United Eyeing Nwa Stronghold

[Cosmo]

Take a deep breath, Cosmo.

OK ... (takes several deep breaths) ... There, that's better! 😉

Actually, WorldTraveler, I think we are largely in agreement that neither Northwest nor United will take much, if any, current traffic from the other. The point that I was really trying to make (and obviously wasn't very clear about) is that United's new flights will enable it to grab a larger than pro-rata share of the Transpacific traffic growth than will Northwest unless the latter carrier grows its Asian operations to make them less NRT-centric, which, unlike United, it's not doing at this time. Otherwise, their relative positions in the Transpacific market will continue to diverge in United's favor.

 

[North by Northwest]

I continue to be amazed when I see statements like the above quote. It simply has no basis in reality. By December, United will have added substantially more new Transpacific service in 2004 (not counting the relatively short Tag flights) than all of its other U.S. competitors combined, as the following list shows:

United
ORD-KIX (Daily)
SFO-PEK (Daily)
HNL-NRT (Daily - for a total of 2 Daily)
ORD-PVG (Daily)
LAX-SYD (3 x Week - for a total of 10 x Week)
HKG-SGN Tag (Daily)

Northwest
PDX-NRT (Daily)
NRT-CAN Tag (Daily)

American
LAX-NRT (Daily)

Continental
HNL-NGO (Daily)
EWR-HKG (1 x Week - for a total of 6 x Week)

Delta
**None**

United has also announced the start of SFO-NGO service in June 2005 and has applied for SFO-CAN service in the current China route case at DOT (although I frankly don't believe they will get that authority in the current route case).

IMHO, it's pretty clear that United is the airline that's most aggressively expanding its Transpacific operations at the expense of its U.S. competitors. So if Northwest hopes to be the biggest U.S. operator in the Transpacific market, it will need to emulate United's growing service pattern in the region.

[post="189200"][/post]​

United can start "new" routes till the cows come home...they had better just hope and pray that they= revenue. Anyone who knows the Japanese culture, knows that they are very, very wary of a bankrupt company("a bankrupt company has lost FACE in their eyes"). Hence, United's high capacity and depressed yeild. Furthermore, Northwest has far more landing and take-off slots at Narita than United will ever have. Northwest Airlines, with 14 percent of all slots, is the biggest foreign carrier at the airport, followed by United Airlines with 10 percent.

Thus, one reason United MUST fly non-stop from the States on many Trans Pacific routes. Our NRT HUB does not just act as a connecting point for flights from the US, it serves as a connecting Hub for our Intra-Asian flights(lots and lots of extra revenue). Furthermore, at the end of the day it comes down to yield and revenue of which NWA has advantageously demonstrated over United time and time again. On another note, I don't think ones wants to tout how new their fleet is while operating in insolvency. Asians trust and respect Northwest because of it's experience and dependability. I dare say United can bragg about it's product. The only class comparable to NWA's World Business Class is their First Class...as small as it is."it will need to emulate United's growing service pattern in the region." There is NOTHING about United that Northwest should remotely emulate. I suggest it should be the other way around with United emulating the most experienced and successfull American carrier serving the Pacific...Northwest. I will say, everyone can rest assured that Northwest will return it's Trans-Pacific non-stops when "IT" sees fit. "Now you're Flying Smart!"

 

[WorldTraveler]

Cosmo,
I'm glad we came to the same point 'cause you really do help make for conversation. I agree w/ your points. Given that NW is the dominant US airline to Japan and nearly all of what UA is adding is NOT to Japan and NW's beyond Japan capacity is apparently optimized for the amount of local NRT/beyond flow, NW is not likely to lose much traffic. It is possible that for some passengers, UA's routings will be more direct and thus can command a higher price than NW's connecting service. Looking at UA and NW's position in HKG, it's easy to see that playing out elsewhere in Asia if NW doesn't offer something to counter UA's growth - although it will probably take time for that all to play out.
Since most of the legacy airlines have said they will start new int'l service, there is the risk they will run into each other. In reality, none of the US legacy carriers have strengths in exactly the same markets. CO's growth from EWR is to markets that no other carrier will likely fly because they can be done with the 757 and the strong NE hub. DL's announcement today of new service to Berlin probably doesn't phase anyone except possibly Lufthansa since DL flew the route before and is the dominant US carrier to continental Europe. Each carrier will add routes based on their strengths and where the financial risks are lowest.

I'm sure we will see many more international route announcements over the next couple months and it SHOULD make the US carriers better competitors with their overseas counterparts and help to move capacity out of the unprofitable domestic market.

 

[Bigsky]

A little competition in the Pacific is good. United will definitely have it's hands full in trying to steal market share while at the same time making a profit. Some reasons:
1) NWA has been flying from the US to Japan longer than any other airline in the world and has unrivaled brand recognition over any US carrier.
2) Cargo: With twelve 747-200Fs flying cargo almost exclusively in the Asia region, NW has no problem filling the passenger aircraft bellies with connecting freight from the cargo operations. PAX aircraft full of freight in the belly equal more revenue.
3) Skyteam: A huge alliance and with NWA and KAL being the only big players in the alliance that serve the Pacific, this is going to place alot of Delta and Continental passengers on NWA aircraft that might have normally gone another route.
4) Management: Let's face it, Tilton and company are still trying to figure out the airline business. You can't simply place some B777s on a bunch of US to Asia routes and hope people show up to fly with you. A better strategy is to match the capacity with the demand as NW has aggressively done. The best example of this is the B757s that fly intra Asia out of NRT. Also considering that the Pacific is an NWA crown jewel, don't expect NW to concede market share. Being the dominant US player in Asia is a necessary part of the strategy to provide long term vitality for NWA and they know it.
5) The BK thing. I guess it's the old samurai mentality being that an airline operating under BK quickly looses respect and most Asians will consider this when choosing between UA and NW.

cheers

bigsky

 

[Cosmo]

Furthermore, at the end of the day it comes down to yield and revenue of which NWA has advantageously demonstrated over United time and time again.

North by Northwest:

Not lately! According to a chart in the Friday, October 8th, edition of Aviation Daily (which was based on airline Form 41 reports to DOT), United's 2nd quarter 2004 Pacific yield was 9.59¢ while Northwest's was only 8.83¢. United also reported a $15 million operating profit in the Pacific during the 2nd quarter (according to a chart on page 15 of its 2nd quarter 2004 SEC Form 10-Q). While not taking anything away from Northwest's leading U.S. carrier position in Japan service, perhaps this indicates that adding Pacific flights that bypass Japan IS a United trait (though possibly the only one at the moment) that Northwest should consider emulating.

 

[JFK777]

This fuss being made about how United is going so extremely international in Asia is only part of the story. UA flies all over the world, it LHR hub rival NRT for its importance, it flies to Germany with Lufthansa, it flies to the most important centers in South America, Sao Paulo & Buenos Aires. NW though strong to Amsterdam and some service to LGW & CDG from its hubs is really NRT- centric.

UA isn't so dependent on Asia. UA also has the Australian routes which are really a separate system. All this strength NW has in Asia is great for NW but UA's got a greater balance world wide. We could argue on this board until I collect Social Security, I'm under 40, but it's like BMW & Mercedes Benz: which is the better car? Whatever difference NW & UA have in Asia, they are both strong and the difference is way too small to quantify.

 

[JetClipper]

Not lately! According to a chart in the Friday, October 8th, edition of Aviation Daily (which was based on airline Form 41 reports to DOT), United's 2nd quarter 2004 Pacific yield was 9.59¢ while Northwest's was only 8.83¢. United also reported a $15 million operating profit in the Pacific during the 2nd quarter (according to a chart on page 15 of its 2nd quarter 2004 SEC Form 10-Q). While not taking anything away from Northwest's leading U.S. carrier position in Japan service, perhaps this indicates that adding Pacific flights that bypass Japan IS a United trait (though possibly the only one at the moment) that Northwest should consider emulating.

I believe the big difference is that United's primary "gateways" to Asia (e.g. ORD and SFO) generate sufficient O&D traffic to warrant non-stops to many Pacific Rim destinations. However, Northwest presently only has one aircraft type with sufficient range to fly DTW- or MSP-Asia (the 747-400). Therefore, these cities, with their smaller O&D markets, must serve as “spokesâ€￾ to the NRT hub, as opposed to “gatewaysâ€￾ in their own right. That being said, if NWA were to purchase an aircraft with the “rightâ€￾ payload/range characteristics (e.g. 7E7 or A350 – Airbus’ A330-200-based answer to the 7E7), I would expect the number of DTW-Asia non-stops to increase considerably.

 

[JFK777]

LAX has served as NW's west coast gateway at various diferent times. They have flown from LAX to NRT(still operated), Osaka, Seoul, Taipei & Sydney. NW's lack of gateway's is a legacy of changing managements and ownership. DTW may be a great hub but many people travel from Detroit to Japn daily, few I would say, It all feed.

 

[North by Northwest]

Not lately! According to a chart in the Friday, October 8th, edition of Aviation Daily (which was based on airline Form 41 reports to DOT), United's 2nd quarter 2004 Pacific yield was 9.59¢ while Northwest's was only 8.83¢. United also reported a $15 million operating profit in the Pacific during the 2nd quarter ( Did you also read the huge glut of capacity that United has flooded the Pacific with? HIgher yield can come from a huge increase in capacity. United's present insovency clearly afords it a place in the "DO NOT EMULATE" catagory. What airline whould you fly? One that is operating in insovency or one that has flown with a steady, strong path for over 57 years? The point remains United will never be able to utilize NRT as a Inter-port connecting Hub (tapping into a huge well of revenue) as well as NWA, due to it's in inferior ratio of slots. That huge capacity increase must be staffed and those planes must be fuled. I hope this is not another "experiment" for United ....they can't afford it.

 

[C54Capt]

North by Northwest,

Of course its just a big experiment by United. Their leader has a grand total of less than three years of airline experience. The sad thing about Tilton's experiments in the airline business are that they make all the airlines, especially his own, weaker.

 

[North by Northwest]

North by Northwest,

Of course its just a big experiment by United. Their leader has a grand total of less than three years of airline experience. The sad thing about Tilton's experiments in the airline business are that they make all the airlines, especially his own, weaker.

[post="190723"][/post]​

[/quote
I just hope that he uses some of his "oil" contacts to secure some deals for United...we all need help with these outrageous oil prices. These prices will sink the whole industry.

 

[TechBoy]

Not lately! According to a chart in the Friday, October 8th, edition of Aviation Daily (which was based on airline Form 41 reports to DOT), United's 2nd quarter 2004 Pacific yield was 9.59¢ while Northwest's was only 8.83¢. United also reported a $15 million operating profit in the Pacific during the 2nd quarter ( Did you also read the huge glut of capacity that United has flooded the Pacific with? HIgher yield can come from a huge increase in capacity. United's present insovency clearly afords it a place in the "DO NOT EMULATE" catagory. What airline whould you fly? One that is operating in insovency or one that has flown with a steady, strong path for over 57 years? The point remains United will never be able to utilize NRT as a Inter-port connecting Hub (tapping into a huge well of revenue) as well as NWA, due to it's in inferior ratio of slots. That huge capacity increase must be staffed and those planes must be fuled. I hope this is not another "experiment" for United ....they can't afford it.

[post="190706"][/post]​

What? North, I think you need to think through what you just said. A huge increase in capacity will lead to LOWER yield unless it is accompanied by a huge increase in demand (or by taking customers from other carriers). If UA's yield is higher, then they clearly have strong demand for their increased capacity in the Pacific.

Now I'm no pollyanna here. UA is still in big trouble, but it's not because of its Pacific operations. NW has made some wise decisions over the years that are helping it now, such as retaining DC-9s and fight LCC incursions on its routes. But don't be so sure that UA doesn't have a good model for flying directly in the Pacific. High revenue business customers prefer direct flights, which probably accounts for UA's higher yields.

As for service difference between UA and NW, don't smoke the company dope too much. As a VFF, I've flown WBC a number of times and UA's F and C many too many times. I'd say that WBC and UA C are comparable in terms of comfort and service with a slight edge to WBC for comfort/service and a slight edge to UA for better planes. But UA has a real F service which is dramatically better than WBC. For my $6000, I prefer UA because of the option to upgrade to F. Other pax may disagree, but somebody is clearly paying high fares to UA to keep that yield up.

 

[JFK777]

I would attribute UA's yield premuim to having a First Class cabin with greater nonstop options then NW. With less room for coach, UA get greater revenue from the C & F cabinsmaking the revenue mix richer. Got to love tose 777's.

AA discovered this formula, their 777 only sit 237 people, leaving the $299 fares to Europe at the gate. AA flies the 777 to NRT, LHR, Buenos Aires, Sao Paulo & Gatwick.

 

[North by Northwest]

I would attribute UA's yield premuim to having a First Class cabin with greater nonstop options then NW. With less room for coach, UA get greater revenue from the C & F cabinsmaking the revenue mix richer. Got to love tose 777's.

AA discovered this formula, their 777 only sit 237 people, leaving the $299 fares to Europe at the gate. AA flies the 777 to NRT, LHR, Buenos Aires, Sao Paulo & Gatwick.

[post="191085"][/post]​

JFK777, you live in a fantasy world with no clue about the nuts and bolts of running a successfull airline operation. On another note COSMO :http://us.rd.yahoo.com/finance/industry/news/latestnews/*http://biz.yahoo.com/ap/041015/united_airlines_2.html....I guess United mang. has to pay for those new expansion plans somehow. They have behaved like amaturs...and amaturs don't survive this cut throat, shrewed business.

 

[North by Northwest]

North by Northwest:

Not lately! According to a chart in the Friday, October 8th, edition of Aviation Daily (which was based on airline Form 41 reports to DOT), United's 2nd quarter 2004 Pacific yield was 9.59¢ while Northwest's was only 8.83¢. United also reported a $15 million operating profit in the Pacific during the 2nd quarter (according to a chart on page 15 of its 2nd quarter 2004 SEC Form 10-Q). While not taking anything away from Northwest's leading U.S. carrier position in Japan service, perhaps this indicates that adding Pacific flights that bypass Japan IS a United trait (though possibly the only one at the moment) that Northwest should consider emulating.

[post="190233"][/post]​

U.S Bueau of Transpotation Statistics :Table 2: Quarterly Domestic Operating profit/loss margin (in percent)
Network Carriers
Ranked by 2nd Quarter 2004 Margin
(Operating Profit/Loss as Percent of Total Operating Revenue)

Excel | CSV

2Q 2004 Rank Network Carriers 2nd Quarter 2003 (%) 3rd Quarter 2003 (%) 4th Quarter 2003 (%) 1st Quarter 2004 (%) 2nd Quarter 2004 (%) 2nd Quarter Operating Profit/Loss $(Millions)
1 Northwest 0.2 5.4 -0.2 -3.9 4.3 84.3
2 US Airways -7.1 -5.7 -4.8 -11.0 2.0 31.9
3 Alaska 1.6 10.6 -4.2 -11.2 1.1 5.5
4 Continental 8.8 -4.3 -8.5 -9.9 -4.3 -59.8
5 American -13.9 -6.3 -13.8 -8.3 -4.6 -145.3
6 United -12.1 0.04 -8.9 -12.2 -4.7 -125.9
7 Delta -6.9 -6.0 -6.7 -13.1 -6.2 -198.0
Table 6: Airline Domestic Unit Revenue (Cents Per Mile)
Network Carriers
Ranked by 2nd Quarter Domestic Unit Revenue
(Domestic Operating Revenue Per Available Seat Mile)

Excel | CSV

2Q 2004 Rank Network Carriers 2nd Quarter 2003 3rd Quarter 2003 4th Quarter 2003 1st Quarter 2004 2nd Quarter 2004 2nd Quarter Operating Revenue $(Millions)
1 US Airways 15.13 14.52 15.19 14.44 16.27 1,620.1
2 Northwest 11.31 11.41 11.65 12.68 14.09 1,979.3 3 Delta 13.02 12.57 12.46 12.31 12.69 3,165.5
4 United 9.80 11.19 10.73 10.84 11.35 2,697.4 5 American 10.58 10.35 10.44 10.29 10.69 3,196.5
6 Continental 10.65 9.95 10.25 10.27 10.58 1,353.8
7 Alaska 9.95 10.45 9.95 9.75 10.33 531.1
Seven-Carrier Total 11.38 11.39 11.43 11.43 12.06 14,543.8

Source: Form 41; Schedule P1.2. T100; T2 Data

Cosmo, you cook statistics just like United cooks it's books to show a profit while LOSING money. Flash with NO cash!