seatback
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Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 12:20 am

Years after Southwest re-entered the Denver market, do you think it was a good move financially to build such a large base? Are they making money in DEN? Would they have been better off making DEN a large spoke city to PHX, LAX, MDW, LAS and BWI?

Denver isn't large enough for three airlines and the other two seem to be committed to the fight.
 
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DeltaMD90
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 12:46 am

Quoting seatback (Thread starter):
Denver isn't large enough for three airlines and the other two seem to be committed to the fight.

I thought UA pulled back just a bit and Frontier is getting clobbered? In fact, I hear time and time again about WN's DEN strategy as an aggressive and successful strategy. I could be wrong...
Ironically I have never flown a Delta MD-90 :)
 
seatback
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 12:55 am

I think they're successful in regards to trafic, but I'm not so sure financially. Frontier, from what I recall has very high load factors out of Denver, but they're not making any money there.
 
splitterz
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 1:46 am

I am willing to bet that WN is loosing a boat load of money only because they can weather the storm longer than the other two carriers, mainly F9.
 
F9Animal
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 1:54 am

Quoting seatback (Thread starter):
Are they making money in DEN?

No, they are losing their tails in DEN.

Quoting splitterz (Reply 3):
I am willing to bet that WN is loosing a boat load of money only because they can weather the storm longer than the other two carriers, mainly F9.

F9 is not going anywhere. Nor are they going under. F9 is turning around, and showing some excellent signs of recovery. The airline has faced some major challenges, and WN is nothing. F9 survived constant assault since it's very beginnings from UA.

WN has had years of success. However, the tide is starting to change. WN has shown signs of soft profits lately.
I Am A Different Animal!!
 
n471wn
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 3:19 am

Quoting F9Animal (Reply 4):
and WN is nothing

You musrt be joking to make such a comment----I guess you have not been in Terminal C lately and seen the mobs of people.....
 
drerx7
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 3:26 am

Quoting F9Animal (Reply 4):
The airline has faced some major challenges, and WN is nothing.

I like both airlines...but a statement like that is delusional. I was absolutely shocked at how much WN has TAKEN over DEN when I flew through there in June...prior to that I had been through there 6-7 months before and they weren't as massive.
Third Coast born, means I'm Texas raised
 
AWACSooner
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 10:38 am

Threads like these are nothing short of bait for the WN bashers.

Yes, WN's entry into DEN can be labeled a success. No, they may not be making money hand over fist, but they're capturing load factors on the routes they've opened...mostly at the expense of UA, but F9 is also seeing dents as well (check the figures, F9 has reduced service or even discontinued service to a few cities that they and WN compete on from DEN). The game is WN's to lose (good lord people, use spell check...it's L-O-S-E).
 
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OzarkD9S
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 10:43 am

Don't know if you want to read much into this but when I booked an upcoming STL-LAS flight on WN, the cheapest options were thru DEN, either direct or connecting. WN seems to be forcing traffic thru DEN to fill seats. Just an observation.
Next up: STL-OAK-RNO-LAS-ICT-STL
 
splitterz
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 10:44 am

Quoting F9Animal (Reply 4):
F9 is not going anywhere. Nor are they going under. F9 is turning around, and showing some excellent signs of recovery. The airline has faced some major challenges, and WN is nothing. F9 survived constant assault since it's very beginnings from UA.

I was just mentioning the fact that WN has a mucher deeper pocket and can sustain constant loses unlike F9.
 
WNCrew
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 11:00 am

I haven't seen anyone post proof, or anecdotal evidence that WN is loosing money in DEN, but a lot of people sure like to say "I doubt.... I dont think...They're probably not.." How can you tell if WN is or isn't making money in DEN?

As for WN vs F9 vs UA, why do people have to get to snappy? This is business... it's not personal, the attacks make people look like primary school children.
ALL views, opinions expressed are mine ONLY and are NOT representative of those shared by Southwest Airlines Co.
 
PlaneAdmirer
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 3:05 pm

Quoting WNCrew (Reply 10):
This is business... it's not personal

You do realize when Hyman Roth & Michael Coreleone used that line it was in reference to someone either of them gave the order to kill.
 
flashmeister
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 3:56 pm

Quoting WNCrew (Reply 10):

I haven't seen anyone post proof, or anecdotal evidence that WN is loosing money in DEN, but a lot of people sure like to say "I doubt.... I dont think...They're probably not.." How can you tell if WN is or isn't making money in DEN?

OK, here's some...

In 2009, it was well known that WN was losing $38 million per quarter just in DEN. That's more than $400k per day.See article.

There's also some anecdotal reports from analysts as recently as April 2011 that WN continues to lose money in Denver, despite becoming #2 in the market. See article.

For more, look at the comments of Michael Boyd and others in the consulting biz. And, of course, it's quite notable that there are few if any analysts trumpeting the profitability of DEN for WN: the conventional wisdom is break-even or worse.
 
splitterz
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 3:59 pm

Quoting flashmeister (Reply 12):

OK, here's some...

In 2009, it was well known that WN was losing $38 million per quarter just in DEN. That's more than $400k per day.See article.

There's also some anecdotal reports from analysts as recently as April 2011 that WN continues to lose money in Denver, despite becoming #2 in the market. See article.

For more, look at the comments of Michael Boyd and others in the consulting biz. And, of course, it's quite notable that there are few if any analysts trumpeting the profitability of DEN for WN: the conventional wisdom is break-even or worse.

Exactly. Thank you for the articles. And this goes directly back to WN being able to ride out financial loses more than F9.
 
AWACSooner
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 4:17 pm

Quoting flashmeister (Reply 12):
In 2009, it was well known that WN was losing $38 million per quarter just in DEN.

That was 2009...

Quoting flashmeister (Reply 12):
There's also some anecdotal reports from analysts as recently as April 2011

Keyword: ANECDOTAL
 
redflyer
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 4:26 pm

Quoting F9Animal (Reply 4):
The airline has faced some major challenges, and WN is nothing. F9 survived constant assault since it's very beginnings from UA.

Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?
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DCA-ROCguy
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 4:33 pm

Quoting flashmeister (Reply 12):
There's also some anecdotal reports from analysts as recently as April 2011 that WN continues to lose money in Denver, despite becoming #2 in the market. See article.

Fair use quote from Denver Post 4/27/11 article:

Insiders have speculated that Southwest was losing money as it gained customers in Denver. Shelswell-White said Southwest doesn't talk about individual city profitability, adding, however, "We wouldn't continue to grow in the market if it weren't working for us

"Speculation" is hardly conclusive. I'd bet Southwest is at least breaking even in DEN. Our threads in 2011 have had a lot of citation of WN getting good yields a lot of places.

I'd also bet DEN can support three carriers, even at today's oil prices. It's a large, remote city. What will likely change is the distribution of market share, and overall seat capacity may moderately decline, as market share shakes out.

My prediction: Frontier stays about where they are. WN grows moderately. UA swaps out more mainline a/c for regional a/c, but doesn't cut many destinations. Incremental decline in seat capacity in Denver will likely come from UA, whose new CO management has other fish to fry.

Jim
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 4:37 pm

Quoting redflyer (Reply 15):
Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?

Besides AA and WN, hasn't every major carrier filed in order to keep flying? And it is arguable that AA should have filed. The idea that F9 should be the one to liquidate when US, NW, DL didn't doesn't quite fly.
 
redflyer
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 5:03 pm

Quoting PlaneAdmirer (Reply 17):
Quoting redflyer (Reply 15):
Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?

Besides AA and WN, hasn't every major carrier filed in order to keep flying? And it is arguable that AA should have filed. The idea that F9 should be the one to liquidate when US, NW, DL didn't doesn't quite fly.

Just goes to show that with the exception of AA and WN, but certainly WN, none of the other carriers survived an "assault".
My other home is a Piper Cherokee 180C
 
PlaneAdmirer
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 5:08 pm

Quoting redflyer (Reply 18):
none of the other carriers survived an "assault".

Those are still flying so IMHO they survived. What didn't survive were the labor contracts, pre-bankruptcy equity holders, and a fair amount of pre-bankruptcy debt and other obligations. That's not to say a lot of carriers didn't liquidate over the years, becaues they have, but so far F9 is still at it.
 
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 5:11 pm

Quoting AWACSooner (Reply 7):
WN's entry into DEN can be labeled a success

Without knowing what their goal was it's tough to say. If it was to push F9 out, then it's so far been a failure. If it's to lose lots of money on a large hub operation, I'd say it's a success.

Quoting AWACSooner (Reply 7):
No, they may not be making money hand over fist

If they're breaking even it's a miracle.

Quoting WNCrew (Reply 10):
How can you tell if WN is or isn't making money in DEN?

WN generally has the same to slightly higher yields and LF as F9, and F9 is losing lots of money, on lower costs.
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n471wn
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 6:31 pm

Quoting flashmeister (Reply 12):
For more, look at the comments of Michael Boyd

Long an individual who did not like LCC's and especially WN
 
wnflyguy
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 6:55 pm

WN is above the break even point and making a small profit in DEN.
DEN adds a lot of value to the WN net work as a whole. It helps relives presser from other WN cities by moving connecting passengers thru DEN frees up some high dollar O&D some where else in the WN system which adds to WN over all bottom line..enjoy wnfg
my post are my opinion only and not those of southwest airlines and or airtran airlines.
 
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mariner
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 7:16 pm

Quoting redflyer (Reply 15):
Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?

It doesn't really matter, does it? An airline called Frontier is still flying at DEN.

If it was the intention to remove the airline called Frontier from the face of the earth, Southwest had that opportunity at the auction and failed.

Quoting DCA-ROCguy (Reply 16):
My prediction: Frontier stays about where they are. WN grows moderately. UA swaps out more mainline a/c for regional a/c, but doesn't cut many destinations.

For the near future, I think that's probably right.

mariner
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redflyer
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 7:26 pm

Quoting mariner (Reply 23):
Quoting redflyer (Reply 15):
Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?

It doesn't really matter, does it? An airline called Frontier is still flying at DEN.

Of course it doesn't matter. Frontier had one profitable quarter out of, what, 12 before WN came to DEN? And then they filed BK within a couple of years of WN entering the DEN market, but according to the poster that I originally quoted, they have "defended against the assaults". So admirable.

Nope, it doesn't matter. This thread is about WN. So let's talk about how they are failing miserably in DEN and bleeding red.
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mariner
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 7:38 pm

Quoting redflyer (Reply 24):
Nope, it doesn't matter. This thread is about WN. So let's talk about how they are failing miserably in DEN and bleeding red.

I assume that's sarcasm (?) because I don't think Southwest is "failing miserably and bleeding red" at DEN. I don't know how profitable the operation is, or indeed if it is profitable at all, but I don't think that matters right now.

Nor do I think Southwest particularly had its guns set at the annoying gnat Frontier, although it might have thought that Frontier could become collateral damage. But hey - that's business and what happened at DEN (particularly with the auction) became lessons learned for the acquisition of Airtran and the push into ATL.

I think Southwest's entry into DEN was a smart and inevitable move and very well-executed. As Mr. Kelly said, Southwest changed its own model for DEN and (I think) was right to do so. DEN was a unique situation, requiring a unique approach.

mariner

[Edited 2011-09-01 12:48:39]
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n471wn
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 7:58 pm

Quoting mariner (Reply 25):
I assume that's sarcasm (?) because I don't think Southwest is "failing miserably and bleeding red" at DEN. I don't know how profitable the operation is, or indeed if it is profitable at all, but I don't think that matters right now.

Nor do I think Southwest particularly had its guns set at the annoying gnat Frontier, although it might have thought that Frontier could become collateral damage. But hey - that's business and what happened at DEN (particularly with the auction) became lessons learned for the acquisition of Airtran and the push into ATL.

I think Southwest's entry into DEN was a smart and inevitable move and very well-executed. As Mr. Kelly said, Southwest changed its own model for DEN and (I think) was right to do so. DEN was a unique situation, requiring a unique approach.

thank you for this thoughful response----these threads about WN seem to always bring out comments which simply are not accurate---the point being that all airlines have strategies which may involve markets where the profitability is the result of a longer plan and these plan executions takes time. It does not matter if WN is making money in DEN or not---they are making money as a company and DEN is an integral part of their strategy and after watching them for 40 years (yes I am ancient) I would not ever bet against them!
 
AADC10
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RE: Southwest & Denver: Was The Build Up A Good Move?

Thu Sep 01, 2011 9:55 pm

WN is probably not making money at DEN but there is an opportunity while F9 is limping and UA is moving resources to maintain the fortress hub at IAH. UA is cutting seats, which drives up yields. UA could cut quite a bit more and make DEN a decent yielding destination. DEN mostly worked as a connecting point when it was dominated by UA. Most of that is going to ORD and IAH so DEN may eventually have decent O&D yield.
 
txagkuwait
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RE: Southwest & Denver: Was The Build Up A Good Move?

Fri Sep 02, 2011 1:49 am

Forget the analysts. If you are not privy to WN's books, then neither they nor you have any way of knowing whether or not WN is making money in Denver.

However, gnaw on this for a moment.

WN's current Prez/CEO, Gary Kelly, is a bean counter. An accountant. A money guy. Just like Southwest's very first Prez/CEO, M. Lamar Muse.

Bean counters are notoriously averse to throwing good money after bad.

If Denver were not profitable, if it were not adding value to the Southwest brand, it would not have grown to its current size. I doubt they would have cut and run.....but you would not see nearly as many destinations and flights as there currently are if it weren't making some money.

How much money any station makes is really hard to say....because there are a million and one ways to calculate it. Do you do it on an added cost basis? Do you allocate General Office overhead by passenger, by RPM, by station? Do you allocate labor expenses by employee head count or by the employee head count with seniority factored in at each individual station?

There is so much darned lag time in the DOT stats but the gap between WN and F9 in terms of yield keeps getting bigger. Southwest is #1 in market share in many of Denver's big, important markets. Being the biggest does you no good if you aren't making money, but if your size bestows upon you certain competitive advantages that allow you to operate from a position of strength, then that is a good thing.

Someone up this thread mentioned WN routing a lot of connecting passengers via Denver......and suggested it might be an attempt to fill empty seats. Allow me to also suggest that Denver is in a really good place, geographically, to connect folks travelling East-West or Northeast-Southwest or Worthwest-Southeast. Thus a big part of connecting folks at Denver might be a successful strategy to reduce their costs of transporting transfer passengers. remember, Kelly is a bean counter and they are notorious for always looking at the cost side of things.

I've been flying WN a bunch AUS-DEN with a few DAL-DEN and SAT-DEN thrown in for good measure (from where I live, Austin Bergstrom is 1.5 hrs, SAT is 2 hrs, and Love Field is 2.5 hrs drive time) and I have noticed that flights are full, fares-while not obscene-have not been sold at fire sale prices as of late, and more than just a few folks are buying Business Select fares.

Denver is a good station for WN. I'd be real surprised if it wasn't making money for them. Nor should anyone forget that during the winter.....when a lot of traffic suffers......Denver becomes a popular destination for people inclined to break various body parts sliding down snow covered mountains on skis.
 
F9Animal
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RE: Southwest & Denver: Was The Build Up A Good Move?

Fri Sep 02, 2011 1:53 am

Quoting splitterz (Reply 13):
Exactly. Thank you for the articles. And this goes directly back to WN being able to ride out financial loses more than F9.

I understand what you are saying, but I am stating that F9 is recovering quite well. F9 losses will turn to profits soon.

Quoting n471wn (Reply 5):
You musrt be joking to make such a comment----I guess you have not been in Terminal C lately and seen the mobs of people.....

I see mobs of people, but have you been to terminal A lately? Guess you missed the mob of guests there?

Quoting redflyer (Reply 15):
Does filing bankruptcy constitute surviving an assault? Or is that a legitimate tactic used to defend against assaults?

Yes... F9 did not file bankruptcy because of WN. You might want to do a little research before making comments like this.

F9 survived "several assaults" from UA. Heavy competition, TED, Shuttle, and the list goes on. F9 survived, and made profits. While F9 might have gotten knocked a knee, the airline has continued to fight. The little guy in the corner has fought back, and gotten up when knocked down many times. Frontier and its employees are very dedicated to serve it's guests, and the guests keep coming back. WN is nothing in comparison to what UA has done to F9 in the past in terms of dirty tactics, and nasty fare wars.

And while we are all speculating, we all simply forget that UA could easily beat both F9 and WN in DEN if it wanted to. UA has plenty of planes, plenty of money, and plenty of gates. UA is not running, nor putting its tail between its legs. The airline is out to make money, and it obviously does not think that growing DEN is a smart move right now. Rest assured though, WN could easily get spanked by UA in DEN.

[Edited 2011-09-01 18:58:07]
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drerx7
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RE: Southwest & Denver: Was The Build Up A Good Move?

Fri Sep 02, 2011 2:09 am

Quoting F9Animal (Reply 29):
Rest assured though, WN could easily get spanked by UA in DEN.

I agree...but in a scenario like that F9 would be a casualty of war. UA can make more money reallocating resources to the coast and down to IAH. They won't be cannibalizing DEN too much though.
Third Coast born, means I'm Texas raised
 
point2point
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RE: Southwest & Denver: Was The Build Up A Good Move?

Fri Sep 02, 2011 11:11 pm

At this point, WN has (or will soon have with MHT and PVD) more n/s destinations out of DEN (51) than all of their other stations except for MDW (56) and LAS (54). And currently more than PHX (50) and BWI (47). Can it soon have more flights/capacity as well?

All stations west of DEN are connected n/s (possibly except ELP), and all that's missing is ISP, LGA, BUF, CLE, ALB and ORF going north and east (I' sort of surprised that PVD and MHT were added before BUF, ALB or ORF, and maybe LGA will come with the FL merger, but anyhow), and then a few of the cities in the southeast and Texas. But otherwise, most of the WN system has flow to/from DEN.

New cities, as well as capacity, keep being added here. With this much entangled here in DEN, I doubt WN is going anywhere soon. As for whether or not they are making any $$$ here, well..... as few posters have already stated, I would imagine it's in how they want to do the accounting. But in at least some ways of accounting, DEN must be of financial benefit to them, otherwise, why keep adding and adding and adding.....?



[Edited 2011-09-02 16:48:40]
 
txagkuwait
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RE: Southwest & Denver: Was The Build Up A Good Move?

Sat Sep 03, 2011 7:09 pm

Quote:
WN could easily get spanked by UA in DEN.

How? Please tell me how Wn could get "spanked" by UA?

Would it be like WN getting "spanked" by "Shuttle by United" in California?

People think about international, they thing about F, but they seldom stop to think that the vast majority of passengers....and most of the money to be made.....is made in what some FAs refer euphemistically to as "the main cabin."

Coach.

A very good argument can be made that WN has a much better Y product than UA.

Economy Plus...you might say. But not everyone on UA gets to sit in E+.

The real head count and the real money is made by the folks sitting in regular old Y.

UA's O&D in Denver has taken a big, serious hit with the presence of WN. The connecting traffic disguises it to an extent, but let us not kid ourselves. Airlines cannot live on the traffic between Pocatello and Baton Rouge. The real money to be made is Denver to Chicago, El Lay, Kansas City, Salt lake, Phoenix, Las Vegas et al.

UA declaring war pm WN in Denver, or anywhere else, will be like starting a land war in Asia. It seldom works out the way you intended.
 
F9Fan
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 1:55 am

Quoting Drerx7 (Reply 30):
They won't be cannibalizing DEN too much though.

Uh, UA is actually cutting year over year capacity at DEN by 11% to 17% this fall, more than any other hub in the UA or CO system (see http://www.cleveland.com/business/in...ontinental_airlines_not_cutti.html).

F9 seems to be holding on OK. Remember, F9 is no longer dependant on just DEN, but has MKE and, to a lesser extent, MCI to support them.
 
Cubsrule
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:07 am

Quoting txagkuwait (Reply 32):
A very good argument can be made that WN has a much better Y product than UA.

Really?

WN's Y product isn't bad, but, as you concede, WN doesn't have Y+. WN doesn't have IFE. While neither is exactly serving gourmet food, UA has BoB that includes real food. WN does not. Neither has free booze. What's better on board on WN? The legroom is about all I can come up with.
I can't decide whether I miss the tulip or the bowling shoe more
 
F9Animal
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:11 am

Quoting txagkuwait (Reply 32):
How? Please tell me how Wn could get "spanked" by UA?

Would it be like WN getting "spanked" by "Shuttle by United" in California?

People think about international, they thing about F, but they seldom stop to think that the vast majority of passengers....and most of the money to be made.....is made in what some FAs refer euphemistically to as "the main cabin."

Coach.

A very good argument can be made that WN has a much better Y product than UA.

Economy Plus...you might say. But not everyone on UA gets to sit in E+.

The real head count and the real money is made by the folks sitting in regular old Y.

UA's O&D in Denver has taken a big, serious hit with the presence of WN. The connecting traffic disguises it to an extent, but let us not kid ourselves. Airlines cannot live on the traffic between Pocatello and Baton Rouge. The real money to be made is Denver to Chicago, El Lay, Kansas City, Salt lake, Phoenix, Las Vegas et al.

UA declaring war pm WN in Denver, or anywhere else, will be like starting a land war in Asia. It seldom works out the way you intended.

UA has the aircraft and funds to put WN and F9 in a world of hurt in DEN. If UA wanted to spank WN and F9, they could. UA could easily add 10 times the flights that WN and F9 flies, and charge 50% of WN's lowest fare in DEN. While UA would take a huge hit in DEN on it, it could be done. WN has fired the first shots to warrant a war..... And I like the odds that UA would win if it did become a battle in DEN.

If UA got a CEO that wanted to fight WN in DEN, I would put my odds on UA. WN has nothing on UA when it comes to cities flown to, and their huge international presence.
I Am A Different Animal!!
 
LAXintl
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:14 am

Boyd Group had a small analysis out with data on traffic and revenues at DEN as of the end of 2010.

Carrier - Average Daily Enplanements - Market Share - % Local O&D - Average Fare - Yield cents
Frontier - 7,499 - 22.6% - 60.3% - $139.86 - 12.94
Southwest - 9,247 - 27.9% - 50.0% - $145.40 - 13.24
United - 10,454 - 31.5% - 58.2% - $209.03 - 16.89

Southwest has managed to grow into the #2 spot for both market share, and average generated local fare and yield.
From the desert to the sea, to all of Southern California
 
atrude777
Posts: 4258
Joined: Wed Aug 13, 2003 11:23 pm

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:28 am

Quoting point2point (Reply 31):
and maybe LGA will come with the FL merger, but anyhow),

While not daily, WN does fly DEN-LGA on Saturday only.

Alex
Good things come to those who wait, better things come to those who go AFTER it!
 
slcdeltarumd11
Posts: 3265
Joined: Fri Jan 09, 2004 7:30 am

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:50 am

Quoting DCA-ROCguy (Reply 16):
My prediction: Frontier stays about where they are. WN grows moderately. UA swaps out more mainline a/c for regional a/c, but doesn't cut many destinations. Incremental decline in seat capacity in Denver will likely come from UA, whose new CO management has other fish to fry.

Seems like a very likely scenario and the one i think is the most likely to happen.
Frontier however is far from "safe" long term however. Frontier has lost so much money for so many quarters now they need to really start making money to survive. Making money aka a small amount isn't gonna cut it they need to really make money we all know that for long term surivial. Frontier has little short term risk of going under but long term they need to make significant money at some point to be able to borrow money at reasonable rates and show potential. DEN and MKE seem like tough markets to ever really make significant money and its gonna be rough. They need somoene to reduce in DEN or MKE. Aren't these the actual two lowest hubs for avergage fares in the entire country?

Quoting redflyer (Reply 24):
Frontier had one profitable quarter out of, what, 12 before WN came to DEN? And then they filed BK within a couple of years of WN entering the DEN market, but according to the poster that I originally quoted, they have "defended against the assaults". So admirable.
Quoting seatback (Thread starter):
Are they making money in DEN?

WN and UA are too large to really know exactly. I doubt either is "making money" but UA is loosing o&d passengers and loyal flyers but probably makes money on connections. WN is gaining marketshare and gaining alot of very loyal and happy DEN customers which long term is worth money and making cities work that even UA or F9 can't.

Frontier is so small and has lost so much money over such a long period of time that its pretty safe to admit that they clearly are loosing money in DEN over any significant time period. They were loosing tons even before MKE entered the picture. DEN cant be profitable for Frontier over a long time period it just cant its too large a part of them and they have lost too much. Even if they are able to turn Denver around they need to make some SERIOUS money Frontier is certainly far from safe long term they have major financial problems but short term they are gonna be a thorn in UA and WN sides. WN is putting alot of pressure on both of them to reduce lets see if someone does?

For WN temporarily they seem like that are interested in grabbing market share, having an actual connection hub, and making routes work that even UA couldn't happen than anything else. Long term i still think WN believes someone will reduce service. I think WN is commited to DEN and bringing one of the other guys to shrink over the long term. I jsut cant see DEN sustaining three hubs permanently someones gotta shrink but who will?
 
swa4life
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:54 am

I'm not going to pretend to be some sort of financial guru, but as a Southwest employee I can tell you that DEN is playing an integral role in our route map right now. It would be difficult to believe that they are NOT making money in DEN, but like I said before,.. Even if O&D traffic in itself is not yielding profits, I can assure you that the "hubbing" that DEN is being used as for west to east (and vise versa) is serving a critical role in what Southwest is doing and that's really all that matters. In the grand scheme of things Southwest Airlines yields profits, and DEN is a part of the reason why.

Oh,.. and as an aside.. I can assure you that Frontier Airlines is a negligible footnote in what Southwest is doing at DEN. If you really think Southwest gives a flying fart about F9 or that they have any affect on what Southwest is doing you're kidding yourself.
 
Cubsrule
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 3:06 am

Quoting swa4life (Reply 39):
Even if O&D traffic in itself is not yielding profits, I can assure you that the "hubbing" that DEN is being used as for west to east (and vise versa) is serving a critical role in what Southwest is doing and that's really all that matters

Assuming that what you have said is so, why is it a good idea for WN - which has always made money focusing on local passengers - to lean on connecting passengers to make money?

I understand the whole thing about needing to change to survive, but why is this a good change to make?
I can't decide whether I miss the tulip or the bowling shoe more
 
slcdeltarumd11
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 3:07 am

Quoting F9Animal (Reply 35):
UA has the aircraft and funds to put WN and F9 in a world of hurt in DEN. If UA wanted to spank WN and F9, they could. UA could easily add 10 times the flights that WN and F9 flies, and charge 50% of WN's lowest fare in DEN. While UA would take a huge hit in DEN on it, it could be done. WN has fired the first shots to warrant a war..... And I like the odds that UA would win if it did become a battle in DEN.

If UA got a CEO that wanted to fight WN in DEN, I would put my odds on UA. WN has nothing on UA when it comes to cities flown to, and their huge international presence.

but united outright refueses to fly to any of the cities from DEN! They wont even fly to LHR, CDG, NRT which is a hub, or MEX! They fight against WN and F9 on the same domestic cities. Its far from too late for UA to be able to kick WN out. WN is able to make cities work that UA couldn't now. WN has the cash to outlast UA and UA would have to reduce profitable international flying to do this rediculous plan so they would bleed so much harder. UA cant spank WN its just not possible they have too high expenses and wont reduce profitable international flying to get these large planes to flood DEN. WN can borrow cash so cheaply and easily that can outlast anyone. People want to loan money they could borrow tons quickly and cheaply if they need it the polar opposite of Frontier.

Lets be honest DEN is not EWR or IAH to United. It is a domestic hub with 2 LCC hubs there and very low fares. They are not going to make a huge money loosing assault to save it. I still think if fronier can make it then UA will shrink and focus less on 0&d and more on connecting traffic that has to flow thru DEN.

[Edited 2011-09-04 20:09:38]
 
LAXintl
Posts: 20183
Joined: Wed May 24, 2000 12:12 pm

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 3:24 am

Quoting slcdeltarumd11 (Reply 41):
They wont even fly to LHR

They tried it for several years -- flight did great with Y class, but terrible in the critical premium cabins.

Quoting slcdeltarumd11 (Reply 41):
or MEX!

They do. Seasonally almost every year. Back this winter - starts Dec 15th - A319
From the desert to the sea, to all of Southern California
 
klwright69
Posts: 2318
Joined: Mon Jan 17, 2000 4:22 am

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 4:36 am

Quoting LAXintl (Reply 42):
Quoting slcdeltarumd11 (Reply 41):
They wont even fly to LHR

They tried it for several years -- flight did great with Y class, but terrible in the critical premium cabins.

Exactly. I think a UA DEN-LHR nonstop would make sense for a 2 class aircraft, flown on a seasonal basis.

I have flown DEN-LHR on BA. I also worked for CO in DEN when they operated DEN-LGW.

My general sense is that DEN-London is a low yield route, and has been. The raw passenger numbers are certainly there to sustain the flight, but not many fully paying pax upfront.
 
JaxMan19
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Joined: Thu Aug 06, 2009 7:16 pm

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 6:23 am

I just dont understand why SW would build up another "hub" in DEN with PHX and LAS being so close, i feel like it is an overkill to say the least.. now a spoke with 50-60 flights would be more appropriate
 
delta2ual
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 2:16 pm

Quoting JaxMan19 (Reply 44):
I just dont understand why SW would build up another "hub" in DEN with PHX and LAS being so close, i feel like it is an overkill to say the least.. now a spoke with 50-60 flights would be more appropriate


I was thinking the same thing. If WN is truly "hubbing" like everyone else is, why the need for 3 large hubs so close together? Of course, after the merger is complete, they will also have like 690 aircraft. At 12 hours/day, can you imagine the number of flights they will have? wow
From the world's largest airline-to the world's largest airline. Delta2ual
 
DfwRevolution
Posts: 8548
Joined: Sat Jan 09, 2010 7:31 pm

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 3:27 pm

Quoting Delta2ual (Reply 45):
I was thinking the same thing. If WN is truly "hubbing" like everyone else is, why the need for 3 large hubs so close together?

1. Because they are the largest domestic carrier and only getting bigger.

2. DEN is also closer to the geographic center of the country than LAS or PHX. Many connections through DEN would result in a shorter trip distance than through LAS or PHX.

Quoting cubsrule (Reply 34):
Really?

WN's Y product isn't bad, but, as you concede, WN doesn't have Y+. WN doesn't have IFE. While neither is exactly serving gourmet food, UA has BoB that includes real food. WN does not. Neither has free booze. What's better on board on WN? The legroom is about all I can come up with.

WN is rolling-out WiFi on-board their fleet, that must count as IFE. Other WN advantages:

- No checked baggage fee
- All WN fares are refundable or reusable (hugely advantageous)
 
XT6Wagon
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 3:51 pm

Quoting JaxMan19 (Reply 44):
I just dont understand why SW would build up another "hub" in DEN with PHX and LAS being so close, i feel like it is an overkill to say the least.. now a spoke with 50-60 flights would be more appropriate

Close? er... Not so much. As others have said DEN is far better for connecting the east and the west parts of the route map than just about anywhere. ABQ was one of thier major east-west connection cities but DEN being a larger city and farther north makes alot of sense.

Part of what people miss in why DEN works on the money side so quickly is that it grew at the expense of the worst flights in the region. So DEN service had a very low bar to beat to be a good thing for WN.

Quoting cubsrule (Reply 34):
WN doesn't have Y+.

Er, thats *ALL* WN offers. 31-32" seating pitch, leather chairs. As for your AVOD bit, iPads are common. For those without them, books and "walkmen" have been around for quite some time... rather longer than your tiny little TV's in the seat back that are often broken.
 
User avatar
ADent
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RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 6:30 pm

Quoting cubsrule (Reply 34):
WN's Y product isn't bad, but, as you concede, WN doesn't have Y+. WN doesn't have IFE. While neither is exactly serving gourmet food, UA has BoB that includes real food. WN does not. Neither has free booze. What's better on board on WN? The legroom is about all I can come up with.

IFE - UA has you there if you want to watch reruns of The Office on the overhead screen. UA does offer CH 9, but that is spotty.

Food - WN offers food free - pretzels, peanuts, sometime cookies. UA offers nothing free and many of the BOB aren't that great.

Service - UA will typically make one pass with the free soda and BOB cart. WN will typically do more on the longer flights.

RJs - MANY of the "UA" flights I am on are operated by CR7 (seen CRJs and ERJs too) No IFE. No BOB. No CH 9. No suitcases on board at all. When you fly WN you are mainline. And these are cities WN flies to (though some are non-stop on UA vs connecting on WN).
 
JaxMan19
Posts: 43
Joined: Thu Aug 06, 2009 7:16 pm

RE: Southwest & Denver: Was The Build Up A Good Move?

Mon Sep 05, 2011 7:11 pm

Quoting dfwrevolution (Reply 46):
. DEN is also closer to the geographic center of the country than LAS or PHX. Many connections through DEN would result in a shorter trip distance than through LAS or PHX.

So then they should choose to keep 2 of those"hubs" i.e DEN, PHX or DEN LAS