U Growth Plans

RowUnderDCA

Veteran
Oct 6, 2002
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www.usaviation.com
Ok, humor me a bit.

Now that U has made a big step toward its so called lower cost structure AND it has announced its February 'increased utilization/increased capacity' p2p schedule, doesn't this presume an increase in demand or a shift in future capacity growth from U's competitors to U?

So, can we assume that

a) Go Fares will be implemented more broadly for the Feb schedule
B) Go Fares will stimulate demand, despite the coming Bush/energy recession
c) the increased demand on the east coast will be accomodated by both U and its competitors, but that U will increase its market share of leisure travelers from Spirit, JetBlue, WN and iAir
d) that the new competitive landscape will make Spirit's, WN's, iAir's and JetBlue's aircraft orders misplaced.... some of that increased system capacity would be best allocated to U.

So, considering the above, does anybody know whether iAir's or Spirit's Airbus orders are compatible with U's Airbus fleet?

Rank speculation.
 
Row,

I certainly don't want to be the one to rain on anyone's parade, but you might want to wait a while before counting those chickens.

With the ratification of the ALPA TA, U has made a significant step toward lowering its labor costs. Achieving a lower cost structure is an entirely different thing. We'll just have to wait and see how that goes, assuming we can stay in business long enough.

As a "for instance", U has apparently done some pretty significant depeaking of PHL. I say apparently because I look at departures for a whole month. Possibly the weekend schedule is changing enough to create a misleading picture when looking at a month, which is why I've been thinking of comparing weekday schedules.

Anyway, this apparent depeaking has made the PHL operation exactly how much smoother? Apparently none, because the delay data remains the same - nearly 30% of departures late by DOT standards of over 14 minutes. Likewise, the taxi-in/taxi-out times remain about the same - 5th highest in the nation with over 8 minutes taxi-in and over 25 minutes taxi-out.

Jim
 
Sorry, Row, I'll try to do better....

a - GoFares will be phased in with the Feb schedule - not 100% but more widespread over time.

b - GoFares will definitely stimulate demand, as proven by where they exist today.

c - U will get our share of the increased demand. But B6 and WN will get their share too (especially if WN can get more gates in PHL).

d - All except for possibly I-Air will continue to get their planes (I-Air may be in BK by Feb).

Probably still not wnat you wanted to hear, but better than my other post....

Jim
 
hey, I got no dog in that hunt

good luck.... it just seemed to me, that even if you assumed a rosie scenario, as I outlined, the competitive picture for a restructured LCC U still has some anomolies in the new market place... for one, all the aircraft orders for existing LCCs. Might U management be thinking that the success of their plan will require that those orders 'go away' somehow?
 
Row,

"U still has some anomolies in the new market place"

I like that word "anomolies".....

Management may well be thinking that those other orders will "go away", but except as noted above for I-Air, I don't think they will. (Spirit is effectively a private company, so no telling what's going to happen there).

I think the real question is "Where will WN and B6 depoly their new planes". With DL pulling the DFW hub down, ATA in trouble (and MDW maybe opening up), PHL gates in any number not available as long as we're in business, etc, they could go anywhere. All those planes that WN & B6 are getting next year might not be competing directly with U.

Jim
 
RowUnderDCA said:
Now that U has made a big step toward its so called lower cost structure AND it has announced its February 'increased utilization/increased capacity' p2p schedule, doesn't this presume an increase in demand or a shift in future capacity growth from U's competitors to U?

Actually, I'd imagine some of both, though arguably it's really recapturing market share lost to other airlines since 2001. CLT mainline departures will still be down 15-20% compared to early 2001 (and down 5% compared to pre-bankruptcy 1) while PHL mainline departures will be down about 10% compared to early 2001 (and level with mid-2002). I have to believe that lower fares at PHL (due to Southwest and the Gofares response) and WAS (due to Independence and the GoFares response) are causing a substantial increase in demand.

RowUnderDCA said:
So, can we assume that

a) Go Fares will be implemented more broadly for the Feb schedule

Honestly, I don't think that's a good assumption. Delta rolled out Simplifares at CVG on every domestic route at once, and both ATL and SLC already had significant low-fare presence. Past practice at US is to keep GougeFares in place as long as possible.

RowUnderDCA said:
B) Go Fares will stimulate demand, despite the coming Bush/energy recession

Low fares stimulate demand, no matter what your political leanings are.


RowUnderDCA said:
c) the increased demand on the east coast will be accomodated by both U and its competitors, but that U will increase its market share of leisure travelers from Spirit, JetBlue, WN and iAir

What about US Airways' coach class product makes it more attractive than jetBlue's, AirTran's, Spirit's, Southwest's, Independence's, or Delta's, if price is equal? Given market perceptions outside of the die-hard UAIR loyalists, I don't think this is supported. What if WN adds another 20 flights at PHL with the two additional gates they have supposedly picked up?

RowUnderDCA said:
d) that the new competitive landscape will make Spirit's, WN's, iAir's and JetBlue's aircraft orders misplaced.... some of that increased system capacity would be best allocated to U.

Even if CASM at UAIR drops 20%, it will still be higher than jetBlue, Southwest, and Spirit. How is increased system capacity best allocated to a higher-cost carrier?

RowUnderDCA said:
So, considering the above, does anybody know whether iAir's or Spirit's Airbus orders are compatible with U's Airbus fleet?

The short answer: No. Both Spirit and Independence went with IAE engines on their Airbuses.