Which hub will close first, post-merger?

[ContUNITEus]

Just because of the fact that almost no International airline flies to PHX, I believe that it will eventually be downgraded and/or disappear from the AA HUB map. Codesharing is a big part of this business, especially since AA doesn't have any service to places like Australia, New Zealand, Singapore, etc....

AA is devoted to Oneworld. Unless AA can persuade Malaysia Airlines, Cathay Pacific, Qantas and JAL to shift its flights to PHX, I don't see PHX surviving this.

Mark my words on this... the day that AA filed for bankruptcy, I knew that it was going to the altar with US Airways. Doug was never going to merge with an airline without it forcibly squeezing out every penny that it could from its employees through the bankruptcy process. This is what he had previously set as a condition to merge with US Airways. After US Airways went to BK1, a merger with HP was proposed.... but Parker was not happy with what US accomplished in its first BK with regards to plundering the employees. So US went into BK2, so that it could eventually merge with HP. Based on this fact about the HP/US merger, I guessed (CORRECTLY) that this AA bankruptcy thing was just the prelude for the merger with US.


I truly believe that I am right about PHX being gone in 10 years
Trust me... PHX is done... gone... bye...bye...

 

[ContUNITEus]

Also.... for all the nay-sayers about LAX, because it 'supposedly' doesn't have any more space and capacity, keep in mind that LAX, just like MIA, is a permanent construction zone... (and I mean that with sarcasm)

LAX is currently in the midst of an expansion project that will be able to accommodate any expansion and shifting that AA may need in the future.

 

[NewHampshire Black Bears]

Ol' AA retiree here.

FIRST, I'd like to say that when it comes to this kind of topic(from especially an AA perspective).... FWAAA has NO Equal. He has been dead-on accurate a high percentage of the time !

NOW, down to 'brass-Tacks'. For someone (ME) who always has an opinion, I"m Soooo G D confused, I don't know where to start. So I'll try First with THE MOST obvious.
DFW-MIA-ORD-PHL definitely...H U B S !
JFK/LAX are and always will be large Focus cities, mainly because of International(especially Kennedy)
I can't see CLT remaining a HUB, not because of MIA, but because of DCA, which will be an Important Focus city. I see CLT becoming an even Bigger focus city than DCA.
PHX ?????? DAMMED if I know ! Aside from PHX's International traffic, it can be a fairly usefull connecting point, similiar to DL's SLC, Which I might add, is a KILLER for DL..out west !!!!!
PHX from a E-W perspective is fine. I just wish it were further North. There is a LOT of destinations that could be served out west, as others have mentioned, in states like MT/ID/OR/WY/WA.
So what happens to PHX(HUB or No HUB)..Dammed if I have a clue !

FWAAA.......HELP me out here, will ya' !

 

[WorldTraveler]

Also.... for all the nay-sayers about LAX, because it 'supposedly' doesn't have any more space and capacity, keep in mind that LAX, just like MIA, is a permanent construction zone... (and I mean that with sarcasm)

LAX is currently in the midst of an expansion project that will be able to accommodate any expansion and shifting that AA may need in the future.

The issue w/ LAX is that, in order to pacify neighborhood noise concerns, the airport authority has had to agree to limit the number of gates.
They can do all the construction they want but they are basically just rearranging the existing infrastructure, not growing the facility.

 

[NewHampshire Black Bears]

Boy oh Boy...WT,......what I'd give for a SLC HUB Now !!
In the very long run, SLC will be hands down be DL's 2nd most valuable Hub !

 

[FWAAA]

Ol' AA retiree here.

FIRST, I'd like to say that when it comes to this kind of topic(from especially an AA perspective).... FWAAA has NO Equal. He has been dead-on accurate a high percentage of the time !

Negative, Bears. I've been wrong plenty of times.

I can't see CLT remaining a HUB, not because of MIA, but because of DCA, which will be an Important Focus city. I see CLT becoming an even Bigger focus city than DCA.

The pundits (and US employees, from Parker on down) have insisted that CLT is the thing that AA needed the most - very few people were saying that PHL or PHX was absolutely required for AA's success, but everyone said that AA needed a southeast connecting hub, so if they were right, I see CLT staying. Maybe with some adjustments, but I see it remaining.

FWAAA.......HELP me out here, will ya' !

My post and $4 will buy you an expensive Starbucks beverage.

PHL and PHX weren't the things that AA really, really needed, but IMO, that doesn't mean they'll be folded up just because AA and US get hitched. As I've posted a lot recently, PHX is a place where a lot of people want to go, as PHX features the 8th largest domestic O&D share. Sure, it shares that market with WN, but then again, which big markets aren't shared with WN? DFW, IAH and CHI are all shared with WN.

I'll be in PHX a few times over the next few weeks as the Spring Training games get underway. Every time I go to PHX, I'm amazed how much that (formerly) small spot in the desert has grown. Right now, it's dealing with the aftermath of the housing bubble, but it's still a desirable, growing region. IMO, the sunbelt will continue to grow.

PHL? New AA has the largest share there and if it makes money, I don't see it shrinking.

 

[nycbusdriver]

The pundits (and US employees, from Parker on down) have insisted that CLT is the thing that AA needed the most -

It's really not what Parker and the US employees think, nor even the pundits.

AA has tried over the years to set up TWO southeast hubs, RDU and BNA. Neither was able to compete successfully with the large, well-established CLT hub. Well, the only thing that has changed in the ensuing years is that CLT (the hub and the city) have grown even larger and more well-established.

The need for a southeast hub in the geographical vicinity of Charlotte is a decision AA management made decades ago. Now, AA will have it.

 

[zethya]

All these speculations regarding PHL, here and elsewhere, makes my head spin. Some even change their tune on the same day and then revert back. If it where my call, I'd strictly base PHL's future structure simply on how much profitable growth can (still) be extracted from JFK with its existing high competitive environment. Once the network/yield management planners determine a max out position for JFK, the remaining international growth requirements to compete with DL, UA and everyone else as a true Global carrier, should flow thru PHL - the only available and viable domestic/international hub in the huge Northeast Megalopolis. If they can miraculously squeeze everything into JFK at acceptable yields, with the available slots, then PHL won't be necessary as a reliever and will be relegated to O&D. If they build up PHL as the primary international connecting hub + local O&D, then as history typically presents, the international O&D numbers (PDEW) should increase significantly. I actually wouldn't be surprised if BA and AA both managed their resources at JFK and PHL to support an almost dedicated O&D JFK and flowed most else thru PHL, resulting in a huge, JFK/PHL OW Mega-Hub. Ever watch the movie, “SOYLENT GREEN”, when E.G. Robinson remarks to Charlton Heston, “So and So crossed the City Line (NYC) into Philadelphia” ?

CLT is a difficult prediction. It might be foolhardy for the new AA to base their future there solely on the obscenely low airport fee structure – which can disappear in a whiff. My theory is that CLT's future will be based on both PHL's eventual use and whether it's more profitable to flow southern bound connecting domestic and Latin America traffic through there or MIA/DFW. One + for CLT is that it seems to have always been Parker's favorite son. On the other hand, US is now in a whole different world and Parker needs to walk the fine line of profitability versus quality. He and the new AA likely will never succeed unless he becomes proficient at Both.

PHX. Well PHX is a low yielding, high O&D market – sort of, but a bit better than LAS. PHX is too far west to probably be a viable E-W connecting point – especially with DFW in the picture. So I would assume a ? has to be, will the new AA continue to expend the necessary resources to support the PHX market, or turn it over to WN and use those resources in higher profit ventures?

 

[jimntx]

will the new AA continue to expend the necessary resources to support the PHX market, or turn it over to WN and use those resources in higher profit ventures?

If the powers that be at (current) AA have any say, PHX would be toast. Not because I have inside information, however. I'm just looking at the past history of AA and other airlines' hubs that were brought into the fold. Pretty much giving the hub/major focus city to WN is standard operating procedure. See also, RNO, SJC, MCI, STL, and so on and so forth. (That is not to say that those resources were allocated to higher profit ventures. We are, after all, in bankrupcty. )

 

[WorldTraveler]

It's worth nothing that PHX has a very high level of connecting/thru traffic for US and WN. The percentage of connecting traffic for US is one of the highest at a hub in the USA while the average fare for PHX is less than at other hubs in the west/southwest.
WN's percentage of local traffic is higher than US (about 2X as high) but still very low for WN's "hubs."

Thus, PHX is probably not as profitable as a lot of people want to believe - high connecting percentages with relatively low local fares is not ideal from a profitability standpoint.

CLT is a higher fare hub but CLT still has one of the highest percentages of connecting traffic in the east.

 

[NewHampshire Black Bears]

Maybe,...WT,...the answer is that......with only the Big 3 left, it's now "in vogue" to have More than 3 hubs as DL and UA are demonstrating.

 

[WorldTraveler]

Bears,
the whole reason the creditors pushed a merger is because US legacy carriers have grown comfortable that they have to maintain a "certain network" including money-losing routes in order to compete. You can't pay labor top wages have $3/gal plus jet fuel just to have a route network competitive w/ other carriers.

CVG and MEM were dramatically reduced in size because they carried high percentages of connecting traffic that could be carried over other hubs.

Carriers that want to make money have to make the same types of tough choices.

BTW, despite have a smaller operation at PHX, WN carries more local passengers and revenue than US. US operates a huge amount of capacity at PHX to serve connecting traffic that was necessary because PHX was US' only remaining major presence in the west.

BTW, since you mentioned it although I am not sure why, DL's hub at SLC has one of the higher percentages of local traffic among DEN, PHX, and SLC and DL's average fares - even if you look solely at domestic traffic - is higher than the other two hubs. SLC will always be a small hub but it is the right size for what it needs to do which is probably why its size has remained fairly stable with few added or dropped routes.

 

[snapthis]

American, US Airways To Defend Merger Plan
February 26, 2013
Reuters

The merger of American Airlines and US Airways would allow the companies to combine complementary networks, preserve competition and save USD$1 billion, executives from the airlines will tell US lawmakers on Tuesday.
An expert on the airline industry will also testify and say that the deal may well harm consumers.
In testimony released in advance of a hearing before a subcommittee of the House of Representatives' Judiciary Committee, US Airways Executive Vice President Stephen Johnson and American Airlines General Counsel Gary Kennedy defended the proposed USD$11 billion transaction.

The Justice Department's Antitrust Division will review the deal to ensure it complies with antitrust law.
Experts have said that the agency is likely to ask for divestitures at US Airways' hubs at Washington's Reagan National and Charlotte, NC, and American's hub at Dallas-Fort Worth.


If approved, it would be the third major US airline merger since 2008.
Kennedy noted that the transaction had been endorsed by unions and the boards of both companies and would create "a degree of financial stability that we have not experienced in many years."
Both executives cited the Delta deal to buy Northwest in 2008 and that of United and Continental in 2010, saying that consumers wanted to fly one airline to their destination, not several, and that this hampered smaller carriers.
"Because of the limited size and scope of their respective networks, neither American Airlines nor US Airways is able to respond fully to that demand and both operate at a competitive disadvantage to the larger networks of Delta Air Lines and United Airlines," said Johnson.
The two airlines networks complement each other more than they compete with each other, both men argued in their testimony.
While the new company - which would be called American Airlines - will become the largest US carrier, it will have just 23 percent of available seats, compared to Delta at 20 percent, United at 18 percent and Southwest at 18 percent, Johnson said in his written testimony.
He also argued that competition in the airline industry is intense, taking issue with those who fear it is becoming too concentrated.
"The new American Airlines will also compete against a host of smaller but lower cost airlines, including JetBlue, Spirit, Alaska, Frontier, Allegiant and Virgin America," Johnson said in the testimony.
A third witness on Tuesday, Kevin Mitchell, chairman of the Business Travel Coalition, doubted the companies' efficiency claims, particularly that they would give consumers better service and save money.
"It is important to note that high profits may indicate any number of developments. One is that carriers have in fact realized claimed efficiencies," said Mitchell, according to the testimony released ahead of the hearing.
Another explanation, he said, was that the profits came from the companies' dominance of the market or from hampering consumers' efforts to effectively price shop.
Mitchell took issue with the merger as being good for consumers: "From a consumer standpoint - individual traveler or corporate travel department - there are few benefits to offset the negative impacts of this proposed merger that include reduced competition, higher fares and fees and diminished service to small and mid-size communities."
Johnson said he expected the transaction to close in the third quarter.
Lawmakers from the Senate Judiciary subcommittee have also announced plans for a hearing on the proposed merger, with no date set so far

divestiture
Disposition or sale of an asset by a company. A company will often divest an asset which is not performing well, which is not vital to the company's core business, or which is worth more to a potential buyer or as a separate entity than as part of the company.

I think DFW and DC OK.
CLT?

 

[wings396]

My heart goes out to all of those poor consumers who have been accustomed to paying 1978 ticket prices up until now. I think that most of us in this industry have had enough of subsidizing low fares with our wages. I'm not saying that anyone should be price gouged, just pay a fair market value for the services that they are receiving. I would love to go buy a new car for 8k, but that ain't gonna ever happen.

 

[snapthis]

My heart goes out to all of those poor consumers who have been accustomed to paying 1978 ticket prices up until now. I think that most of us in this industry have had enough of subsidizing low fares with our wages. I'm not saying that anyone should be price gouged, just pay a fair market value for the services that they are receiving. I would love to go buy a new car for 8k, but that ain't gonna ever happen.

You are right about that. Consolidation is going to change the ball game.