apodino
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United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 6:46 pm

While I don't believe this is true, Smisek made the following comment today that I found interesting.

Quote:
President and CEO Jeff Smisek told an analyst’s conference in New York that his plan is to increase international flying as much as demand will support, and to make its domestic network as big as needed to supply passengers to international flights.

(Courtesy of KHOU.com)

So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too? A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed? Another translation may be, Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

I personally don't believe it will be that dramatic, but its a comment that makes me stop and think for a second.
 
ukoverlander
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 6:50 pm

Quoting apodino (Thread starter):
A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed?

A lot of people? Who are these people?
 
apodino
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 6:56 pm

Quoting ukoverlander (Reply 1):
A lot of people? Who are these people?

There are a lot of pilots on a pilot forum who are thinking this is true. With UA/CO pilots trying to pursue tougher scope, these comments from Smisek are not going to sit well with those pilots and this is going to make negotiations a lot tougher, and a lot angrier.
 
AADC10
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 6:58 pm

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too? A lot of people are taking this that his long range vision of United is to shrink the domestic network down to a level where its primarily feeding international flights, or to put it another way, as small as needed? Another translation may be, Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

The first part is correct. The view is that domestic travel will not be profitable in the long term because it is too easy for competitors to enter domestic. International is much more difficult to jump in. Domestic will scale down to whatever point is profitable.

How that translates into actual routes and planning remains to be seen. I find it difficult to believe that UA would abandon some of the usual domestic tactics, such as clogging up fortress hubs and predatory pricing. My guess would be that more routes will move to UAX.
 
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enilria
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 7:00 pm

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too?

Delta has been saying that is their strategy for a long time and they apparently feel that their current network accomplishes that, despite it having a lot of domestic routes. If he were really serious in those comments he would close CLE immediately since it is incongruous with those goals.

Quoting apodino (Thread starter):
Outsource all domestic flying, save for the 737/A320,

I think the days of large scale CPA outsourcing are gone. Maybe via pro-rate.
 
Rdh3e
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 7:21 pm

Quoting apodino (Thread starter):
Outsource all domestic flying, save for the 737/A320, don't order more narrowbodies, and eventually eliminate mainline domestic service altogether.

This statement is ludicrous, with scope negotiations are how they are, and there already being caps in place on how much UAX flying can be done (does no one realize this) there is actually no way to possibly come close to doing this. Pilots in the know would realize this, UAX isn't getting any bigger, and since it's pegged against mainline flying, any decrease in mainline flying comes with a commensurate decrease in UAX flying.
 
simairlinenet
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 7:45 pm

I think this is an overreaction.

Quoting apodino (Thread starter):
President and CEO Jeff Smisek told an analyst’s conference in New York that his plan is to increase international flying as much as demand will support, and to make its domestic network as big as needed to supply passengers to international flights.

We don't have the original quote here, but if it were a direct quote, then this is a misinterpretation.

"We need to make our domestic network big enough to feed the international network" could mean "we need to be sure to grow or restructure domestic flying in the right places to support international growth" (Pan Am argument to buying National)

"We need to make our domestic network small enough to feed only the international network" clearly means "we're going to downsize domestic flying in favor of international itineraries."
 
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ADent
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 7:54 pm

Quoting rdh3e (Reply 5):
there already being caps in place on how much UAX flying can be done

What is the PMUA cap on UAX flying?
 
peanuts
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 7:55 pm

Quoting enilria (Reply 4):
Delta has been saying that is their strategy for a long time and they apparently feel that their current network accomplishes that, despite it having a lot of domestic routes.

Correct. It seems that DL and UA are on the same page here. DL is also shedding most EAS flying, so more domestic routes will be cut.
AA is also getting into this mindset with ATI/JV in place and cornerstone hub thinking.

The only big difference between DL and UA/AA is that I believe DL will remain to have a fairly big P2P presence as well, where it makes sense, especially with WN in mind...
 
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enilria
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:13 pm

Quoting peanuts (Reply 8):
The only big difference between DL and UA/AA is that I believe DL will remain to have a fairly big P2P presence as well, where it makes sense, especially with WN in mind...

It seems that way, although whether it is a good financial strategy I might question.
 
Rdh3e
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:20 pm

Quoting ADent (Reply 7):
What is the PMUA cap on UAX flying?

Not to be a jerk about it, but I'm pretty sure that's confidential between UA and ALPA. If someone else wants to spill that's fine, there are probably hundreds of people on here that know.
 
ScottB
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:28 pm

Quoting apodino (Thread starter):
So is he saying here that the his goal for the domestic network is to feed international flights, rather than try to make money on the domestic side too?

The first analyst question was about the balance between the changes in domestic and international capacity in 2012, since consolidated capacity will be flat. Smisek's response:

Quote:
We expect to shrink the domestic capacity and grow the international capacity and basically balance off those two. The international business for us historically at both carriers has done quite well. And the domestic capacity is basically, I view that as a feeder for the international capacity, and so that's how we'll balance the two.
 
hiflyer
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:37 pm

Quoting ADent (Reply 7):
What is the PMUA cap on UAX flying?

Far less restrictive that PMCO....UA allows 70 seats...CO maxes at 50 for starters on rj's, Getting agreement between the pmco and pmua versions will be tough but then with UA itself...gonna take a bit....damn hard to put the rj genie back into the bottle without giving up something major. greater than 70 seat coming in house now with 70 later is a favorite topic....
 
Rdh3e
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:39 pm

Quoting hiflyer (Reply 12):
Far less restrictive that PMCO....UA allows 70 seats...CO maxes at 50 for starters on rj's, Getting agreement between the pmco and pmua versions will be tough but then with UA itself...gonna take a bit....damn hard to put the rj genie back into the bottle without giving up something major. greater than 70 seat coming in house now with 70 later is a favorite topic....

He's not asking about scope, he's asking about the Cap on the actual amount of flying they can do. Which has nothing to do with the size of the planes. Irrespective of any ASM limitations being related to the size of the AC.
 
LAXdude1023
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 8:44 pm

If you look at CO's Houston and Newark hubs, they have kind of been doing that already.

United is a different story. They are heavy internationally out of SFO and IAD. ORD has lots of international and domestic flights, but then they have a hub in Denver thats almost all domestic.
It is what it is...
 
Rdh3e
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 9:25 pm

Quoting LAXdude1023 (Reply 14):
Denver thats almost all domestic.

Yep, this week ~2800 flights, with ~175 International (if you include Hawaii) since I think that would be included in the international "type" of flight that SMI/J is referring to.
 
BC77008
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 10:58 pm

They better not be downsizing domestic! I non-rev with them all the time!   
"He waited his whole damn life to take that flight. And as the plane crashed down he thought 'Well isn't this nice...'"
 
DualQual
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 11:09 pm

Quoting rdh3e (Reply 13):
He's not asking about scope, he's asking about the Cap on the actual amount of flying they can do. Which has nothing to do with the size of the planes. Irrespective of any ASM limitations being related to the size of the AC.

UA's cap is a ratio or mainline to "large RJ". I can't remember what the ratio is. I want to say it can't be more than 50/50.

CO actually has no cap on the amount of RJ flying. The only cap is the 50 seat restriction.
There's no known cure for stupid
 
gigneil
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RE: United/Continental Conceding Domestic Market?

Thu Sep 15, 2011 11:45 pm

It'd be awfully spiffy if they'd improve the domestic network from IAD and SFO.

NS
 
AvSafety46
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 6:17 am

From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.
 
apodino
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 6:20 am

Quoting AvSafety46 (Reply 19):
From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.

I am hearing rumblings of the same thing...this coupled with Smisek's comments have me worried, and a lot of pilots as well. At least the pilots can always vote not to ratify the new deal.
 
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kgaiflyer
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 7:41 am

Quoting gigneil (Reply 18):
It'd be awfully spiffy if they'd improve the domestic network from IAD and SFO.

I just booked IAD-ELP / ELP-LAX for October 8th.

IAD-IAH & IAH-ELP are both OO CR7's that carry both CO and UA codeshare numbers (historically arrives-departs the same Concourse B gate at IAH -- according to Flightaware -- so both segments are probably on the same ship). Late that day I will fly ELP-LAX on an OO CR2.

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

Neat!  
 
iaddca
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 11:54 am

Quoting kgaiflyer (Reply 21):

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

no amount of MP miles is worth that
 
slcdeltarumd11
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 12:12 pm

If this were really to happen Denver and Cleveland would offer nothing. Seems like they would become a much smaller airline. I bet you he just means generally more international and less domestic
 
rising
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 12:58 pm

Quoting slcdeltarumd11 (Reply 23):
I bet you he just means generally more international and less domestic

Yes, it is in response to the airline taking on 6 787s and 19 739s in 2012. The cuts will be needed to offset any increase in capacity, which they must do to maintain profitability and pricing power. It has nothing to do with "conceding" the domestic network. The title of this thread is quite unfortunate and stems from serious misinformation. I would encourage everyone to watch the presentation and see what was actually said.

One of the first slides is entitled, "Serving the most destinations in the U.S." There is also a nifty photo of what the future Sky cabins will look like.  http://ir.unitedcontinentalholdings....entDetails&c=83680&eventID=4195076



[Edited 2011-09-16 06:29:29]
If it doesn't make sense, it's because it's not true.
 
UALFAson
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 1:30 pm

Quoting iaddca (Reply 22):

Quoting kgaiflyer (Reply 21):

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

no amount of MP miles is worth that

HAHAHAHA! Amen, brother! You are SO right about that. Thanks for the early morning laugh!
"We hope you've enjoyed flying with us as much as we've enjoyed taking you for a ride."
 
mogandoCI
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 1:51 pm

the way i read this as ceding marginal DEN routes to WN and treat it as a hub for the northwest plains plus the Colorado resorts. UA/CO has enough east-west hubs that DEN is pure overhead.

CLE has to be truncated. Pull it down quick instead of wasting time like DL on CVG and MEM.
 
N766UA
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 2:04 pm

Quoting mogandoCI (Reply 26):
CLE has to be truncated.

Why? It's making money.
This Website Censors Me
 
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kgaiflyer
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 2:23 pm

Quoting UALFAson (Reply 25):
Quoting iaddca (Reply 22):
Quoting kgaiflyer (Reply 21):

So that will be Atlantic-to-Rockies-to-Pacific ( 2229 nm ) without ever setting foot on a mainline jet.

no amount of MP miles is worth that
HAHAHAHA! Amen, brother! You are SO right about that. Thanks for the early morning laugh!

Well . . . I guess it's a point-of-view thing.

The CO early morning IAD-IAH red-eye used to be a 735 -- then a 145XR -- then nothing -- then back to an XR. So boarding a CR7 with ExPlus in the early morning dark really isn't so bad by comparison.

It is probable that the nice people at Fort Bliss-Alamogordo-White Sands -- who had a single 735 -- influenced CO for frequency over size, and the IAH-ELP route went all E145 all the time. So the twice-a-day CR-7s with ExPlus are a bonus.

I don't know the history of ELP-LAX except that it is a competitive route against AE and WN with most non-connecting O&D going to WN.

Anyway, several El Paso restaurants have been highlighted recently on the Food Channel (Food Channel personality Aaron Sanchez is an El Paso native) so you could say I'm going out for lunch rather than harvesting MP miles  

[Edited 2011-09-16 07:38:48]
 
codc10
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 2:36 pm

Quoting AvSafety46 (Reply 19):
From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.
Quoting AvSafety46 (Reply 19):
I am hearing rumblings of the same thing...this coupled with Smisek's comments have me worried, and a lot of pilots as well. At least the pilots can always vote not to ratify the new deal.

Both sides are rather far apart at this point. UA recently made an interesting, some may say reasonable, proposal to the pilots regarding an expedited mediation phase that would attempt to bring closure to the scope issue within 90 days (followed by binding arbitration for all other unresolved issues, not including scope), but this was rejected by the pilots.

Another issue that is being raised is outsourcing at the top end of the fleet. Many pilots believe the company wants to begin outsourcing international flying to JBA partners, and are looking for contractual protections to ensure the highest-paid crews do not see their flying cut.

The DL merger contract is a baseline for negotiations. I doubt we'll see anything materially worse than that.
 
Rdh3e
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 2:41 pm

Quoting CODC10 (Reply 29):
The DL merger contract is a baseline for negotiations. I doubt we'll see anything materially worse than that.

Didn't PMUA offer the pilots a word for word DL contract in '09?

Quoting CODC10 (Reply 29):
Another issue that is being raised is outsourcing at the top end of the fleet.

Ala Aer Lingus IAD-MAD.
 
apodino
Topic Author
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 2:49 pm

Quoting CODC10 (Reply 29):

Both sides are rather far apart at this point. UA recently made an interesting, some may say reasonable, proposal to the pilots regarding an expedited mediation phase that would attempt to bring closure to the scope issue within 90 days (followed by binding arbitration for all other unresolved issues, not including scope), but this was rejected by the pilots.

I heard some stories that said that the MEC nearly agreed to BA already. Apparently it was a tie vote in the MEC with one abstention or something like that. She hasn't been heading UALPA for very long, but I am already seeing calls for Wendy Morse to resign. It is rather unfortunate because she hasn't even had much of a chance to really negotiate anything yet.
 
ordbosewr
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 7:39 pm

Quoting CODC10 (Reply 29):
Another issue that is being raised is outsourcing at the top end of the fleet. Many pilots believe the company wants to begin outsourcing international flying to JBA partners, and are looking for contractual protections to ensure the highest-paid crews do not see their flying cut.

I think this is not really a Air Lingus issue (the pilots really want this gone already) much as it is the LH, SAS, Swiss, AC, etc issue (those included in the * JV++) where they have metal neutral revenue to the company.
It could lead to a solution where LH takes over all the US to Europe flying, and the UA pilots want to ensure that they have a piece of that flying. I think a reasonable approach is to fence it using % or minimums in quantity of flights probably by aircraft type.
It is kindda funny if you compare this Pilot view and the already announced plans to move domestic config planes to international configs to support international flying. And the addition of 787 and A350 planes in the coming years. Yes, all of those will result in retirements of some kind (ie PMCO 762 fleet).

As for Wendy, she is in a no-win situation. She escaped the recalled situation last year, but it is clear there are 'factions' within the PMUA pilot community that is going to make getting a deal difficult. As stated at the congressional hearing before the merger was approved both pilot group representatives expressed views that would make it difficult to get a joint deal without someone 'losing' (company or pilots union)!
 
norcal
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 7:52 pm

Quoting rdh3e (Reply 30):
Didn't PMUA offer the pilots a word for word DL contract in '09?

No they offered Delta pay + $1 which is a far worse contract than what Delta actually has given the better work rules that Delta has. The devil is in the details

Quoting AvSafety46 (Reply 19):
From what I hear everybody is going to be surprised at the Scope UA is going to getting away with and not in a good way for mainline. We all will need to see what is announced.

The membership will likely vote down any scope relaxation. The best that UA management can hope for in terms of scope is the current number of 70 seaters on property. Anything else is likely to get voted down unless there is a significant change of heart amongst the pilots.
 
DualQual
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 10:14 pm

Quoting norcal (Reply 33):
No they offered Delta pay + $1 which is a far worse contract than what Delta actually has given the better work rules that Delta has. The devil is in the details

They didn't even offer that. First year pay was still far lower than what DAL first year pay was. Calling it Delta +1 and and then gutting any of the work rules and pay that might make it a somewhat attractive offer does not make it Delta +1.
There's no known cure for stupid
 
norcal
Posts: 1507
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RE: United/Continental Conceding Domestic Market?

Fri Sep 16, 2011 11:22 pm

Quoting DualQual (Reply 34):
They didn't even offer that. First year pay was still far lower than what DAL first year pay was. Calling it Delta +1 and and then gutting any of the work rules and pay that might make it a somewhat attractive offer does not make it Delta +1.

Agreed, it was a PR play by management to try and cast the union in a bad light.

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