Tilton...and...Consolidation..."AGAIN"

[LGA Fleet Service]

The DOJ isn't out of the regulating business as far as anti-trust and the last time I looked the DOJ was part of the US Gov't. or weren't you paying attention?

Not responding to the anti trust aspect, I'm responding to the "US Government Over Capacity Police" comment.

Thanks for paying attention though. 😉

 

[jbguppy]

Not responding to the anti trust aspect, I'm responding to the "US Government Over Capacity Police" comment.

Thanks for paying attention though. 😉

How is it that you think a merger by AMR would be prevented??

Are you telling me that you think the government doesn't actively affect the industry.

Taxes, Security fees, ATSB?? Pension legislation...

Crawl out from under your rock and PAY ATTENTION!!!

JBG

 

[JungleClone]

If UA decides to use ETOPS 767's and/or 757's on added European service, how will they continue to serve Hawaii with the given level of frequency? UA owns Hawaii and has no plans to back down, especially now that they've gotten the economics right in that market. You can't make the ETOPS-required maintenance #3 services work if you start pulling those aircraft out and sending them to Europe and back.

 

[LGA Fleet Service]

Crawl out from under your rock and PAY ATTENTION!!!

On second thought, you and your constant mantra of "Crawl out from under your rock and pay attention" makes further discourse pointless.

Feel free however to crawl back under your rock and have intercourse with yourself.

 

[Ukridge]

Cosmo,

You had mentioned your optimism that United would gain a route to China from Washingon. Why are there any restrictions at all? Is the airport in Beijing so saturated that it cannot handle all the air traffic? In other words, why cannot all the competitors vying for the route be granted authority? Why just one and why the sanginuity?
I had at first thought this may be an airport capacity problem with both US and European carriers arriving in China but then I wondered whether they do indeed arrive at the same time? Would not the European carriers arrive early in the morning and the US carriers later in the afternoon or evening?
Another question that I was thinking of was that of the assurance everyone speaks of Heathrow access as a mine of gold. Is this really true? Do the figures support this? I saw the discussion of United pulling out of NY beacuse of the stiff compeition with BA, American, and Virgin (nearly 14 flights a day was it between these two cities?). Is Heathrow really that profitable to United when BA and Virgin cover the US territory with flights as thickly as a plague of locusts? The intense competition would seem to drive the fares and yields down instead of up. Just a curiousity.
Also, does this mean that United will not be ordering the A380 before the end of the year?
Cheers

 

[FWAAA]

Cosmo,
You had mentioned your optimism that United would gain a route to China from Washingon. Why are there any restrictions at all? Is the airport in Beijing so saturated that it cannot handle all the air traffic? In other words, why cannot all the competitors vying for the route be granted authority? Why just one and why the sanginuity?

Ukridge: Sorry to jump in - as Cosmo could probably explain it better, but here goes: The limits flow from the somewhat restrictive USA-China bilateral agreement - it strictly limits the number of frequencies each side may grant each year to its airlines. For 2007, the agreement says that seven weekly frequencies may be awarded to an incumbent carrier (meaning UA, NW, CO or AA). So one airline gets one new daily flight in 2007. In 2008, the USA may award rights to another new airline (but does not require a new airline be named) and it also allows seven more weekly frequencies.

Open Skies between the USA and China would allow what you asked; but then again, open skies don't even exist between London's two major airports and the USA, and our two countries have been friendly for going on 200 years now.

Accordingly, as you can guess, China rights are somewhat valuable and the competition is kinda fierce. B)

 

[Cosmo]

Cosmo,

You had mentioned your optimism that United would gain a route to China from Washingon. Why are there any restrictions at all? Is the airport in Beijing so saturated that it cannot handle all the air traffic? In other words, why cannot all the competitors vying for the route be granted authority?

As FWAAA notes, the simple answer is that the most recent U.S.-China bilateral agreement (which was signed in 2004 and is NOT an Open Skies agreement) only allows for an excrutiatingly slow increase in weekly frequencies and carrier designations for the U.S. side, notwithstanding the dramatic passenger growth in the market. As I understand it, the main reason for this is to protect the Chinese carriers that have difficulty competing on the level of U.S. carriers (much less at the level of a Singapore, Cathay or JAL) and thus not be swamped by unfettered competition by the U.S. carriers. Indeed, the number of U.S. flights flown by the Chinese carriers is nowhere near the current maximum allowable number of frequencies they could operate, while the U.S. carrier allocation of flights is maxed out.

Why just one and why the sanginuity?

You're starting to sound suspiciously like a certain Airbus captain at a Tempe, Arizona-based airline!

I had at first thought this may be an airport capacity problem with both US and European carriers arriving in China but then I wondered whether they do indeed arrive at the same time? Would not the European carriers arrive early in the morning and the US carriers later in the afternoon or evening?

To my knowledge, this is not an issue because: 1.) Beijing is expanding its airport, in part due to the upcoming 2008 Olympics; and 2.) as you suggested, most flights from Europe arrive in Beijing in the morning (with the latest being a CPH-PEK flight operated by SAS that arrives at 1305) while most flights from North America arrive in the afternoon (generally after 1500). In fact, United is proposing an IAD-PEK flight with an arrival at 1420, IIRC, and the other U.S. carriers have proposed similar afternoon arrival times in Beijing.

Another question that I was thinking of was that of the assurance everyone speaks of Heathrow access as a mine of gold. Is this really true? Do the figures support this? I saw the discussion of United pulling out of NY beacuse of the stiff compeition with BA, American, and Virgin (nearly 14 flights a day was it between these two cities?). Is Heathrow really that profitable to United when BA and Virgin cover the US territory with flights as thickly as a plague of locusts? The intense competition would seem to drive the fares and yields down instead of up. Just a curiousity.

The term "gold mine" might be a bit of an overstatement, but as a rule, LHR yields tend to be higher than comparable-distance LGW yields for U.S. carriers (U.K. and other foreign carriers don't report this O&D data to the U.S. DOT, at least not for public consumption). For example, in the year ended March 31, 2006, United's IAD-LHR yield (at 3,677 sm) was more than 20 percent greater than Continental's CLE-LGW yield (at 3,763 sm) and Northwest's DTW-LGW yield (at 3,786 sm), and more than 40 percent higher than US Airways' PHL-LGW yield (at 3,563 sm). But United's problem in the JFK-LHR market was that it could not profitably sustain a competitive level of service against the much larger number of frequencies offered by American, BA and even Virgin at a yield that was 43 percent lower than American's. That's why United sold its New York-London authority -- but NOT its LHR slots -- to Delta and will stop serving the JFK-LHR route later this month. And while Delta certainly has a stronger position in the New York market than United has, it remains to be seen whether Delta's new JFK-LGW flights will achieve a significantly better result than United's JFK-LHR flights did, especially since Continental's EWR-LGW yields were 38 percent lower than American's JFK-LHR yields despite Continental also having a strong position in the New York market. (Sorry, but the DOT's rules prevent me from quoting each carrier's actual numbers.)

Also, does this mean that United will not be ordering the A380 before the end of the year?

I think that is a very safe assumption!

 

[jbguppy]

On second thought, you and your constant mantra of "Crawl out from under your rock and pay attention" makes further discourse pointless.

Feel free however to crawl back under your rock and have intercourse with yourself.

Must have touched a nerve, feel free to come back after you have educated yourself about the companies, the market, cost, revenue, and how all those things interract.

You are boring me.

JBG

 

[Ukridge]

Thank you for the interesting information Cosmo. Now I can see why the competition for the route authority is so keen.
Although I made a spelling mistake with the word 'sanguinity' I, as perhaps you do as well, still chuckle over the fine Captain's stuggle with the word. I well remember his effort to portray gloom and foreboding as to United's future but he then stated that he was 'sanguine' regarding the airline's prospects!

 

[JungleClone]

UKridge,

LHR is not the all-important cash cow it used to be. While it still is important, it's not nearly as important as it once was. 10-15 years ago, LHR was still a major connecting point to cities in Europe and beyond. But over the years, other European hubs have been built up and strengthened (via lucrative codesharing), which has given alternatives to connecting at LHR. Also, Open Skies has allowed for a dramatic increase in nonstops from the U.S. to second and third tier cities in Europe, thereby also hurting LHR's connectivity. And fare levels to Europe in general are not always enough to ensure profit if costs cannot be trimmed to the lowest possible levels.

Don't get me wrong, as long as LHR continues to be access-restricted, it will be strategically important for the carriers that serve it. I just don't think it's nearly the strategic asset it once was.

 

[FWAAA]

Don't get me wrong, as long as LHR continues to be access-restricted, it will be strategically important for the carriers that serve it. I just don't think it's nearly the strategic asset it once was.

I've previously posted similar thoughts about Tokyo and particularly the fifth freedom rights owned by NW and UA; with longer and longer range airplanes here now and planned for the future, NRT's strategic value should decline since more and more flights can overfly NRT directly to their Asian destinations. Still, access to NRT is restricted and should retain some value.

 

[Ukridge]

This is a very good discussion and it makes one think if Tokyo is almost a mirror image of London. I had read that Singapore Airlines is now launching some of its fleet on flights as long as 19 hours (New York, Los Angelas)and completely by-passing a stop in Tokyo. Although Europe does not stand in quite the same need to "bypass" a hub on a ultra long-haul flight, with the growing alliance hubs in Frankfurt, Paris, and Amsterdam, it certainly must decant a little of the value of what was once a "must have" or "must stop" airport.
I had just always heard of Heathrow spoken of as if it were a sacred diety and when I hear such ecomium, I grow a bit suspicious of the underlying premise.
As Cosmo brought out and the light slighty starts to grow in my dim bulb for me, it appears as if London is no longer the "certainty" that it was once but more of a "well, it depends." As his figures bring out, New York was no longer profitable, but perhaps with the retained slot, another city would be.
Cheers