The concept that some people can’t seem to grasp – or at least don’t want to – is that hubs exist solely to carry the traffic that will never be able to fly on nonstop routes.
Hubs COULD be placed in any city – but industry experience shows that operating hubs solely for the purpose of connections is financially unsustainable, so hubs are built around cities with large amounts of local traffic. The connecting traffic is possible because it takes up only a portion of the capacity – some of which should be used to carry local traffic.
Anyone who understands the airline industry knows that the US was “overhubbed” for much of the first 30 years post deregulation. Airlines set up hubs all over the country so that they could sell their services to every possible market across the country. Hubs like RDU, BNA, and SJC quickly fell as reality demonstrated that airlines COULDN’T be all things to all people. In the decades that followed, other hubs were dismantled as well.
But there are significant differences in the outcome of some hub closures and others….. in hubs like BNA, RDU, SJC, STL, BWI, and LAS, the previous hub carrier not only closed its hub – but it also lost the local market. In the case of AA’s first 3 hub closures, AA not only allowed the local market to a low fare carrier but AA was unable to hold onto the local market, ceding control not only to a low fare carrier BUT ALSO to another network carrier.
In complete contrast, when DL closed its hub in DFW, it retained its relative position in the local market as the #2 carrier – and that position will be further strengthened as other carriers pull down their presence in the DFW market. US has also been able to retain its position in the PIT local market.
Despite pulling down CVG over the past several years, DL has managed to maintain the same percentage of the local market – and despite repeated attempts by the airport and local communities to woo low fare carriers to CVG, DL’s competitors know full well that DL will fight to retain the local market – worth about $1 billion/year and will put the connecting capacity back into the market in order to ensure DL’s long-term success in the market
More recently, we have seen the strength of US’ PHL hub be used as being capable of turning back low fare carrier assaults. Yet in PIT, US still has the highest revenue share of the local market – even without having a hub.
Other than airline egoists, no one besides local airport authorities s really care if there is a hub in your local airport… because again, connecting passengers can connect ANYWHERE.
So, despite the attempts that some want to make about reductions in hub capacity, the real question is how effective are those hub airlines at maintaining their revenue in the local market and in the larger total domestic market – which is reflective of how well those carriers can connect traffic at all.
The evidence is overwhelming that Delta Air Lines has been able to serve the domestic US market where DL is the #1 carrier in more markets than any other airline, connects more passengers across its network than any other airline, and has been able to flip the switches and levers across his network to move connect passengers where it needs to maintain its position in hubs where it needs to and divert those passengers to other hubs when that is needed. Of course, DL’s ability to maintain and grow ts presence in the domestic market is directly related to its ability to successfully compete with low fare carriers.
IN COMPLETE CONTRAST, other airlines have either said like UA’s new management which brought over the philosophy of CO that there is no money to be made in the domestic market – which is highly ironic considering that EVERY US airline obtains the majority of its revenue in the domestic marketplace. If there is no money to be made in the domestic market place, then there are a lot of shareholders who would like to know why billions of dollars of resources are devoted to serving that market.
And then you have carriers that have repeatedly failed to defend their markets against low fare carriers – and even the hubs which they call as their core markets – or we can use the term “cornerstone” as they do – are completely overrun with low fare carriers that cause that hub carrier to continuously reduce its presence in that market. In fact, in one of the most absurd arrangements in the entire US airline industry, one carrier has turned around and created a partnership with the same low fare carrier that drove them from many of its core markets – and that low fare carrier then had the audacity to turn around and start attacking key markets in yet another hub.
Not surprisingly, that AAirline, given some of the US’ most choice routes during the regulated era, has continually lost its share of the domestic market to more nimble competitors not only of the low cost variety but also among its network carrier brethren.
There is a reason why the Ft. Worth based airline is the industry’s favorite punching bAAg.
So, my friends, this thread is really a not very veiled attempt by some people to deflect the masses from the fact that their “chosen instrument” has failed at doing what IT should have done by attempting – yet massively failing to paint a convincing picture that DL is failing in its domestic markets.
You see, compatriots, DL managed to turn its business around in its restructuring, merged an airline with a business model very similar to its own but with significantly different geographical coverage, and then has managed to build on its own network through internal growth and swap of key industry assets.
TO be sure, DL has its issues to address… but the business world and the industry has consistently recognized Delta for being one of the best run airlines in the world.
Whether an individual or a company, when you know what it is you do well, refine strategies where revisions need to be made, and have the certainty to know what you are doing right and the humility to know where you need to admit someone else does something better – and you should learn from them.
Thus, DL has managed to run its business well including in the domestic market – while other AAirlines continue to struggle, never able to admit they really can’t do what they are supposed to do – to the complete delight of their competitors.
So, let’s see this thread for what it is – yet one more attempt by those who can’t admit their own failure – extended to the organizations they value – reflected in a not even accurate attempt to portray others as failures at the very things that in fact THEY FAIL AT.
Given that DL manages to run its business well, it’s not hard to see why the DL forum on this board is pretty quiet other than when the quiet is interrupted by those who try to deflect attention from the failure of their own chosen instruments.
