More cuts from LAS?

[LGA777]

I was really surprised when I heard recently US was dropping JFK-LAS, especially with the attempts to get LGA-LAS (and PHX) exceptions made from the NY Port Auth. But since then I started looking at the market and I think I see why US is dropping the route. I tried booking flight JFK-LAS r/t for 10 days in advance. Several carriers including US offered a fare or $226 round-trip. While I am no expert on yields I can't see how US could make money on a transcon with those fares. The other factor is the competition on the route, using Thursday Feb 26 as a sample here is what is available nonstop from JFK to LAS.

US 2 A-320
DL 1 757 3 738 4 Total
AA 1 757
B6 4 A-320
VX 1 A-320 1 A-319

That's 13 nonstops, then you can add EWR

CO 2 753 1 757 3 739 6 Total

That makes 19 Nonstops out of NYC.

So while I hate it when US runs I guess I sort of understand this one. Perhaps when the economy improves and if some of the competition is reduced it will return.

Regards

LGA777

 

[BuffaloJoe]

US did run WN off of the PHL-BDL, PHL-LAX- PHL-OAK (SFO for US, OAK for WN).

Actually I believe PHL-SJC would have been a better route to serve for WN, not OAK. But with the economy now, those long haul flights are more costly, better off running 2-3 flights in that 6 1/2 hour block than that 1 flight.

 

[TheNewUSAirways]

Awesome . .send 'em on over to VX!

 

[PHL]

I realize US had hoped it would benefit from *A feed, but clearly that isn't the case. US is probably the last choice for new yorkers wanting to make the trip when they have those other airlines to choose from in the same price range.

All those other JFK-LAS airlines have good feed from intl. legs, too and B6 made JFK its own little O&D base and built up a very loyal following in NYC.

 

[sharktooth]

US did run WN off of the PHL-BDL, PHL-LAX- PHL-OAK (SFO for US, OAK for WN).
Once WN did fly to SFO. I don't know if WN left because they were losing money in SFO against HP (SFO-PHX) and because of UA.
WN is not infallible. WN was always bigger and more profitable than HP. It is amazing that WN tried for 25 years to eliminate HP out of the air and yet they stayed. HP never tried to run WN out of the air.
Now that WN does'nt have the cost or fuel advantage anymore we'll see how many markets WN will flee from when the competition heats up.

Very interesting post.

1. HP had nothing to do with SWA being displaced from SFO, it was (almost) all UA with their United Shuttle, seven flights each hour each direction from 5:30 AM to 10:30 PM, just in the LAX-SFO market. In the 98-01 years, weekday flights from 8 AM to 8 PM were generally overbooked, all while charging twice what Tom Legow said US needed to make money in that market.

2. WN never tried to "kill" HP. Many "analysts" think of the Wright Amendment as an obstacle for WN. In fact, after HP and WN beat each other to a pulp in the late 80s, leaving HP in BK and retreating to PHX, it became obvious (to me, at least) that WN used the Wright Amendment as a protection for their core business in order to rebuild.

3. WN has tremendous "cost" advantages. They own quite a bit of their fleet, if not all. Their management costs are far less than HP, HP emphasizes new hires to "reduce costs", apparently ignoring rather expensive long-term "training" costs while WN actually derives many of their reduced costs due to embracing longevity. WN also acknowledges that out-sourcing only saves money in the short-term and becomes quite expensive over a longer time period, something apparently missing in the business schools of today, emphasizing the new god, the quarterly report, as opposed to good, long-term business practices.

 

[Travelpro72]

Look you see US pulling out of markets that they have virtually NO competition on. Claiming they can't charge enough to make it profitable. PLEASE. blah, blah, blah. US couldn't win at bingo if they were the only one playing.

 

[john john]

The PIT ABS baggage system was funded through a government bond shared by US Airways and ACAA. US does not lease the baggage belt system, they in effect are co-owners. Only lease liabilities can be renegotiated or thrown out in BK court, not government bond liabilities.

So they charge other airlines to use it

 

[Dog Wonder]

So they charge other airlines to use it

Other airlines don't want it.

It is faster to run the bags than to put them on the belt.

 

[SpinDoc]

Other airlines don't want it.

It is faster to run the bags than to put them on the belt.

Back when PIT was a major hub for US, it made very good sense to have the baggage belt system because of the large volume of luggage that had to be moved efficiently from air side to land side baggage claim, and also between air side and the E-Gates. When you have 200+ mainline flights and 300+ Express flights per day, you can't possible have enough personnel and equipment to make transfers efficient.

Now, with 51 flights per day for mainline and Express in PIT, the belt system is redundant and inefficient. As a matter of fact, Allegheny County has shut down most of the belts and only air side to baggage claim transfers from B-Concourse, and ticket counter to B-Con make up areas are now possible. Other airlines in PIT have less than 25 flights per day each, and they can easily drive the bags down to the claim belts, so the belt system is worthless to them. US Airways made a huge error by signing onto the bond initiative for the belt system, and they are on the hook through 2018 at a cost of roughly $7 million per year.

When you look at it from this perspective, what HP will do is eat the cost of the belt system, but cut all other costs in PIT. Ultimately, this will mean reducing mainline flights and outsourcing operations to Piedmont so they can take a tax write off on PIT operations through the wholly-owned subsidiary (shell game on the ledger).

In order to get to this point, they eliminated the wholly-owned PSA ground services subsidiary because they were unionized and represented higher costs going forward. To satisfy federal regulations regarding the union situation with PSA, they had to wait at least 1 year before re-Expressing PIT. My theory is that they will reduce mainline flights again in April to the minimum limit, and then outsource operations to Piedmont who currently has no union representation.