Could mini-hub land in Indy?
Source: Indianapolis Business Journal
Publication date: 2003-08-04
Arrival time: 2003-08-18
Talk of US Airways Group Inc.'s expanding at Indianapolis International Airport might be just a ploy by the airline to gain leverage with officials in Pittsburgh, where it is negotiating a new lease on its hub facility.
But sources close to the company said the Arlington, Va.based airline, which emerged from Chapter 11 bankruptcy this spring, has taken a close look at Indianapolis as a site for a minihub offering more flights here using primarily small and midsize regional jets.
US Airways officials declined to comment on the matter and sources at BAA Indianapolis, the firm that manages the local airport, said they have not heard of any impending expansion.
"They certainly have a strong presence here and operated somewhat of a mini-hub here in the early 1990s, but we haven't heard anything recently," said Dennis Rosebrough, BAA Indianapolis public affairs director.
US Airways accounts for about 10 percent of the flights coming and going from Indianapolis International Airport, giving it the second-largest presence behind Indianapolis-based ATA Holdings Corp. Besides Pittsburgh, US Airways has hubs in Philadelphia and Charlotte, N.C., with major operations in Boston, New York and at Reagan National Airport in Washington, D.C.
"This talk of expansion in Indianapolis, I think, is US Airways trying to put pressure on Pittsburgh," said Joe Brancatelli, airline industry analyst and publisher of Joesentme.com, a Web site dedicated to business travel information. "The success of mini-hubs has always been questionable and US Airways doesn't appear to be in an expansion mode."
But others point out that US Airways has taken delivery recently on several 50- and 75-seat regional jets and that a Midwest hub in Indianapolis could be more cost-effective than one in Chicago, St. Louis or Cincinnati.
US Airways also reportedly has considered moving its maintenance hub into the vacated United Airlines maintenance facility in Indianapolis, which would make the mini-hub a nice fit here.
Mini-bubs surfaced in the mid- to late-1980s, with mixed results. They are often served by a combination of aircraft, but predominantly smaller planes that feed popular routes and fly to regional markets too small for jumbo jets. The emergence of small jets replacing slower, less-fuel-efficient turboprop planes has given the mini-hub idea new life.
If US Airways opened a mini-hub here, it would likely require several more gates and could offer 25 percent to 50 percent more flights.
"US Airways could be putting up a trial balloon here," said Morten Beyer, president of Morten Beyer & Agnew Inc., an aviation consultancy in McLean, Va. "US Airways is an important airline to Indianapolis already, so I suppose they could consider expansion there."
But the strong presence of ATA, Dallas-based Southwest Airlines Inc. and other low-cost carriers in Indianapolis, Beyer said, means a US Airways expansion could be difficult.
"They'd have to be competitive on pricing," he said. "There's a significant presence in Indianapolis demonstrating the will to treat airline tickets like a commodity and compete almost solely on price."
US Airways has come a long way in righting its financial ship since it filed Chapter 11 in August 2002. After controlling expenses and increasing ridership, the company reported July 28 that it turned a $13 million profit in its second quarter, compared with a $248 million loss the same quarter a year ago. And its emergence from Chapter 11 also makes it eligible for low-interest government loans.
The airline is scheduled to continue taking delivery on regional jets through 2005. It hopes the smaller aircraft will help it serve more markets while cutting costs. Hiring pilots for those planes - often done through contracts with nonunion regional airlines - also costs less than hiring pilots for larger planes.
This practice has met the resistance of US Airways pilots' union, but the company is determined.
"The [regional jets] will enable us to increase hub feed by adding new markets that were too distant for turboprop aircraft and replace current turboprop flying," said IMS Airways President and CEO David Siegel during a recent teleconference.
Indianapolis' central location, Beyer said, could make it ideal for a mini-hub. But Brancatelli isn't convinced a hub is the best thing for the Circle City.
"As one airline hubs in a city, others pull out," he said. "You have less competition and prices go through the roof. Look at Detroit with Northwest or Denver with United. Airline prices are far greater there. Indianapolis can play one airline against the other."
"The business community loves to tout the hub-city status because you can get more direct, nonstop flights," he added. "But the cost is too great. Indianapolis would be better off with service from airlines like ATA, Southwest and Jet Blue. The hub system works for airlines with a ferocious cost to everyone else."
Source: Indianapolis Business Journal
Publication date: 2003-08-04
Arrival time: 2003-08-18
Talk of US Airways Group Inc.'s expanding at Indianapolis International Airport might be just a ploy by the airline to gain leverage with officials in Pittsburgh, where it is negotiating a new lease on its hub facility.
But sources close to the company said the Arlington, Va.based airline, which emerged from Chapter 11 bankruptcy this spring, has taken a close look at Indianapolis as a site for a minihub offering more flights here using primarily small and midsize regional jets.
US Airways officials declined to comment on the matter and sources at BAA Indianapolis, the firm that manages the local airport, said they have not heard of any impending expansion.
"They certainly have a strong presence here and operated somewhat of a mini-hub here in the early 1990s, but we haven't heard anything recently," said Dennis Rosebrough, BAA Indianapolis public affairs director.
US Airways accounts for about 10 percent of the flights coming and going from Indianapolis International Airport, giving it the second-largest presence behind Indianapolis-based ATA Holdings Corp. Besides Pittsburgh, US Airways has hubs in Philadelphia and Charlotte, N.C., with major operations in Boston, New York and at Reagan National Airport in Washington, D.C.
"This talk of expansion in Indianapolis, I think, is US Airways trying to put pressure on Pittsburgh," said Joe Brancatelli, airline industry analyst and publisher of Joesentme.com, a Web site dedicated to business travel information. "The success of mini-hubs has always been questionable and US Airways doesn't appear to be in an expansion mode."
But others point out that US Airways has taken delivery recently on several 50- and 75-seat regional jets and that a Midwest hub in Indianapolis could be more cost-effective than one in Chicago, St. Louis or Cincinnati.
US Airways also reportedly has considered moving its maintenance hub into the vacated United Airlines maintenance facility in Indianapolis, which would make the mini-hub a nice fit here.
Mini-bubs surfaced in the mid- to late-1980s, with mixed results. They are often served by a combination of aircraft, but predominantly smaller planes that feed popular routes and fly to regional markets too small for jumbo jets. The emergence of small jets replacing slower, less-fuel-efficient turboprop planes has given the mini-hub idea new life.
If US Airways opened a mini-hub here, it would likely require several more gates and could offer 25 percent to 50 percent more flights.
"US Airways could be putting up a trial balloon here," said Morten Beyer, president of Morten Beyer & Agnew Inc., an aviation consultancy in McLean, Va. "US Airways is an important airline to Indianapolis already, so I suppose they could consider expansion there."
But the strong presence of ATA, Dallas-based Southwest Airlines Inc. and other low-cost carriers in Indianapolis, Beyer said, means a US Airways expansion could be difficult.
"They'd have to be competitive on pricing," he said. "There's a significant presence in Indianapolis demonstrating the will to treat airline tickets like a commodity and compete almost solely on price."
US Airways has come a long way in righting its financial ship since it filed Chapter 11 in August 2002. After controlling expenses and increasing ridership, the company reported July 28 that it turned a $13 million profit in its second quarter, compared with a $248 million loss the same quarter a year ago. And its emergence from Chapter 11 also makes it eligible for low-interest government loans.
The airline is scheduled to continue taking delivery on regional jets through 2005. It hopes the smaller aircraft will help it serve more markets while cutting costs. Hiring pilots for those planes - often done through contracts with nonunion regional airlines - also costs less than hiring pilots for larger planes.
This practice has met the resistance of US Airways pilots' union, but the company is determined.
"The [regional jets] will enable us to increase hub feed by adding new markets that were too distant for turboprop aircraft and replace current turboprop flying," said IMS Airways President and CEO David Siegel during a recent teleconference.
Indianapolis' central location, Beyer said, could make it ideal for a mini-hub. But Brancatelli isn't convinced a hub is the best thing for the Circle City.
"As one airline hubs in a city, others pull out," he said. "You have less competition and prices go through the roof. Look at Detroit with Northwest or Denver with United. Airline prices are far greater there. Indianapolis can play one airline against the other."
"The business community loves to tout the hub-city status because you can get more direct, nonstop flights," he added. "But the cost is too great. Indianapolis would be better off with service from airlines like ATA, Southwest and Jet Blue. The hub system works for airlines with a ferocious cost to everyone else."
