US Hubs Are Sub Par?

[BoeingBoy]

Actually, all of the airlines are focusing on cost.

I don't see PHL in any disadvantage either, at least not from ORD.

-Kinglobjaw

While all the airllines are focusing on cost, you're looking at the wrong definition of cost. Cost per available seat mile is what matters, not total cost (US's total expenses for 2008 were about half of AA's yet AA had lower CASM). Adding RJ flying is increasing CASM, not reducing it.

The disadvantage of PHL is in O&D traffic - ORD is generally in the top 5 of the ranking by O&D while PHL is usually 14 or 15th. The presumption is that hub O&D traffic is higher yield - the hub allows more non-stop flights for local traffic, and non-stop can generally support higher fares than connections. Of course, there are exceptions - LAS is generally #1 in O&D traffic but has lower yields due to the leisure nature of most of that traffic.

Jim

 

[Pacemaker]

Your hubs are your hubs, for better or worse. You don't just decide to shut down CLT and move it to ATL, or "open a new hub in ORD".


CASM for regionals are the highest of any group. CASM for US Airways is the highest of all the non-regionals, pretty much always has been. Very short stage-lengths, lots of 120-seat airplanes, and low daily utilization compared to the rest means you're spending a lot of resources to generate a relatively small amount of seat-miles. Obviously it's not high employee pay & benefits.

 

[SS255]

So how does US expect to remedy this problem? Seriously.

They have to be better than their competition.

 

[vantheman63]

Obviously it's not high employee pay & benefits.

Its not? Interesting...

Why am I thinking Mr. P is sending a message???

 

[ClueByFour]

City Population (referncing the US Census Bureau)

18 Memphis Tennessee 674,028
19 Charlotte North Carolina 671,588

33 Atlanta Georgia 519,145

So?

If only the people from the actual city matter, then everyone who is not at JFK, ORD, or LAX is screwed.

ATL's metro area has anywhere between 2.5 and 3x as many people as CLT. CLT's a whole lot closer to MEM than it is to ATL in MSA population.

CLT, if WN ever came in, would be dropped just as fast as PIT was, especially in the post-finance-meltdown era.

I agree with the hub problem. Absent PHL (which makes for a really crappy connecting hub) US is at a disadvantage to the legacy carriers (and, when you think about it, even some of the real LCCs).

 

[vantheman63]

So?

If only the people from the actual city matter, then everyone who is not at JFK, ORD, or LAX is screwed.

ATL's metro area has anywhere between 2.5 and 3x as many people as CLT. CLT's a whole lot closer to MEM than it is to ATL in MSA population.

CLT, if WN ever came in, would be dropped just as fast as PIT was, especially in the post-finance-meltdown era.

I agree with the hub problem. Absent PHL (which makes for a really crappy connecting hub) US is at a disadvantage to the legacy carriers (and, when you think about it, even some of the real LCCs).

From my vantage point, it really has a whole lot less to do with whether or not US has "better hubs" and more to do with "how do you address that and what's your plan?"

Look, NONE of us know what they are looking at...and at the end of the day, when it comes to the technical analysis of whatever it is they are looking at, it' s fair to say they've forgotten more than I will ever know about what makes their business run.

And it's also fair to say that other airlines have issues with hubs....and not only survive, but manage them to maximize whatever value they have. Why does CLE work so well for CO? Because of the HUGE population base? Or the monster incomes in and around the rust belt that have loads of money? (I think we know the answers to that.) I believe Kelner once stated that CLE is an excellent "overflow valve" for their most valuable hub, EWR.

And EWR, in all it's glory and value, Big Lar was asked, "what keeps you awake at night?" His answer? EWR. That was from the minutes of their last CO DO in IAH.

So, on one hand, we have "how do you play that hand you were delt to win" and on the other hand, "be careful what you wish for."

And then we have a CEO who just goes, "we can't win with the hand we have so we'll have to keep getting rid of cards and hoping for an ace." And by the way, poker champions WIN with the worst cards...that's the ONLY way they can win!

That's the part that I think people miss here. I have no idea, truly, about population and demographics....my God, it's enough I have to worry about how much alcohol is in the wines I'm carrying with me to Manchester and Amsterdam today....

The part that's the grind for me is the complete lack of imagination and creativity to work with the hand you have, and delivering a "we need to cut costs" message...which is (a.) probably how they/he feel/s and (b.) the fact they/he are already working on another angel to grind the employees.

Friggin train wreck. Like another one we have going in another major metropolitan area.

 

[Travelpro72]

The merger between US and HP only bought the combined company time. US has NO game. They CANNOT compete with the 'true" LCC's and they CANNOT hold their own against the big guys. I don't' care how hard your focus on "taking care of the passenger" and "running a supposed #1" airline, if you don't evolve to compete your business will fail. Look at all of the changes we have seen at US since the merger. The ONLY talent you seem to see is cost cutting. While that's fine and good there is more to running a business. They just don't get it. Wanna see what happens if they were to ask employees for a pay cut? Lights out.

 

[aredeeyou22]

The merger between US and HP only bought the combined company time. US has NO game. They CANNOT compete with the 'true" LCC's and they CANNOT hold their own against the big guys. I don't' care how hard your focus on "taking care of the passenger" and "running a supposed #1" airline, if you don't evolve to compete your business will fail. Look at all of the changes we have seen at US since the merger. The ONLY talent you seem to see is cost cutting. While that's fine and good there is more to running a business. They just don't get it. Wanna see what happens if they were to ask employees for a pay cut? Lights out.

Agree 100%! I think that outside of consolidation, our prospects are limited. We could offer the best product in the free world, and I believe our revenue opportunities would still be limited as opposed to the other majors.

Interesting read from LK at CO about where his airline is heading:

http://www.chron.com/disp/story.mpl/front/6326245.html

I realize this is the US board, but these two paragraphs struck me as interesting:

Even in situations where a competitor’s fare cost was actually higher once the bag fee was added, travel Web sites and reservation services often wouldn’t reflect that, he said. Continental’s fares would appear more expensive to customers, even if the final cost was lower, and Kellner said resisting the fee didn’t seem to draw passengers.

“After about four months, we were picking up zero market share by not having a fee,â€￾ Kellner said. Continental’s first-bag fee took effect last September

LK says the fares appear higher, and the majority of people were simply choosing the cheaper option. With all the talk of elites defecting to CO on here, I am truly surprised that CO has not gained market share. Also, with respect to the "kettles", doesn't this show that amenities like free food in Y and PTV's in every seat do not allow CO to charge a fare premium? The majority of travelers enjoy these amenities immensely, but are unwilling to pay extra for them.

 

[Travelpro72]

I hesitate to bring up the word merger but I agree that without one US is a little lamb lost in the wood. Others have merged bigger around you and can compete on a more global scale. Couple that with carriers that have far more reach and a much larger airline/network. With that being said we get back to what US brings to a merger table. We've all heard it over and over (shuttle, this that and whatever). In all US doesn't bring much. Hell even the CEO admits US is lacking.

 

[vantheman63]

LK says the fares appear higher, and the majority of people were simply choosing the cheaper option. With all the talk of elites defecting to CO on here, I am truly surprised that CO has not gained market share. Also, with respect to the "kettles", doesn't this show that amenities like free food in Y and PTV's in every seat do not allow CO to charge a fare premium? The majority of travelers enjoy these amenities immensely, but are unwilling to pay extra for them.

I can't speak to whether or not they've gained market share, outside of me, as one customer who's moved to them.

But I think there's a line to draw between "fees/lower fares & value."

At the end of the day, there is one thing Mr. Parker IS correct about...as a business owner, "time" is my most valuable commodity...and in most cases, I will fly THE most direct route I can to get where I need to go.

But when all else is equal, for example, me flying PVD-SFO which means I will be stopping somewhere, I look at VALUE next...and value is a component of many things, including air fare, service and yes, hubs.

 

[aredeeyou22]

I can't speak to whether or not they've gained market share, outside of me, as one customer who's moved to them.

You don't have to. Larry is telling you that CO gained "zero market share". This may also mean that DP was correct in saying that they saw no defection of passengers with the fees they added. After reading this board since the HP merger, I am frankly quite shocked that CO has not gained market share...

But I think there's a line to draw between "fees/lower fares & value."

Agreed. Whether or not you agree with the drink fees, bag fees, award fees, etc, or the harsh way they were implemented, one can see why US pushed for these so aggressively. Question is, was CO aggressive enough?

At the end of the day, there is one thing Mr. Parker IS correct about...as a business owner, "time" is my most valuable commodity...and in most cases, I will fly THE most direct route I can to get where I need to go.

Agreed. I'll also add that we, as employees, hope that the US product will once again become something more than "when you have no other choice" travel. Remains to be seen.

But when all else is equal, for example, me flying PVD-SFO which means I will be stopping somewhere, I look at VALUE next...and value is a component of many things, including air fare, service and yes, hubs.

True dat.

 

[USstew23]

Your hubs are your hubs, for better or worse. You don't just decide to shut down CLT and move it to ATL, or "open a new hub in ORD".


CASM for regionals are the highest of any group. CASM for US Airways is the highest of all the non-regionals, pretty much always has been. Very short stage-lengths, lots of 120-seat airplanes, and low daily utilization compared to the rest means you're spending a lot of resources to generate a relatively small amount of seat-miles. Obviously it's not high employee pay & benefits.

EXACTLY!!! and thank you for putting it in the readers digest version..lol.. I'm always trying to explain this very thing to people and they just look at me like I have 2 heads!!

 

[Art at ISP]

Agree 100%! I think that outside of consolidation, our prospects are limited. We could offer the best product in the free world, and I believe our revenue opportunities would still be limited as opposed to the other majors.

Interesting read from LK at CO about where his airline is heading:

http://www.chron.com/disp/story.mpl/front/6326245.html

I realize this is the US board, but these two paragraphs struck me as interesting:

Even in situations where a competitor’s fare cost was actually higher once the bag fee was added, travel Web sites and reservation services often wouldn’t reflect that, he said. Continental’s fares would appear more expensive to customers, even if the final cost was lower, and Kellner said resisting the fee didn’t seem to draw passengers.

“After about four months, we were picking up zero market share by not having a fee,â€￾ Kellner said. Continental’s first-bag fee took effect last September

LK says the fares appear higher, and the majority of people were simply choosing the cheaper option. With all the talk of elites defecting to CO on here, I am truly surprised that CO has not gained market share. Also, with respect to the "kettles", doesn't this show that amenities like free food in Y and PTV's in every seat do not allow CO to charge a fare premium? The majority of travelers enjoy these amenities immensely, but are unwilling to pay extra for them.

At least Larry Kellner is honest in what he's saying...as opposed to Scotty boy who said he sees the market "stabilizing". The fact is that Larry has credibility--with employees and customers. US management has NONE.

Regarding Larry's observation of zero market share improvement, and the obvious bias of the off brand booking engines, I have to agree completely. Had the booking engines like Orbitz, Travelocity, etc. been forced to include the baggage and other likely fees to their price quotes, I am sure CO would have picked up market share. To me this sounds a bit like false advertising, and I think it is incumbent on the groups who control these engines to level the playing field.

Unfortunately, there is a place for alacarte pricing in the airline world today--and I do not see it going away anytime soon. That said, where US crossed the line was the beverage fees, which they had to rescind. I think if one had access to the true numbers, you would find that many US elites are gone (enough for even a blind executive to notice), and I do think they are finally worried. Perhaps the kettles won't carry the company after all....

However, as Van has said, to me, absent a nonstop flight option, to me it's the value--which includes not only price, but product, service, and reliability. If I am going to travel, especially on a trip with connections, I need to know that in the event of an irregular operation, someone has my back. I need to know that if there is a complaint filed, the appropriate management team will address the root cause of the problem, not just throw vouchers at me to get me to shut up and go away. Unfortunately, this is as yet not the case with US.

Last week I had a connection in IAH...admittedly short at 48 minutes scheduled. Our inbound was held up by ATC and we held for a while, and eventually got to the gate about 35 minutes late, leaving me approximately 12 minutes to get from the first flight to the second. Now this was IAH, where NOTHING is really close--so as close as C-24 SOUNDS to C-29, they are really just about on the opposite ends of the airport.

I literally RAN to the connecting gate, taking every bit of 14 minutes....schedule minus 1. There were people at the counter, and an agent there was shaking her head no--so I expected the worst. Instead, I went to the boarding scanner, and the agent asked if I was Art, to which i said yes, and he said, "we were waiting for you". I do not imagine the experience would have been similar on US.

As to the hubs, I was witness to what Larry said about Newark--that it keeps him up at night. BUT, while every airline has its highs and lows, CO provides a level of consistency not present at other carriers...I can count on them to be honest when something goes wrong, and to do the right thing in the event of irregular ops.

Talking about value--tomorrow's trip is on WN--to BNA. Unrestricted, Business Select ticket for about half of what the "majors" were asking---so go figure.

My BEST to you all.

 

[Travelpro72]

Well back to the topic.....US has hubs in cities that cannot compete with the likes of the big guys. US better have some sort of plan is all I know.

 

[Art at ISP]

Actually, Travelpro,
CLT SHOULD Be a gold mine.......but perhaps it is too reliant on the financial giants.....