Overcapacity

[JS]

Well...  based on US Airways 2 BK's, flying from LGA to every small town from Lebanon, NH to Wilmington, NC doesn't seem very successful either.

Where's the cause and effect?

Let the folks in ILM and LEB make connections at the hubs to get to LGA.  That's what the hubs are for.  Then use the LGA slots to take people where they are actually going.  I am not suggesting that US Airways "become" jetBlue...  I just think they should use their assets in the most efficient manner possible.

US Airways Express offers 150 seats/day from ILM to LGA and 76 seats/day from LEB to LGA.  Furthermore, there is no nonstop competition on either route.  Some of those slots would be better used, in my opinion, to fly LGA-MCI, or LGA-MCO, or LGA-YYZ, or where you can fill up more than 19 seats.  Not only do bigger markets offer more revenue potential, but using bigger aircraft lowers CASM.  But you can't fly a 737 to LEB.

[post="257962"][/post]​

For LEB, the only other place that would be useful is BOS (similar to the BOS to AUG, RKD, BHB and PQI routes). PIT, PHL and CLT are too far away for a B1900.

The reason US flies LGA-ILM non-stop in addition to connections via CLT is because people like to fly non-stop, even if it is on a RJ (I personally would take the connecting mainline flights, but that's just me).

Besides, all this talk about replacing commuter flights with mainline flights at LGA is a waste of time. You cannot use a commuter slot for a mainline flight. I don't know if US is using all their slots or if they're leasing them, but at any rate, you can't just cancel the LGA-ILM RJ and replace it with LGA-MCO on an A320.

The issue of efficient usage of air space with respect to commuter and mainline slots at LGA (as well as DCA) is a matter that needs to be taken up with Congress. Well, actually, all you have to do is wait until 2007, when the LGA high density rule (slots) expire under TIA 21.

 

[funguy2]

Well... its less of a cause and effect, and more of a short coming of the business plan in the current environment.

For LEB, presumably all of those pax are not headed to NYC... Thus connections at other hubs could still get them efficiently to whereever they are headed.

As for LGA-ILM... If US Airways discontinued nonstop service, chances are that no other airline would add the service... Therefore, US Airways could retain a good portion of the ILM-LGA traffic over its hubs, and provide that service at a lower cost. Meanwhile, that slot could be reallocated to some other service which would require more capacity. That would seem to be a net positive to me.

Also, US Airways is not in the LGA-ORD market. Yes, US Airways serves the market with connections. However a connection from LGA to ORD is uncompetitive. Here is a market which US Airways could add at the expense of LGA-ILM. You would keep a good portion of the ILM traffic (because a connection from ILM to LGA is competitive) and add a market which was previously untapped.

Back in 1989, post US/PI merger, the combined US/PI flew real jets from LGA to BUF, ROC, SYR, ORF, RIC, DAY, PIT, CLT, RDU, GSO, and probably others. This makes me think that at least some of US Airways Express current LGA operation is being operated on "mainline" slots. That implies that in some cases, you could cancel a CRJ and add an A320. Of course, I have no specifics on this, but I suspect it to be true. If anyone has specifics, I'd love to see them.

 

[JS]

As for LGA-ILM... If US Airways discontinued nonstop service, chances are that no other airline would add the service...

Delta

Also, US Airways is not in the LGA-ORD market. Yes, US Airways serves the market with connections. However a connection from LGA to ORD is uncompetitive. Here is a market which US Airways could add at the expense of LGA-ILM. You would keep a good portion of the ILM traffic (because a connection from ILM to LGA is competitive) and add a market which was previously untapped.

What???? LGA-ORD? You have got to be kidding. That market has 33 daily flights on UA and AA, and UA is a US codeshare partner. There is zero need for US Airways to fly LGA-ORD.

 

[funguy2]

Delta
What???? LGA-ORD? You have got to be kidding. That market has 33 daily flights on UA and AA, and UA is a US codeshare partner. There is zero need for US Airways to fly LGA-ORD.

[post="258022"][/post]​

Would DAL add ILM-LGA? Maybe, Maybe not.

Does LGA-ORD need US Airways? No. But JFK-LAX did not need jetBlue either. LGA-ORD is a HUGE travel market. If US Airways got a 10% share of the traffic, I would think that would be more lucrative than 90% of the ILM-LGA traffic... particularly if you lower costs and keep 50% of the ILM-LGA traffic along the way.

 

[JS]

Would DAL add ILM-LGA? Maybe, Maybe not.

Does LGA-ORD need US Airways? No. But JFK-LAX did not need jetBlue either. LGA-ORD is a HUGE travel market. If US Airways got a 10% share of the traffic, I would think that would be more lucrative than 90% of the ILM-LGA traffic... particularly if you lower costs and keep 50% of the ILM-LGA traffic along the way.

[post="258033"][/post]​

The topic of this thread is "overcapacity" and how to solve the problem, yet you are suggesting that US start flying from LGA into one of the most congested airports in the country that is overflowing with capacity (even more so when you add ATA's flights to MDW).

Also, look at the fares. LGA-ILM starts at $238 roundtrip on NW and DL and $288 on US. LGA-ORD starts at $139 roundtrip on AA and $178 on UA. Why would you want to switch to a lower-yield, saturated market in exchange for giving Delta the opportunity to replace your non-stop flight to ILM? (presumably there isn't enough demand to support two carriers on that route)

 

[funguy2]

The topic of this thread is "overcapacity" and how to solve the problem, yet you are suggesting that US start flying from LGA into one of the most congested airports in the country that is overflowing with capacity (even more so when you add ATA's flights to MDW).

Also, look at the fares. LGA-ILM starts at $238 roundtrip on NW and DL and $288 on US. LGA-ORD starts at $139 roundtrip on AA and $178 on UA. Why would you want to switch to a lower-yield, saturated market in exchange for giving Delta the opportunity to replace your non-stop flight to ILM? (presumably there isn't enough demand to support two carriers on that route)

[post="258039"][/post]​

The thread title is overcapacity... And refers to industry overcapacity. The solutions to industry overcapacity are: all airlines reduce some capacity or some airlines reduce all capacity. Neither is likely to occur.

So, the next best thing is for US Airways to be profitable (or at least lose less money). In order to be profitable, US Airways has to make the best uses of its resources, including limited slots at LGA. The debate here has since gone on to how can US Airways make the best use of its limited slots at LGA.

Based on the fares you've given above, LGA-ILM Yield is $0.57 per ASM. On LGA-ORD, it is $0.18. So great LGA-ILM is higher yielding traffic than LGA-ORD. So why aren't AMR, DAL, NWAC, and JBLU falling all over themselves to get into LGA-ILM? I suspect the local market size is small. Probably less than 150 seats/day, which US Airways offers (although I don't know). Maybe US Airways can offer 2 flights (100 seats) and use that slot for some other market... Maybe LGA-ORD, maybe LGA-YYZ, it doesn't really matter. What does matter is that US Airways enter some large markets where demand is robust. And in markets where demand is decent, like LGA-BUF, operate a similar number of seats on different aircraft, such that the slots can be used to their maximum potential.

On LGA-BUF, US Airways flies today 9 flights, offering 474 seats per day (an average of 52 seats/flight). If US Airways operated the market on 4 737's per day, it could offer 504 seats/day and reallocate 5 slots to something else.

If US Airways did this, they would collect a similar amount of revenue, operate the route at a lower cost, and be able to reallocate 5 slots to some other route and collect even more revenue.

What's so difficult to understand about this?

For ILM and LEB, if your load factor is something less than 70%, kill a flight and reallocate the slot to some other market. Or, again you could operate less flights on larger equipment, free up the slots, and use those freed up slots to operate to new markets or old ones which may have growing demand.

With the number of slots US Airways holds at LGA, it should be a market leader. US Airways should have been NYC's hometown airline long before jetBlue. And yet its not. I think it has something to do with how the company allocates its slots.

 

[JS]

The thread title is overcapacity... And refers to industry overcapacity.  The solutions to industry overcapacity are: all airlines reduce some capacity or some airlines reduce all capacity.  Neither is likely to occur.

So, the next best thing is for US Airways to be profitable (or at least lose less money).  In order to be profitable, US Airways has to make the best uses of its resources, including limited slots at LGA.  The debate here has since gone on to how can US Airways make the best use of its limited slots at LGA.

Based on the fares you've given above, LGA-ILM Yield is $0.57 per ASM.  On LGA-ORD, it is $0.18.  So great LGA-ILM is higher yielding traffic than LGA-ORD.  So why aren't AMR, DAL, NWAC, and JBLU falling all over themselves to get into LGA-ILM?  I suspect the local market size is small.  Probably less than 150 seats/day, which US Airways offers (although I don't know).  Maybe US Airways can offer 2 flights (100 seats) and use that slot for some other market...  Maybe LGA-ORD, maybe LGA-YYZ, it doesn't really matter.  What does matter is that US Airways enter some large markets where demand is robust.  And in markets where demand is decent, like LGA-BUF, operate a similar number of seats on different aircraft, such that the slots can be used to their maximum potential.

US is operating three flights a day using an ERJ -- morning, afternoon and evening. That's the minimum a route should have. Besides, even if you cut it down to one flight a day, what would you do with two slots? Fly somewhere else twice a day? It's just not worth it.

So what if AA, DL, NW and B6 aren't flying LGA-ILM? Is there some rule that US has to chase the cheap seats, and do what everyone else is doing? I could understand why a competitor of US would just love to see US pull out of every market it dominates, but don't you want US to prosper?

On LGA-BUF, US Airways flies today 9 flights, offering 474 seats per day (an average of 52 seats/flight).  If US Airways operated the market on 4 737's per day, it could offer 504 seats/day and reallocate 5 slots to something else.

If US Airways did this, they would collect a similar amount of revenue, operate the route at a lower cost, and be able to reallocate 5 slots to some other route and collect even more revenue.

US would not collect a similar amount of revenue by cutting the number of flights in half.

What's so difficult to understand about this?

It's not difficult. You are the one making assumptions about the competition and the marketplace that are not true.

For ILM and LEB, if your load factor is something less than 70%, kill a flight and reallocate the slot to some other market.  Or, again you could operate less flights on larger equipment, free up the slots, and use those freed up slots to operate to new markets or old ones which may have growing demand.

With the number of slots US Airways holds at LGA, it should be a market leader.  US Airways should have been NYC's hometown airline long before jetBlue.  And yet its not.  I think it has something to do with how the company allocates its slots.

[post="258051"][/post]​

70% is the systemwide load factor. If you cut every flight that has a load factor less than 70%, eventually you will have no flights. You cannot cut your way to profitability.

If LGA-FWA were a better use of the three slots than ILM, fine, replace ILM with FWA. But you have to look at each market individually as well as the overall network. Applying an overly generalized plan like "no turboprops" or "no load factors under 70%" or "no flights to cities under 2 million" is a recipe for a quick failure.

 

[funguy2]

JS - I understand your points... And without specific data, I cannot comment on specifics...

But here is the general idea... Let's say, for example, US Airways has 1 LGA slot, and flies a 50 seat aircraft on it. If US Airways could upgage that flight to a 100 seat aircraft, and that upgage results on $1 more profit, then it should be done. Now, in US Airways' case, that may involve choosing different markets simply because places like ILM and LEB cannot support dramatically increased ASM's.

I think 4 well-timed flights between BUF and LGA would not lose that much traffic. US Airways offers currently a 6:20am, 7:40am, and 8:50am departure from BUF. I would think these could be consolidated into a single 7:30am or so departure. Its a one-hour difference from the other two flights.. Its not like I am suggesting US Airways offer 7am and that's it.

 

[BoeingBoy]

funguy,

I generally agree with you on this point, but will point out one small thing.

US is in the position of losing mainline equipment - at least going forward. To replace express with mainline on any route, like LGA-BUF, requires pulling a mainline plane from some other route. With the declining mainline fleet going forward, something of the opposite will be happening - express replacing mainline on more and more routes.

Of course, one would hope that those that make the decisions as to where to deploy the available mainline planes would do so intelligently so as to maximize total revenue and minimize total cost. With the history of this place, though, one just has to wonder....

Jim

 

[funguy2]

BoeingBoy:

I absolutely understand. That is one of the reasons why I don't think US Airways ultimately makes it... It seems like they are going in the opposite direction than they should be in a number of strategic areas... Like this one. It is my belief that once jetBlue begins flying those E-190's, US Airways' potential for success declines considerably. Just wait until jBlue starts to offer E-190 flights on JFK-CMH and JFK-ORF and JFK-RDU. The viability of these markets from LGA on 50-seaters (or smaller) will decline rapidly, and for US Airways, it will be too late to make significant changes.