What Will Happen To Hubs? Clt - Phl - Pit

deltawatch

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Aug 20, 2002
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www.usaviation.com
If labor costs are lowered and the new business plan kicks in, I look for major MAINLINE downsizing at the CLT and PHL hubs and the elimination of the PIT hub.

Traditional hub-and-spoke carriers like U must adopt a lower-cost business model to compete with the influx of low-cost carriers that are aggressively taking market. Today's hub-and-spoke model was originally developed in the late 1970s to provide passengers quick and convenient connections through hub cities. The market is now mature enough that you don't need to design your operational structure around the connecting passenger. The local traffic to and from traditional hubs (focus cities) is so large that you can afford to adopt much more efficient point-to-point operating procedures and still provide connections as a by-product of the system. Hub-and-spoke carriers must change now or continue losing share to low-cost competitors.

Usairways is small enough to make the changes faster than any other hub-and-spoke carrier. What this means is fewer mainline flights in CLT, PHL and more direct mainline flights out of LGA, BOS, DCA, IAD, BWI, TPA, MCO, MIA, ATL to cities like RIC, ORF, CHS, GSO, BUF, ALB, PVB, BDL. I think you will see the feed for CLT and PHL's long haul service come from some mainline but mostly RJ's.
 
What you say might be true. Look at PSA Airlines, WO, having bases in TYS, DAY, CAK, PIT, PHL, and soon to open in CLT with the emergence of the 701-CRJ. See a pattern? I personally flew on the 701 yesterday from CLT to DAY to visit family and the plane was extremely comfortable and the service was far superior to our mainline. As said before in many posts about PSA, they are doing an outstanding job- and I am actually proud that they are representing us here at mainline on the Express side. Now, how do we reduce Mesa's flying and give it back to the WO's and keep the money within the company? As a side note: what is your opinion on Mesa's relationship with U now that Siegle has left us? Will be interesting.
 
Have heard that because they would like to keep a "hub" close to PIT that they may close PIT and establish a mini hub at ERI. Apparently they are starting a runway expansion and the costs to fly out of ERI are far less.
 
How about bringing on that armada of regional jets to try and force your core travelers to fly them. If that happens, you will see the compettion come in with full sized jets and eat your lunch!
 
The hubs have to shrink if they plan on flying more planes out of DCA, LGA & BOS.

My question is don't they already have capacity issues at these major airports??
How can they just assume they are going to do more flying out of these cities, I understand the notion of them replacing some of the hub destinations to other cities, but that is not going to translate into a ton of flights.

Secondly isn't Philly just going to be a huge loss leader with the arrival of LUV. The revenue there is going to get pummeled starting May and the landing fees are high. I am in no way suggesting abandoning that hub but why not move some of your primary connecting traffic to another hub??

Thanks
 
TheWatcher said:
How about bringing on that armada of regional jets to try and force your core travelers to fly them. If that happens, you will see the compettion come in with full sized jets and eat your lunch!
Wrong.... they may come and server a few key markets but that’s it. Let’s use CLT as an example; think about it, how many flights leave CLT each day that could carry a 75% load factor if there were no inbound connections on board? There are maybe 5 to LGA, 5 to DCA, 5 to BWI, 2 to MCO 1 to MIA a couple to the left coast, local markets just not there. If the markets not there who’s going to come in and fly it? If the company starts flying point to point then CLT loses flights. Passengers that are connecting to BOS in CLT today will be flying nonstop from CHS, JAX, RIC, RDU and ATL. You also need to take a look at the new RJ’s, they seat 90 people and have a first class.

Now PHL's a different story, they can fill planes up with local customers!
 
deltawatch said:
Now PHL's a different story, they can fill planes up with local customers!
The only problem with PHL is they may be the 5th largest local market domestically but they rank somewhere around 19th in local pax boarded. There seems to be many reasons for that given the close proximity to NYC as well as BWI both of which have LCC. Now if management came in and made some sense of the fares then those that travel to BWI and NYC might fly from PHL but nothing is guaranteed. That's a lot of percentage points to make up but that doesn't mean it can't be done. Fares aren't the only issue regarding PHL.
 
deltawatch said:
Wrong.... they may come and server a few key markets but that’s it. Let’s use CLT as an example; think about it, how many flights leave CLT each day that could carry a 75% load factor if there were no inbound connections on board? There are maybe 5 to LGA, 5 to DCA, 5 to BWI, 2 to MCO 1 to MIA a couple to the left coast, local markets just not there. If the markets not there who’s going to come in and fly it? If the company starts flying point to point then CLT loses flights. Passengers that are connecting to BOS in CLT today will be flying nonstop from CHS, JAX, RIC, RDU and ATL. You also need to take a look at the new RJ’s, they seat 90 people and have a first class.

Now PHL's a different story, they can fill planes up with local customers!
I could see your point if CLT was a expensive hub to maintain and inefficient. However, it's just the opposite. So why not try and get as many people as often as possible to connect through CLT and offer a lot more options and frequency to their final destination rather then cutting back and offering regional jets.

If the goal is to purely improve O&D stats, then be more competitive with surrounding airports and people and companies would consider using it.

Example:
US Airways: CLT-LGA-05/07/04 - 05/10/04= $1,004.21
American: RDU-LGA- 05/07/04- 05/10/04= $183.20
 
CLT-Douglas

Thank you for amplifying the point I have been trying to make for a long time now.

If you lowered high end of the the fare structure, a greater percentage of customers would fly last minute, the load factors would climb, and the AVERAGE fare would go up, thereby creating more revenue.

It worked for HP, and it worked for AS (whose costs are not much lower than US).

My best to you all....
 
TheWatcher said:
How about bringing on that armada of regional jets to try and force your core travelers to fly them. If that happens, you will see the compettion come in with full sized jets and eat your lunch!
I think this is completely true. As an example I flew to LGA-DAY this past weekend to visit family. How did I get there and why? US has (or had, I didnt even check) an RJ non-stop. Not flying an RJ that far. US also had connecting flights, mostly or exclusively express. I ended up on UA even though it took a bit longer since I had to connect through ORD. The reason, out of the 4 segments only 1 was not on a full size jet. Also of interest I think, the flight DAY-ORD was on an A320 and SOLD OUT. Waitlisted too. Everyone wanted to be on that flight and not one of the UA RJ flights.
 
deltawatch said:
The local traffic to and from traditional hubs (focus cities) is so large that you can afford to adopt much more efficient point-to-point operating procedures and still provide connections as a by-product of the system. Hub-and-spoke carriers must change now or continue losing share to low-cost competitors.
I personally dont believe that this will ever happen despite it probably being the correct way to proceede.

Why?

Well...

Because this is way to radical of a change for U. U is limping right now -- hemoraging money, alienating VFFs due to a sense of impending doom, and generally trying to change many small things hoping they will add up.

What we are talking about here is a pretty decent sized shift in the way the U does business -- and it will most likely take time have all the bugs worked out, and a profit realized.

It is much easier to cut out in-flight meals and movies, and beg for concessions.

Bottom line -- too far from the status quo to be done.
 
shaka said:
The hubs have to shrink if they plan on flying more planes out of DCA, LGA & BOS.

My question is don't they already have capacity issues at these major airports??
How can they just assume they are going to do more flying out of these cities, I understand the notion of them replacing some of the hub destinations to other cities, but that is not going to translate into a ton of flights.
Capacity issues at BOS & LGA?!?!?

I remember only 3 short years ago when BOS & LGA had both close to 100 mainline flights each. Cities such as RDU, BUF, ROC, GSO all had mainline from these cities.

US Airways has beautiful facilities at both of these airports. Compare the US terminal at LGA to JetBlue's JFK terminal. Or the BOS facility to almost any other facility in the country... US wins hand down.

US Airways operates from 15 Mainline gates and 4 express gates in BOS, while it operates from 7 express gates and 13 Mainline gates in LGA.

If US were to come through on the rumored "gate sales" in these cities, say, to Virgin, they could still operate their current operations with no problem. It is my firm belief that if US sold their entire BOS shuttle terminal off, they could operate out of the mainline/express terminal with the same number of flights with no problem at all. Most of the day, many of the gates go unused.

It is truly sad to see what has become of both LGA & BOS. I hope upon hope that these cities see a return of more mainline flying in the future. Why not transcon's out of BOS? US was the biggest carrier there only 3 years ago. It isn't like AA & DL have grown there... it is that US has shrunk there. AA offers service to places like SEA from BOS. US could have done that too.

LGA, of course, is a different story with the perimeter issues. That is why I always say US should never have abondoned both EWR & ISP. They could have drawn a lot of transcon traffic to either city. And yes, you heard me right, ISP!!! The runways there are long enough for a full 757/767 (longer than LGA in fact), and the drive from NYC-ISP is 1 hour- 1 1/2 hour tops.

US should never have given up at EWR either just because of CO. With all the NY customer base, US could have been HUGELY successful at EWR to destinations outside of the LGA perimeter.
 
ISP,

At BOS you're right - we could add flights there with no problem. However, LGA has slot restrictions so we would either need more slots or convert some RJ slots to mainline (if that's possible).

How long is the runway at ISP? While I've never flown the planes we would likely use for transcon, I would think you'd need 8-1000 feet.

Jim