United To Cut Transcons
- Thread starter Dizel8
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Well...hopefully the enhanced service works because Ted and United Express service really suck. Mesa has made UX service the worst in the industry. Sorry Mesa guys, I know its not your fault, but when you are the lowest bidder United gets what they pay for.JAMAKE1 said:
for those of you speaking out of your arses, here's the deal... UAL does NOT have a hub per se at JFK. CAL, DAL, and AMR all have larger domestic presences in the Hillary state. UAL offers three class service in this market primarily for one reason. A VERY large client demands it. UAL would stand to lose a dollar trying to save a penny. The 767-200 "flying bathtub" would ahve been gone LONG ago if not for the three class requirement in the market. The 757 is the next largest jet that will be remaining in the fleet.
Will the revenue premium offset the CASM increase? I willing to bet that it does. However, will UA be able to keep enough seats free to sell to the high-yield O/D passengers in these markets? I'm talking about the UA flyers who decide to route (for example) SEA-SFO-JFK instead of SEA-ORD/DEN-NYC for a chance to upgrade into business class and a guarantee of E+ across the country. It would be a mess for UA to re-write their flight applications and routings on all their fares (though it could be done). Cause I promise that the smart flyer will take their cheap fare and route via these flights if they can from places like SEA, PDX, SAN, PHX, etc.
Another issue with this service looks to be aircraft utilization. 13 planes for 24 flights a day? So each one flies 2 flights a day with one spare? Seems pretty low to me. UA should figure out how to work in a couple extra tags to DEN or SEA. With the 3-classes of international flights being sold from LAX/SFO to Australia and Asia, having a 3 class plane to connect from/to those flights to SEA/DEN (which I imagine provide a good amount of feed to those int'l flights) would be a nice benefit to the F/C passengers. Instead of sitting in domestic F on their first/last leg, at least they get another leg of int'l F/C. Would the extra cost of operating a couple extra shorter flights a day outweigh the potential benefit?
Anyway, I think this is a good idea, and hopefully it is successful. Perhaps LAX/SFO to IAD on a couple of flights would be the next step if it works?
Another issue with this service looks to be aircraft utilization. 13 planes for 24 flights a day? So each one flies 2 flights a day with one spare? Seems pretty low to me. UA should figure out how to work in a couple extra tags to DEN or SEA. With the 3-classes of international flights being sold from LAX/SFO to Australia and Asia, having a 3 class plane to connect from/to those flights to SEA/DEN (which I imagine provide a good amount of feed to those int'l flights) would be a nice benefit to the F/C passengers. Instead of sitting in domestic F on their first/last leg, at least they get another leg of int'l F/C. Would the extra cost of operating a couple extra shorter flights a day outweigh the potential benefit?
Anyway, I think this is a good idea, and hopefully it is successful. Perhaps LAX/SFO to IAD on a couple of flights would be the next step if it works?
It is good to see a premium strategy. For too long, UA has been trying to be everything to everybody - doing everything to try to capture the low end, yet attract the high yield passenger.
With the LCCs aggressively entering the transcon market, I think segmenting the market like this is a wise strategy - to get away from just matching price to providing a superior product - and charging more for it.
I would speculate that these markets are probably 90% local so O&D feed is not an issue.
With the LCCs aggressively entering the transcon market, I think segmenting the market like this is a wise strategy - to get away from just matching price to providing a superior product - and charging more for it.
I would speculate that these markets are probably 90% local so O&D feed is not an issue.
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I would like to point out that ATA's B757-200 seats 200 pax. The pitch of 32"-33" is better than on AWA or standard coach on United (both 31", I believe).
The Gopher
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Something had to be done on transcons... the 767-200 would be due for D-check, and according to Steve Forte's briefing, the cost of upgrading the 757-200 to p.s. service is less than the cost of undergoing the D-check for the 767s. That part makes sense, since the 767-200 is due for retirement anyway.
On the the other hand, the cost environment on transcons has been falling. One need ony see JBU and AWE snatching both share and profits from this route. The fare trend line over the last two years is going *down*. So UA introduces a more expensive product? Hm, not sure if I follow that one. I think I'd rather see some Ted action on transcons, with regular 2-class 757s on the first and last flights of the day.
On the the other hand, the cost environment on transcons has been falling. One need ony see JBU and AWE snatching both share and profits from this route. The fare trend line over the last two years is going *down*. So UA introduces a more expensive product? Hm, not sure if I follow that one. I think I'd rather see some Ted action on transcons, with regular 2-class 757s on the first and last flights of the day.
Despite falling average fares in these markets, I think that this is a good move for UA. JFK-LAX/SFO are among the few markets that consistently sell a lot of F/C/Y fares. AA and UA have battled for these pax for years, with AA holding better market share. B6, HP and to a lesser extent DL are now driving the low fare part of this market and UA cannot profitably compete on that basis. But it doesn't take all that many F/C/Y fares to make a 757 profitable.
This move will put tremendous pressure on AA to improve its transcon service. The 767 are ratty old planes and will not compare to the new UA offering. So I would think that UA will take a small, but very profitable, share of the market from AA.
This move will put tremendous pressure on AA to improve its transcon service. The 767 are ratty old planes and will not compare to the new UA offering. So I would think that UA will take a small, but very profitable, share of the market from AA.
I really hope this works for UA since this strategy should allow them to focus on their natural strength in providing service to high-yield customers. I've been somewhat amazed how all the legacy carriers have chased (down) after the LCCs to try and pick such low-yielding customers when costs never were in line with that market segment. The decision to use 757s seem to be the right gauge for this part of the market. Those high yield customers are out there but in far fewer numbers than in previous years. Unfortunately for UA most of them have converted over to charter, fractional, and other non-scheduled high end flight options which have become much more attractive to putting up with the headaches that come with flying out of major airports in a post 9/11 world. If UA could find a way to improve that part of the customer experience then there is a great chance for success, barring the already mentioned issue with FFs.
Actually, this strategy may work very well for UAL...
If UAL takes more of the mid-to-high end pax of this market, that means JBLU and America West will have a hard time selling their higher fares (which I assume to be around the mid-point for the market over-all). Thus America West and JBLU get stuck with all the $99 fares and very few $499 fares to make-up the difference, as UAL probably gets all the $499-$999 fares...
By stealing the high-end traffic away from the LCC's, the LCC's cannot average up the fares, and this could cause a market exit.
On the otherhand, if UAL's prices are too high, it will drive folks to the LCC's... (i.e. If fares are $899 and up when LCC's cap at $599)
It will all depend on UAL's pricing (and whether they can make money on that pricing structure). I think this might be a success for UAL.
If UAL takes more of the mid-to-high end pax of this market, that means JBLU and America West will have a hard time selling their higher fares (which I assume to be around the mid-point for the market over-all). Thus America West and JBLU get stuck with all the $99 fares and very few $499 fares to make-up the difference, as UAL probably gets all the $499-$999 fares...
By stealing the high-end traffic away from the LCC's, the LCC's cannot average up the fares, and this could cause a market exit.
On the otherhand, if UAL's prices are too high, it will drive folks to the LCC's... (i.e. If fares are $899 and up when LCC's cap at $599)
It will all depend on UAL's pricing (and whether they can make money on that pricing structure). I think this might be a success for UAL.
HPearlyretiree
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ATA Dude/Dudette, I sure as hell hope that the 757's are now only 200 seats, but they used to be 218 from MDW-PHX-HNL/OGG, and sitting in them was akin to being "interviewed" by the friendly Khmer Rouge prison guards! 😀
Since I took early retirement, I can't do the cheap seats on ATA to Hawaii, I was always treated wonderfully by the PHX staff, I think I flew with nearly every one. But, next time I fly to Hawaii as a revenue dude, it will most likely be Aloha or Hawaiian.
Since I took early retirement, I can't do the cheap seats on ATA to Hawaii, I was always treated wonderfully by the PHX staff, I think I flew with nearly every one. But, next time I fly to Hawaii as a revenue dude, it will most likely be Aloha or Hawaiian.
coolflyingfool
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So if UA is only going to have a few of the 757s reconfigured, what happens when one breaks where there isn't a spare or the plane is running over 3 hours late due to ATC?
