with vacancy rates above 20%, does it make sense to build yet another 1.2 million sq. ft. office tower at the Victory Development just north of downtown?

Whatever financial problems the DFW area has had in the past sure hasn't dampened enthusiasm in regards to population growth. The Dallas Business Journal recently had an article stating that the area had grown from 5.2 million in the 2000 census to roughly 6 million today making it the largest metro area in the entire South.

I think it was Michael that mentioned that cheap land has a lot to do with fast pace growth. There's plenty of that around (and folks joke that the northern suburbs will eventually reach Oklahoma) but I also think that DFW airport has been the biggest boon for the region in population and economic growth. AA moving down in the late 70s opened up many non stop routes from DFW which made this area attractive to others that eventually moved down or expanded including JC Penney, Exxon Mobil, Kinkos, and many others.

Tim

 

[jimntx]

The Dallas Business Journal recently had an article stating that the area had grown from 5.2 million in the 2000 census to roughly 6 million today making it the largest metro area in the entire South. 
Tim

[post="252522"][/post]​

The trick behind that piece of information is defining the metro area. The SMSA (Standard Metropolitan Statistical Area) is defined by the U. S. Census Bureau. In it's infinite wisdom (and with a little political chichanery by N. Texas politicians), Dallas and Ft. Worth and all the cities in between are counted as a single SMSA.

Houston's SMSA, on the other hand, does not even include Galveston which is less than 20 miles away (if you look at southernmost Houston boundary to northernmost Galveston boundary). In fact, IIRC almost nothing outside of Harris County (where Houston is located) is counted in Houston's SMSA.

If you included everything which is in Houston's direct economic sphere, Houston's SMSA would be considerably larger than anything else in the South.

JIMNTX, World Master of TOPIC DRIFT! (Sorry, bout that, guys.)

 

[FWAAA]

I'm skeptical of claims that the presence of an airline hub somehow produces superior economic growth within the region over having no hub. But I doubt the presence of a hub depresses growth, either.

The existence of fortress hub pricing has been well documented, but not everyone's a believer. Small cities (spokes) with service to most hubs often have fairly reasonable prices, especially compared to flights from the hub to the ultimate destination. Maybe that's due to competition between all the legacy carriers and maybe it's due to the Southwest Effect. Hard to tell from where I sit.

 

[Busdrvr]

I'm skeptical of claims that the presence of an airline hub somehow produces superior economic growth within the region over having no hub.  But I doubt the presence of a hub depresses growth, either.

The existence of fortress hub pricing has been well documented, but not everyone's a believer.  Small cities (spokes) with service to most hubs often have fairly reasonable prices, especially compared to flights from the hub to the ultimate destination.  Maybe that's due to competition between all the legacy carriers and maybe it's due to the Southwest Effect.  Hard to tell from where I sit.

[post="252574"][/post]​

Negative, Although Mikes Bezerkeley friend tilted a study to suggest higher cost travel due to hub dominance, other (IMO, more thorough) studies indicate the opposite, suggesting that consumers in the most dominated "overpriced' markets, actually enjoy CHEAPER air travel. had Mike done a more thorough google search, he'd found it....

 

[casual rat]

I'm skeptical of claims that the presence of an airline hub somehow produces superior economic growth within the region over having no hub.  But I doubt the presence of a hub depresses growth, either.

The existence of fortress hub pricing has been well documented, but not everyone's a believer.  Small cities (spokes) with service to most hubs often have fairly reasonable prices, especially compared to flights from the hub to the ultimate destination.  Maybe that's due to competition between all the legacy carriers and maybe it's due to the Southwest Effect.  Hard to tell from where I sit.

[post="252574"][/post]​

In the good ole days, DEN-SEA was over $700, DEN-DSM was over $700--each way (walk up, coach)! You don't see fares like those anymore. DEN-LAX, DEN-SFO were less than $200 under the same circumstances, during the same time frame.... Competition breeds lower fares--it's a fact!

 

[mrfish3726]

Busdrvr says "studies indicate the opposite, suggesting that consumers in the most dominated "overpriced' markets, actually enjoy CHEAPER air travel. had Mike done a more thorough google search, he'd found it"


Come on BUS, we know that when DEN INTL opened 10 years ago and Continental scaled way back here. UniTED was gouging the CRAP out of the DEN market till F-9 came into play! And with it came cheaper fares which MANY in the DENVER market welcome and still enjoy today.

 

[whlinder]

UniTED was gouging the CRAP out of the DEN market till F-9 came into play!

[post="252644"][/post]​

Weren't they just plain old United back then?

 

[whlinder]

I think it is a pretty big stretch to say that the presence of a hub airport equates to population growth in the metropolitan area. If United suddenly decided to close their Denver hub and move it to Wichita, would Wichita suddenly go on a growth spurt. The presence of good air service is no doubt an attraction to a metropolitan area, and the location of the airport figures prominently in the geographic growth of the area.

I believe IAD was mentioned as a hub that 'caused' massive growth in Northern Virginia. My opinion is that IAD is the major driver of growth in western Fairfax county and in Loudoun. But that growth is not driven by the UA hub at Dulles, it was driven by the presence of Dulles the airport. Washington needed somewhere to put an airport capable of handling large jets, and for whatever reason, they picked the site where Dulles sits today. Well of course there were construction jobs that came with the airport, as well as the need to build roads to get to it. The presence of the airport and the roads to get to it kicked off the growth in the area. Growth caused originally because someone picked where the airport would be built.

It is the same story in Seattle. Why is Microsoft there? Did they have some great attraction to land Microsoft? No, they were just lucky that Bill Gates and Paul Allen were born there.