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United/Continental Conceding Domestic Market?  
User currently offlineapodino From United States of America, joined Apr 2005, 4234 posts, RR: 6
Posted (2 years 10 months 2 weeks 4 days 2 hours ago) and read 10315 times:

While I don't believe this is true, Smisek made the following comment today that I found interesting.

Quote:
President and CEO Jeff Smisek told an analyst’s conference in New York that his plan is to increase international flying as much as demand will support, and to make its domestic network as big as needed to supply passengers to international flights.

(Courtesy of KHOU.com)

So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too? A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed? Another translation may be, Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

I personally don't believe it will be that dramatic, but its a comment that makes me stop and think for a second.

35 replies: All unread, showing first 25:
 
User currently offlineukoverlander From United Kingdom, joined May 2010, 363 posts, RR: 0
Reply 1, posted (2 years 10 months 2 weeks 4 days 2 hours ago) and read 10295 times:

Quoting apodino (Thread starter):
A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed?

A lot of people? Who are these people?


User currently offlineapodino From United States of America, joined Apr 2005, 4234 posts, RR: 6
Reply 2, posted (2 years 10 months 2 weeks 4 days 2 hours ago) and read 10242 times:

Quoting ukoverlander (Reply 1):
A lot of people? Who are these people?

There are a lot of pilots on a pilot forum who are thinking this is true. With UA/CO pilots trying to pursue tougher scope, these comments from Smisek are not going to sit well with those pilots and this is going to make negotiations a lot tougher, and a lot angrier.


User currently offlineAADC10 From United States of America, joined Nov 2004, 2073 posts, RR: 0
Reply 3, posted (2 years 10 months 2 weeks 4 days 2 hours ago) and read 10222 times:

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too? A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed? Another translation may be, Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

The first part is correct. The view is that domestic travel will not be profitable in the long term because it is too easy for competitors to enter domestic. International is much more difficult to jump in. Domestic will scale down to whatever point is profitable.

How that translates into actual routes and planning remains to be seen. I find it difficult to believe that UA would abandon some of the usual domestic tactics, such as clogging up fortress hubs and predatory pricing. My guess would be that more routes will move to UAX.


User currently offlineenilria From Canada, joined Feb 2008, 7039 posts, RR: 13
Reply 4, posted (2 years 10 months 2 weeks 4 days 2 hours ago) and read 10199 times:

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too?

Delta has been saying that is their strategy for a long time and they apparently feel that their current network accomplishes that, despite it having a lot of domestic routes. If he were really serious in those comments he would close CLE immediately since it is incongruous with those goals.

Quoting apodino (Thread starter):
Outsource all domestic flying, save for the 737/A320,

I think the days of large scale CPA outsourcing are gone. Maybe via pro-rate.


User currently offlinerdh3e From United States of America, joined Mar 2011, 1613 posts, RR: 3
Reply 5, posted (2 years 10 months 2 weeks 4 days 1 hour ago) and read 10072 times:

Quoting apodino (Thread starter):
Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

This statement is ludicrous, with scope negotiations are how they are, and there already being caps in place on how much UAX flying can be done (does no one realize this) there is actually no way to possibly come close to doing this. Pilots in the know would realize this, UAX isn't getting any bigger, and since it's pegged against mainline flying, any decrease in mainline flying comes with a commensurate decrease in UAX flying.


User currently offlinesimairlinenet From United States of America, joined Oct 2005, 911 posts, RR: 2
Reply 6, posted (2 years 10 months 2 weeks 4 days 1 hour ago) and read 9949 times:

I think this is an overreaction.

Quoting apodino (Thread starter):
President and CEO Jeff Smisek told an analyst’s conference in New York that his plan is to increase international flying as much as demand will support, and to make its domestic network as big as needed to supply passengers to international flights.

We don't have the original quote here, but if it were a direct quote, then this is a misinterpretation.

"We need to make our domestic network big enough to feed the international network" could mean "we need to be sure to grow or restructure domestic flying in the right places to support international growth" (Pan Am argument to buying National)

"We need to make our domestic network small enough to feed only the international network" clearly means "we're going to downsize domestic flying in favor of international itineraries."


User currently offlineADent From United States of America, joined Dec 2006, 1359 posts, RR: 2
Reply 7, posted (2 years 10 months 2 weeks 4 days 1 hour ago) and read 9883 times:

Quoting rdh3e (Reply 5):
there already being caps in place on how much UAX flying can be done

What is the PMUA cap on UAX flying?


User currently offlinepeanuts From Netherlands, joined Dec 2009, 1438 posts, RR: 4
Reply 8, posted (2 years 10 months 2 weeks 4 days 1 hour ago) and read 9883 times:

Quoting enilria (Reply 4):
Delta has been saying that is their strategy for a long time and they apparently feel that their current network accomplishes that, despite it having a lot of domestic routes.

Correct. It seems that DL and UA are on the same page here. DL is also shedding most EAS flying, so more domestic routes will be cut.
AA is also getting into this mindset with ATI/JV in place and cornerstone hub thinking.

The only big difference between DL and UA/AA is that I believe DL will remain to have a fairly big P2P presence as well, where it makes sense, especially with WN in mind...



Question Conventional Wisdom. While not all commonly held beliefs are wrong…all should be questioned.
User currently offlineenilria From Canada, joined Feb 2008, 7039 posts, RR: 13
Reply 9, posted (2 years 10 months 2 weeks 4 days ago) and read 9709 times:

Quoting peanuts (Reply 8):
The only big difference between DL and UA/AA is that I believe DL will remain to have a fairly big P2P presence as well, where it makes sense, especially with WN in mind...

It seems that way, although whether it is a good financial strategy I might question.


User currently offlinerdh3e From United States of America, joined Mar 2011, 1613 posts, RR: 3
Reply 10, posted (2 years 10 months 2 weeks 4 days ago) and read 9673 times:

Quoting ADent (Reply 7):
What is the PMUA cap on UAX flying?

Not to be a jerk about it, but I'm pretty sure that's confidential between UA and ALPA. If someone else wants to spill that's fine, there are probably hundreds of people on here that know.


User currently offlineScottB From United States of America, joined Jul 2000, 6712 posts, RR: 32
Reply 11, posted (2 years 10 months 2 weeks 4 days ago) and read 9616 times:

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too?

The first analyst question was about the balance between the changes in domestic and international capacity in 2012, since consolidated capacity will be flat. Smisek's response:

Quote:
We expect to shrink the domestic capacity and grow the international capacity and basically balance off those two. The international business for us historically at both carriers has done quite well. And the domestic capacity is basically, I view that as a feeder for the international capacity, and so that's how we'll balance the two.


User currently offlinehiflyer From United States of America, joined Nov 2004, 2167 posts, RR: 3
Reply 12, posted (2 years 10 months 2 weeks 4 days ago) and read 9555 times:

Quoting ADent (Reply 7):
What is the PMUA cap on UAX flying?

Far less restrictive that PMCO....UA allows 70 seats...CO maxes at 50 for starters on rj's, Getting agreement between the pmco and pmua versions will be tough but then with UA itself...gonna take a bit....damn hard to put the rj genie back into the bottle without giving up something major. greater than 70 seat coming in house now with 70 later is a favorite topic....


User currently offlinerdh3e From United States of America, joined Mar 2011, 1613 posts, RR: 3
Reply 13, posted (2 years 10 months 2 weeks 4 days ago) and read 9543 times:

Quoting hiflyer (Reply 12):
Far less restrictive that PMCO....UA allows 70 seats...CO maxes at 50 for starters on rj's, Getting agreement between the pmco and pmua versions will be tough but then with UA itself...gonna take a bit....damn hard to put the rj genie back into the bottle without giving up something major. greater than 70 seat coming in house now with 70 later is a favorite topic....

He's not asking about scope, he's asking about the Cap on the actual amount of flying they can do. Which has nothing to do with the size of the planes. Irrespective of any ASM limitations being related to the size of the AC.


User currently onlineLAXdude1023 From India, joined Sep 2006, 7505 posts, RR: 24
Reply 14, posted (2 years 10 months 2 weeks 4 days ago) and read 9490 times:

If you look at CO's Houston and Newark hubs, they have kind of been doing that already.

United is a different story. They are heavy internationally out of SFO and IAD. ORD has lots of international and domestic flights, but then they have a hub in Denver thats almost all domestic.



Stewed...Lewd...Crude...Irreverent...Belligerent
User currently offlinerdh3e From United States of America, joined Mar 2011, 1613 posts, RR: 3
Reply 15, posted (2 years 10 months 2 weeks 3 days 23 hours ago) and read 9355 times:

Quoting LAXdude1023 (Reply 14):
Denver thats almost all domestic.

Yep, this week ~2800 flights, with ~175 International (if you include Hawaii) since I think that would be included in the international "type" of flight that SMI/J is referring to.


User currently offlineBC77008 From United States of America, joined Sep 2011, 296 posts, RR: 0
Reply 16, posted (2 years 10 months 2 weeks 3 days 22 hours ago) and read 9142 times:

They better not be downsizing domestic! I non-rev with them all the time!   


"He waited his whole damn life to take that flight. And as the plane crashed down he thought 'Well isn't this nice...'"
User currently onlineDualQual From United States of America, joined Mar 2006, 755 posts, RR: 1
Reply 17, posted (2 years 10 months 2 weeks 3 days 21 hours ago) and read 9084 times:

Quoting rdh3e (Reply 13):
He's not asking about scope, he's asking about the Cap on the actual amount of flying they can do. Which has nothing to do with the size of the planes. Irrespective of any ASM limitations being related to the size of the AC.

UA's cap is a ratio or mainline to "large RJ". I can't remember what the ratio is. I want to say it can't be more than 50/50.

CO actually has no cap on the amount of RJ flying. The only cap is the 50 seat restriction.


User currently offlinegigneil From United States of America, joined Nov 2002, 16347 posts, RR: 85
Reply 18, posted (2 years 10 months 2 weeks 3 days 21 hours ago) and read 8958 times:

It'd be awfully spiffy if they'd improve the domestic network from IAD and SFO.

NS


User currently offlineAvSafety46 From United States of America, joined Aug 2011, 22 posts, RR: 0
Reply 19, posted (2 years 10 months 2 weeks 3 days 14 hours ago) and read 8364 times:

From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.

User currently offlineapodino From United States of America, joined Apr 2005, 4234 posts, RR: 6
Reply 20, posted (2 years 10 months 2 weeks 3 days 14 hours ago) and read 8354 times:

Quoting AvSafety46 (Reply 19):
From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.

I am hearing rumblings of the same thing...this coupled with Smisek's comments have me worried, and a lot of pilots as well. At least the pilots can always vote not to ratify the new deal.


User currently offlinekgaiflyer From United States of America, joined Jul 2008, 4239 posts, RR: 1
Reply 21, posted (2 years 10 months 2 weeks 3 days 13 hours ago) and read 7980 times:
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Quoting gigneil (Reply 18):
It'd be awfully spiffy if they'd improve the domestic network from IAD and SFO.

I just booked IAD-ELP / ELP-LAX for October 8th.

IAD-IAH & IAH-ELP are both OO CR7's that carry both CO and UA codeshare numbers (historically arrives-departs the same Concourse B gate at IAH -- according to Flightaware -- so both segments are probably on the same ship). Late that day I will fly ELP-LAX on an OO CR2.

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

Neat!  


User currently offlineiaddca From United States of America, joined Jul 2007, 286 posts, RR: 0
Reply 22, posted (2 years 10 months 2 weeks 3 days 9 hours ago) and read 7092 times:

Quoting kgaiflyer (Reply 21):

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

no amount of MP miles is worth that


User currently offlineslcdeltarumd11 From United States of America, joined Jan 2004, 3359 posts, RR: 0
Reply 23, posted (2 years 10 months 2 weeks 3 days 8 hours ago) and read 6939 times:

If this were really to happen Denver and Cleveland would offer nothing. Seems like they would become a much smaller airline. I bet you he just means generally more international and less domestic

User currently offlinerising From United States of America, joined May 2010, 269 posts, RR: 1
Reply 24, posted (2 years 10 months 2 weeks 3 days 8 hours ago) and read 6585 times:

Quoting slcdeltarumd11 (Reply 23):
I bet you he just means generally more international and less domestic

Yes, it is in response to the airline taking on 6 787s and 19 739s in 2012. The cuts will be needed to offset any increase in capacity, which they must do to maintain profitability and pricing power. It has nothing to do with "conceding" the domestic network. The title of this thread is quite unfortunate and stems from serious misinformation. I would encourage everyone to watch the presentation and see what was actually said.

One of the first slides is entitled, "Serving the most destinations in the U.S." There is also a nifty photo of what the future Sky cabins will look like.  http://ir.unitedcontinentalholdings....entDetails&c=83680&eventID=4195076



[Edited 2011-09-16 06:29:29]


If it doesn't make sense, it's because it's not true.
25 UALFAson : HAHAHAHA! Amen, brother! You are SO right about that. Thanks for the early morning laugh!
26 mogandoCI : the way i read this as ceding marginal DEN routes to WN and treat it as a hub for the northwest plains plus the Colorado resorts. UA/CO has enough eas
27 N766UA : Why? It's making money.
28 Post contains images kgaiflyer : Well . . . I guess it's a point-of-view thing. The CO early morning IAD-IAH red-eye used to be a 735 -- then a 145XR -- then nothing -- then back to
29 CODC10 : Both sides are rather far apart at this point. UA recently made an interesting, some may say reasonable, proposal to the pilots regarding an expedite
30 rdh3e : Didn't PMUA offer the pilots a word for word DL contract in '09? Ala Aer Lingus IAD-MAD.
31 apodino : I heard some stories that said that the MEC nearly agreed to BA already. Apparently it was a tie vote in the MEC with one abstention or something lik
32 ORDBOSEWR : I think this is not really a Air Lingus issue (the pilots really want this gone already) much as it is the LH, SAS, Swiss, AC, etc issue (those inclu
33 norcal : No they offered Delta pay + $1 which is a far worse contract than what Delta actually has given the better work rules that Delta has. The devil is in
34 DualQual : They didn't even offer that. First year pay was still far lower than what DAL first year pay was. Calling it Delta +1 and and then gutting any of the
35 norcal : Agreed, it was a PR play by management to try and cast the union in a bad light.
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