RowUnderDCA
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It is also just illegal to impose a local 'head tax'X-U said:
Southwest And Others Have Pit In Their Sights
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JAMAKE1
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I find it very telling that in the same week that USAir announces a major reduction in Pittsburgh, Southwest proclaims, "Oh by the way, we might add ONE new city in 2005." Southwest is probably licking their chops to start serving Pittsburgh; with a fairly good sized metropolitan area, a nearly brand new modern airport facility, and a whole slew of gates soon to be availble, it is ripe territory for Southwest's brand of service. They have always been cautious and will get their ducks in order in Philly first. I have witnessed Southwest drive US out of its major markets during the past 15 years. California. Florida. Baltimore. Possibly Philadelphia. It looks as if PIT could just be handed over to them...
WorldTraveler
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Remember that AA built hubs with great facilties in BNA and RDU and then shrunk them which provided great territory for WN. Although it's hard to take, US isn't the only airline that has done this.
If you look at other airports in medium-sized cities where WN is the dominant carrier, it's easy to imagine O&D traffic at PIT increasing dramatically. As of 2Q03, BNA has more O&D than PIT, in spite of a metro poulation that is barely half as large. MCI has 40% more O&D even though the KC area is only 3/4 the size of the Pittsburgh area. RDU has 17% more O&D with half the metro population. I don't think it's unreasonable to expect that significant low-fare competition would increase PIT's O&D by 50-100% as folks would travel more often and opt for alternative airports like CAK or CLE less often.
Airports can impose a head tax on passengers -- that's what the PFC is.
Even if the ACAA were to offer Southwest some sort of short-term incentives or travel bank, that's not how LUV management does business. They want their new markets to be able to stand on their own in the long term, since WN generally invests a good bit of money in opening up new cities (witness the heavy marketing of Philly). As things stand now, per-passenger costs at PIT are reportedly comparable to those at PHL; it's just that fewer people connect at PHL. And PHL's per-passenger costs didn't keep Southwest out. To be frank, I believe funneling connecting traffic through PHL isn't the answer to the PIT dilemma since it's probably more costly in total to send a passenger via PHL. But I don't have access to those proprietary numbers.
I will say that pulling down the PIT hub will undoubtedly attract new/additional LCC service, in the form of WN, B6, FL, F9, TZ, HP, or some combination. PIT will lose much of its non-EAS regional service, but very few passengers in the Pittsburgh area use that service (due to high fares) , so it will be hardly missed. Most routes with any appreciable traffic will retain service on US or other carriers, and/or will see LCC replacement service.
Airports can impose a head tax on passengers -- that's what the PFC is.
Even if the ACAA were to offer Southwest some sort of short-term incentives or travel bank, that's not how LUV management does business. They want their new markets to be able to stand on their own in the long term, since WN generally invests a good bit of money in opening up new cities (witness the heavy marketing of Philly). As things stand now, per-passenger costs at PIT are reportedly comparable to those at PHL; it's just that fewer people connect at PHL. And PHL's per-passenger costs didn't keep Southwest out. To be frank, I believe funneling connecting traffic through PHL isn't the answer to the PIT dilemma since it's probably more costly in total to send a passenger via PHL. But I don't have access to those proprietary numbers.
I will say that pulling down the PIT hub will undoubtedly attract new/additional LCC service, in the form of WN, B6, FL, F9, TZ, HP, or some combination. PIT will lose much of its non-EAS regional service, but very few passengers in the Pittsburgh area use that service (due to high fares) , so it will be hardly missed. Most routes with any appreciable traffic will retain service on US or other carriers, and/or will see LCC replacement service.
Based on 2003 passenger loads, WN should be able to offer nonstop service to the following airports (in decreasing order of passenger loads):
ISP (as a substitute for NYC; B6 would take the JFK run)
MCO
MDW (as a substitute for ORD)
LAS
PHL
TPA
LAX
MHT (as a substitute for BOS)
PVD (as a substitute for BOS)
OAK (as a substitute for SFO)
FLL
ISP (as a substitute for NYC; B6 would take the JFK run)
MCO
MDW (as a substitute for ORD)
LAS
PHL
TPA
LAX
MHT (as a substitute for BOS)
PVD (as a substitute for BOS)
OAK (as a substitute for SFO)
FLL
sfb - good post... I would only add that in addition to the stimulation of fares at PIT (and for the metro-PIT region), PIT will gain passengers who now drive from DuBois, Morgantown, and Altoona for the low-fares rather than pay top-dollar for travel out of their small-hometown. I am assuming that for some folks, driving to PIT vs. flying out of Altoona is not worth the hassle today, because the fares at PIT are not low. So I assume that the general fare level made it a fly vs. no-fly decision rather than a pay more at Altoona or pay less at PIT and drive decision.
Furthermore the "double-whammy" of many smaller towns like Altoona losing air service + the new low-fares at PIT, would have an appreciable effect on PIT O&D passengers. I presume this is part of the reason for the MCI, RDU, and BNA numbers you have quoted. I am guessing folks drive from Topeka to MCI rather than fly US Express. I think that will happen in Western PA when/if US Express goes away.
I don't see a lot of replacement carriers moving into these smaller markets. To the extent that there are EAS markets, there may be a few exceptions due to political pressure, but the service will become less and less used over time... like the Air Midwest MCI system. Also, some carriers will apply for alternate hub service. For example, I understand that EAS services to Jamestown and Bradford were bid on Mesa/Colgan to PIT for US Airways, but also by Commutair as CO Connection to CLE.
I would also guess that US Airways may continue to serve some small PA towns via PHL, but once there are low-fare options within a 2-3hr drive, Southwest has shown (over and over) it can get people into their cars to drive for a good fare.
Furthermore the "double-whammy" of many smaller towns like Altoona losing air service + the new low-fares at PIT, would have an appreciable effect on PIT O&D passengers. I presume this is part of the reason for the MCI, RDU, and BNA numbers you have quoted. I am guessing folks drive from Topeka to MCI rather than fly US Express. I think that will happen in Western PA when/if US Express goes away.
I don't see a lot of replacement carriers moving into these smaller markets. To the extent that there are EAS markets, there may be a few exceptions due to political pressure, but the service will become less and less used over time... like the Air Midwest MCI system. Also, some carriers will apply for alternate hub service. For example, I understand that EAS services to Jamestown and Bradford were bid on Mesa/Colgan to PIT for US Airways, but also by Commutair as CO Connection to CLE.
I would also guess that US Airways may continue to serve some small PA towns via PHL, but once there are low-fare options within a 2-3hr drive, Southwest has shown (over and over) it can get people into their cars to drive for a good fare.
mweiss-
They probably could manage BDL, ALB, BWI, STL, MCI, MSY, HOU, PHX, SEA, SAN, AUS, SAT, PBI, JAX, BNA, IND, and RDU as well -- traffic numbers to most of those places are depressed by high fares. Take BDL as an example. About 80 daily passengers each way even with the average fare at $274. You'd pick up a ton of folks who choose to drive six hours now if the average fare dropped to, say, $80. BNA-RDU tripled in passenger volume when WN entered the market, and they only dropped the average fare from $170 to $80.
They probably could manage BDL, ALB, BWI, STL, MCI, MSY, HOU, PHX, SEA, SAN, AUS, SAT, PBI, JAX, BNA, IND, and RDU as well -- traffic numbers to most of those places are depressed by high fares. Take BDL as an example. About 80 daily passengers each way even with the average fare at $274. You'd pick up a ton of folks who choose to drive six hours now if the average fare dropped to, say, $80. BNA-RDU tripled in passenger volume when WN entered the market, and they only dropped the average fare from $170 to $80.
sfb,
You may be right. I chose markets that would be supportable if traffic doubled. Some may do better than that. Further, some may work as the beginnings of one-stop service to other cities.
Markets that would work if traffic tripled:
DAL (except for Wright, so no go there)
PHX
DEN
RSW
HOU
Here's what the other markets you mentioned did last year:
BDL 30K
ALB 15K
BWI 16K (but DCA did 33K, so WN would probably succeed here easily)
STL 25K
MCI 29K
MSY 36K
SEA 48K
SAN 46K
AUS 12K
SAT 14K
PBI 43K
JAX 26K
BNA 20K
IND 17K
RDU 28K
From this list, I'd say SAN, SEA, and PBI are marginal. BWI, as I noted above, should be OK. The rest wouldn't pay the bills even at triple the loads.
You may be right. I chose markets that would be supportable if traffic doubled. Some may do better than that. Further, some may work as the beginnings of one-stop service to other cities.
Markets that would work if traffic tripled:
DAL (except for Wright, so no go there)
PHX
DEN
RSW
HOU
Here's what the other markets you mentioned did last year:
BDL 30K
ALB 15K
BWI 16K (but DCA did 33K, so WN would probably succeed here easily)
STL 25K
MCI 29K
MSY 36K
SEA 48K
SAN 46K
AUS 12K
SAT 14K
PBI 43K
JAX 26K
BNA 20K
IND 17K
RDU 28K
From this list, I'd say SAN, SEA, and PBI are marginal. BWI, as I noted above, should be OK. The rest wouldn't pay the bills even at triple the loads.
RowUnderDCA
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Only with Federal approval for certain approved purposes.sfb said:
I'll agree on SAN and SEA being marginal -- but more so due to WN being far more focused on short-haul flying. As for PBI, it's hard to not fill planes to Florida if the fares are low enough.mweiss said:
I think you'd see some dramatic traffic improvements on the short-haul markets (250-500 miles) that seem weak; to take another example, BWI-ALB O&D traffic increased roughly eight-fold (from 75 daily to over 600) between the beginning of 2000 and 2003, largely because fares dropped by about 70%. Remarkably, PIT-ALB currently manages roughly 75 daily passengers (total in both directions) at an average fare well over $300 each way. Dropping that to $75 would likely result in a similarly dramatic traffic increase. I think that most people would rather fly than drive from places like BDL, ALB, IND, SDF, RDU, or BNA if they're traveling to PIT, but they take one look at the fares and decide that flying doesn't offer enough value to justify what they're asked to pay.
On the medium-haul routes (like STL, MCI, AUS, SAT, MSY, PBI, JAX, etc.), lower fares wouldn't have quite the same stimulative effect, and it's very possible that they may never come to pass or might take a few years to show up.
RowUnder-
You are correct, the federal government must approve PFC's, but they have approved PFC's at most large airports already. IAH, HOU, and MEM are notable exceptions.
I am not sure that comparing ALB-BWI to ALB-PIT is apples to apples. One would have to take into consideration that BWI is an alternative airport to the DCA area, and maybe even PHL area. Thus, some amount of that 'stimulated' traffic would actually be traffic that formerly flew to DCA and maybe IAD/PHL. Plus, I'll assume for the moment that the DC area has a much greater component of tourist stimulation that PIT probably doesn't have (like folks who take their kids to the White House because its fairly cheap, but don't have a "reason" to go to PIT).
I won't deny that lower fares will stimulate demand, but I am not sure if ALB-DC area is apples-to-apples comparable to ALB-PIT.
I won't deny that lower fares will stimulate demand, but I am not sure if ALB-DC area is apples-to-apples comparable to ALB-PIT.
Cosmo
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And to take funguy2's comment above one step further, remember that many people who now live in the DC area originally came from somewhere else, thus generating an inordinate amount of VFR (Visiting Friends and Relatives) traffic that most other cities can't match on a per-capita basis. So the difference between ALB-PIT and ALB-BWI is more than just tourism, it's also folks in the DC area with the need and/or desire to often see family and friends. And given the overall wealth in the DC region, they generally have the financial wherewithal to do it.
