jimyvr
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United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 8:09 am

http://biz.yahoo.com/prnews/070517/aqth139.html?.v=1

United Airlines, announced today it has reduced 2007 mainline domestic capacity growth by approximately 2.0 percent from previously planned levels. This reduction in domestic capacity enables the company to meet increasing international demand and optimize its revenue performance.

The 0.5% increase in international side is mainly the relaunch of LAX - Hong Kong and Washington - Rio.
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worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 8:57 am

it will be interesting to see where US pulls domestic capacity down but the west coast is clearly under pressure for UA with the arrival of Virgin America and WN at SFO and DEN.... DL's LAX buildup will have some affect on UA but it's probably relatively small at this point. The East coast is still under pressure but no one is adding a whole lot of Washington capacity at the moment.

I'd still like to know what kind of utilization UA has been getting out of its 744 and 763s since they are apparently able to add these new routes w/ its existing a/c. Nothing has been said about removing domestic a/c at UA but I heard rumors that might happen... any knowledge of that?
 
Bicoastal
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 9:48 am

Has UA reached an agreement with its pilots to fly more this summer? If not, UA will have to reduce its schedule because it won't have the pilots to fly the planes this summer. Better to cancel now, than to piss off the passengers with last minute cancellations due to lack of crew.
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Zone1
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 9:50 am

Quoting WorldTraveler (Reply 1):
I'd still like to know what kind of utilization UA has been getting out of its 744 and 763s since they are apparently able to add these new routes w/ its existing a/c.

I can't imagine they have spectacular utilization on their 744s. I've been in ORD when I see 4 of them in a row pull by from their holding area near the hangars in the afternoon. That's a lot metal just hanging around.
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mariner
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 9:53 am

The Denevr Post take on it:

http://www.denverpost.com/avalanche/ci_5920124

"United last month warned that it might lower domestic capacity because of weak U.S. revenues, pointing to Denver as a key area where its revenues have suffered.
Low-cost carriers Southwest Airlines and Frontier Airlines have stepped up their competition in Denver. United's chief revenue officer John Tague said last month: "Clearly, we're under pressure in Denver, and we expect that to continue."


mariner
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LAXintl
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 9:54 am

During the 1st quarter earning call, UA advised they had several 737s leases expiring going into the 4th quarter and it had flexibility including retaining the capacity, removing it totally, or possibly back filling it with UAX.
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777fan
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 10:19 am

Quoting Zone1 (Reply 3):
I can't imagine they have spectacular utilization on their 744s. I've been in ORD when I see 4 of them in a row pull by from their holding area near the hangars in the afternoon. That's a lot metal just hanging around.

Hmmm, do you hang around long enough to see them depart to HKG, PVG, FRA, and PEK?! They get better use out of them than you think.


777fan
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RDUDDJI
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 11:20 am

This is a smart move by UA. I think we'll see others follow. I've been hearing since Feb that Revenues are bad and the outlook isn't any better domestically. Pricing power is non-existent, and fuel is going up. Cutting capacity will raise CASM about 1% but will lower overall costs and allow a more efficient operation. Plus they plan to grow Int'l capacity slightly too.

Quoting Bicoastal (Reply 2):
Has UA reached an agreement with its pilots to fly more this summer? If not, UA will have to reduce its schedule because it won't have the pilots to fly the planes this summer. Better to cancel now, than to piss off the passengers with last minute cancellations due to lack of crew.

Ding, Ding, Ding, kill two birds with one stone...chalk one up for Mgmt.

Quoting Zone1 (Reply 3):
I can't imagine they have spectacular utilization on their 744s. I've been in ORD when I see 4 of them in a row pull by from their holding area near the hangars in the afternoon. That's a lot metal just hanging around.

That would be because they do 744 maintenance there...
Sometimes we don't realize the good times when we're in them
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 11:29 am

Quoting RDUDDJI (Reply 7):
This is a smart move by UA. I think we'll see others follow. I've been hearing since Feb that Revenues are bad and the outlook isn't any better domestically.

actually CO and DL are not seeing yield softness as other carriers are.... in fact, DL is supposedly talking w/ China about acquiring up to 20 MD90s in return for a bunch of CRJs. CO, as we know, is adding domestic capacity.
 
AirCop
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 11:33 am

Quoting Jimyvr (Thread starter):
United Airlines, announced today it has reduced 2007 mainline domestic capacity growth by approximately 2.0 percent from previously planned levels

The way I read this; the only thing UA did was reduced what was planned for growth and not what was actually flying at the moment.
 
RDUDDJI
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 11:42 am

Quoting WorldTraveler (Reply 8):
actually CO and DL are not seeing yield softness as other carriers are.... in fact, DL is supposedly talking w/ China about acquiring up to 20 MD90s in return for a bunch of CRJs. CO, as we know, is adding domestic capacity.

Wait and see my friend. Everyone is seeing weakened Domestic demand. NWA wants to codeshare with YX (an airline they have fiercely competed with over the years). Even the LCC's are making other plans. WN is joining the GDS in hopes of higher revenues... FL is attempting a takeover of YX. B6 is slowing deliveries and considering selling more 320's. F9 is looking to Central America to increase Int'l traffic. These aren't all coincidences.

UA's announcement is just the tip of the iceburg for the legacy carriers.
Sometimes we don't realize the good times when we're in them
 
SESGDL
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 1:03 pm

Quoting RDUDDJI (Reply 10):

Wait and see my friend. Everyone is seeing weakened Domestic demand. NWA wants to codeshare with YX (an airline they have fiercely competed with over the years). Even the LCC's are making other plans. WN is joining the GDS in hopes of higher revenues... FL is attempting a takeover of YX. B6 is slowing deliveries and considering selling more 320's. F9 is looking to Central America to increase Int'l traffic. These aren't all coincidences.

UA's announcement is just the tip of the iceburg for the legacy carriers.

DL, however, cut capacity drastically in the domestic market during bankruptcy, in fact, a little bit too much. DL has been trying to fill the void by adding RJs (which they have a plethora of) everywhere, but this hasn't been the best move. DL's domestic market is profitable, and DL is dying to add some mainline capacity in exchange for RJ current capacity.

Jeremy
 
atlaaron
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 1:42 pm

Quoting WorldTraveler (Reply 8):
actually CO and DL are not seeing yield softness as other carriers are.... in fact, DL is supposedly talking w/ China about acquiring up to 20 MD90s in return for a bunch of CRJs.

 checkmark  None of us know the exact truth but DL did recently announce (I can search for a link if you want me to) that they are seeing strong advance bookings, while others have stated they are seeing weakness. Could just be "luck" with the primary markets served, or perhaps DL is actually gaining a competitive edge.
 
fdex727
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 2:59 pm

I hate to say it, but I see United turning more stations domestically over to express. Bring express flying in at slow times, while bringing in mainline during busy periods, see RDU with their new mainline IAD, ORD and DEN flights. GSO comes to mind having worked there with UA. Stations with one to two mainline flights a day I would say are at risk. It just does not make sense having employees topped out at 19-20 dollars an hour when UA can bring in contract employees for much less. I never thought I would say these thing but with ever increasing competition an UA's desire to cut labor costs where else can it come from.

Let me just add that I hope i'm wrong about these thing as I still have many friends at GSO, BOS, PVD and CLT.
 
zvezda
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.

Fri May 18, 2007 3:07 pm

Quoting Fdex727 (Reply 13):
I hope i'm wrong about these thing as I still have many friends at GSO, BOS, PVD and CLT.

At CLT, wouldn't it make sense for UA to contract their ramp ops to Star Alliance partner US? I don't think UA have enough flights to CLT to match US in efficiency there.
 
UAL777UK
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 7:07 pm

Quoting WorldTraveler (Reply 1):
I'd still like to know what kind of utilization UA has been getting out of its 744 and 763s since they are apparently able to add these new routes w/ its existing a/c. Nothing has been said about removing domestic a/c at UA but I heard rumors that might happen... any knowledge of that?

I cannot comment on the 767's but ORD is losing the extra 747 to HKG which goes 2/3 times a week to accomadate the LAX-HKG flight.

Quoting Zone1 (Reply 3):
I can't imagine they have spectacular utilization on their 744s. I've been in ORD when I see 4 of them in a row pull by from their holding area near the hangars in the afternoon. That's a lot metal just hanging around.

They are pretty much utilized to the max, they need to be on the ground at some stage!!!

Quoting 777fan (Reply 6):
Hmmm, do you hang around long enough to see them depart to HKG, PVG, FRA, and PEK?! They get better use out of them than you think.

 checkmark 
 
hiflyer
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Fri May 18, 2007 11:02 pm

"United Airlines, announced today it has reduced 2007 mainline domestic capacity growth by approximately 2.0 percent from previously planned levels."

They are reducing 2007 GROWTH by 2%....not overall flying! There is still growth....98% if my math is right...grin!! Heck...y'all got stations closing...737's grounding...747 utilization.....DIA failing....all types of stuff out of an announcement they are reducing GROWTH by 2 percent.

 wink   wink 
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 12:27 am

Quoting RDUDDJI (Reply 10):
UA's announcement is just the tip of the iceburg for the legacy carriers.

you assume that all airlines are run the same... I say they are not.

You might also want to consider that UA and US are the network carriers in whose hubs LFCs are most growing… it’s not surprising that UA’s yields are under pressure when WN, Virgin America, F9 etc are growing in their markets. But you don’t see LFCs growing in AA, CO, DL, and NW hubs…. Perhaps those LFCs see opportunities… and perhaps those other LFCs have a reputation for not defending their markets. Once you let LFCs into your hub and they start growing, it’s mighty hard to keep them in a box.
 
UAL777UK
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 12:55 am

Quoting WorldTraveler (Reply 17):
But you don’t see LFCs growing in AA, CO, DL,

Hmm, me thinks DL might disagree. Airtran are a big player at ATL
 
mcdu
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 1:06 am

Quoting WorldTraveler (Reply 17):
But you don’t see LFCs growing in AA, CO, DL, and NW hubs…

Your right. AA never had to fight LCC growth at SJC. CAL never had to worry about SWA over at HOU. And how about DL and JFK with B6. Dumping all those DH8's in there to counteract B6, what did that cost? Did B6 smell blood in the water at DL? Perhaps they grew too agressively but DL is not immune. How about DL and SLC with the B6 buildup. DL closing DFW and reducing CVG. Those hubs fell and are falling.

Glad DL has all the answers.

 Smile
 
fdex727
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 5:38 am

Quoting Zvezda (Reply 14):
At CLT, wouldn't it make sense for UA to contract their ramp ops to Star Alliance partner US? I don't think UA have enough flights to CLT to match US in efficiency there.

There are 5-6 ORD flights, 2 DEN and 5 to IAD. Being a decent sized line station It would be difficult to contract just the ramp. When I worked there in 2003-2004 we had around 40-50 CSR's, most crosstrained in ramp and ticket operations. If only the ramp were contracted out you would probably furlough 75% or more, the rest would staff the counter and baggage service office. Not saying it couldn't happen it's just highly improbable under current circumstances.

I also forgot about AC, I know UA has given up the contract in several cities but during my time we also worked 3 daily YYZ flights.
 
COEI2007
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 5:50 am

Quoting WorldTraveler (Reply 17):
But you don’t see LFCs growing in AA, CO, DL, and NW hubs…. Perhaps those LFCs see opportunities… and perhaps those other LFCs have a reputation for not defending their markets. Once you let LFCs into your hub and they start growing, it’s mighty hard to keep them in a box.

AA has competition from WN at Chicago and LAX. CO has competition from B6 at EWR/JFK, HOU, DL has competition from FL at ATL, B6 at JFK, B6 at BOS...... UA isnt the only airline facing competition. I know with CO, when B6 entered EWR, they matched fares and used 757-300's to give them an advantage, and try to drive B6 out. I'm not sure that CO could do the same with WN.
 
FlyPNS1
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 8:13 am

As SESGDL points out, the prime reason DL isn't seeing domestic weakness is because DL is slashing domestic capacity. In April 2007, DL's domestic ASM's dropped by 7.3% even with some growth at the Connection carriers. Keep in mind too, this is on top of 13.5% ASM cuts in the previous April.

As long as DL continues slashing domestic capacity, it's not likely they will feel a lot of domestic weakness. Of course, perpetually shrinking domestic could have other negative consequences.
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 8:27 am

Quoting UAL777UK (Reply 18):
Hmm, me thinks DL might disagree. Airtran are a big player at ATL

FL has not grown significantly in ATL. They are out of gates and DL is using that to its advantage. Why do you think FL is so anxious to buy YX but to find a way to deploy all of those new 737s on order.

Quoting Mcdu (Reply 19):
Your right. AA never had to fight LCC growth at SJC. CAL never had to worry about SWA over at HOU.

Let we acquaint you w/ the tense of verbs in the English language. AA FOUGHT and LOST LFCs in SJC.... AA HAS not had any significant LFC growth at DFW or MIA despite predictions that would happen.

WN doesn't fly from IAH any longer IIRC. .. so CO obviously did something right. B6 hasn't grown in EWR and in fact has pulled back service.

Quoting Mcdu (Reply 19):
How about DL and SLC with the B6 buildup.

WN at SLC is about the same size as it was 10 years ago. .... there has been no buildup.

Quoting Mcdu (Reply 19):
And how about DL and JFK with B6

You might want to look at the stats but DL is growing much faster than B6 at JFK....and DL isn't leaving thousands of passengers stranded on flights either.

Face it... UA and US have allowed one LFC after another to get a toe hold in their markets... and they just keep growing.. BTW.... Virgin America was approved to fly today... guess where they will be based? UA's #1 west coast market.
 
AADC10
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 8:39 am

This is all about mainline. No destinations will be dropped and possibly more will actually be added but smaller cities will lose mainline service and go to UAX.
 
mcdu
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 9:14 am

Quoting WorldTraveler (Reply 23):
Let we acquaint you w/ the tense of verbs in the English language.

LET WE? did you mean "let me"???????????? Nice one. You need to reread that sentence then try again. If the facts are not disputable then you claim you can not understand the sarcasm that was ment in that sentence.

How is that DFW hub doing for dear old DAL and not to mention the CVG hub???? Growing those are you?
 
FlyPNS1
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 9:28 am

Quoting WorldTraveler (Reply 23):
FL has not grown significantly in ATL.

Statements like this is why your posts are discounted as nothing more than Delta cheerleading. Over the past 3 years Airtran's traffic in ATL has increased 35.6%. Sounds pretty significant to me.

Even in just the past year, Airtran's traffic at ATL has grown 6.6%. DL's traffic at ATL shrunk by 0.6% despite all the international growth. Domestically, DL's traffic at ATL shrunk by 4.1% in the past year.

If DL was having so much luck competing against LCC's, why is DL slashing domestic capacity so sharply? The LCC's are feeding off of DL's customers just as rapidly as they are feeding off of UA, US, etc. Remember, you don't necessarily have to enter someone's hub in order to steal their traffic.
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 9:56 am

Quoting FlyPNS1 (Reply 26):
Even in just the past year, Airtran's traffic at ATL has grown 6.6%. DL's traffic at ATL shrunk by 0.6% despite all the international growth. Domestically, DL's traffic at ATL shrunk by 4.1% in the past year.

so obviously DL has redeployed its assets....and added a great deal more capacity to international markets.

And you also fail to respond to the question as to why FL is so hot on trying to find another place to grow... you might also want to post statistics showing that FL has a considerable revenue deficit compared with DL. FL has simply lived off of DL's spill.... which was significant as DL downsized in BK. Now that DL is aggressively recapturing traffic in ATL, FL is in trouble. You also have failed to mention that FL is delaying 737 deliveries.

but you MISS the point. Why don't you tell us WN's growth rate at DEN, PIT, and PHL?

Quoting FlyPNS1 (Reply 26):
why is DL slashing domestic capacity so sharply?

because DL carried more CONNECTING domestic traffic than any other airline IN THE WORLD.... and no one is stepping in to replace that.

I repeat, though.... DL still operates the WORLD's largest hub at ATL, including the US' largest DOMESTIC operation.

But this thread is about UA... and not too many people, including you, are able to defend UA's decision to cut domestic capacity. Nor are you able to defend the growth of LFCs in UA's hubs.
 
cch362
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 12:39 pm

Quoting WorldTraveler (Reply 27):
But this thread is about UA... and not too many people, including you, are able to defend UA's decision to cut domestic capacity. Nor are you able to defend the growth of LFCs in UA's hubs.

What UA is doing is not so different than what Delta is doing. Delta's 1Q report stated a cut of 5 to 7% in domestic mainline capacity for the rest of the year. A lot of the flying will be transferred to DLX carriers. Ditto for United to Express.

And this time it may not be a case of LCCs winning the battle yet again. Both FL and WN are under pressure because they have all these planes coming online. Otherwise FL wouldn't be trying to acquire YX and WN wouldn't have sounded so cautious in their 1Q statements. They may have flights in the hubs, but if their RASM and yield don't keep up, they're in for a spanking because legacy carriers' costs are much more competitive now.
 
FlyPNS1
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sat May 19, 2007 11:24 pm

Quoting WorldTraveler (Reply 27):
But this thread is about UA... and not too many people, including you, are able to defend UA's decision to cut domestic capacity. Nor are you able to defend the growth of LFCs in UA's hubs

It's very easy to defend UA's domestic capacity cut. Domestic traffic is beginning to weaken, UA is reacting to that by reducing domestic capacity. It's funny that you jump all over UA, but most of the legacies are cutting domestic capacity or keeping it basically flat. Of course, when DL cuts domestic capacity, you think they are geniuses, but when UA does it, it's bad.

As for LFC growth in UA hubs, LFC's are looking for markets with large O+D bases. So large markets like DEN and SFO are very appealing. Other than ATL, DL's hubs are less appealing. SLC and CVG are both small and growth potential is minimal. This is exactly why DL's traffic is shrinking or stagnant at both of those hubs.

You're correct that FL is looking for other places to grow. But it's not because they are scared of DL at ATL, it's simply a lack of gates which is the only way DL is able to stop FL's growth at ATL.
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sun May 20, 2007 3:54 am

Quoting Cch362 (Reply 28):
What UA is doing is not so different than what Delta is doing.

actually it is.. UA is simply pulling domestic capacity and shuffling their int'l network... they aren't really adding much new and are sending their costs up as they pull capacity. DL is redeploying capacity. Also, UA cut much deeper in BK than DL did. The fact that UA is cutting (not redeploying) just 18 months out of BK is not a terribly comforting sign.

Quoting Cch362 (Reply 28):
but if their RASM and yield don't keep up, they're in for a spanking because legacy carriers' costs are much more competitive now.

Actually, the network carriers are already reporting RASM growth far stronger than the LFCs. Several of the LFCs incluidng FL are not filling the capacity they are adding which is sending their load factors and RASMs down.

Quoting FlyPNS1 (Reply 29):
It's funny that you jump all over UA

I jump over UA because they had an incomplete BK as many people stated. they are now not able to compete effectively and they are allowing other carriers to grow in their hubs. AA is cutting capacity and is not on the most solid ground but AA is not exactly allowing LFCs to grow in its hubs. If anyone, DL is growing the most in AA's NYC and Latin America markets.

Quoting FlyPNS1 (Reply 29):
Other than ATL, DL's hubs are less appealing

JFK is a hub for DL and it s the world's largest market for travel... and DL is growing and winning there.

Quoting FlyPNS1 (Reply 29):
You're correct that FL is looking for other places to grow.

You also fail to appreciate that DL is not cutting capacity in its FL competitive markets... it is cutting capacity in other markets. Because DL uses an O&D revenue mgmt system, they are able to turn away the lower value flow traffic while preserving their presence in the local markets competitive w/ FL and other LFCs.
 
FlyPNS1
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sun May 20, 2007 5:45 am

Quoting WorldTraveler (Reply 30):
DL is redeploying capacity.

But the only reason DL is redeploying capacity, is because they were sub-optimally utilizing widebody aircraft on domestic routes. The other legacies weren't doing that. And I might remind you, that DL has dumped 170 mainline planes since 9/11. And by time DL's management is done, DL will have lost more domestic marketshare than any other legacy carrier.

Quoting WorldTraveler (Reply 30):
JFK is a hub for DL and it s the world's largest market for travel... and DL is growing and winning there

Unless you can show me financials that show DL is making money on all these new routes, you can't say DL is winning at JFK. I might also add that despite being a hub, DL still has fewer than 100 mainline departures at JFK. Currently, DL has only one hub that is supporting more than 100 mainline flights a day. That is the weakest of any legacy carrier and illustrates how fragile most of DL's hubs are.


Look, I'm not saying UA did a great job restructuring. They didn't. However, these cuts are nothing to get excited about.
 
FreequentFlier
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sun May 20, 2007 9:32 am

Quoting WorldTraveler (Reply 30):
I jump over UA because they had an incomplete BK as many people stated. they are now not able to compete effectively and they are allowing other carriers to grow in their hubs. AA is cutting capacity and is not on the most solid ground but AA is not exactly allowing LFCs to grow in its hubs. If anyone, DL is growing the most in AA's NYC and Latin America markets.

Its kind of silly to suggest that UA is "allowing" LCCs to grow in their hubs. UA doesn't grant permission. LCCs are free to fly wherever they want (oh, except DAL, but that's another story  sarcastic  ) - the legacies can only compete. Do you think WN is making money in DEN when they're running 50% LF in several markets? Do you think they're making money in IAD when they're running 40-50% LF in several markets there? Did UA "allow" F9 to enter SFO-LAX when F9 decided to split? Same with F9 SFO-LAS? How 'bout DEN-YYC? Did UA "allow" AS to enter SFO-SAN now that AS is pulling out a couple of months after they entered the market (and before WN announced it was going in)? How about DH? Did UA "allow" them to stay in business? Will UA "allow" WN to walk over them in SFO? Will it "allow" VX to do the same? The fact of the matter is that UA isn't "allowing" LCCs to do anything - it can only compete and force the LCCs into a weak hand. WN has a tendency to stay in a market until the market grows enough to match capacity, rather than reducing capacity to meet current demand (see DEN and IAD and soon SFO).

The fact of the matter is that LCCs are going into UA's hubs because UA's hubs are places LCCs want to be in. Don't think so? Wall Street seems to think so. Every single analyst regards UA's network as the best in the business. LAX, SFO, DEN, ORD, IAD, NRT - stack it up against any competitor and its pretty clear who's network you'd rather have.
 
worldtraveler
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sun May 20, 2007 9:55 am

Quoting FlyPNS1 (Reply 31):
But the only reason DL is redeploying capacity, is because they were sub-optimally utilizing widebody aircraft on domestic routes. The other legacies weren't doing that. And I might remind you, that DL has dumped 170 mainline planes since 9/11.

every carrier has its reason it ended up in C11 or very close. And despite dumping alot of mainline aircraft, system capacity has not dipped below 5% reductions.... DL is using its fleet very efficiently now. Part of what BK gives is the ability to dump a/c; if DL did that and used its remaining fleet far more efficiently, they did their job.

Quoting FlyPNS1 (Reply 31):
Unless you can show me financials that show DL is making money on all these new routes, you can't say DL is winning at JFK.

there are plenty of metrics that can be used to describe winning.... and there are certainly JFK routes that are profitable. DL execs have been free to say JFKBOM has been profitable from day 1. Most airlines, though, don't report individual route performance so beyond what is said, we don't know what is profitable for ANY airline.

Quoting FreequentFlier (Reply 32):
UA doesn't grant permission.

but if an airline does not aggressively compete w/ the new LFC, they might as well send an invitation. you'll remember that UA has a history of not even being competitive on fares w/ LFCs. for years, F9 was able to price its product lower than UA's and UA didn't match. that's why WN is showing up in UA's hubs. meanwhile, US has downgraded markets to RJs and pulled out of markets.... remember what US used to be in BWI.

Quoting FreequentFlier (Reply 32):
Do you think WN is making money in DEN when they're running 50% LF in several markets?

maybe not... but I don't guess you would say they are winning. I'll bet they will stay and sustain a loss... and set up a nice size operation in DEN and SFO until they have the size operation they want. When their overall financials are as good as they are, WN can afford it.

Quoting FreequentFlier (Reply 32):
Every single analyst regards UA's network as the best in the business.

no... they regard UA's hub locations as the best... UA's network is no longer considered the best in the business... UA has not even been consistently profitable on its domestic system since emerging from C11. And they haven't made money in Latin America in a REAL long time.

Quoting FreequentFlier (Reply 32):
stack it up against any competitor and its pretty clear who's network you'd rather have.

I'd rather have the one that is making money... geography, like any asset, only matters if you know how to make the asset work for you.
 
FreequentFlier
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RE: United Cut Domestic Capacity By 2%/ Intl Up 0.5%

Sun May 20, 2007 11:19 am

Quoting WorldTraveler (Reply 33):
maybe not... but I don't guess you would say they are winning. I'll bet they will stay and sustain a loss... and set up a nice size operation in DEN and SFO until they have the size operation they want. When their overall financials are as good as they are, WN can afford it.

That was sort of my point. Its not like UA sits back and takes it. UA competes just as any carrier does would. However, when an airline like WN is overall profitable, it can afford to subsidize losing routes in the short run in order to get a foothold of a market. UA is the most exposed carrier to LCC competition because LCCs want to fly into UA's hubs. But do you think WN is NEVER going to enter MSP? CVG? ATL? CLT? MEM? You could make the case they won't ever enter LGA, EWR or JFK but somehow I don't see WN avoiding the others forever and ever. They have to put the new deliveries somewhere.

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