Which hub will close first, post-merger?

[jimntx]

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.

Correction: Today's passengers are not paying anything close to a 1978 ticket price. Adjusted for inflation the average round-trip ticket today is about half what a round-trip ticket cost in 1978. In '78, the average round-trip ticket was something like $550. Today it is less than $300.

According to this website, http://www.davemanuel.com/inflation-calculator.php , $550 in 1978 would be the equivalent of $1,936.62 in 2012.

 

[wings396]

Wow, worse that I had thought. Guess that I need to hope for a New car for much less.

 

[nycbusdriver]

It's bovine excrement that there would be less competition. AA and US hardly compete now. There are only about a dozen overlapping city pairs, and no one is stopping DL, UA, SW, JB, etc. from jumping in on those if they don't already.

"Less competition" is the battle cry of consumer advocates who can't think of anything substantial to say, or have their heads tucked firmly up.

 

[PullUp]

Ahem. We do compete with AA now.
How about LGA-MIA? BOS-DFW? LAX-DFW?
Any number of city pairs where we connect and they non-stop are competitive routes, no?
Why connect through PHL or CLT when flying BOS-DFW?
On the other hand, why fly south to MIA or west to DFW to get from JAX to PHL?
Lots of changes coming.
Cheers.

 

[WorldTraveler]

you are absolutely right... and there are tens of thousands of markets that none of the network carriers serve nonstop but in which they all carry various amounts of traffic via connections.

 

[nycbusdriver]

Ahem. We do compete with AA now.
How about LGA-MIA? BOS-DFW? LAX-DFW?
Any number of city pairs where we connect and they non-stop are competitive routes, no?
Why connect through PHL or CLT when flying BOS-DFW?
On the other hand, why fly south to MIA or west to DFW to get from JAX to PHL?
Lots of changes coming.
Cheers.

Stops, and transfers, are a huge competitive disadvantage. Just ask British airways how they are doing in the JFK-LAX market via LHR.

 

[necigrad]

Stops, and transfers, are a huge competitive disadvantage. Just ask British airways how they are doing in the JFK-LAX market via LHR.

How well is it working for WN? Let's not make stupid comparisons to prove a point, let's make more relevant ones.

Yeah, I'm assuming this was a bit tongue in cheek, but still...

 

[nycbusdriver]

How well is it working for WN? Let's not make stupid comparisons to prove a point, let's make more relevant ones.

Yeah, I'm assuming this was a bit tongue in cheek, but still...

With the intrinsic time and hiking factors making connections less competitive, the only option for a carrier to compete on a city pair it "shares" with a non-stop carrier is price. The price needs to be a fair savings to convince someone to take on the hassles noted on a connection. Since the connection implies additional take-offs, landings, airports fees, etc. there are heavy additional costs to that carrier in terms of fuel, maintenance (aircraft cycles) making, etc. as well as the need to underprice the non-stop flight which operates at peak economic efficiency.

Once a carrier starts depending on short stage length flights to compete, the carrier is doomed to lose money. It's just the nature of the beast. That's why transoceanic flying with its long stage lengths are almost always profitable.

Even without the tongue-in-cheek examples, saying realistically that US competes with AA on JFK-LAX is ludicrous.

 

[Beancounter]

What, no option for none? I'm going to laugh if none are closed and in a couple years Parker opens a hub for Pacific/Asia flying. If I had to vote, It would be a PHL-PHX toss up.

Bean

 

[jimntx]

How well is it working for WN? Let's not make stupid comparisons to prove a point, let's make more relevant ones.

Yeah, I'm assuming this was a bit tongue in cheek, but still...

Necigrad, I'm afraid you have made a classic mistake with the WN argument. You have assumed that the traveling public applies logic to its decisions. When they book an RIC-LAX itinerary on WN, they are perfectly comfortable with the possibility of changing planes at (worst case) STL, HOU, and PHX to get to LAX. Booking on US, DL, UA or AA, they will swell up like a blowfish and refuse to book if it isn't non-stop from Bugtussle, W. VA. to PVG.

 

[737823]

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.

Actually it's not that you are subsidizing cheap ticket prices, it's more than the market dynamics in the highly competitive airline industry put tremendous pressure on price for the sale of undifferentiated goods/services. To much of the traveling public, a NYC-MCO ticket is the same whether they fly AA, B6, DL, UA or any number of other carriers serving that market.

PS you will soon be able buy a new car for $8000:

Indian automaker Tata is redesigning their $3,000 Nano minicar for release in the U.S. within the next three years, according to Automotive News.

Tata's billionaire chief, Ratan Tata, said the new features will include power steering, traction control, a bigger engine and "more bells and whistles." With these additions in place, the new Nano Tata would cost around $8,000. If this price were to a hold, it would make the Nano America's cheapest car behind the likes of the Nissan Versa ($11,750) and the Hyundai Accent ($13,205).

http://www.huffingtonpost.com/2012/10/15/tata-nano-3000-car-coming_n_1967753.html

Josh

 

[robbedagain]

recheck the prices for ny to mco and i doubt its all the same price josh as wings said most of us have subsidized the cheap air travel if they want cheap cheap product check out spirit air or allegiant air dirt cheap prices but youll end up paying a lot more for everything else from checking bags to pillows etc but compare their prices to b6 aa us ua n dl and let us know

 

[WorldTraveler]

glad you mentioned the Tata, Josh, but their quality is not exactly on par w/ even entry level sedans in the US.
Americans are well trained in how to shop for bargains and to shy away from what really is not one.

It is precisely because the network carriers have not differentiated their service from low fare carriers -who often have had better service and amenities than the legacy carriers - that customers show little brand loyalty.

The legacy carriers in the US invented loyalty programs; the most telling sign is that some carriers are able to deliver a high enough quality product that they can move from a "butts in seats" loyalty program to one that actually measures revenue loyalty. Some carriers will have no problem finding passengers who will pay good money for tickets and yet have less generous loyalty programs for the "butts in seats" crowd simply because loyalty means receiving rewards that reflect the differentiation in what you pay compared to the masses.

 

[Crazy Daytripper]

This merger is about growth and not consolidation. I cant find it right off hand but, there is a slide out there showing the EAST MID and WEST of the USA. On that slide US/AA will be number 1 in the east and mid but only 3d in the west. So if US/AA wants to be number one in the west as well there will have to be growth, and the only growth can be mad out west is SOME LAX and mosly PHX. look ad what DL has in SLC. The cities that SLC flys to over US in PHX is A LOT!!!!! So once again this mean growth and not consolidation.

 

[john john]

http://articles.philly.com/2013-03-28/news/38073083_1_ceo-doug-parker-american-airlines-us-airways#ixzz2PGoLw9T3
US Airways CEO Doug Parker was in Philadelphia on Tuesday, touting the benefits of a merger with American Airlines and reaffirming that Philadelphia would be key to the combined airline.
Parker, who will head the new American when the deal closes, likely in September, was in Philadelphia for the first time since the planned merger was announced Feb. 14.
Parker met with Mayor Nutter and went bowling with a group of 40 to 50 US Airways employees