mattya9
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More AA/US Merger News

Fri Aug 24, 2012 6:47 pm

Not a lot of new information here. However, it is stated in the article the PHX hub would remain the same size so it can take care of the domestic traffic out west while (assuming) LAX handles the international traffic and heavier cross country traffic. Of course this is all taken with a grain of salt and I'll believe it when I see it. Thoughts everyone?

http://www.azcentral.com/arizonarepu...ays-inches-toward-merger-deal.html

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Cubsrule
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RE: More AA/US Merger News

Fri Aug 24, 2012 6:49 pm

Would Doug Parker say anything different to the Phoenix media?
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n737aa
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RE: More AA/US Merger News

Fri Aug 24, 2012 6:54 pm

Ask the folks in STL how that worked out for them....STL was to be a reliever hub for ORD and was supposed to grow...never happened. STL is just another spoke now.

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milemaster
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RE: More AA/US Merger News

Fri Aug 24, 2012 6:54 pm

These AA/US merger threads are going to be fun to read 3 - 4 years from now.
 
EricR
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RE: More AA/US Merger News

Fri Aug 24, 2012 8:46 pm

Quoting mattya9 (Thread starter):
it is stated in the article the PHX hub would remain the same size so it can take care of the domestic traffic out west while (assuming) LAX handles the international traffic and heavier cross country traffic.



If the merger does take place, PHX will not survive as a hub in the long term.

The bread & butter of the US hub in PHX is connecting the west coast to points east. Both AA & and surprisingly US have a very small presence in the Rocky Mountain states. What is the point of a PHX hub when the combined carrier has a very limited presence in the Rocky Mountain region?

DFW & ORD already exist as hubs to connect the west coast to destinations in the Midwest and East. Therefore, approximately 2/3 to 3/4 of US's connecting traffic in PHX would be siphoned off by ORD and DFW. LAX already serves as a intra-west connecting hub. It is not in an ideal geographic location, but PHX is not much better.

It would be a different story if the combined carrier had a massive presence in the Rocky Mountain states such as DL or UA, but they don't. Based on the current combined route map of US and AA, the only cities that really would benefit from keeping a PHX hub would be SLC, ABQ, DEN, BOI, ELP, TUC, DRO, GJT, and JAC. These are not enough destinations to warrant the expense of maintaining a hub in PHX.
 
HPRamper
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RE: More AA/US Merger News

Fri Aug 24, 2012 8:52 pm

Quoting EricR (Reply 4):
What is the point of a PHX hub when the combined carrier has a very limited presence in the Rocky Mountain region?
Quoting EricR (Reply 4):
It would be a different story if the combined carrier had a massive presence in the Rocky Mountain states such as DL or UA, but they don't. Based on the current combined route map of US and AA, the only cities that really would benefit from keeping a PHX hub would be SLC, ABQ, DEN, BOI, ELP, TUC, DRO, GJT, and JAC. These are not enough destinations to warrant the expense of maintaining a hub in PHX.

Maybe the new airline would choose to restart service in the intermountain West in the absence of a UA codeshare. HP used to serve quite a few markets in the region that were abandoned shortly after the US merger. I may be making an assumption, but my impression of an airline that truly wants to be a domestic powerhouse is that they would want a comprehensive, cross-country network especially in cases where they cannot rely on a codeshare. In this instance, the intermountain West would be the only real "hole" in the new AA network.
 
LAXdude1023
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RE: More AA/US Merger News

Fri Aug 24, 2012 8:52 pm

Quoting mattya9 (Thread starter):
Not a lot of new information here. However, it is stated in the article the PHX hub would remain the same size so it can take care of the domestic traffic out west while (assuming) LAX handles the international traffic and heavier cross country traffic. Of course this is all taken with a grain of salt and I'll believe it when I see it. Thoughts everyone?

DL told the same thing to MEM and CVG.

That said, I dont think PHX suffers the same fate as MEM and CVG. I also dont think it will be the same size. I see a hub of about 200 departures of which about 70 are mainline. Mainline cities served would be those on the Coasts and other hub cities. RJ destinations served would be those in the Mountain West, Southwest, and Midwest.
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AAIL86
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RE: More AA/US Merger News

Fri Aug 24, 2012 9:04 pm

"Gov. Jan Brewer and other political leaders have launched an effort to keep the headquarters in Arizona."

Read more: http://www.azcentral.com/arizonarepu...ard-merger-deal.html#ixzz24V2aG9Z6

Maybe she could also ask him about restarting PHX-HNL-NGO with a couple leased A380s   
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PHX787
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RE: More AA/US Merger News

Fri Aug 24, 2012 9:13 pm

Quoting milemaster (Reply 3):
These AA/US merger threads are going to be fun to read 3 - 4 years from now.

We should make a book

Quoting mattya9 (Thread starter):
Not a lot of new information here. However, it is stated in the article the PHX hub would remain the same size so it can take care of the domestic traffic out west while (assuming) LAX handles the international traffic and heavier cross country traffic.

This is what I've been saying would happen. PHX has too much of a hub here and, coupled with O&D to PHX during peak season, and the population here, US would be very stupid to close the hub. LAX is an obvious int'l destination and maybe with the dual west coast hub there would be an exponential increase of LAX-PHX routes (maybe one every half hour) to accommodate this.

Given this formula too, maybe PHX would see some of AA's 787s do some international service as well.


If this happens (as it rightfully should,) then the AA/US merger would be beneficial to DFW, LAX, and PHX altogether. LAX is too big to handle any sort of expansion, PHX is ripe for expansion, and DFW is fine where it's at.
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flyingsux
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RE: More AA/US Merger News

Fri Aug 24, 2012 9:32 pm

Quoting PHX787 (Reply 8):
If this happens (as it rightfully should,) then the AA/US merger would be beneficial to DFW, LAX, and PHX altogether. LAX is too big to handle any sort of expansion, PHX is ripe for expansion, and DFW is fine where it's at.

I don't agree - what purpose would having a hub between LAX and DFW serve, especially so close to LA? Ask anyone who thinks CLE's days are numbered...
 
commavia
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RE: More AA/US Merger News

Fri Aug 24, 2012 9:48 pm

Quoting EricR (Reply 4):
If the merger does take place, PHX will not survive as a hub in the long term.

I still say it depends on where the hypothetical resulting airline's costs ended up, but I think Parker's emphatic and categorical statements that the hub would remain the same size are a total fantasy. Politicians are stupid, so they'll buy it, but it's a fantasy. I stand by my prediction from a month ago that the best case scenario for Phoenix would likely end up being a hub with daily departures in the low 200s, about 1/3 being mainline. (Some analysts apparently agree.)

Quoting EricR (Reply 4):
It would be a different story if the combined carrier had a massive presence in the Rocky Mountain states such as DL or UA, but they don't. Based on the current combined route map of US and AA, the only cities that really would benefit from keeping a PHX hub would be SLC, ABQ, DEN, BOI, ELP, TUC, DRO, GJT, and JAC. These are not enough destinations to warrant the expense of maintaining a hub in PHX.

Yep.

Quoting HPRamper (Reply 5):
Maybe the new airline would choose to restart service in the intermountain West in the absence of a UA codeshare. HP used to serve quite a few markets in the region that were abandoned shortly after the US merger.

Where? Where could they plausibly add that they don't already fly? Colorado Springs maybe? I just don't see much opportunity for growth there.

Quoting HPRamper (Reply 5):
I may be making an assumption, but my impression of an airline that truly wants to be a domestic powerhouse is that they would want a comprehensive, cross-country network especially in cases where they cannot rely on a codeshare. In this instance, the intermountain West would be the only real "hole" in the new AA network.

A hypothetical "new AA" need not have a huge presence in the Rocky Mountain region in order to have a "comprehensive, cross-country network." From a strategic perspective, the Rockies are by far the least important region in the country for an airline to have a presence in. The region is vast and, outside of a few population centers, pretty much the most sparsely populated piece of the entire mainland U.S. The only way for a legacy airline to have a major presence in that region is to have a hub in Denver, or failing that, Salt Lake City. Failing that, there is no alternative. AA - with or without a merger - will be relegated to serving the region from the periphery, with flights nonstop to hub markets outside the area like DFW, ORD, etc. And that's just fine. An airline must have a presence in the Upper Midwest to have a "comprehensive, cross-country network." They also must have a presence in the Northeast. The Rockies are not critical.

Quoting AAIL86 (Reply 7):
"Gov. Jan Brewer and other political leaders have launched an effort to keep the headquarters in Arizona."

Good luck with that.

Quoting PHX787 (Reply 8):
Given this formula too, maybe PHX would see some of AA's 787s do some international service as well.

I doubt it. If United can barely manage a longhaul operation from Denver, which is a far more important market, and a substantially larger hub, with far more connectivity, I see virtually nothing out of Phoenix. The BA 747 is more than sufficient.

Quoting PHX787 (Reply 8):
LAX is too big to handle any sort of expansion, PHX is ripe for expansion, and DFW is fine where it's at.

Not quite.

First off, LAX actually does have room for expansion, and will soon have more - although I agree that LAX is not an ideal place for hub to flow people between "the west and the rest" (of the country, that is). PHX is "ripe for expansion" in terms of facilities, perhaps, but it's market is low-yielding and economy has been hit hard. DFW is the one that has both the facility and economic fundamentals for major growth.
 
AAIL86
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RE: More AA/US Merger News

Fri Aug 24, 2012 10:08 pm

Quoting PHX787 (Reply 8):
If this happens (as it rightfully should,) then the AA/US merger would be beneficial to DFW, LAX, and PHX altogether. LAX is too big to handle any sort of expansion, PHX is ripe for expansion, and DFW is fine where it's at.

Well I certainly don't buy the theory that PHX is going to be de-hubbed ... but pray tell what kind of expansion are you thinking PHX is ripe for? I could see AA(US)/BA perhaps going twice daily on PHX-LHR (x2 332, maybe?) , but otherwise isn't that about it?

Quoting commavia (Reply 10):
Quoting AAIL86 (Reply 7):
"Gov. Jan Brewer and other political leaders have launched an effort to keep the headquarters in Arizona."

Good luck with that.

I was being sarcastic  

[Edited 2012-08-24 15:22:10]
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LAXdude1023
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RE: More AA/US Merger News

Fri Aug 24, 2012 10:29 pm

Quoting AAIL86 (Reply 11):
Well I certainly don't buy the theory that PHX is going to be de-hubbed ... but pray tell what kind of expansion are you thinking PHX is ripe for? I could see AA(US)/BA perhaps going twice daily on PHX-LHR (x2 332, maybe?) , but otherwise isn't that about it?

Maybe a 777 to Hermosillo.  
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cjpmaestro
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RE: More AA/US Merger News

Fri Aug 24, 2012 11:16 pm

Quoting commavia (Reply 10):
First off, LAX actually does have room for expansion, and will soon have more - although I agree that LAX is not an ideal place for hub to flow people between "the west and the rest" (of the country, that is). PHX is "ripe for expansion" in terms of facilities, perhaps, but it's market is low-yielding and economy has been hit hard. DFW is the one that has both the facility and economic fundamentals for major growth.

One great thing about US Management and why they have been profitable and doing well during these times is because they are making their decisions on what makes economic sense to the airline. They aren't making decisions based on status or strategies that look good on paper, but make financial sense. That being said - in a US/AA combined entity I fully expect the US management team to be in charge and then if PHX is making money, it will stay. If routes or strategies out of LAX or DFW are not profitable, they will go. The routes in and out of PHX right now have to be profitable for the airline or they would go. This group would abandon the 'cornerstone strategy' quickly if it's made up of financial duds and if they can grow profitable operations out of PHX, then they will grow it.

One also has to argue that if they pull down the hub who would be there to pick up the slack? Phoenix is a major metropolitan city of nearly 4.5 million and growing and the airport is 14th busiest in the country (that may need some true-up, going by memory). There is demand here that 300+ US flight a day fill that someone would need to fly.
 
phxa340
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RE: More AA/US Merger News

Fri Aug 24, 2012 11:27 pm

Quoting PHX787 (Reply 8):
PHX has too much of a hub here and, coupled with O&D to PHX during peak season, and the population here, US would be very stupid to close the hub

As mentioned in other PHX threads, population size means nothing when it comes to yields. O&D can be handled fine by DL, UA, WN, and whats left of US to all snowbird cities during the winter time. It wouldn't be stupid, it would be prudent. For example I know that more than half of US' Hawaii flights are not profitable from PHX but its the only way they can maintain a presence in the market - these flights can be transferred to AA easily in LAX unless PHX will tolerate a fare increase to make these flights consistently profitable.

Quoting PHX787 (Reply 8):
PHX is ripe for expansion

PHX departures from 06 to 12 have fallen 9% for US. By comparison Charlotte is up 22%. With LGA winding down , PHX has become the most , if not close, to the most unprofitable hubs for US (US' words, not mine). So while yes, they might turn a small profit every year on PHX, if they can move a lot of the fleet to DFW and LAX for profitable expansion, why not.
 
commavia
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RE: More AA/US Merger News

Fri Aug 24, 2012 11:28 pm

Quoting cjpmaestro (Reply 13):
and then if PHX is making money, it will stay.

And thus the question - will it be profitable? That is the central question.

Quoting cjpmaestro (Reply 13):
If routes or strategies out of LAX or DFW are not profitable, they will go.

Obviously - that would be the case with or without a merger. The problem is that both of those places generate, in general, higher yields than PHX, and both are capable of handling, to one extent or another, virtually the exact same traffic flows that PHX does.

Quoting cjpmaestro (Reply 13):
The routes in and out of PHX right now have to be profitable for the airline or they would go.

In the airline industry, it's virtually never that overly simplistic. But to use your simplified statement, again, the question is not whether PHX is profitable now. (Although, while I suspect PHX is profitable now, I also suspect it is the least profitable and lowest-yielding of USAirways' hubs.)

The real question is where PHX would stand at the "new AA," which is going to have substantially higher costs in various areas - including labor - than USAirways does now. Parker has made no secret of the USAirways strategy up to now: retrench to hubs they generally dominate, keep labor costs low, and use those lower costs to pay for the lower yields from their generally structurally disadvantaged hubs. Not sure that calculus will work post-merger.

In addition, much of the underlying logic and justification for a PHX hub goes away once a "new AA" has a viable alternative. USAirways today, with their "barbell" east/west network, has no alternative to PHX for accessing the western U.S. AA does.

Quoting cjpmaestro (Reply 13):
One also has to argue that if they pull down the hub who would be there to pick up the slack?

Southwest.

Quoting cjpmaestro (Reply 13):
Phoenix is a major metropolitan city of nearly 4.5 million and growing and the airport is 14th busiest in the country (that may need some true-up, going by memory). There is demand here that 300+ US flight a day fill that someone would need to fly.

Local demand is most definitely not filling those 300 flights. The PHX market alone, as low-yielding as it is compared with some other U.S. legacy airline hubs, could never profitably support anywhere near that amount of flights. Much of the capacity on those 300 flights are filled with connections - connections, again, that a "new AA" could either stop selling altogether (the lowest-yielding ones) or could easily shift to other hubs.
 
lhcvg
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RE: More AA/US Merger News

Fri Aug 24, 2012 11:40 pm

Quoting EricR (Reply 4):
If the merger does take place, PHX will not survive as a hub in the long term.

     

Quoting PHX787 (Reply 8):
This is what I've been saying would happen. PHX has too much of a hub here and, coupled with O&D to PHX during peak season, and the population here, US would be very stupid to close the hub. LAX is an obvious int'l destination and maybe with the dual west coast hub there would be an exponential increase of LAX-PHX routes (maybe one every half hour) to accommodate this.

Realistically, just ask IAH about how promises to keep a big-city hub at full strength work out medium- to long-term. Things were fine for a while, then in 2012 IAH has begun to shrink. PHX will inevitably do the same. In fact, I would make a further analogy between the two to say that, like IAH, PHX is poorly located for a lot of domestic connecting traffic when you factor in that it will be sandwiched between company hubs at DFW and LAX after this hypothetical merger.
 
AAIL86
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RE: More AA/US Merger News

Sat Aug 25, 2012 12:14 am

Quoting LHCVG (Reply 16):
Realistically, just ask IAH about how promises to keep a big-city hub at full strength work out medium- to long-term. Things were fine for a while, then in 2012 IAH has begun to shrink. PHX will inevitably do the same. In fact, I would make a further analogy between the two to say that, like IAH, PHX is poorly located for a lot of domestic connecting traffic when you factor in that it will be sandwiched between company hubs at DFW and LAX after this hypothetical merger.

Not sure that's a fair comparison. Its true that there's been a very slight reduction at IAH by UA - but thats the result of UA punishing the city for its stance on WN at HOU. IAH has the among highest average fares in the country, mostly due to its robustly evergreen energy and marine traffic. PHX, however, has no such luxury. UA IAH-Europe/South America is massive, and thats with BA(2x 777), AF, KL, LH(1x 380), EK and QR providing international competition. PHX has one daily 744 - total.

Bottom line is - the very best outcome PHX can except (and I think I'm being a bit generous here) in the medium term is 225 daily hub flights on AA(US); and on the international side - perhaps 2x (332?) on PHX-LHR and maybe, just maybe in a dream scenario a JL 787 on PHX-NRT.... (did I also mention my DFW-HEL 787 dream?   ) Any more growth then then that would mean oil is back to $40 a barrel level.

As Commavia said, good luck with that.
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hiflyeras
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RE: More AA/US Merger News

Sat Aug 25, 2012 12:26 am

PHX always struck me as a poor location for a hub unless you're going to Mexico. It's practically on the US-Mexico border and any city worth a darn would have n/s service to/from SEA, the Bay Area or LAX. The entire purpose of the US/AA merger talk is so Parker and gang can walk away from the PHX hub in favor of DFW.
 
iFlyLOTs
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RE: More AA/US Merger News

Sat Aug 25, 2012 1:21 am

PHX really has no need to be a hub, others in the potential network (DFW, LAX and even ORD to an extent) can pick up the slack. What does it really offer to the network of the future airline? Not much that isn't already served through the other hubs.

I do wish to ask a question though, what would the fleet look like if this merger actually happens? I assume the MD-80s and 734s would be the first ones out as well as some of the older 757s and 767s, but what else would happen? And what would be moved to replace the MDs and 734s?
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lhcvg
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:12 am

Quoting AAIL86 (Reply 17):
Not sure that's a fair comparison. Its true that there's been a very slight reduction at IAH by UA - but thats the result of UA punishing the city for its stance on WN at HOU. IAH has the among highest average fares in the country, mostly due to its robustly evergreen energy and marine traffic. PHX, however, has no such luxury. UA IAH-Europe/South America is massive, and thats with BA(2x 777), AF, KL, LH(1x 380), EK and QR providing international competition. PHX has one daily 744 - total.

That wasn't meant to be taken too literally - just to draw the broad outline that PHX is certainly a larger city than say STL, MEM, CVG, CLE, etc., and that if a city the size of IAH can see some reducations (given the strengths you mention), then surely PHX is somewhat expendable. But it is true that there are some significant caveats as you point out.
 
PHX787
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:23 am

Quoting AAIL86 (Reply 11):
but pray tell what kind of expansion are you thinking PHX is ripe for? I

Latin American service, and I can't tell you how long the airport and community has been pressing for Asia service.

Rumors still flying like a swarm of bees about NRT service from US -_-
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jporterfi
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:24 am

Quoting HiFlyerAS (Reply 18):
PHX always struck me as a poor location for a hub unless you're going to Mexico. It's practically on the US-Mexico border and any city worth a darn would have n/s service to/from SEA, the Bay Area or LAX. The entire purpose of the US/AA merger talk is so Parker and gang can walk away from the PHX hub in favor of DFW.

  

This pretty much sums things up. PHX works now because US uses it as a gateway to cities on the West Coast and to compete with AA at DFW. However, if US and AA merged, DFW would prevail: it has a bigger O&D yeild, and is in a better location in terms of the entire country (and is also far enough from LAX that US/AA could build LAX up also). PHX, aside from flights from hubs which cater to O&D passengers would only serve smaller cities in the West (inland states) if US/AA did not have enough demand for flights from DFW (or LAX) to those cities. In that case, PHX would act as a funnel to generate enough capacity to those cities. But I'd say regional flights at best to smaller Western cities, and I actually don't even think that will happen.
 
HPRamper
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:31 am

Quoting commavia (Reply 10):
Where? Where could they plausibly add that they don't already fly? Colorado Springs maybe? I just don't see much opportunity for growth there.
Quoting commavia (Reply 10):
It would be a different story if the combined carrier had a massive presence in the Rocky Mountain states such as DL or UA, but they don't. Based on the current combined route map of US and AA, the only cities that really would benefit from keeping a PHX hub would be SLC, ABQ, DEN, BOI, ELP, TUC, DRO, GJT, and JAC. These are not enough destinations to warrant the expense of maintaining a hub in PHX.

It depends on what you mean by plausible. If HP could serve all those markets pre-merger, I don't see why a huge new AA couldn't, with the entire domestic network to feed the routes. And yes, COS is an obvious add as well as BIL, GTF, PVU, and the Colorado ski markets which HP also used to serve. Throw in CPR, FMN and ROW, there is still FLG and RNO...saying that the reason not to serve these markets is because they aren't a major player in the region is a circular argument.

Quoting phxa340 (Reply 14):
With LGA winding down , PHX has become the most , if not close, to the most unprofitable hubs for US (US' words, not mine). So while yes, they might turn a small profit every year on PHX, if they can move a lot of the fleet to DFW and LAX for profitable expansion, why not.

PHX is easily the least profitable hub for US but it's a necessary one. Tell me how many routes could be effectively moved to LAX from PHX, taking into consideration that LAX has very little room for expansion. Maybe the Hawaii flights?
 
PHX787
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:37 am

Quoting HPRamper (Reply 23):
Maybe the Hawaii flights?

Apparently most of those hawaii flights are heavily influenced by O&D
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mattya9
Topic Author
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:39 am

Quoting HPRamper (Reply 23):

That's what I was thinking as well. Keep PHX for more of a domestic/Latin America hub and put the more profitable/popular routes in and out of LAX. If PHX isn't that far from LAX then feeding the smaller, domestic, routes shouldn't be too much of a problem. Think of it this way for domestic service, PHX for the west/northwest, DFW for the midwest (especially the south), ORD for the midwest (especially the north), MIA for the southeast, and then CLT and PHL for the northeast. Again, keep in mind, this is just for the domestic part of the merger. Yes, you'll have some overlap here and there but with strategic planning I think that could be fairly minimal. That's my 2 cents.

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commavia
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RE: More AA/US Merger News

Sat Aug 25, 2012 2:50 am

Quoting HPRamper (Reply 23):
It depends on what you mean by plausible. If HP could serve all those markets pre-merger, I don't see why a huge new AA couldn't, with the entire domestic network to feed the routes.

Depends on what you mean by "entire domestic network." Because of Phoenix's generally terrible location (for everything other than connections in/out of California), the only "domestic network" that would really be feeding flights from Phoenix to the Rocky Mountain region would be flights from California, Arizona and New Mexico. Everything else would be handled from somewhere else, because Phoenix is so far out of the way and other hubs are far more direct, or just not served at all if AA had no other hub to handle the given routing.

As to the larger point, saying America West could make those markets work in 2004 versus what a hypothetical "new AA" could make work now is completely detached from the numerous confounding variables that have changed in that time. First and foremost, fuel was a whole lot cheaper then, so America West was far more able to do things that would never be possible now (Exhibit A: LAS hub and 1am connecting bank). Second, but closely linked to first: all of these hypothetical new markets out of Phoenix are quite small, and would almost certainly never be feasible with anything larger than an RJ, which is going to be difficult to make work given its high costs, the markets' small size, PHX's lower yields, and competitive reality (namely, in that region, United and Delta will always be larger).

In short - I doubt that much of what the PHX hub supports now would be rendered unprofitable by the higher costs of a combined "new AA," let alone any growth beyond what capacity PHX already has. I stand by my original prediction: if this merger happens, if PHX is able to retain 2/3 of its current schedule (departures) and half its capacity (seats) within 5 years, I think PHX should call that a huge win.

Quoting HPRamper (Reply 23):
And yes, COS is an obvious add as well as BIL, GTF, PVU, and the Colorado ski markets which HP also used to serve. Throw in CPR, FMN and ROW, there is still FLG and RNO...saying that the reason not to serve these markets is because they aren't a major player in the region is a circular argument.

Yeah - again - all tiny markets that would be served with high-cost RJs from a low-yielding hub. Doesn't exactly sound like a recipe for success.

Quoting HPRamper (Reply 23):
PHX is easily the least profitable hub for US but it's a necessary one.

Necessary now. Post-merger? Highly debatable.

Quoting HPRamper (Reply 23):
Tell me how many routes could be effectively moved to LAX from PHX, taking into consideration that LAX has very little room for expansion. Maybe the Hawaii flights?

Most "routes" wouldn't have to "move" to LAX, since many of the markets that generate much of PHX's connections are already served over LAX by AA and/or Eagle. However, it is true, the capacity USAirways currently moves over PHX could never be replicated by AA today at LAX due to capacity constraints and market realities. Nonetheless, it likely wouldn't need to be in.

As I have said, I see PHX ceding much of its traffic now to LAX, but to DFW, which is in just as good if not better a geographic position to handle virtually all of PHX's traffic flows. Plus, DFW is a dramatically larger, substantially higher yielding, and not-insignificantly less competitive market, as well. Some connections could also easily be moved over ORD - primarily connections coming out of the northwest (SEA and PDX) - there, again, ORD is in a vastly better geographic position to handle virtually all the same traffic flows PHX handles today. And yes, even LAX could take some of the traffic flows, particularly those coming from transcon/longhaul/Hawaii flights. When you add all that up, plus take into account the inevitable downsizing of capacity that PHX is likely to endure even if those other hubs weren't so much better situated, one can easily envision how a "new AA" could rather efficiently "optimize" capacity in the western U.S. And that, again, leads me back to my conclusion that PHX's best case scenario is a hub with daily departures in the low 200s and about 2/3 regional.

[Edited 2012-08-24 19:53:52]
 
AAIL86
Posts: 420
Joined: Wed Feb 09, 2011 6:00 am

RE: More AA/US Merger News

Sat Aug 25, 2012 3:05 am

Quoting PHX787 (Reply 21):
Latin American service, and I can't tell you how long the airport and community has been pressing for Asia service.

Rumors still flying like a swarm of bees about NRT service from US -_-

Pretty much every airport board worth beans presses for more service for their airport. MIA keeps talking a lot about Asia service- and they haven't gotten it. The president of DFW has been making noise to - 'turn DFW into the Dubai of this hemisphere'.

As far as Asia from PHX , I think your best chance lies with JAL - right now they are being a little adventurous with their their shiny new toys. If NRT-SAN goes well, maybe, just maybe ...

PHX-South America? That won't happen.... just look at how little LAX-South America service there is. LAX-GRU wouldn't even exist if not for KE's need to refuel somewhere convenient. So if LAX-GRU can't cut it, how could PHX-GRU? PHX-SCL, you say? I've seen the numbers on DFW-SCL firsthand - they are solid - but only because there's tons of east coast feed. PHX won't have that and so even hub-to-hub wouldn't be enough ....

Quoting LHCVG (Reply 20):
That wasn't meant to be taken too literally

Fair enough, I see your point. :/

[Edited 2012-08-24 20:10:55]
Next
 
EricR
Posts: 1223
Joined: Mon Jul 26, 2010 4:15 pm

RE: More AA/US Merger News

Sat Aug 25, 2012 4:29 am

Quoting commavia (Reply 10):
I still stand by my prediction from a month ago that the best case scenario for Phoenix would likely end up being a hub with daily departures in the low 200s, about 1/3 being mainline. (Some analysts apparently agree.)


What I fail to understand is how these analysts are calculating 200-220 daily flights. I estimate that only 1/4 of the traffic remains at PHX once you strip out:
A.) The western originating traffic that can be funneled through DFW or ORD (which is a majority of the traffic considering AA & US have a weak Rocky Mtn presence today)
B.) The Hawaiian traffic (which will most likely be funneled through LAX)
C.) The L.A. originating traffic (which has good N/S coverage out of LAX on AA today)
D.) The Mexican flights (which will be funneled through LAX or DFW)

The remaining traffic will not be able support 200+ flights per day. In my opinion 80 flights would be the appropriate number at that point. But, I don't think the airline would keep a hub open to support less than 100 daily flights.

The only thing I can think of (which HPRamper alluded to) is that the analysts are assuming the combined carrier will build up PHX with a specific focus on the Rocky Mtn region. However, with PHX's less than desirable geographic location, I do not see that turning into a successful strategy especially when competing against better positioned competitor hubs at SLC and DEN.
 
klkla
Posts: 625
Joined: Fri Jul 16, 2004 8:51 am

RE: More AA/US Merger News

Sat Aug 25, 2012 4:59 am

Quoting HPRamper (Reply 23):
PHX is easily the least profitable hub for US but it's a necessary one. Tell me how many routes could be effectively moved to LAX from PHX, taking into consideration that LAX has very little room for expansion. Maybe the Hawaii flights?

That's the problem. They wouldn't be moving to LAX. They would be moving to #1 DFW and #2 ORD which make much more sense as connecting hubs than PHX. With the additional frequent flyers that AA would get form the merger LAX might be able to add some of the Mexico flights but long term PHX would be toast.
 
lhcvg
Posts: 1255
Joined: Mon May 25, 2009 2:53 pm

RE: More AA/US Merger News

Sat Aug 25, 2012 6:26 am

Quoting klkla (Reply 29):

That's the problem. They wouldn't be moving to LAX. They would be moving to #1 DFW and #2 ORD which make much more sense as connecting hubs than PHX. With the additional frequent flyers that AA would get form the merger LAX might be able to add some of the Mexico flights but long term PHX would be toast.

I think you raise a good point we need to remember here. PHX might in fact make a decent reliever/complement to LAX in isolation, but when you have both DFW and ORD, that value pretty much disappears.
 
Osubuckeyes
Posts: 1680
Joined: Mon Mar 01, 2004 10:05 am

RE: More AA/US Merger News

Sat Aug 25, 2012 7:40 am

Quoting commavia (Reply 26):
and would almost certainly never be feasible with anything larger than an RJ, which is going to be difficult to make work given its high costs, the markets' small size, PHX's lower yields, and competitive reality (namely, in that region, United and Delta will always be larger).

I agree RJs are not feasible for most PHX destinations for the very reasons you state here, hence the industry is trying to trend away from heavy RJ flying.

Quoting commavia (Reply 26):
And that, again, leads me back to my conclusion that PHX's best case scenario is a hub with daily departures in the low 200s and about 2/3 regional.

Yet you argue that PHX will become basically an RJ hub for US/AA. If you look at the current service in PHX not including US, every airline is a majority mainline. I would think that the strategy of US/AA or any airline in a low yielding market would be to shy away from high cost RJs. If this merger happens, and assuming there is not some deal struck with the state or city PHX will ultimately be mostly dehubbed. I could see a handul of CO and AZ ski destinations as well as top 10 O&D stations.

I think a good comparison in terms of domestic service to PHX would be LAS. Lots of low yielding leisure travel. Replacing US would be other competitors increasing hub capacity, WN jumping in, and possibly some random P2P to top destinations.
 
wdleiser
Posts: 865
Joined: Thu Apr 22, 2004 9:32 am

RE: More AA/US Merger News

Sat Aug 25, 2012 11:29 am

Quoting LHCVG (Reply 16):

Yet IAH is still UA 's largest hub. Flowing in some United birds that have the economy plus reduces seats in the IAH market. Also, cutting flights that make you lose money in general is a good business idea. IAH-AKL was never going to happen chief.
 
commavia
Posts: 9651
Joined: Mon Apr 25, 2005 2:30 am

RE: More AA/US Merger News

Sat Aug 25, 2012 12:10 pm

Quoting osubuckeyes (Reply 31):
I agree RJs are not feasible for most PHX destinations for the very reasons you state here, hence the industry is trying to trend away from heavy RJ flying.
Quoting osubuckeyes (Reply 31):
Yet you argue that PHX will become basically an RJ hub for US/AA.

Two things: first, when I said "regional," I wasn't necessarily meaning just 50-seat RJs. I was thinking of some level of turboprop flying, and primarily of 70-90-seat jets, which, while still suboptimal economically, have vastly better economics than 50-seat jets.

However, secondly, on that point, there is a balance that exists between the higher cost of RJs and the higher yields an airline can generate in RJ markets by constraining capacity. Put another way - sure, RJs (especially small ones) do have very high CASM, but if the airline is able to cut capacity in a market by using small jets, they can force yields up to the point where RASM covers that high CASM.

The challenge in Phoenix would not be that basic underlying logic - that works. The real challenge will be what other airlines (specifically, Southwest) do. If "new AA" were to cut capacity by reducing flights and reducing aircraft size, it would only be able to cover those higher cost small jets if no other carrier comes in and backfills the capacity, as Southwest is sure to do in some markets.

I think a "new AA" might be able to find an equilibrium between higher-cost small jets, higher yields in markets where capacity is decreased, and Southwest coming into some of those markets and backfilling some of that capacity. But, maybe not - that's why I sad it's the best case scenario for PHX.

Quoting osubuckeyes (Reply 31):
If this merger happens, and assuming there is not some deal struck with the state or city PHX will ultimately be mostly dehubbed.

If all comes to pass as you suggest, the State and City would be wise to resist bending over backwards for AA - or any other airline. Governments have gone out of their way time and time again to keep airlines in their city (hub, maintenance base, whatever), and in virtually every example it hasn't worked, or hasn't worked as well as hoped. It's just a waste of money, and in this case, what is going to happen is going to happen regardless of how many taxpayer dollars get thrown at it.
 
phxa340
Posts: 985
Joined: Thu Mar 29, 2012 4:07 am

RE: More AA/US Merger News

Sat Aug 25, 2012 3:18 pm

Quoting PHX787 (Reply 24):
Apparently most of those hawaii flights are heavily influenced by O&D

You have stated this 3 times within the last 6 months and everytime I have provided with you the facts which you seemingly ignore. Less than half of US' Hawaii customers are O&D from PHX. Look in the PHX thread 1 , I provided the stats.
 
apodino
Posts: 3027
Joined: Mon Apr 04, 2005 2:11 am

RE: More AA/US Merger News

Sat Aug 25, 2012 4:01 pm

There is talk about Geography on here...but let me remind you people that PHL, which is US most profitable hub, is not exactly in a great geographical position either, nor is MIA on the AA side. One thing to remember currently about LAX and PHX, is that at LAX, AA is currently maxed out on mainline gate space, meaning that if west coast traffic is shifted to LAX, it would most likely be on Eagle. Most of the US traffic at PHX is currently mainline (I believe it is the only Mainline Majority hub in the US System). Also remember that if there is regional expansion, it is not unlikely that RAH would be the ones to do the flying, which means that they would need mainline gates because of the needs of the 170. I know that in a merger they would ideally like to shift some capacity to LAX, but the logistics may not be at LAX to support such a thing without outsourcing everything to 50 seaters, which is something I think we all agree that Parker does not want to do.

That being said, I think the DFW hub is a much bigger threat to PHX than LAX. DFW clearly has room to grow, could absorb some traffic that shifts to there, and is obviously better positioned geographically. That being said though, if you look at all the major business stations in the east (BOS, JFK, PHL, DCA, ATL, etc) and there is value in NS service to many of these locations (even though a few of them are existing hubs for AA/US pre merger). There is a lot of O and D demand in the winter time as well, and from all indications, this is a profitable hub for US despite the huge presence of WN at the airport. I hear a lot of mention on here about CVG, MEM, CLE, and STL, and I think these are apples to oranges comparisions. CVG, MEM, and CLE have been RJ dominated hubs for years, and STL became that after the merger, and since RJ's are not making money for airlines these are naturally going to be the first to go. Even DL dehubbed DFW after it became too dependent on RJ's. As I said, PHX is currently a Mainline Majority hub, and those are the hubs that tend to survive mergers.

I am not saying PHX is going to be what it is now post merger...but what I am saying is that PHX makes money before the merger, and I don't see how slapping a new coat of paint (or stripping paint to bare metal) on the sides of airplanes will change that.
 
tropix
Posts: 1
Joined: Thu Mar 09, 2006 12:40 am

RE: More AA/US Merger News

Sat Aug 25, 2012 4:28 pm

PHX will go the way of CVG, MEM, PIT, STL... It's all about the bottom $ and anyone will say anything to drive the deal for US, and not for AA.
 
HPRamper
Posts: 4588
Joined: Sat May 14, 2005 4:22 am

RE: More AA/US Merger News

Sat Aug 25, 2012 4:39 pm

Quoting tropix (Reply 36):
PHX will go the way of CVG, MEM, PIT, STL... It's all about the bottom $ and anyone will say anything to drive the deal for US, and not for AA.

It won't, because it can't.

Yeah, I could see a drawdown via losing all the LAX traffic (which would have its own flights to the major markets) and losing connections to DFW, but that still leaves plenty of traffic to operate a hub. I think the AS codeshare is being overlooked here. It's going to be a major factor in what happens to PHX. If the new AA somehow lost the codeshare, PHX would be vital to keeping at least a semblance of West Coast operation outside the four or five largest markets. If both are lost, well, AA is nothing more than a token presence outside LAX.
 
commavia
Posts: 9651
Joined: Mon Apr 25, 2005 2:30 am

RE: More AA/US Merger News

Sat Aug 25, 2012 6:33 pm

Quoting apodino (Reply 35):
There is talk about Geography on here...but let me remind you people that PHL, which is US most profitable hub, is not exactly in a great geographical position either, nor is MIA on the AA side.

Wrong on both counts.

PHL is, indeed, in a great geographical position. It is penetrated deep enough into the northeastern population cluster to pull a huge amount of O&D, and to offer a wide array of connections to large and small regional markets on relatively short stage lengths, but it is still far enough outside the "upper right corner" of the map so as not to be out of the way for logical connections.

Similarly, MIA is in about the most ideal possible geographic position for the type of hub it is - international, oriented towards Latin America. Indeed, it is precisely this location has made Miami as a city and South Florida as a region the crossroads of the Americas and a huge nexus for commercial, political and cultural exchange between North and South America, and it is also precisely this location that has made MIA as a hub the undisputed 800 lb gorilla of Latin American connections, without any equal among any single other U.S. connecting point.

Quoting apodino (Reply 35):
One thing to remember currently about LAX and PHX, is that at LAX, AA is currently maxed out on mainline gate space, meaning that if west coast traffic is shifted to LAX, it would most likely be on Eagle. Most of the US traffic at PHX is currently mainline (I believe it is the only Mainline Majority hub in the US System). Also remember that if there is regional expansion, it is not unlikely that RAH would be the ones to do the flying, which means that they would need mainline gates because of the needs of the 170. I know that in a merger they would ideally like to shift some capacity to LAX, but the logistics may not be at LAX to support such a thing without outsourcing everything to 50 seaters, which is something I think we all agree that Parker does not want to do.

LAX has some room for incremental growth, and it will soon have more. But, that's largely irrelevant anyway, since any minimal amount of incremental growth LAX might hypothetically see would likely be almost entirely in the form of increased aircraft size rather than increased frequency.

Quoting apodino (Reply 35):
That being said though, if you look at all the major business stations in the east (BOS, JFK, PHL, DCA, ATL, etc) and there is value in NS service to many of these locations (even though a few of them are existing hubs for AA/US pre merger).

True, which is why nobody is suggesting a "new AA" would just eliminate all flying in PHX. There is a local market that does need to be served. But it doesn't need a 300-flight, 2/3 mainline operation to do it.

Quoting apodino (Reply 35):
There is a lot of O and D demand in the winter time as well, and from all indications, this is a profitable hub for US despite the huge presence of WN at the airport.

I am not quite sure of just how profitable and/or high-yielding that seasonal winter demand might be in PHX. And as for the hub's overall profitability - it may be profitable now, but that has no bearing on if it will be going forward.

Quoting apodino (Reply 35):
As I said, PHX is currently a Mainline Majority hub, and those are the hubs that tend to survive mergers.

Respectfully, I think you're mistaking correlation for causation. It is true that in most cases, mergers have led to eliminating more RJ-dependent hubs and keeping, and even growing, more mainline-heavy hubs. But that doesn't mean that solely because PHX, today, has more mainline it would survive a merger.

Quoting apodino (Reply 35):
and I don't see how slapping a new coat of paint (or stripping paint to bare metal) on the sides of airplanes will change that.

Because along with that new coat of paint is also going to come consequentially higher costs in various areas including labor. PHX only survives today as a U.S. network airline hub because USAirways has the lowest unit costs of the network airlines. Those costs are going to rise in a merger - it's inevitable. The key point many of us are making, though, is that while - at least theoretically - a "new AA" would be able to raise fares and yields post-merger to cover those higher costs, it will only be able to do so in certain planes, and/or by reducing capacity somewhere. And PHX, for various reasons already discussed, seems like a fairly logical somewhere.

Quoting HPRamper (Reply 37):
but that still leaves plenty of traffic to operate a hub.

Does it?

Quoting HPRamper (Reply 37):
PHX would be vital to keeping at least a semblance of West Coast operation outside the four or five largest markets.

Define "West Coast operation." PHX isn't on the coast, and is only a bit player, today, as-is, in intra-west connections where nonstops on Alaska and Southwest dominate, and where United is a player via their SFO hub (the only true network airline hub in the Pacific time zone). Post-merger, with higher costs, I see PHX being even less viable and competitive for those few marginal intra-west connections, and I see much of the rest of its connections - those moving between the west and somewhere else - being at least as well served, if not better served, via other hubs (DFW, LAX, ORD, etc.).

Quoting HPRamper (Reply 37):
If both are lost, well, AA is nothing more than a token presence outside LAX.

Well, but again, if you define "West Cost operation" or "presence" as intra-west, then AA already has little presence, and for that matter so does USAirways. The majority of connections USAirways moves over PHX are not intra-west but between the west and somewhere else.
 
southwest737500
Posts: 611
Joined: Tue Mar 15, 2011 11:49 pm

RE: More AA/US Merger News

Sat Aug 25, 2012 6:40 pm

Quoting commavia (Reply 38):

Actually CLT is the most profitable
Next flight: TUL-ATL-CLT CRJ900 and MD88
 
phxa340
Posts: 985
Joined: Thu Mar 29, 2012 4:07 am

RE: More AA/US Merger News

Sat Aug 25, 2012 7:03 pm

Quoting southwest737500 (Reply 39):

Not true , Kirby has said that DCA is .
 
PHX787
Posts: 7877
Joined: Thu Mar 15, 2012 7:46 pm

RE: More AA/US Merger News

Sat Aug 25, 2012 7:12 pm

Quoting commavia (Reply 38):
Quoting southwest737500 (Reply 39):
Quoting phxa340 (Reply 40):

If all three of you are gonna criticize me for having apparent false information, I too feel justified to say this: GET YOUR FACTS LINED UP TOO.
Follow me on twitter: www.twitter.com/phx787
 
phxa340
Posts: 985
Joined: Thu Mar 29, 2012 4:07 am

RE: More AA/US Merger News

Sat Aug 25, 2012 7:54 pm

Quoting PHX787 (Reply 41):

I posted exact O&D for Hawaii passengers on US. Not sure how more specific you want me to get . My posts include stats , yours never do .... Just saying.
 
HPRamper
Posts: 4588
Joined: Sat May 14, 2005 4:22 am

RE: More AA/US Merger News

Sun Aug 26, 2012 2:45 am

Quoting commavia (Reply 38):
Define "West Coast operation." PHX isn't on the coast, and is only a bit player, today, as-is, in intra-west connections where nonstops on Alaska and Southwest dominate, and where United is a player via their SFO hub (the only true network airline hub in the Pacific time zone). Post-merger, with higher costs, I see PHX being even less viable and competitive for those few marginal intra-west connections, and I see much of the rest of its connections - those moving between the west and somewhere else - being at least as well served, if not better served, via other hubs (DFW, LAX, ORD, etc.).

I never said PHX was on the coast. DL likewise doesn't have a hub on the coast, yet SLC serves as their hub for the West Coast and Mountain West and it does a pretty good job of it. I also made that statement in the context of contingency on the AS codeshare, which nominally serves as the AA West Coast presence.
I also don't think intra-West traffic ex-LAX is "marginal." There are a lot of people out there that don't live in the Basin. Unless you mean yield-wise, well, this would be equivalent to subtracting a player from the market, and even if that player is a small one there will be a resultant pricing adjustment.

Quoting commavia (Reply 38):
Well, but again, if you define "West Cost operation" or "presence" as intra-west, then AA already has little presence, and for that matter so does USAirways. The majority of connections USAirways moves over PHX are not intra-west but between the west and somewhere else.

Really? Subtract hub flights to CLT and PHL and I would like to see the breakdown of where most of those aircraft are headed. PHX has always been heavily geared toward serving the western half of the country, even for connections between two points in California. But in any case the West Coast is more than just Los Angeles which I think a lot of people like to forget or ignore, just like many people feel there is no East Coast outside New York.

Quoting southwest737500 (Reply 39):
Actually CLT is the most profitable
Quoting phxa340 (Reply 40):
Not true , Kirby has said that DCA is

I believe Kirby stated that DCA had the highest profit margin. Not the same as most profitable although it is completely believable that DCA is more profitable than PHX.
 
PHX787
Posts: 7877
Joined: Thu Mar 15, 2012 7:46 pm

RE: More AA/US Merger News

Sun Aug 26, 2012 5:31 am

Quoting HPRamper (Reply 43):
I never said PHX was on the coast. DL likewise doesn't have a hub on the coast, yet SLC serves as their hub for the West Coast and Mountain West and it does a pretty good job of it. I also made that statement in the context of contingency on the AS codeshare, which nominally serves as the AA West Coast presence.

This is what I keep referring to: US has perfect capabilities of operating a hub at LAX (like DL does) and at PHX (like SLC for DL) and DFW (like a smaller ATL for DL) without having many issues. The issues are organizing the routes.

I see this happening: Trans-pac from LAX, mountain west and west coast and Hawaii from PHX (hawaii from LAX too), and central, organized etc etc from DFW, northeast from CLT, NYC, and PHL (one of those may have to go) and of course Latin America from MIA.
Follow me on twitter: www.twitter.com/phx787
 
LAXdude1023
Posts: 4431
Joined: Thu Sep 07, 2006 3:16 pm

RE: More AA/US Merger News

Sun Aug 26, 2012 1:07 pm

Quoting PHX787 (Reply 21):

Outside of the few destinations it currently serves in Mexico, PHX has a zero percent chance of being a Latin America hub. Outside of Mexico, PHX has very little O&D to Latin America even to the other Central American nations. In a US/AA merger, you probably would see PHX focus on connections to the Mountain West and Southwest. Long haul to Europe, LHR is going to be it. NRT may happen if the 332 has legs for it.
It is what it is...
 
lucky777
Posts: 294
Joined: Tue Oct 14, 2008 4:40 am

RE: More AA/US Merger News

Sun Aug 26, 2012 1:42 pm

Quoting PHX787 (Reply 41):
If all three of you are gonna criticize me for having apparent false information, I too feel justified to say this: GET YOUR FACTS LINED UP TOO.

The fact that you keep attempting to show the viability of a PHX hub, only to have it shot down by more intelligent reasons as to why it won't work should show you why PHX's days are numbered as a hub city.
 
commavia
Posts: 9651
Joined: Mon Apr 25, 2005 2:30 am

RE: More AA/US Merger News

Sun Aug 26, 2012 1:55 pm

Quoting HPRamper (Reply 43):
I never said PHX was on the coast. DL likewise doesn't have a hub on the coast, yet SLC serves as their hub for the West Coast and Mountain West and it does a pretty good job of it.

Again - you're talking about hubs used to move people between the west and somewhere else. I was talking specifically about intra-west (and by that I mean the west coast - apologies if I was not more clear in what I meant previously). SLC is a fine hub for moving people between the west and the rest of the country, and it's the "silver medal" of hubs when it comes to the mountain west, but it is an awful hub for intra-west. How many people are going from SEA to SAN via SLC? Not many. There are some sure, but it's a relatively small number and it certainly at a yield discount to a nonstop on Alaska or even a connection via SFO on United because SLC is so out of the way. It is the same thing with PHX - that is the point I was trying to make.

As I said, the intra-west market, which is how I would define a "West Coast operation," is dominated primarily by lots of nonstop flights on Alaska and Southwest, plus lots of connections on United over their megahub at SFO. Beyond that, everybody else is a far more marginal player.

Quoting HPRamper (Reply 43):
I also don't think intra-West traffic ex-LAX is "marginal." There are a lot of people out there that don't live in the Basin. Unless you mean yield-wise, well, this would be equivalent to subtracting a player from the market, and even if that player is a small one there will be a resultant pricing adjustment.

What I was referring to was that the portion of the intra-west market PHX is able to viably capture as a hub is marginal because it's out of the way. Is somebody going to fly SFO-PSP via PHX? Again - sure, it certainly happens. But the amount of people that do that rather than just take a nonstop flight is tiny, and it is lower-yielding than a nonstop. That was my point.

Quoting HPRamper (Reply 43):
Really? Subtract hub flights to CLT and PHL and I would like to see the breakdown of where most of those aircraft are headed. PHX has always been heavily geared toward serving the western half of the country, even for connections between two points in California.

Again, you're talking about PHX as a hub between the west and the rest, and that to me is not a "West Coast operation." You're original words were "West Coast operation." To me, since PHX is not only not on the west coast, but also serves virtually no viable purpose as hub for connections within the west coast, but only between the west coast and somewhere else, it is a marginal hub - meaning it is only marginally, if at all, a true "West Coast operation."

By that definition - lots of flights "geared toward serving the western half of the country" with connections to somewhere else - DFW could be a western hub, which I don't think anyone would cal it.

Quoting HPRamper (Reply 43):
But in any case the West Coast is more than just Los Angeles which I think a lot of people like to forget or ignore, just like many people feel there is no East Coast outside New York.

Obviously. Nobody said LA was the only city on the west coast, just as nobody said New York was the only said on the east coast.
 
HPRamper
Posts: 4588
Joined: Sat May 14, 2005 4:22 am

RE: More AA/US Merger News

Sun Aug 26, 2012 2:42 pm

Quoting commavia (Reply 47):
Again, you're talking about PHX as a hub between the west and the rest, and that to me is not a "West Coast operation." You're original words were "West Coast operation." To me, since PHX is not only not on the west coast, but also serves virtually no viable purpose as hub for connections within the west coast, but only between the west coast and somewhere else, it is a marginal hub - meaning it is only marginally, if at all, a true "West Coast operation."

The entire point of what I was getting at is this: neither AA nor US has a "western" network nor a true west coast hub. As you mention, the only real multipurpose hub that can serve the entire coast is SFO. Therefore, if PHX is subtracted, there is then basically zero opportunity for connections west of DFW/ORD, if we assume LAX is primarily an O&D market. That equates to AA/US basically handing every non-primary market east of the Rockies to UA and to a lesser extent DL.

Are you saying they should hang the West Coast ex. LAX out to dry? Or should we simply assume the AS codeshare continues as normal? My standpoint there is that with no PHX the AA/US network stands to lose a lot of feed unless the AS codeshare is adopted and modified and service to SEA and PDX expanded to capture it.
 
commavia
Posts: 9651
Joined: Mon Apr 25, 2005 2:30 am

RE: More AA/US Merger News

Sun Aug 26, 2012 3:13 pm

Quoting HPRamper (Reply 48):
Therefore, if PHX is subtracted, there is then basically zero opportunity for connections west of DFW/ORD

Yep - just as is basically the case now for AA, and USAirways. PHX, today, only provides meaningful connection opportunities between California and Colorado and New Mexico. PHX is a marginal, bit player in the intra-California connection market, and beyond California-PHX-Colorado/New Mexico, virtually every other connection PHX now caters to could easily - at least theoretically - be handled via another hub.

That doesn't mean other AA hubs would be capable of absorbing all the capacity PHX now handles, but again, they might not have to, since I think PHX shrinking in capacity post-merger is inevitable anyway.

So let's play a little though experiment. Let's say - for argument's sake - that PHX does, off the top, lose 1/3 of its daily departures and 1/2 its capacity as the hub moves to a 200 flights/day-1/3 mainline operation. Then let's say - as some have suggested - that you take away some level of the connections PHX now handles from SEA/PDX/YVR to the east, and shift those via DFW/ORD. Then you take away some level of connections PHX now handles from the big California markets+LAS/TUS and shift those via DFW, and perhaps to a lesser extent ORD. Then take away some level of connections PHX now handles to small California markets and shift those via LAX. All of these shifts would be relatively small - say only 5-10% (namely, probably the highest-yielding 5-10%) of the total volume in each case.

Now - with what you have left - is that enough to sustain a PHX hub, and a profitable on at that? That is really the question.

Quoting HPRamper (Reply 48):
That equates to AA/US basically handing every non-primary market east of the Rockies to UA and to a lesser extent DL.

False. It equates to AA and USAirways - as they already do now - not wasting their time trying to connect all those markets in the western U.S. together, which is a losing proposition. That doesn't mean not serving them at all - it just means not catering to connections between them.

And as to your larger point - Delta is already basically the same non-entity in the intra-west market as AA and USAirways. Just as with every other network airline save United, they have basically accepted the reality that you cannot make money in that region. Delta has, thus, basically retreated to the same strategy AA has: try and build a meaningful presence, built primarily on O&D and longhaul connections, with a big operation at LAX, rely on Alaska for everything else, and then simply use hubs hundreds of miles away to connect the west to the rest of the world. Smart move.

Quoting HPRamper (Reply 48):
Are you saying they should hang the West Coast ex. LAX out to dry?

Yes - again, just as AA and USAirways already do now. The West Coast is the "graveyard of legacy airline empires" - everybody has tried, everybody has failed. There is no point in AA, USAirways, or a hypothetical merged AA-USAirways to even attempt to get back into the intra-west coast market, where they will surely lose, yet again. The reason is simple, it is too competitive, too low-yielding, and the only network airline hub that is capable of servicing the region and not being too low-yielding is already spoken for (SFO).

As such, the best course is to not waste time trying to make money with intra-west connections, and instead focus on a market where AA, USAirways, and/or AA-USAirways actually does have a shot at being successful - which is using bigger, stronger hubs to connect the west with the rest of the world.

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