PIT vs CLE - sorry another PIT topic

[PHX PHLyer]

Delta has chosen to shrink CVG significantly but things there seem to be stable for now; of course, they didn't choose to cut CVG anywhere nearly as deeply as US cut PIT. The CO hub at CLE had more mainline service in the past -- roughly 80 daily departures just prior to 9/11.

CVG is a similar market to PIT. BUT, there is not 1 discounter at CVG.....NOT ONE! CVG has the highest fares (BY FAR) in the country. Yet, Delta STILL had to drastically cut flights there. Why....because even though the locals were paying out the wahzoo, they didn't make up a high enough percentage of the passengers, and those connecting passengers paying the cheap fares and connecting were still making it unprofitable. So....what did they do.....shrink the hub to skew it more heavily towards having more O&D on each plane than previously....therefore increasing profits. If Southwest went into CVG tomorrow with 25 flights to 6-7 destinations, I guarantee that Delta would start shrinking CVG just the same way that US has.

US started doing to PIT after BK1 what DL did to CVG prior to their BK. Shrink some flights and rely less on connecting traffic. The reason that CVG has leveled off is because in response.....no discounters came in. At PIT they did. If CVG gets some competition.....I think DL says bye-bye to hub status.

Wrong, based on the averages - only about 50% O&D.

But if you don't like PHL-BOS (it was the first in the report that didn't have WN competition), how about:

PHL-IND: 26 cents/seat mile
PHL-JAX: 20 cents/seat mile
PHL-MCO: 17 cents/seat mile
PHL-TPA: 15 cents/seat mile
PHL-FMY: 16 cents/seat mile
PHL-PBI: 17 cents/seat mile
PHL-FLL: 15 cents/seat mile
PHL-MCI: 20 cents/seat mile

Those aren't bad yields assuming they have a decently high O&D percentage on board. Taking the first example, PHL-IND, US flies on average 257 passengers per day. Based on the capacity on the route of around 365 seats, that is a load factor of over 70% with ONLY O&D passengers. At 26 cents/seat mile, that would be a very profitable route. Something tells me PIT couldn't fill 5 flight a day to IND with 0ver 70% O&D. And all of those Florida destinations are probably largely O&D destinations and are cheap to operate out of.....I don't know what FMY is off the top of my head.

As for the rest, you're saying it's more profitable to make that "low yield" connecting traffic make their connections in PHL (which won't increase that "low yield"), at higher cost (aircraft/fuel/crew/mishandled baggage/misconnects/etc) while the local O&D traffic pays enough less to wipe out most of the advantage of the extra O&D traffic in PHL?

Jim

I don't really understand the part that says "pays enough less"....but I think my answer to your question is YES! I am saying that it is more profitable to put lower yielding passengers through PHL (despite its problems) than PIT because there are far less of them per plane depressing the yeild for the flight, and the much higher percentage of business travelers in PHL than PIT are paying a higher fare and representing a larger portion of the plane than those would be in PIT.

 

[BoeingBoy]

I don't really understand the part that says "pays enough less"....

and the much higher percentage of business travelers in PHL than PIT are paying a higher fare and representing a larger portion of the plane than those would be in PIT.

The two are tied together, because the PHL O&D passenger is not, on average, paying more than the PIT O&D passenger (equal route lengths). Thus you need more PHL O&D traffic on the planes just to make up for the lower average O&D fares before you can even begin talking about offsetting the "low yield" connecting fares. And that's just the revenue side - it doesn't factor in the higher cost of operating at PHL on the expense side. That also has to be offset with O&D passengers before you can talk about profitability.

Jim

 

[BoeingBoy]

Almost forgot.....

Those aren't bad yields assuming they have a decently high O&D percentage on board. Taking the first example, PHL-IND, US flies on average 257 passengers per day. Based on the capacity on the route of around 365 seats, that is a load factor of over 70% with ONLY O&D passengers.

Nice use of creative logic - assuming every O&D passenger is on one of the non-stops and none were on one of the 14 connecting flights every day. Maybe you should tell Tempe that they don't need to show those connections since no one takes them........

Or could it be that (gasp) some of that O&D traffic is taking the connections because of the "low yield" that comes with connecting?

Jim

 

[ClueByFour]

nevermind

 

[PHX PHLyer]

Almost forgot.....
Nice use of creative logic - assuming every O&D passenger is on one of the non-stops and none were on one of the 14 connecting flights every day. Maybe you should tell Tempe that they don't need to show those connections since no one takes them........

Or could it be that (gasp) some of that O&D traffic is taking the connections because of the "low yield" that comes with connecting?

Jim

Ummmm....creative logic?????....the consumer air fare report tells the number of people traveling between PHL and IND.....O&D numbers.....Starting in PHL and ending in IND. Only.....no one starting or ending anywhere else. Unless they connect in PIT on one of the two flights. The numbers are for US....and probably almost all passengers are on PHL-IND non-stop flights. 257 passengers only flying PHL-IND..........357 possible seats between PHL and IND. With over 70% O&D on PHL-IND, that means that only a maximum of ~30% can even be connecting.

Look....I have nothing to gain in this....I am not trying to use fuzzy numbers or creative logic.....I am just trying to explain why PIT would not be profitable......I am not anti-PIT.....I am not pro US....I am just telling it like it is.

 

[PHX PHLyer]

The two are tied together, because the PHL O&D passenger is not, on average, paying more than the PIT O&D passenger (equal route lengths). Thus you need more PHL O&D traffic on the planes just to make up for the lower average O&D fares before you can even begin talking about offsetting the "low yield" connecting fares.

Here is a market that is kind of miraculously the same exact distance from PIT as it is from PHL. And it is the first comparable market where both PIT and PHL face the same type of competition. Some of the first ones I went through had WN competition in PHL, but not PIT, etc.

PIT-MIA 1013 miles
PHL-MIA 1013 miles

US has 54% of the PIT-MIA traffic and there are a total of 250 daily passengers. Average fare is $165. 135 daily passengers @ $165 per passenger.

US has 50% of the PHL-MIA traffic and there are a total of 862 daily passengers. Average fare is $177. 431 daily passengers @ $177 per passenger.

And you wonder why they would rather take a flight away from PIT and run it through PHL?

 

[Travelpro72]

Have you ever felt sometimes like your talking to the leg on a table?

 

[Travels2mch]

PIT-MIA 1013 miles
PHL-MIA 1013 miles

US has 54% of the PIT-MIA traffic and there are a total of 250 daily passengers. Average fare is $165. 135 daily passengers @ $165 per passenger.

US has 50% of the PHL-MIA traffic and there are a total of 862 daily passengers. Average fare is $177. 431 daily passengers @ $177 per passenger.

And you wonder why they would rather take a flight away from PIT and run it through PHL?

I'm not disputing your facts, but taking the spreadsheet out of the picture for a moment and inserting the human (customer) side.....as a customer connecting (not originating in either of the 2 cities), would you rather connect through PIT where you deal with friendlier employees, a much more user friendly facility and a much better chance of being ontime, or through PHL where, well it's quite the opposite?

I'm just asking so don't flame me, but are there any statistics on the connecting customers that fly other airlines since the options to connect are PHL vs. PIT? Also, in those costs for PHL, is there a way to factor in ill will gained when you pi$$ off the customers by subjecting them to PHL? That loss of future business to other airlines, and you know the old...they tell 10 friends who tell 10 friends? Also throw in the cost to feed and overnight missed connections (if they pay anything anymore), paying to deliver bags that miss connections. I'm sure those numbers would change for PHL.

I'm not an airline employee, economist or consultant....just an observant customer who has tried both ways and endured PHL many times. I'm one of those that will never step foot in PHL again, and when that is my option, my money goes to United, Delta and Midwest. Couple that with the lack of flights from PIT, the unreliable service that US provides and the painful lack of customer service (supported by the inept management), I will probably be seeking a status match with another airline before the end of the year.

 

[RowUnderDCA]

YES!!! You basically just made the case as to why PIT can no longer work. The only way that it could work with such low O&D numbers was to charge outrageous fares to the local population to subsidize all of the connecting passengers on the flight. They had a monopoly on the PIT market, and that was the only way that it could work as a hub city. Enter AirTran, jetBlue, Southwest, Frontier, etc., and now they can't charge those fares (as you say), and it can no longer work for them. It's simply called economics.

I'm not a PIT basher....I have connected there and found it to be a great airport....but I am in the aviation consulting business and know why it can no longer work as a hub, and make no excuses for it (unlike most all the PIT loyalists here). It can't work as a hub if there is competition....period...sounds kind of ridiculous to hear that (ripping people off was the only key to success)....but it's true.

Thank you for the simplest, clearest explanation regarding PIT that I've read on these boards. In the era of WN and its clones, PIT can't work.

 

[RowUnderDCA]

I do concur that LCC should use the PHL-PIT relationship more like CO uses EWR-CLE.

But LCC still treats PHL like a constrained market, retaining their addiction to RJ's, schedules, FF relationships and dominant hub economics, when they should be well passed shifting to a new strategy of more mainline flights, more mainline gates, more efficient capacity, exercising a strategy to move the AAs, DL, NW, CO's to using smaller jets to their hubs like LCC does from its hubs to the other legacies mega hubs. Then you can use PIT like a CLE.

The trick is to get the mainline planes, mainline gates and improved operational performance out of PHL.

Also, regarding PHX and WN. Looking at a map, I'd hazard a guess that relatively high percentage of Pheonixers leaving the city do so by air than by surface transportation, compared to almost any city other than STL or maybe DEN. So, I think that the yields compete more with the cost of driving. So, there may be more market segmentation at PHX than other local markets. I mean to say, I wouldn't be surprised to learn that some in Phoenix just won't fly WN out of a sense of status.... the 'bus-factor.'

 

[CynicalResAgent]

Actually PIT is (or will be next month) at about 31 daily mainline departures and roughly 75 Express, not 100. 20-25% of the Express departures at PIT are EAS to places like FKL, JHW, JST, PKB, etc. One third of the Express departures (25) are at-risk RJ service by Trans States.

See I say it's a management factor. I think CO has a better control over their costs and their yields and they are offering flights to where people want to fly. In PIT US is flying to a lot of EAS cities and a hand full of smaller cities and not offering the flights that would allow for a higher yield connection.

Look at what CO has done in CLE

In 2007 they added capacity in the following markets

Destination % capacity increase
San Francisco 45%
Orlando 33%
Seattle 32%
Los Angeles 10%

In 2008 they are adding the following cities

Greensboro, N.C.
Omaha, Neb.
Savannah, Ga.
Birmingham, Ala.
Charleston, S.C.
Green Bay, Wis.
Tulsa, Okla.
Little Rock, Ark.
Memphis, Tenn.
Lansing, Mich.
Des Moines, Iowa
Kalamazoo, Mich.

A few of those are cities that we used to fly to from PIT.

Also May 22, 2008 they begin service to CDG.

I say it's smarter management. Not the city, but then again I could be wrong, after all CO doesn't win award for their service do they?






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[jimcfs]

CVG is a similar market to PIT. BUT, there is not 1 discounter at CVG.....NOT ONE! CVG has the highest fares (BY FAR) in the country. Yet, Delta STILL had to drastically cut flights there. Why....because even though the locals were paying out the wahzoo, they didn't make up a high enough percentage of the passengers, and those connecting passengers paying the cheap fares and connecting were still making it unprofitable. So....what did they do.....shrink the hub to skew it more heavily towards having more O&D on each plane than previously....therefore increasing profits. If Southwest went into CVG tomorrow with 25 flights to 6-7 destinations, I guarantee that Delta would start shrinking CVG just the same way that US has.

US started doing to PIT after BK1 what DL did to CVG prior to their BK. Shrink some flights and rely less on connecting traffic. The reason that CVG has leveled off is because in response.....no discounters came in. At PIT they did. If CVG gets some competition.....I think DL says bye-bye to hub status.

The locals at CVG discovered they had some choices a short drive away to DAY and CMH to the north and SDF to the south. Let's see, WN is at two of those three (CMH and SDF), AirTran (and I believe Frontier) is at DAY.

I wonder if the costs are that much higher at CVG than most LCC's are willing to pay. The airport authority there must still be happy with the traffic DL provides else one would think they would court the LCC's with reduced fees/incentives. So, until that happens, DL has the stranglehold on CVG and those who want LC service will drive the hour or so to get lower fares.

 

[Poug Darker]

PHL will be cleared up next year after the UAL merger, when all international connections will leave from IAD. East coast international feed gets routed to/from IAD and PHL will change status to a domestic hub operation. Viola! Headaches eased considerably.

 

[Be Careful What You Wish For.]

PIT will not come back. Join the rest of us in the refugee life style that is the reality of the current USAir. I feel for PIT, but it is the last of the 90's bases that is being adjusted. Hopefully the next merger won't be as traumatic compared to what the pilots are going through now. Be careful what you wish for...

 

[WCT]

PHX Flyer, is it true that Southwest has the number one yields in the PHX and LAS markets, as a hub city? I always thought AmWest and WN were tight, but AmWest had an advantage in PHX. Have things changed? Does this mean US will continue to downgrade the PHX hub? Kind of scary to think we have always been the number 1 airline in PHX, WN is 3, but they control more of the traffic, yields???