Cory6188
Topic Author
Posts: 2621
Joined: Mon Feb 02, 2004 12:29 am

Lack Of Competition Between Legacy Carriers

Wed Jul 13, 2005 8:51 am

B6's recent announcement that they're planning on starting EWR service had me wondering...

Why do the legacy carriers never try to encroach upon each other's territory. Clearly, at least in hub cities, there are travelers with loyalty to a certain airline, but that hasn't stopped any of the LCCs from trying to move in.

For example, why hasn't CO tried to move into MIA? Or AA try to gain a foothold in DTW? Etc, etc.

It might seem like a stupid question, but I really became more curious the more I thought about it, especially considering that all of the LCCs have no qualms about diving into a legacy carrier's fortress hub.

Is there some sort of gentleman's agreement between the Big Six that keeps them from competing on the same routes and cities, or is there some other force at work here?

I would love to hear your opinions.

[Edited 2005-07-13 01:58:00]
 
dtwclipper
Posts: 6668
Joined: Wed Oct 29, 2003 3:17 am

RE: (Lack Of) Competition Between Legacy Carriers

Wed Jul 13, 2005 8:58 am

Quoting Cory6188 (Thread starter):

Is there some sort of gentleman's agreement between the Big Six that keeps them from competing on the same routes and cities, or is there some other force at work here?

They are already competing on the same routes. The hub system allows them to create city pairs, such as GRR-SYR, AA through ORD, NW through DTW, CO through CLE etc.

There is no need to encroach on some one elses HUB when you already have the the facilities
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PSU.DTW.SCE
Posts: 6187
Joined: Mon Jan 28, 2002 11:45 am

RE: Lack Of Competition Between Legacy Carriers

Wed Jul 13, 2005 9:36 am

The reason being, that many of these routes from hub cities can't exist solely on O&D, specifically with the aircraft sizes and frequencies that they offer. For example, AA could ever operate DTW-SYR with any sort of stand alone O&D, if they were lucky, at best 1 ERJ a day. Our national transportation network wouldn't be able to provide the air service levels to many small and mid-sized communities without the hub cities and the large operations in key markets that ensues.
 
dtwclipper
Posts: 6668
Joined: Wed Oct 29, 2003 3:17 am

RE: Lack Of Competition Between Legacy Carriers

Wed Jul 13, 2005 9:39 am

Quoting DTW.SCE" class=quote target=_blank>PSU.DTW.SCE (Reply 2):
The reason being, that many of these routes from hub cities can't exist solely on O&D, specifically with the aircraft sizes and frequencies that they offer

I guess I should have gone further into detail, but you are absolutly right.

There is no way for example, that DTW could support 2X DTW-FRA, 2X DTW-CDG, 2XDTW-NRT, let alone KIX and what is it now 4X DTW-AMS. It's all hub traffic.
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1MillionFlyer
Posts: 1937
Joined: Wed Sep 08, 2004 8:55 am

RE: Lack Of Competition Between Legacy Carriers

Wed Jul 13, 2005 9:51 am

At least in the case of CO/NW/DL they are part of Skyteam and code share which really allows them to share some of the costs of those big hubs.
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dutchjet
Posts: 7714
Joined: Sat Oct 14, 2000 6:13 am

RE: Lack Of Competition Between Legacy Carriers

Wed Jul 13, 2005 9:51 am

It complicated, as far as the legacy carriers are concerned, its all about hubs and connections - each legacy carrier can get you from Boston to Los Angeles, for example, some will do it nonstop, others via hubs located throughout the US. Thus, they are all competing. The other side of the story is that there is limited competition at the specific hub cities - CO dominates at EWR, AA at DFW, etc. Legacy carriers do compete on specific routes - but the overall view is that as long as any of the legacy carriers can move you from one city in the US to another, the airlines are competing - look at the route network instead of the routes. Airlines dont invade eachothers hub because it usually sets off an expensive and needless fare war - and to be honest, there are enough hubs in the USA airline system.

LCCs are less hub oriented and move in on specific routes, JetBlue for example is big on the NYC-Florida market and competes with the legacies and LCCs.....one of the biggest complaints concerning LCCs is that they only target high demand routes: JetBlue is great if you are travelling from JFK to FLL, but they are of little help if you are flying from Charleston to Boise or from Austin to Portland. Legacy carriers claim this is partly why there costs are be higher - they provide more comprehensive service and dont simply pick and chose the highest demand routes.

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