shanderawx
Topic Author
Posts: 134
Joined: Tue Feb 28, 2006 3:34 pm

Korea, Hong Kong, China And IAH

Sun Mar 11, 2012 9:30 pm

With the size, Latin presence, and growth of IAH, why is Asian growth so stymied?
Only CO to NRT and Singapore to SIN via Moscow, lots of cargo flights, but not passengers,
Large Asian community here and the town industry (oil, energy) is ubiquitous.
 
User avatar
IrishAyes
Posts: 2162
Joined: Sat Jan 26, 2008 6:04 pm

RE: Korea, Hong Kong, China And IAH

Sun Mar 11, 2012 10:09 pm

1). Volatile economy, slump in premium travel, VFR traffic is too infrequent and price-elastic to chase after
2). Yields likely not strong enough to offset high-costs of operating ULH flights/aircraft in today's fuel environment
3). Relatively weak financial health of legacy carriers in Asia; too high risk to broaden int'l operations when medium-haul/intra-Asia flights are struggling as is.
4). Also would be frivolous on UA metal, which can funnel IAH-Asia traffic via West Coast hubs (LAX/SFO) or over NRT without having to dedicate two aircraft and stretching their fleet on a thin-route.
5). Competition/growth/rise of Middle East carriers already serving IAH

Frankly, with the reductions on IAHLOS and IAH-DME-SIN, as well as EK axing their second daily IAHDXB flight, it's clear that all the "growth potential" people claim IAH has is quite over-hyped.
confidence is silent. insecurities are loud.
 
PLANEMANGROY
Posts: 4
Joined: Sun Apr 25, 2010 8:32 pm

RE: Korea, Hong Kong, China And IAH

Sun Mar 11, 2012 10:29 pm

There isn't enough motivation for UA or any Asian carriers to expand service between IAH and Asia. Operating costs are just too high and it's easier for UA to connect passengers through LAX, SFO, ORD, or even NRT.
Glorious Metal Birds, They Fly The Sky Like An Eagle In The Eye Of A Hurricane
 
trex8
Posts: 4618
Joined: Sat Nov 02, 2002 9:04 am

RE: Korea, Hong Kong, China And IAH

Sun Mar 11, 2012 10:37 pm

CI did TPE-SEA-IAH for a few years and had to drop it, it did ok initially with lots of pax heading for Vietnam etc but with more direct connections in recent years it wasn't sustainable. Maybe they would have done better if they could have operated something other than aa A343. IMHO if they did TPE-ANC-IAH with an A333 they might have enough cargo to make it work without a long transpac segment and better fuel economy in an A330.
 
User avatar
drerx7
Posts: 4223
Joined: Fri Jun 30, 2000 12:19 am

RE: Korea, Hong Kong, China And IAH

Sun Mar 11, 2012 10:57 pm

CI was chasing the high VFR traffic with low fares, the problem was it was a long journey as opposed to IAH-NRT/LAX/SFO-onward. In IAH defense, they are gaining A380 and the second DXB axing resulted in the remaining daily upgrading to a 77W. And the new UA timetable for Apr/May has a lot of UA capacity coming in the form of 757s everywhere.
Third Coast born, means I'm Texas raised
 
LAXdude1023
Posts: 4460
Joined: Thu Sep 07, 2006 3:16 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 1:34 am

I think IAH could support one more destination in Asia.

I think we can rule out HKG. Local market is very small and there is no hub on the HKG side for connections. AA/CX would have much better luck trying this one out of DFW since there are hubs on both sides and the local market is bigger, but even then Im skeptical that would work either.

They have a partner with a hub on the ICN side, but Im still extremely skeptical. KE had a much larger network with CO was partners with them and they never launched IAH. If KE couldnt make it work, I doubt OZ has a shot. Not to mention, the Korean O&D in Texas is heavily centered in North Texas, not South Texas.

PVG or PEK would be the way to go. Large local markets both (with PEK being slightly larger) and the yields are really good to PVG. Then they have Air China to feed in PEK and Shanghai Airlines in PVG. I think one of these would work, but not both. I think PVG would be the better choice, but I dont know what UA would think.
It is what it is...
 
User avatar
drerx7
Posts: 4223
Joined: Fri Jun 30, 2000 12:19 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 1:49 am

Whatever and whoever flies anything new between IAH and Asia - I think it will be the domain of the 787.
Third Coast born, means I'm Texas raised
 
avi8
Posts: 881
Joined: Sun Jun 26, 2011 1:36 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 1:55 am

Did IAH-LOS get reduced?
avi8

Medschool student
 
User avatar
drerx7
Posts: 4223
Joined: Fri Jun 30, 2000 12:19 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 2:08 am

Quoting avi8 (Reply 7):

Did IAH-LOS get reduced?

Yeah, but that is due in part to the recent unrest in LOS as well as the 777 is a lot of plane for a fledgling market. Also the VFR traffic is highly seasonal in the market...this isn't the season.
Third Coast born, means I'm Texas raised
 
klwright69
Posts: 2394
Joined: Mon Jan 17, 2000 4:22 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 11:43 am

Quoting avi8 (Reply 7):
Did IAH-LOS get reduced?

Yes, it did. In the last thread about the route, I pointed out that it is now 5x a week. But it is bumped up to daily certain summer and holiday weeks.
 
CZ346
Posts: 95
Joined: Wed Feb 01, 2012 2:57 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 12:50 pm

IAH to Asia is a rough one. A big part of it is that the market is based on foreign demographic and tourism. MOST of the people in these categories don't travel enough to care about a single connection on one end. Most of the ULH flights that connect locations with major foreign demographics or tourism gains also serve another purpose; Business. And business in the America's can be boiled down to this (obviously with exceptions) - Southeast: Latin America ; West Coast: Asia ; Northeast: All of the Above

Business travel between Asia and the America's pretty much boils down to outsourcing. I'm not saying this is the only reason, but its the larger part of it. Most of this sourcing is going to either US consumers or intermediates. Those products / end products then are transported / forwarded to Latin America if needed, or shipped directly to Latin America and typically the consignee on the BOL/ Revised BOL is none other than that American middle man (can you tell I've spent a ton of time in outsourcing out of China into Latin America?).

As much as it hurts me not to go off on a rant about the ENDLESS opportunities out there regarding bringing products from Latin America into China, products that China are net importers of (BPG soyabean oil ... woodchips, etc.), I'll spare you, but that unfortunately doesn't happen.

Long story short, the Asia - Latin America via IAH market is TINY; and the flight between GRU and IAH is just as comparable to the flight between GRU and EWR. It's just not a market that isn't already fulfilled through connections of equal total travel time / number of connections.

Sorry, hope I didn't get too off topic...
 
aeroblogger
Posts: 1380
Joined: Tue Dec 20, 2011 5:53 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 12:58 pm

Quoting LAXdude1023 (Reply 5):

PVG or PEK would be the way to go. Large local markets both (with PEK being slightly larger) and the yields are really good to PVG. Then they have Air China to feed in PEK and Shanghai Airlines in PVG. I think one of these would work, but not both. I think PVG would be the better choice, but I dont know what UA would think.

FM moved to SkyTeam a couple years back after being bought out by MU. So I think PEK would be best choice in China for UA...
Airports 2012: IXE HYD DEL BLR BOM CCU KNU KTM BKK SIN ICN LAX BUR SFO PHX IAH ORD EWR PHL PVD BOS FRA MUC IST
 
Tdan
Posts: 497
Joined: Mon Nov 28, 2011 9:36 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 1:16 pm

Quoting IrishAyes (Reply 1):
1). Volatile economy, slump in premium travel, VFR traffic is too infrequent and price-elastic to chase after
2). Yields likely not strong enough to offset high-costs of operating ULH flights/aircraft in today's fuel environment
3). Relatively weak financial health of legacy carriers in Asia; too high risk to broaden int'l operations when medium-haul/intra-Asia flights are struggling as is.
4). Also would be frivolous on UA metal, which can funnel IAH-Asia traffic via West Coast hubs (LAX/SFO) or over NRT without having to dedicate two aircraft and stretching their fleet on a thin-route.
5). Competition/growth/rise of Middle East carriers already serving IAH

Frankly, with the reductions on IAHLOS and IAH-DME-SIN, as well as EK axing their second daily IAHDXB flight, it's clear that all the "growth potential" people claim IAH has is quite over-hyped.

Oi, way too many opinions here without any granularity to make such broad generalizations:

1) Listen to all of the US carrier earnings calls and there was not one mention of a slump in premium travel. Premium travel to/from Asia and Latin America is on fire, only Europe is in a bit of a slump and that region does not affect IAH-Asia demand. Market volatility is not in-and-of-itself a determinant of route profitability. Volatility simply implies an increasing amplitude and standard deviation and not a negative or declining demand for travel. There is no correlation. Highly volatile growth is still growth.

2) Today's fuel environment is the biggest hurdle in starting new markets. Since IAH-Asia is such a long flight, it will adversely affect price-sensitive demand. However, there is not a single route flown by a US carrier between the continental US and Asia that is dependent on this low-yield, VFR, price-sensitive traffic. They are all determined by the business demand (unlike some routes to Europe which make money largely from the coach cabin).

3) ??? Other than JAL and Malaysian (which is a hot mess), what other Asian majors are having issues?

4) This is largely true as the UA network allows the IAH traffic to be funneled throughout the system. However, this is only UA and does not affect foreign carriers.

5) EK/QR do carry a bunch of traffic to South Asia, but not as much between IAH and East/Southeast Asia.

Having said all of that, the Asian demand from IAH is growing, but is not yet concentrated. The largest unserved business markets are in China, but the local market alone cannot support the routes just yet. Flow will be needed and aside from Florida, China-IAH will overfly everywhere else in the US, requiring significant backtracking. Additionally, any flow beyond IAH to Latin America is stymied due to the visa requirements for Chinese passports.

I think OZ would do phenomenally on ICN-IAH. Even though the local market is small compared to DFW, the connections on both ends are very good and large enough to more than support a nonstop bridge. Plus, S. Korea is part of the visa-waiver program, so ICN-Latin America traffic can be easily carried.
We will ride this thunderbird, silver shadows on the earth, a thousand leagues away our land of birth... -Captain Bruce
 
2travel2know2
Posts: 2316
Joined: Mon Apr 26, 2010 3:01 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 3:08 pm

Isn't Harbin HRB China energy capital? If so, wouldn't a HRB-IAH work?
Be CA PEK-HRB-IAH... or even the strangest of routings UA B757 IAH-ANC-HRB? (feed in ANC from SFO and ORD)
I'm not on CM's payroll.
 
LAXdude1023
Posts: 4460
Joined: Thu Sep 07, 2006 3:16 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 3:37 pm

Quoting 2travel2know2 (Reply 13):
Isn't Harbin HRB China energy capital? If so, wouldn't a HRB-IAH work?

No, never. The market is tiny at best.

Quoting Tdan (Reply 12):
I think OZ would do phenomenally on ICN-IAH. Even though the local market is small compared to DFW, the connections on both ends are very good and large enough to more than support a nonstop bridge. Plus, S. Korea is part of the visa-waiver program, so ICN-Latin America traffic can be easily carried.

I would be more than willing to be proven wrong on this, but given that KE was much more abitious than OZ and they didnt start it then, I would be somewhat surprised if ICN-IAH was started.

I still think given that IAH can probably only support one more flight to Asia, China is the best bet. From IAH, thats simply where the O&D is. I do agree CZ346, Asia-Latin American is overblown with the exception of a few cities (GRU, GIG, EZE, MEX, SCL, and LIM) and connections to those cities from Asia are plentiful.
It is what it is...
 
Tdan
Posts: 497
Joined: Mon Nov 28, 2011 9:36 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 7:32 pm

Quoting LAXdude1023 (Reply 14):
I would be more than willing to be proven wrong on this, but given that KE was much more abitious than OZ and they didnt start it then, I would be somewhat surprised if ICN-IAH was started.

We've had this discussion before and you've made some great points about it. I was surprised that KE never tried IAH during CO's time in Skyteam. However, there are two big reasons why I believe KE never came to town:

-KE was already at DFW, which has a much larger local market
-There was no visa waiver for South Korean passports at the time

Additionally, IAH-Asia has continued to grow, particularly in business class. If CO were still in Skyteam, I think KE would have eventually started IAH alongside DFW, especially after the visa waiver program came into existence. There's just too much front cabin demand from IAH to Asia for only one nonstop and no foreign carriers (SQ excluded since they route via Europe).

Again, agree to disagree. I don't think any other airline except for OZ (or NH operating IAH-NRT #2) could make IAH-Asia work, but I think there is a potential growth opportunity present for those carriers.
We will ride this thunderbird, silver shadows on the earth, a thousand leagues away our land of birth... -Captain Bruce
 
LAXdude1023
Posts: 4460
Joined: Thu Sep 07, 2006 3:16 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 7:35 pm

Quoting Tdan (Reply 15):
Again, agree to disagree. I don't think any other airline except for OZ (or NH operating IAH-NRT #2) could make IAH-Asia work, but I think there is a potential growth opportunity present for those carriers.

You bring up some great points as well. I dont think either of us doubts that IAH could use another flight to Asia, I think where we disagree is where that flight would be better placed.

I guess only time will tell.
It is what it is...
 
User avatar
drerx7
Posts: 4223
Joined: Fri Jun 30, 2000 12:19 am

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 7:58 pm

Quoting Tdan (Reply 15):
Again, agree to disagree. I don't think any other airline except for OZ (or NH operating IAH-NRT #2) could make IAH-Asia work, but I think there is a potential growth opportunity present for those carriers.

I agree - I could see another IAH-Asia flight (to PEK more than likely) via UA on the 787. My money is honestly on NH as a NRT second flight perhaps 3-5x weekly with a 787.
Third Coast born, means I'm Texas raised
 
User avatar
IrishAyes
Posts: 2162
Joined: Sat Jan 26, 2008 6:04 pm

RE: Korea, Hong Kong, China And IAH

Mon Mar 12, 2012 8:43 pm

Quoting Tdan (Reply 12):
Premium travel to/from Asia and Latin America is on fire.

I've been told quite the opposite. Latin America continues to attract strong demand for premium travel, but in Asia, equities are down 4%. Future expections on equity markets tend to drive business decisions in relation to discretionary spending on items such as paying for premium seats. If equities are down, you would think that demand for premium travel likely is down as well.

Now, it's possible we may be getting our information from different sources. But, why haven't we seen major recent expansion in nonstop US-Asia routes? DL axed ATLPVG, SQ has reduced frequencies on LAXSIN and IAH-SIN, TG has canned the nonstop LAXBKK, and aside from the LAX-PVG routes that started nearly a year back, has anything else come online since then?

Quoting Tdan (Reply 12):
Today's fuel environment is the biggest hurdle in starting new markets. Since IAH-Asia is such a long flight, it will adversely affect price-sensitive demand. However, there is not a single route flown by a US carrier between the continental US and Asia that is dependent on this low-yield, VFR, price-sensitive traffic. They are all determined by the business demand (unlike some routes to Europe which make money largely from the coach cabin).

I never pointed to any examples of routes that carried only VFR traffic. I simply stated that Asian carriers have huge exposure to the high jet fuel environment which will undoubtedly affect decisions in relation to operating ULH flights.

Now, as new a/c deliveries with lower C/ASMs become available, the situation may change, but that is still a few years away.

Quoting Tdan (Reply 12):
3) ??? Other than JAL and Malaysian (which is a hot mess), what other Asian majors are having issues?

Okay, in your defense, here is an area that could have merited further elaboration from my end.

In Asia, the real growth is in the middle class/low-cost carrier segment, particularly on the short to medium haul segments, which has been a boon for the LCCs but a blow for the legacies. Stability of the int'l operations for the legacy carriers depend on the feed from shorter haul routes into their hubs. This has plagued the likes of MH, TG, etc.

The way I see it, these carriers need to make insure their domestic networks can compete viably against the growing LCCs before attempting high-risk ventures in the ULH arena.

You made some good points though, thanks for challenging my over-simplification. I'm on vacation, so I'm a bit disconnected these days  Smile

[Edited 2012-03-12 13:45:15]
confidence is silent. insecurities are loud.

Who is online