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MAN Hub Development Idea Post BMI  
User currently offlinesandyb123 From UK - Scotland, joined Oct 2007, 1096 posts, RR: 0
Posted (2 years 7 months 2 weeks 1 day 22 hours ago) and read 3889 times:
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Hi all

About 15 months ago I posted on here about the opportunity of BMI creating a hub airline business at MAN. The hypothetical proposal was that BMI would consolidate their business, sell their slots at LHR to BA / VS and use the income to develop the following business at MAN:

Network:
- Long haul network flying to the middle east and tatl, connecting through MAN,
- Short haul European network connecting major European cities with MAN, connecting on to long haul network,
- O&D traffic at MAN for both networks.

Market:
- leisure short haul and long haul 0&D market @ MAN
- long haul connecting leisure market
- budget business connecting traveller
- O&D business traveller
- alliance affiliation

Development:
- Airside connections between terminals at MAN,
- competitive business facilities both onboard and at MAN,
- Efficient connection times at MAN,
- competitive fares vs non-stops and European hubs.

A lot has happened in 15 months, most recently BMI been gobbled up by IAG and the future of BMI and BMI regional is unknown but regardless BMI is off the scene.

Questions:
Would such a strategy have saved BMI?
Would such a strategy work??
Would MAN support a venture with infrastructure changes?
Would star alliance support route development at MAN after loosing BMI?
Are there any established airlines that could step into this market?

Sandyb123

[Edited 2012-01-09 16:04:47]


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8 replies: All unread, jump to last
 
User currently offlineJasonCRH From United States of America, joined Jun 2005, 296 posts, RR: 4
Reply 1, posted (2 years 7 months 2 weeks 1 day 22 hours ago) and read 3865 times:

in answer to your questions:

1) bmi would have bled even more money with this strategy
2) No, such a strategy would not work. At the end of the day, large quantities of LOCAL O&D paid PREMIUM traffic is what makes such a hub work. MAN simply does not have those volumes, and that's been shown time and time again.
3) Who knows
4) Star Alliance has NO role in determining what routes their member airlines fly. All Star Alliance does is provide some level of marketing support and coordination. It has NO influence whatsoever on hub determination/ who flies what route/ who code shares, etc
5) any established airline that did this would lose tons of money and go out of business.


User currently offlineYVRLTN From Canada, joined Oct 2006, 2447 posts, RR: 0
Reply 2, posted (2 years 7 months 2 weeks 1 day 20 hours ago) and read 3706 times:

Never - you are assuming BD are going to replicate BA at LHR and it would take half a lifetime to do that.

Quoting sandyb123 (Thread starter):
Long haul network flying to the middle east and tatl, connecting through MAN,

People get all excited about the heavy metal from the Mid East into MAN, but they are feeding their own hubs. I bet the percentage of pax actually going to DXB, AUH or DOH is less than 10%. So you would need one helluva network - like BA at LHR - to offer all the final destinations pax are actually flying to using EK et al. That would not happen over night and is only one side of the hub. Then look transatlantic, the US carriers are using 757's or 767's at best, again to fly to their hub the other side.

Quoting sandyb123 (Thread starter):
- Short haul European network connecting major European cities with MAN, connecting on to long haul network,
- O&D traffic at MAN for both networks.

The thing is, while we can not deny there is money to be made in the MAN market, for those who are actually making money, MAN is a spoke. It would take a generation to build up a network like EK have in DXB or BA at LHR and as history has panned out during the time BD "could" have been doing this with the advent of FR & U2 and all the other LCC's, the alliances, airline groups in Europe and Mid East juggernauts, there would never have been enough time for BD. The fact is the majority of the O&D pax is going with LCC's.

Quoting sandyb123 (Thread starter):
- leisure short haul and long haul 0&D market @ MAN
- long haul connecting leisure market
- budget business connecting traveller

I think here was one of BD's biggest problems, they had a confused brand where they didnt really know who they were catering too so as a result failed at all of it. As above, O&D will go with the cheapest, so you need a cost base accordingly and that sure would not happen by creating a MAN hub. The traditional leisure pax are now moving towards creating their own holiday package, and will therefore fall into the same category as O&D pax - cheapest price. Witness ZB moving into more and more scheduled flights and woes at TCX. You also have to remember that for EK for example, their bread and butter is not O&D. For them they are making the most of location location location. Sure, MAN is at a crossroads between Europe and N America. But all they would be doing is replicating BA at LHR, LH at FRA, AF at CDG and KL at AMS. Now with ATI, there really is not much point competing with BA to the USA...And for BA at LHR their O&D market is 3-4 times bigger than MAN to begin with.

Quoting sandyb123 (Thread starter):
- alliance affiliation

No benefit. They were in Star primarily to feed its members from LHR to the UK regions - and despite multiple codeshares, still managed to lose money. I dont see how MAN would improve fortunes vs LHR where there are many more connecting opportunities to other carriers. As for Star, I could see UA or AC for example possibly be interested in using a 777 to MAN and let BD serve smaller cities like ARN, NCE & BRU, but they "could" have done that at LHR too, but didnt. Well, they did, but it didnt make them any money. Basically, anything they "could" have done from MAN they "should" have been able to do at LHR - with even greater Star connections and O&D.

Latterly, as LH are the big cheese in Star, why would they allow BD to replicate what they are doing at FRA?? Likewise BA/IB in OW and AF/KL in Skyteam. So, regardless of the tricky LH ownership question, they would have had to leave Star and go it alone. Its sad to see the end of BD, they had a niche, they did not adapt with the changing times and lost their way but they never ever had the resources to go it alone at MAN or anywhere, and now their niche has gone. Hence all there is left worth talking about is slots at LHR.



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User currently offlinesandyb123 From UK - Scotland, joined Oct 2007, 1096 posts, RR: 0
Reply 3, posted (2 years 7 months 2 weeks 1 day 12 hours ago) and read 3522 times:
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Quoting YVRLTN (Reply 2):
they had a confused brand where they didnt really know who they were catering too
Quoting YVRLTN (Reply 2):
Hence all there is left worth talking about is slots at LHR.

Agreed. I think that this was BMIs biggest downfall. They tried and failed to get a slice of the London market and turned their back on an established market at MAN.

Quoting JasonCRH (Reply 1):
Star Alliance has NO role in determining what routes their member airlines fly

I meant rather that an alliance would support a MAN route network rather than dictate it's model.

Quoting YVRLTN (Reply 2):
It would take a generation to build up a network like EK

I don't think the vision was for anything like a DXB hub. The market isn't there and there has been huge political influence on the success of middle east hubs.

Quoting YVRLTN (Reply 2):
their bread and butter is not O&D

Perhaps I've miss represented the idea.

The majority of business was connecting / transfer pax. To this end MAN as a market is less significant as routes would be promoted as end to end, with a change in MAN. The cost saving would have to come by competing with direct flights. Some routes you couldn't compete with but for ULH i.e Middle East / India - west coast US there could be a market.

For example, AF / KL are trying to compete with long haul ex UK. I did some fare searches and flying from EDI / GLA / MAN etc to New York via CDG or AMS is actually cheaper than if you originate from one of those hubs.

Sandyb123



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User currently offlineskipness1E From United Kingdom, joined Aug 2007, 3229 posts, RR: 1
Reply 4, posted (2 years 7 months 2 weeks 1 day 12 hours ago) and read 3487 times:

Quoting sandyb123 (Reply 3):
They tried and failed to get a slice of the London market and turned their back on an established market at MAN

This is quite incorrect, they had a massive and profitable slice of the London market that Manchester could not replicate. Where they went wrong was not being able to adapt when the market changed. Diamond service was very successful and profitable in it's day with a loyal following, many of whom still fly with BMI today out of sheer loyalty.

Besides, it's not as if Manchester is lacking short and long haul connectivity! easyJet could massacre BMI on any MAN point to point and the legacy network would have a competitve advantage in that they would have both point to point and feed at the hub.

Quoting sandyb123 (Thread starter):
Development:
- Airside connections between terminals at MAN,
- competitive business facilities both onboard and at MAN,
- Efficient connection times at MAN,
- competitive fares vs non-stops and European hubs.

If BMI were the sort of company that could do this well they wouldn't be losing so much money at LHR. You say "competitve fares". Imagine the market from MAN on Euro capitals : CDG / AMS / MAD / FRA(I know !) / TXL. How exactly do they compete and make money as LH, AF and KL have the long haul feeder advantage as per above and easyJet are taking the loco market from below. You'd be the skinny cheese in someone elses sandwich.


User currently offlineammunition From United Kingdom, joined Feb 2002, 1065 posts, RR: 4
Reply 5, posted (2 years 7 months 2 weeks 1 day 11 hours ago) and read 3420 times:

Regional are not going anywhere!


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User currently offlineskipness1E From United Kingdom, joined Aug 2007, 3229 posts, RR: 1
Reply 6, posted (2 years 7 months 2 weeks 1 day 9 hours ago) and read 3253 times:

Quoting sandyb123 (Reply 3):
For example, AF / KL are trying to compete with long haul ex UK. I did some fare searches and flying from EDI / GLA / MAN etc to New York via CDG or AMS is actually cheaper than if you originate from one of those hubs.

True, BA can be cheaper from Europe via LHR than simply starting at LHR.


User currently offlineLX138 From United Kingdom, joined Jul 2009, 396 posts, RR: 0
Reply 7, posted (2 years 7 months 2 weeks 1 day 7 hours ago) and read 3144 times:

Quoting sandyb123 (Thread starter):
About 15 months ago I posted on here about the opportunity of BMI creating a hub airline business at MAN. The hypothetical proposal was that BMI would consolidate their business, sell their slots at LHR to BA / VS and use the income to develop the following business at MAN:

I've actually suggested a very similar strategy for them in the past so of course think that what you've said sounds well thought out and interesting, the long-haul network would need to be highly tailored however towards the local O&D market though because a hub focus would require a much larger scale operation than BD has ever been. Similarly multiple flights to Asia and the Far East would need 99% transfer traffic as there is a tiny O&D market from MAN.

Quoting sandyb123 (Reply 3):
I meant rather that an alliance would support a MAN route network rather than dictate it's model.

I don't see why Star Alliance wouldn't support the idea no. A lot of people on here think the alliances are some huge powerful company in their own right with bosses siiting round desks planning on how they are going to take over the world! It's not like that at all.

Quoting ammunition (Reply 5):
Regional are not going anywhere!

But they are! Regional won't be around in its current shape or form this time in 18 months - no matter who or how they get bought.



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User currently offlineJasonCRH From United States of America, joined Jun 2005, 296 posts, RR: 4
Reply 8, posted (2 years 7 months 2 weeks 1 day 7 hours ago) and read 3113 times:

I still really do not understand what you are suggesting. At the end of the day, the Star Alliance (or any other alliance, for that matter), is made up of individual airlines making resource allocation decisions designed to increase profits for themselves. Where it makes sense to work with alliance partners, they do. But, if they think they can make more money using those resources on something that doesnt contribute to the alliance, they absolutely will.

You repeatedly say that the Manchester hub could offer lower fare options for long haul travelers. That's all fine and nice, but if you were to talk to planners at United, or Lufthansa, or any othe rmember of Star, and ask them to create a hub at Manchester to support bmi, and tell them that the fares would have to be low to attract traffic to transfer over Manchester, they'd laugh you right out of the room. They make far more money working together to funnel traffic over Frankfurt and Munich (and enjoy way higher fares and amounts of local OD traffic) than they could ever get at Manchester.

This is but one example. Again, at the end of the day, alliances are made up of individual airlines, all with their own imperatives to try to make profits. Contributing to a low fare hub model at Manchester for an ailing, smaller, alliance member simply is not a prudent business decision.

Quoting sandyb123 (Reply 3):
I meant rather that an alliance would support a MAN route network rather than dictate it's model.


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