phllax
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I'm surprised this hasn't been brought up, but with P&G's recent announcement that they will divest around 100 brands, will the reduced corporate presence mean the end of the CVG hub?
CVG after P&G Divestiture
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eolesen
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They may be dumping ~50% of their brand portfolio, but that doesn't mean that the corporate presence is shrinking by 50%
The figures I've seen say that brands they're keeping account for 90% of the revenues and 95% of their profits.
The figures I've seen say that brands they're keeping account for 90% of the revenues and 95% of their profits.
To eolesen's point, here's a quote:
http://www.businessinsider.com/r-pg-eyes-duracell-braun-in-sweeping-brand-culling-sources-2014-18
If you could sell 50-100 underperforming brands and yet retain 90% of your total annual sales and 95% of your total annual profits, might as well sell those underperforming brands to someone else who might have better ideas about how to make those brands thrive. Or, maybe it's actually selling the underperformers to chumps (ala Trump taking Merv Griffin to the cleaners decades ago) who will lose their shirts in their failed attempts to turn those brands around. Either way, that helps P&G's numbers.
To the extent the CVG hub still relies on CRJ200s, it's likely to get smaller regardless of P&G. The markets that can support 76-seaters or larger will get them and the markets that can't support anything larger than 50 seats will lose service - same story as all other small and medium sized towns.
http://www.businessinsider.com/r-pg-eyes-duracell-braun-in-sweeping-brand-culling-sources-2014-18
If you could sell 50-100 underperforming brands and yet retain 90% of your total annual sales and 95% of your total annual profits, might as well sell those underperforming brands to someone else who might have better ideas about how to make those brands thrive. Or, maybe it's actually selling the underperformers to chumps (ala Trump taking Merv Griffin to the cleaners decades ago) who will lose their shirts in their failed attempts to turn those brands around. Either way, that helps P&G's numbers.
To the extent the CVG hub still relies on CRJ200s, it's likely to get smaller regardless of P&G. The markets that can support 76-seaters or larger will get them and the markets that can't support anything larger than 50 seats will lose service - same story as all other small and medium sized towns.
AdAstraPerAspera
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CVG Sales Set Record at Frontier: http://www.usatoday.com/story/todayinthesky/2014/09/05/frontier-cincinnati-airport-sales/15143217/
The DL-created demand for low fares appears to be large
The DL-created demand for low fares appears to be large
metopower
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I'm happy for for the people in Cincinnati . They will finally get what they have long been asking for... An airline with cheap fares. Frontier is that airline and now they will get their chance to see if they can support and airline and not be just a hub without originating traffic to support a hub. If an ultra low fare airline can not sustain the traffic base and grow then we will have the answer.
WorldTraveler
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there is a lot of corporate traffic from CVG. That traffic will not fly F9 because F9 doesn't provide the level of service that a city like Cincinnati needs.
DL controls a larger share of revenue from CVG than any other former hub has at this point after hub realignment.
F9 will succeed at pulling a lot of the low fare traffic that has long leaked from CVG to surrounding cities - SDF, DAY, CMH etc. The real picture of how well F9 does from CVG will have to include what other carriers do at other cities. In fact, the changes to FL at DAY alone could easily provide more than enough traffic to fill F9's flights at CVG.
The fact that F9 focuses on leisure traffic and not the business markets which are still the majority of DL's operation at CVG says DL and F9 will likely coexist.
DL pulled most of its capacity to leisure destinations so there was a market that DL left unserved.
Still, you are right, meto, that CVG wanted and now has a low fare carrier so it is up to them to show what difference it makes in the level of service the city has.
DL controls a larger share of revenue from CVG than any other former hub has at this point after hub realignment.
F9 will succeed at pulling a lot of the low fare traffic that has long leaked from CVG to surrounding cities - SDF, DAY, CMH etc. The real picture of how well F9 does from CVG will have to include what other carriers do at other cities. In fact, the changes to FL at DAY alone could easily provide more than enough traffic to fill F9's flights at CVG.
The fact that F9 focuses on leisure traffic and not the business markets which are still the majority of DL's operation at CVG says DL and F9 will likely coexist.
DL pulled most of its capacity to leisure destinations so there was a market that DL left unserved.
Still, you are right, meto, that CVG wanted and now has a low fare carrier so it is up to them to show what difference it makes in the level of service the city has.
WorldTraveler
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data is the friend of anyone who wants the truth. It is also an unwelcome intrusion to those who want to continue with their incorrect ideas.
F9 has an average fare well below the average of the legacies including DL at CVG. The kinds of average fares F9 produces is not indicative of much business traffic.
Others may have said that WN doesn't carry business traffic but I have repeatedly noted that WN has higher average fares than other carriers including legacies in key markets.
WN does very well at attracting business traffic in locations where it is the only or largest carrier. They do not do near as well when the have to directly compete against one or more legacy carriers which explains why WN dominates its markets by pumping levels of capacity into the market which other carriers cannot match and seeks to find markets where it doesn't have to directly compete with legacy carriers, esp. in their hubs.
specific to CVG, F9 is not operating a schedule that is conducive to business passengers but even in the markets they do serve, DL has already pulled down its service in markets where F9 is growing. F9 is not taking anything from DL but finding a niche because of the DL pulldowns.
DL and F9 are chasing different markets in CVG and the two can likely coexist quite well with CVG getting the low fare service it has long wanted, even if the major business markets are still heavily served by DL.
F9 has an average fare well below the average of the legacies including DL at CVG. The kinds of average fares F9 produces is not indicative of much business traffic.
Others may have said that WN doesn't carry business traffic but I have repeatedly noted that WN has higher average fares than other carriers including legacies in key markets.
WN does very well at attracting business traffic in locations where it is the only or largest carrier. They do not do near as well when the have to directly compete against one or more legacy carriers which explains why WN dominates its markets by pumping levels of capacity into the market which other carriers cannot match and seeks to find markets where it doesn't have to directly compete with legacy carriers, esp. in their hubs.
specific to CVG, F9 is not operating a schedule that is conducive to business passengers but even in the markets they do serve, DL has already pulled down its service in markets where F9 is growing. F9 is not taking anything from DL but finding a niche because of the DL pulldowns.
DL and F9 are chasing different markets in CVG and the two can likely coexist quite well with CVG getting the low fare service it has long wanted, even if the major business markets are still heavily served by DL.
eolesen
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You operate under flawed assumptions if you think you can use fare data alone to indicate how much business traffic there is on a given carrier.
Even if you had access to the RBD's, you couldn't say with any degree of confidence what the leisure/business mix is, because you'll never be able to determine the degree to which business travelers are buying the lower fare tickets and using the fare model to their advantage.
Even if you had access to the RBD's, you couldn't say with any degree of confidence what the leisure/business mix is, because you'll never be able to determine the degree to which business travelers are buying the lower fare tickets and using the fare model to their advantage.
WorldTraveler
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and labels such as business or leisure really mean nothing anyway... carriers could care less if they are carrying someone to work or the beach as long as those people will pay decent fares.
Airlines like any business want to maximize revenue.
Average fares are as close of a proxy as any to the percentage of traffic that is leisure vs. business.
And what does matter is that the ULCCs don't carry the high value passengers from any hub - but they do manage to pull off a lot of very price sensitive customers which are necessary to fill seats which legacy carriers need.
again, in the case of CVG, DL has pulled down its schedule to the greatest degree in heavily leisure markets such as to LAS and Florida so it is no surprise that some type of LCC or ULCC will find a market there.
There still is not evidence that DL has lost the business market - or, if you prefer, the high value traveler market.
DL still carries the majority of the local revenue from both CVG and MEM because of average fare premiums.
Airlines like any business want to maximize revenue.
Average fares are as close of a proxy as any to the percentage of traffic that is leisure vs. business.
And what does matter is that the ULCCs don't carry the high value passengers from any hub - but they do manage to pull off a lot of very price sensitive customers which are necessary to fill seats which legacy carriers need.
again, in the case of CVG, DL has pulled down its schedule to the greatest degree in heavily leisure markets such as to LAS and Florida so it is no surprise that some type of LCC or ULCC will find a market there.
There still is not evidence that DL has lost the business market - or, if you prefer, the high value traveler market.
DL still carries the majority of the local revenue from both CVG and MEM because of average fare premiums.
eolesen
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Again, you're making an assessment on the fare data alone. You have no basis to evaluate the average value of a sale.
Look at what airlines like G4, NK and F9 are doing in the ancillary space. That's raising the average yields far above what you can extrapolate from just the average fare.
Look at what airlines like G4, NK and F9 are doing in the ancillary space. That's raising the average yields far above what you can extrapolate from just the average fare.
WorldTraveler
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and part of the reason why airlines use ancillary charges is because they aren't taxed at the same rate as air fares and the ancillary revenues can't be attached to specific markets in competitor and government viewable databases.
The simple fact is that corporate customers are not using ULCCs, E. It doesn't take a rocket scientist to realize that, esp. from CVG, they don't fly to the same locations that business travelers go and they don't do it at the times that business customers need.
You are the one that is making the charge that corporate customers are fleeing to ULCCs. You need to provide evidence that is happening.
and you might also want to consider that, if your assertion is correct, then AA will be more affected than any other hub airline because AA at DFW has more ULCC competitive capacity than any other hub in the US.
You can't have it both ways. either ULCCs don't attract corporate passengers who have long been known to want the schedules and amenities that the legacies offer or none of that stuff matters and then ULCCs attract business passengers after all - and AA is most definitely affected.
what is absolutely clear and without dispute is that ULCCs carry double digit percentages of local passengers from DFW.
If you'd like to argue that a ULCC has been able to carry 1/5 of the local passengers that AA carries and those are real corporate passengers, then the addition of a major LCC hub will have a far larger impact on AA - esp. since it has already been demonstrated that WN carries as many if not more passengers from DAL compared to what AA carries from DFW in the markets where WN can currently fly nonstop to those markets from DAL.
In fact, I can't think of a single market that WN serves from DAL that WN doesn't have equal or nearly equal revenue and market share that AA has - and in a lot of cases, WN has a significant advantage.
The simple fact is that corporate customers are not using ULCCs, E. It doesn't take a rocket scientist to realize that, esp. from CVG, they don't fly to the same locations that business travelers go and they don't do it at the times that business customers need.
You are the one that is making the charge that corporate customers are fleeing to ULCCs. You need to provide evidence that is happening.
and you might also want to consider that, if your assertion is correct, then AA will be more affected than any other hub airline because AA at DFW has more ULCC competitive capacity than any other hub in the US.
You can't have it both ways. either ULCCs don't attract corporate passengers who have long been known to want the schedules and amenities that the legacies offer or none of that stuff matters and then ULCCs attract business passengers after all - and AA is most definitely affected.
what is absolutely clear and without dispute is that ULCCs carry double digit percentages of local passengers from DFW.
If you'd like to argue that a ULCC has been able to carry 1/5 of the local passengers that AA carries and those are real corporate passengers, then the addition of a major LCC hub will have a far larger impact on AA - esp. since it has already been demonstrated that WN carries as many if not more passengers from DAL compared to what AA carries from DFW in the markets where WN can currently fly nonstop to those markets from DAL.
In fact, I can't think of a single market that WN serves from DAL that WN doesn't have equal or nearly equal revenue and market share that AA has - and in a lot of cases, WN has a significant advantage.
WorldTraveler
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feel free to call it what you wish - or how you think I characterize it - but ULCCs carry more passengers from DFW than they do from any other legacy carrier hub and they carry a far higher percentage of passengers at DFW than they do at other hubs, including CVG.
And at CVG, DL already pulled out of many of the markets or reduced capacity where ULCCs are growing. AA is still operating in the same markets where the ULCCs are growing.
The ULCCs at CVG are taking passengers in markets that DL chose to quit flying nonstop.
And at CVG, DL already pulled out of many of the markets or reduced capacity where ULCCs are growing. AA is still operating in the same markets where the ULCCs are growing.
The ULCCs at CVG are taking passengers in markets that DL chose to quit flying nonstop.
