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US Airways Business Strategy?

Tue Dec 31, 2002 3:05 am

Ok, now i am pretty sure i remember when US filed for ch. 11 several months ago that part of there business plan was to obviously cut the number of flts, but also to focus more on their hubs, PHL, PIT, CLT, and decrease the number of point-point service. I also know how important BOS, LGA, and DCA are for them and some of their routes are very profitable.

However what i am not understanding is the carribean flts from LGA, DCA, and now from BOS. Now, the flts from LGA and DCA are the only available flts to the Carribean from those airports but are they really that profitable??? Also why is US trying to start Carribean service at BOS? AA already has a decent hold on that market with A300 and comparable aircraft flying between SJU-BOS, while US will have 2x weekly A320's. Is it really worth US to fly these routes, or should they just use the aircraft to increase their Carribean operation at CLT and PHL???
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RE: US Airways Business Strategy?

Tue Dec 31, 2002 3:07 am

Most of those routes are weekend only. Studies have shown that most of the Carribean tourists originate in the northeast US so I assume those routes are to make it more convenient for them.
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RE: US Airways Business Strategy?

Tue Dec 31, 2002 3:43 am

I would expect they sell the seats through one-week package tours. It's not wildly profitable, but they need all the cash they can get right now.
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RE: US Airways Business Strategy?

Tue Dec 31, 2002 5:50 am

There are two other important reasons for the increase in Caribbean flying:

1) Aircraft utilization: Using airplanes on the weekend only island flights increases utilization on days that typically saw little flying. Flying airplanes = revenue... non-flying airplanes = expensive billboards.

2) Frequent Flyer Award programs: Much of the Caribbean flying is geared to FF award travel, as well as the package vacation market. The intent is to attract more premium business travel by adding more enticing awards to the FF program.
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RE: US Airways Business Strategy?

Tue Dec 31, 2002 6:41 am

This is a decent strategy for US. When TWA was absorbed by AA it was the number 2 US-caribbean carrier (IIRC), raising fares and giving the airlines more pricing power in the Carib. No low-cost competitors (except B6 to SJU) and a way remove capacity from its domestic network without parking more aircraft are also positive aspects of this strategy. Plus UA's biggest weakness in terms of a mileage program is the lack of Caribbean service (I think they fly IAD/ORD-STT-SJU-IAD/ORD once a week) will give US plenty of UA FFers trying to burn their miles to the Carib.
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RE: US Airways Business Strategy?

Tue Dec 31, 2002 8:13 am

Yes UA does lack presence in the carribean and i guess UA paxs have more of an opportunity from these extra gateways to connect to a US flt flying to the carribean.

However the last thing US needs right now, is for UA ff's who earned their miles paying for a ticket on UA flts, to get a free ride on a US flt. US needs UA's pax to pay for their tickets on US but earn ff miles while doing it.

RE: US Airways Business Strategy?

Tue Dec 31, 2002 8:46 am

United does lack in service to the Caribbean, but they are BIG in flights to Hawaii, which is a HUGE frequent flier destination. They are actually the #1 carrier to the islands. They fly the 747-400, 777, 767-300, and 757 there. They don't fly there from as many US cities as other carriers, but as far as traffic goes, they carry far more people to Hawaii than anyone else, including Hawaiian Air.

United's Hawaii routes include:
Denver to Honolulu & Kona,
Los Angeles to Honolulu, Kona, Maui, Lihue
San Francisco to Honolulu, Kona, Maui, Lihue
Tokyo/Narita to Honolulu

Considering starting service to Honolulu from Osaka/Kansai, as well as a possible restart of Chicago-Honolulu.

After 9/11, many more people started flying to Hawaii instead of overseas destinations (not wanting to travel international), and United has ramped up service to the islands, they actually have more Hawaii flights now than they did before 9/11.