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Hub O&D And Airline Profitability  
User currently offlineRwSEA From Netherlands, joined Jan 2005, 3093 posts, RR: 2
Posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4190 times:

Take a look around at the carriers that are doing relatively well and those that aren't, and look at their hubs:

Doing Ok:

AA - DFW, ORD, MIA, JFK
CO - EWR, IAH, CLE
UA - ORD, IAD, SFO, DEN (Doing OK because they have a plan to leave BK).

Not Doing so Well:

DL - ATL, CVG, SLC
NW - DTW, MSP, MEM
US - PHL, CLT

The airlines that are doing better seem to have hubs in strong business markets, while those that aren't doing as well have hubs in smaller cities with weaker O&D traffic and less business travel.

In other words, one could say that CO is doing relatively well compared to NW because they rely on business travellers flying to IAH or EWR as a larger portion of their passengers, while NW shuttles people through MEM or MSP to other places that might not have as many non-stops.

Business travel is what drives airline yields and profits. Further, most business travellers prefer non-stops to their destinations, which tend to be places like LAX, NYC, SFO, ATL, ORD, IAH, DFW, BOS, etc. Nonstops can command higher yields so airlines can charge more.

Looking at today's airline situation, how does an airline's hubs drive it's profitability? Is DL suffering because it only has one strong O&D hubs, and two others that are almost purely for connections? Is AA doing relatively well because people have to fly to DFW and ORD for business and pick AA for the nonstop? Will this continue to influence airline profitability or is this just circumstantial evidence?

How important are the airline's specific hubs to their profitability?

27 replies: All unread, showing first 25:
 
User currently offlineSHUPirate1 From United States of America, joined Sep 2003, 3670 posts, RR: 17
Reply 1, posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4157 times:

Quoting RwSEA (Thread starter):
AA - DFW, ORD, MIA, JFK

American has a hub at JFK? That's funny, because I seem to remember their hubs being Chicago-O'Hare, Dallas-Fort Worth, Miami, San Juan, and St. Louis...

Quoting RwSEA (Thread starter):
UA - ORD, IAD, SFO, DEN

I think the airport management at Los Angeles International would like to have a word with you.  Wink



Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
User currently offlineRoseFlyer From United States of America, joined Feb 2004, 9607 posts, RR: 52
Reply 2, posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4144 times:

I think airport hubs are a huge part of what can make an airline successful. Northwest has to fight hard to keep its yields up in the Midwest. They have created artificially high fares out of MSP and many other Midwest markets by trying to eliminate the competition from low cost carriers.

However you have to look at whether having hubs in big cities is ideal. UA and AA are pretty good since WN doesn't serve their main airports but rather other airports in their cities. Dallas and Chicago can support multiple operations, but the evidence of LCCs is there. When WN came to PHL, US probably got hurt quite a bit. Also with Airtran killing yields in ATL, DL suffers. UA started Ted in part to fight F9. DL and AA got hurt out of New York when B6 came. So big cities that have a lot of business travelers also have to deal with more low cost competition.

So in the end some smaller markets are left untouched. NW in MSP, DL in CVG etc don't suffer from LCCs. The markets may be smaller, but there are fewer low cost competitors which results in similar yields. So there is a benefit from having smaller O/D hubs since there is less competition.

So what is the best? In general it has the most to do with management. How the airline is run and what it offers is the key to success. These airlines aren't suffering necessarily from hubs and those locations.



If you have never designed an airplane part before, let the real designers do the work!
User currently offlineTWA902fly From United States of America, joined Dec 1999, 3125 posts, RR: 4
Reply 3, posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4145 times:

i think hub-wise the best airlines are UA and CO. Co simply because it has hubs in the 1st and 4th largest cities in the United States. and UA because it has IAD - The nation's capitol, ORD - Business and Transportation hub for the whole country - DEN - Business hub for all of the rocky mountain states, and SFO/LAX, both huge O/D markets, and the #2 and i dont know what SFO is these days metro areas. Also people from California tend to travel more than people from other portions of the country. I think the only thing missing for UA is reach to the southeast - everything else they have pretty well covered. IAD/ORD reach to the bigger places... but i find holes in their network such as LIT... I always though an A319/CR7/CRJ hub at MSY for UA could work to connect the dots ( i dont know about economics), but with the current state of MSY that wont happen for any airline for a long time.

CO i thought was always smart in catering to business traffic. First of all they're in Houston and New York - oil and money, two of the most important things in the world, and they provide nonstop service to the world from these two places. They put the right planes with the right frequencies to get the most. CO is rarely very cheap? why? their seats go fast - they put ERJ's on ORD-IAH, every seat is then filled with a high-paying business passenger. IAH-ANC has a 737-800 on it, while DL's ATL-ANC has a 767-300ER, and their expansion to Europe into untapped business markets is smart. I think buying AS would be a smart idea for them - as Seattle is a big destination within itself and the Alaska routes will remain high-profit until someone like Southwest attacks them. ANC is an expensive destination, and the obvious hub for intra-state flights within the state connecting it to the rest of the world. ANC and SEA could both serve as connecting points to Asia - Japan, Korea, and China being within 767 range of SEA and 757 range of ANC. A 737-800 with winglets, the same one flying IAH-ANC could technically fly ANC-NRT...

What do the other airlines have to offer? AA with Miami and Dallas - yeah that is up there too, Dallas competes with Chicago a bit for east/west traffic, and will never catch up to CO's IAH-Mexico operation. They have a bucket of gold at MIA, true, but holes in the northeast and west without a hub. A lot of point to point in the east, but no hub.

The other airlines are trying hard - but an airline with hubs at PHL/PIT/CLT/PHX/LAS is an airline that will never be as big as an airline flying out of ORD,IAD,DEN,LAX,SFO... An airline trying to corner in the midwest and fly across the pacific (MSP/MEM/DTW) cant compete against UA and AA's O/D out of ORD

Delta tried to expand a little late i think, however JFK, SLC and ATL are doing a good job. I think after the death of TWA any airline could have taken JFK and turned it into CO's EWR... too bad for the legacies that airline was JetBlue. SLC has quite a bit of O/D for a city as small as it is - a lot of jobs and expansion in the area. Also SLC connects a lot of smaller moutain communities and serves as a natural hub for the area. ATL is a big O/D city, but Delta has put a lot of trust in it. If the southeast's economy should suffer a downturn, they will be in trouble (say a hurricane passes through)

before anyone gets super mad - these are my OPINIONS, please add to them.

'902

[Edited 2005-09-09 00:36:29]


life wasn't worth the balance, or the crumpled paper it was written on
User currently offlineMAH4546 From Sweden, joined Jan 2001, 32734 posts, RR: 72
Reply 4, posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4098 times:

Quoting TWA902fly (Reply 3):
Co simply because it has hubs in the 1st and 4th largest cities in the United States

Cities, but that really doesn't mean anything. Markets are what matter:

http://www.proximityone.com/msa03us.htm



a.
User currently offlineJmc1975 From Israel, joined Sep 2000, 3267 posts, RR: 15
Reply 5, posted (8 years 11 months 3 weeks 4 days 19 hours ago) and read 4106 times:

Quoting RwSEA (Thread starter):
Take a look around at the carriers that are doing relatively well and those that aren't, and look at their hubs:

Doing Ok:

AA - DFW, ORD, MIA, JFK
CO - EWR, IAH, CLE
UA - ORD, IAD, SFO, DEN (Doing OK because they have a plan to leave BK).

Not Doing so Well:

DL - ATL, CVG, SLC
NW - DTW, MSP, MEM
US - PHL, CLT

Your kidding right? Are you UA-biased? US is actually better off than UA...they've got a merger that have saved their bacon. UA still has NOT emerged.



.......
User currently offlineLaxintl From United States of America, joined May 2000, 25145 posts, RR: 46
Reply 6, posted (8 years 11 months 3 weeks 4 days 18 hours ago) and read 4034 times:

I have a copy of a in depth 2004 report on US airline hub's. Data for the report was based on both pre and post 9/11 data.

In terms of overall profitability (many variables compared including #'s of pax, yield, airport cost, etc.) the report ranked them in the following order.

CLT
IAD
DFW
ORD
MSP
IAH
ATL
SFO
DEN
DTW
PHX
PHL

The report also goes into depth regarding dual carrier hub airports like ORD and DEN.

For instance at ORD, UA and AA make use of the airport in vastly differnent ways.
United which had 51% of the departures and 53% of the seats uses ORD as a significant transfer airport with 70% of passengers passing thru.
AA on the other hand operates a smaller hub with 39% of the airports flights and flights and 36% of the seat only online transfers 57% of its passengers. (As comparison AA at DFW connects 82%)
United however due to its size at ORD still manages to out carry AA with about 1million more O&D passengers.
To United, ORD is part a larger international route network, while to AA ORD is more geared to connect Chicago with a host of domestic business and leisure markets, and a few international markets. For instance AA's key Latin America market is not connected to AA's Chicago hub.

As a result of AA's focus on Chicago and its domestic needs, it out carries United in O&D passengers in several important markets like LGA.
However at the end of the day, due United greater strength and reach at ORD, its yields outstrip AA by as much as 15%, making it much more important of a hub then to what ORD is to AA.



From the desert to the sea, to all of Southern California
User currently offlineAADC10 From United States of America, joined Nov 2004, 2088 posts, RR: 0
Reply 7, posted (8 years 11 months 3 weeks 4 days 18 hours ago) and read 4037 times:

Quoting Jmc1975 (Reply 5):
Your kidding right? Are you UA-biased? US is actually better off than UA...they've got a merger that have saved their bacon. UA still has NOT emerged.

The point is that the hubs are doing okay. That does not mean the entire system is okay, but the hubs are pretty good. The landing fees at DEN are probably deadly.

UA still claims that LAX is a hub, despite the appearance that they are in full retreat there. SFO and IAD and DEN to a lesser extent were great hubs during the tech boom because of their proximity to large numbers of free spending tech companies. Their collapse really hurt UA. LAX obviously has tremendous O&D, but almost every major airline except B6 is there and competition is fierce.

The fotress hubs are probably doing okay. It is the smaller hubs that are killing the legacy carriers. ATL is probably profitable for Delta, but CVG is obviously a drag, which is why they are reducing it. For US, PHL is still okay, despite WN's arrival. It was PIT that was killing them, mabye CLT too. MSP and DTW work for NW, I do not know about MEM, but they are probably a lot weaker than ORD, ATL, DFW or IAH because they have smaller O&D.


User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 8, posted (8 years 11 months 3 weeks 4 days 17 hours ago) and read 4002 times:

Quoting MAH4546 (Reply 4):

Cities, but that really doesn't mean anything. Markets are what matter:

http://www.proximityone.com/msa03us.htm

It all depends how you cut the lines for those MSA's MAH4546. For instance, on there ABE is #63, we sure as hell don't rank #63 in terms of # of flights per day in our airport. For example, Des Moines is #94, you can bet your butt they have a much higher travel need than ABE. Why? ABE travelers can go to EWR or PHL within 90 minutes... DSM travelers can go nowhere of significance in that time frame.

In terms of TV Markets, ABE is included in Philly, because Allentown has no real network TV of its own. Drawing the line to include ABE's 3/4 of a million people into PHL gives Philly a substantial boost up the list... except PHL doesn't get all of those, the NJ people go to NYC. Confused yet?? It's because the lines are drawn for specific self-serving reasons for that particular industry. The numbers you have are the raw Census data MSA's... but the problem about that is that many places that are much closer to one smaller city than another larger one, are included in the bigger city's tally... so in terms of TV, or relative to our discussion here, the catchment area of an airport, those numbers are misleading.

ABE's airport catchment area, regardless of what the LNAA tells you about suburban Philly and NJ on their horrible website, is very skewed towards the north and west as opposed to the south and east... because no viable airports are in the RDG, Lebanon, and southern Pocono regions (yeah.. AVP is up there, I'm talking the southern half)

MSA values are good for a count of people for taxing purposes, or building a mall or something, but as far as viability of an airline hub or something is concerned... they're not worth the paper they're printed on. Remember, MSA's are gathered by the Federal Government... their mission is just dividing up services and collecting taxes in the most fair way they can attempt to come up with (jokes about gov't fairness aside), not to decide who'd rather drive to which airports, and which airports cost more. Don't forget in a case like CVG people are driving up to places like DAY and IND despite living in the CVG MSA... for cheaper fares. People drive from ABE to PHL/EWR for cheaper fares as well.. and people drive from places like ERI to PIT/BUF/CLE too. I've taken more than enough urban planning/geography/census data courses to go into a longer tirade on this, but I'll give you all a reprieve.  Smile


User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 9, posted (8 years 11 months 3 weeks 4 days 17 hours ago) and read 3961 times:

Point to point is becoming more and more important in the USA. Therefore the number of hubs is shrinking, and I expect that this tendency will go on. Only hubs in the 10 biggest metro areas will last in the long run. Everything else has to rely to much on connection traffic and can't generate enough O&D traffic for beeing viable in the changed environment.

User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 10, posted (8 years 11 months 3 weeks 4 days 17 hours ago) and read 3966 times:

Quoting JoFMO (Reply 9):
Point to point is becoming more and more important in the USA. Therefore the number of hubs is shrinking, and I expect that this tendency will go on. Only hubs in the 10 biggest metro areas will last in the long run. Everything else has to rely to much on connection traffic and can't generate enough O&D traffic for beeing viable in the changed environment.

Then what kind of planes are you going to P2P services from the smaller cities like ABE, MDT, GSO, TLH, SBN, etc, etc.? Cessna 182's and Lear 45's?? That's about what the O&D from these cities to any specific cities in the nation beyond those "Top 10" you mention. You can't move ALL that smaller-city traffic to the top 10 metros in the country. Look what happens @ ORD, NYC's big 3, ATL, PHL, LAX, SFO, etc. with traffic problems/ground delays. Take away the CLT's, CVG's, and MSP's of the air networks and you have to funnel that much more traffic through the remaining hubs which are already maxed out. You'd have total gridlock in those large city hubs because of people coming from the ABE's of the world to ORD, instead of CLE or CLT.


User currently offlineJoFMO From Germany, joined Jul 2004, 2211 posts, RR: 0
Reply 11, posted (8 years 11 months 3 weeks 4 days 16 hours ago) and read 3931 times:

I don't expect that the biggest part of the traffic growth of the future will be tunneled through hubs. The bigger part of the furture growth will be generated and absorbed by point to point traffic.

The best example for this development is the new Song route LAX-BDL. A route that had 342 daily passengers with 29% transported by UA (faremeasure.com). Most of them will now use Song. And there are hundreds of similar routes that nobody would have ever expected to get nonstop traffic anytime soon.
Next route of this kind might be LAX-Raleigh with 333 daily passengers and 23% transported by DL so far. I anybody enters this route, ATL and CLT will feel the loss.


User currently offlineIndy From United States of America, joined Jan 2005, 4550 posts, RR: 18
Reply 12, posted (8 years 11 months 3 weeks 4 days 16 hours ago) and read 3905 times:

Quoting RoseFlyer (Reply 2):
DL in CVG etc don't suffer from LCCs

Actually CVG is taking a beating. Not because of LCCs at CVG but because of them at surrounding airport. Thats really the problem in this region of the country. There are so many metro areas that are easy to get to from each other. This area just doesn't support monopoly pricing and I think thats what you need from your local market to offset the lack profit with connecting traffic.



Indy = Indianapolis and not Independence Air
User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 13, posted (8 years 11 months 3 weeks 4 days 16 hours ago) and read 3886 times:

Quoting Indy (Reply 12):
Thats really the problem in this region of the country. There are so many metro areas that are easy to get to from each other

I agree with ya 100% there, but there's a caveat to that these days. The same people who'll "drive a mile to save a penny" are also the people who are ready to park their cars and walk everywhere now that gas is way expensive too... gas prices might be the savior of places like CVG, as odd as it sounds. Personally I won't think about driving to EWR/PHL for less than a $100 r/t savings VS ABE... but there are some people who'll do it for $30, and for the gas prices now that $30 gets burned up really quickly... not to mention DAY/CMH/IND are longer distances away from CVG than those 2 are from here.


User currently onlineSESGDL From United States of America, joined Jan 2001, 3474 posts, RR: 10
Reply 14, posted (8 years 11 months 3 weeks 4 days 15 hours ago) and read 3890 times:

I'll give my opinion on this.

Obviously UA has the best hub setup, with 4 huge O&D markets (LAX, SFO, ORD, and IAD), and one relatively large O&D hub, DEN. However, they have significant competition at every single one of their hubs.

Delta - DL has its ATL superhub, the gateway to the South, the 9th largest O&D city in the US. They connect approximately 64% of passengers that use ATL, so ATL is actually a hugely efficient hub, hence the reason DL seems to use ATL for pretty much everything. DL's CVG hub is extremely low in terms of O&D, for its size it should get significantly more. SLC is a strong O&D market for its size, and is good-sized compared to most other hubs. DL also has a strong presence in MIA/FLL/PBI area, MCO, TPA, the D.C. area, BOS, and the NY area, where DL is a solid #3, just behind AA. Just because an airline considers cities a hub means nothing. UA, for example, has by no means the strength in huge O&D markets like FLL/MIA/PBI, MCO, BOS, and NYC that DL does.

American - American operates hubs at 3 huge O&D markets, ORD, DFW, and MIA. They also operate a sizeable O&D hub at STL, which is located perfectly for East-West travel. AA's SJU hub connects people to the Caribbean. AA also operates substantial services in LA, the NYC area, and Boston.

Continental - CO's EWR hub is probably has more potential than any other hub due to its size, as the largest O&D market in the US. IAH is obviously also a large O&D market, but is actually smaller in terms of O&D compared to DFW and ATL.

US Airways - US operates a hub at one of the largest O&D markets in the country, PHL, and people seem to underestimate CLT's importance as a city. CLT has strong O&D, and is a rising force in the South. Though substantially weaker than ATL, CLT is a great market for a hub.

Northwest - People seem to not know that MSP is actually NW's largest O&D city. Approximately 50% of NW's passengers at MSP originate or terminate there, while DTW has 60% connecting. MSP and DTW in terms of O&D are nearly tied, with MSP having substantially more O&D in terms of city size than DTW. MEM, at last word, had nearly 90% of passengers connecting.

It's hard to say whether or not large O&D cities are better than small O&D cities. Just think back to the 90's when airlines were all about connecting hubs, and look at how profitable they were.

Also take in the fact that even hubs at huge O&D markets: ORD, ATL, DFW, and IAH, still connect more passengers than those who originate there. In terms of overall O&D, EWR has the most originating and terminating passengers of any US airline hub, which at the last statistics I saw was about 80%.

Jeremy


User currently offlineTornado82 From , joined Dec 1969, posts, RR:
Reply 15, posted (8 years 11 months 3 weeks 4 days 15 hours ago) and read 3832 times:

Quoting SESGDL (Reply 14):
Continental - CO's EWR hub is probably has more potential than any other hub due to its size, as the largest O&D market in the US.

But, unfortunately, there's no room to grow more flights in the airfield constraints.


User currently offlineJmc1975 From Israel, joined Sep 2000, 3267 posts, RR: 15
Reply 16, posted (8 years 11 months 3 weeks 4 days 14 hours ago) and read 3799 times:

With Delta's reduction, CVG is ripe for some LCC competition to bring prices more in line with reality. Delta is doing the right the by focusing more on CVG's high-yield O&D traffic rather than trash-yield mega RJ connections.


.......
User currently offlineCkfred From United States of America, joined Apr 2001, 5220 posts, RR: 1
Reply 17, posted (8 years 11 months 3 weeks 4 days 12 hours ago) and read 3776 times:

One of the keys to a profitable hub is to have a sizable amount of O&D traffic. AA's purpose in buying TWA was to have a second Midwest hub, because the chances of ORD and STL having thunderstorms or snow at the same low are low. But AA learned the hard way that TWA didn't have a lot of O&D traffic.

Lack of O&D traffic is one of the reasons that AA closed BNA and RDU. Although it made sense to have a Southeast hub and a Florida hub (BNA and RDU, respectively), neither hub had the amount of O&D traffic that ORD, DFW, and MIA had in terms of percentage of total traffic.


User currently offlineApodino From United States of America, joined Apr 2005, 4263 posts, RR: 6
Reply 18, posted (8 years 11 months 3 weeks 4 days 12 hours ago) and read 3755 times:

If DFW has a sizeable amount of O and D traffic, howcome 82 percent of AA's traffic there is connecting, and of the remaining 18 percent, I bet 10 percent is non rev passengers. Makes no sense to me.

User currently onlineSESGDL From United States of America, joined Jan 2001, 3474 posts, RR: 10
Reply 19, posted (8 years 11 months 3 weeks 3 days 22 hours ago) and read 3622 times:

Quoting Apodino (Reply 18):
If DFW has a sizeable amount of O and D traffic, howcome 82 percent of AA's traffic there is connecting, and of the remaining 18 percent, I bet 10 percent is non rev passengers. Makes no sense to me.

AA carried over 16,000,000 passengers at DFW last year. Multiplying that by two for departures and arrivals, you've got about 32,000,000 passengers. In terms of O&D that's about 5.76 million passengers on AA from DFW. Don't forget that the majority of passengers flying other airlines at DFW are also O&D passengers. However, I think that 82% is relatively high. What I heard was more in the realm of 60% of AA's DFW passengers are connecting, so about 12.8 million passengers on AA at DFW are O&D.

Jeremy


User currently offlineSTLGph From United States of America, joined Oct 2004, 9338 posts, RR: 25
Reply 20, posted (8 years 11 months 3 weeks 3 days 21 hours ago) and read 3612 times:

Quoting Jmc1975 (Reply 16):
With Delta's reduction, CVG is ripe for some LCC competition to bring prices more in line with reality.

Delta and CVG are in bed with each other. Don't look for LCC's to be coming to Cincinnati any time soon.

Quoting Ckfred (Reply 17):
AA's purpose in buying TWA was to have a second Midwest hub, because the chances of ORD and STL having thunderstorms or snow at the same low are low. But AA learned the hard way that TWA didn't have a lot of O&D traffic.

AA's biggest problem in the TWA buy out was too many spoke routes overlapped with STL, DFW, and ORD.


Quoting AADC10 (Reply 7):
ATL is probably profitable for Delta, but CVG is obviously a drag, which is why they are reducing it.

Incorrect. CVG is Delta's highest "money premium" performing city with $767 million for the 4.1 million Delta flies in and out of the city, not counting the 17 million connecting passengers.

http://www.kypost.com/2004/05/12/delta05-12-2004.html



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineStirling From Italy, joined Jun 2004, 3943 posts, RR: 21
Reply 21, posted (8 years 11 months 3 weeks 3 days 21 hours ago) and read 3597 times:

Quoting SESGDL (Reply 14):
People seem to not know that MSP is actually NW's largest O&D city

Makes sense tho', Detroit has much more LCC competition than MSP...

Quoting SHUPirate1 (Reply 1):
American has a hub at JFK?

Well, they do/will have a snazzy new terminal...it might not be a textbook example of an airline hub, but it is an obviously very important piece of the AA network.

Quoting Tornado82 (Reply 8):
MSA values are good for a count of people for taxing purposes, or building a mall or something, but as far as viability of an airline hub or something is concerned... they're not worth the paper they're printed on.

So very true.
Multiple airports in overlapping statistical areas...it's an elusive pursuit...trying to determine accurate capture areas....MSAs are good for broad generalizations, and nothing much else, because, by MSA, CMSA standards, my town and metro of a half million should have 30X more airline service than it does at the present. Then there are places where the inverse is true; either because of leisure O&D or a hub....
Best advice, ignore the population numbers, they never add up.



Delete this User
User currently offlineLawnDart From United States of America, joined May 2005, 970 posts, RR: 3
Reply 22, posted (8 years 11 months 3 weeks 3 days 21 hours ago) and read 3573 times:

Quoting RoseFlyer (Reply 2):
Northwest has to fight hard to keep its yields up in the Midwest

MSP is one of the highest yield hubs out there...

Quoting TWA902fly (Reply 3):
I think buying AS would be a smart idea for them - as Seattle is a big destination within itself and the Alaska routes will remain high-profit until someone like Southwest attacks them.

Unlikely that WN will fly to Alaska...and AS has competed very well with WN in SEA so far...

Quoting SESGDL (Reply 14):
DL's CVG hub is extremely low in terms of O&D, for its size it should get significantly more. SLC is a strong O&D market for its size, and is good-sized compared to most other hubs.

Both CVG and SLC have O/D greater than comparably sized cities, but they're still pretty low...

Quoting SESGDL (Reply 14):
They also operate a sizeable O&D hub at STL, which is located perfectly for East-West travel.

One of the problems with STL is that it is a little too far west to be a perfect East-West hub...

Quoting SESGDL (Reply 14):
CO's EWR hub is probably has more potential than any other hub due to its size, as the largest O&D market in the US.

As Tornado82 pointed out, the potential will be sorely tested by the congestion. And be careful when you say "O&D" when what I think you mean is catchement area...NYC as a whole is the largest O&D, but it's divided between 3-5 airports.

Quoting SESGDL (Reply 14):
and people seem to underestimate CLT's importance as a city. CLT has strong O&D, and is a rising force in the South.

CLT's O&D isn't much different than RDU's, and AA learned a long time ago that cities of that size don't support very large, profitable hubs. The one good thing that CLT has going for it is that it is basically the only alternative to the ATL superhub, and it survives on overflow...

Quoting Jmc1975 (Reply 16):
Delta is doing the right the by focusing more on CVG's high-yield O&D traffic rather than trash-yield mega RJ connections

The yields on most RJ services are not trash...

Quoting Apodino (Reply 18):
If DFW has a sizeable amount of O and D traffic, howcome 82 percent of AA's traffic there is connecting, and of the remaining 18 percent, I bet 10 percent is non rev passengers. Makes no sense to me.

This makes no sense to me...the size of O&D at a hub, and the percentage of O&D versus connecting traffic don't relate. For example, 18% of 100 million is still a pretty damn big hub (those are not DFW's numbers, I'm just using it as an example...). The point is, DFW's O&D makes it a pretty large O&D market, the connecting traffic doesn't factor in to it - they're considered total passengers, not O&D.

Quoting STLGph (Reply 20):
Delta and CVG are in bed with each other. Don't look for LCC's to be coming to Cincinnati any time soon.

If you were a little, non-discrept midwestern city that had no business being a (inter)national airline hub, and you'd issued bonds for millions of dollars in terminal and runway facilities, you'd be sleeping with the one who brung ya, too.  Wink


User currently offlineLaxintl From United States of America, joined May 2000, 25145 posts, RR: 46
Reply 23, posted (8 years 11 months 3 weeks 3 days 20 hours ago) and read 3535 times:

Quoting STLGph (Reply 20):
Incorrect. CVG is Delta's highest "money premium" performing city with $767 million for the 4.1 million Delta flies in and out of the city, not counting the 17 million connecting passengers.

CVG has one of the higher O&D yields in the country. As of mid 2004 it stood at a wooping 20.8cent, likely due DL dominance and lack of competition. As a comparison SLC was 10.3cent and ATL 9.6cents. But the overall CVG market is the smallest of DL's hub and like others have mentioned faces spill because people drive to other airports in the region.

Quoting Apodino (Reply 18):
If DFW has a sizeable amount of O and D traffic, howcome 82 percent of AA's traffic there is connecting, and of the remaining 18 percent, I bet 10 percent is non rev passengers. Makes no sense to me.

I dont know if the study I have counts AA and AA Eagle together or backs out the Eagle numbers to come up with 82% connections at DFW.

I have seen AA for report both mainline and Eagle numbers jointly at times and separately at others. Some airlines like United, nearly always separate out United Express stats.
Also could be the airport authorities figures in DFW. At LAX for instance, Eagle is considered part of AA as its a wholly owned subsidiary, but United Express is treated as a separate company when the airport reports its statistics.



From the desert to the sea, to all of Southern California
User currently offlineStlgph From United States of America, joined Oct 2004, 9338 posts, RR: 25
Reply 24, posted (8 years 11 months 3 weeks 3 days 20 hours ago) and read 3531 times:

Quoting LawnDart (Reply 22):
If you were a little, non-discrept midwestern city that had no business being a (inter)national airline hub, and you'd issued bonds for millions of dollars in terminal and runway facilities, you'd be sleeping with the one who brung ya, too.

absolutely.

Quoting LawnDart (Reply 22):
One of the problems with STL is that it is a little too far west to be a perfect East-West hub...

I would argue with you on that one.

one good thing STL had going for it was the distance it has from a Louisville, or a Dayton, or a Flint, etc. of course, somehow, that managed to get messed up for TWA with Lambert greed enjoying the scope of TWA and a very large operation from Southwest going on here for a city its size. and look where the greed got 'em. this is exactly why Cincinnati isn't courting anybody else.



Eternal darkness we all should dread. It's hard to party when you're dead.
25 RoseFlyer : Would it still be one of the highest yielding hubs if NW had not agressively fought off LCCs? Whenever an LCC announces service to MSP, NW instantly
26 Laxintl : Since I previously touched on the topic, let me list the average local O&D yield for several airports. Pretty interesting, and shows what competition
27 ERJ170 : I think RDU can make it as a single hub for an airline.. it has good O&D, good facilities, and a good cachement area.. I mean, it can't be used as a m
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