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illinoisman
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Mergers Resulting In Decreased Service At MKE

Sat Apr 13, 2013 11:40 pm

http://www.jsonline.com/business/air...port-v39fl99-202845351.html?page=1

"When talk turns to expanding airline service at Milwaukee's Mitchell International Airport, a question has been popping up lately: Are there any airlines left to bring new flights here?

The short answer is no.

With American Airlines and US Airways merging - the deal announced in February is being reviewed by regulators and likely to gain approval - there will be four major airlines serving more than 85% of the U.S. market.

And all four of them - the others are Southwest, Delta and United - already serve Milwaukee, where passenger numbers continue to fall as airfares rise amid the reduction in airline competition.

A total of 7.5 million passengers passed through Mitchell in 2012, compared with 9.5 million in 2011 and nearly 10 million in 2010, when AirTran and Frontier had hubs here and Southwest was operating its first full year at the airport.

Barring, say, Delta deciding to pick a fight with market share leader Southwest here - and no one is saying that is anything more than hypothetical - the commercial air service we have now is probably what we're going to have for the foreseeable future, market watchers say."


Good article and very realistic, I'm afraid. I use ORD quite a bit in order to get direct flights, and would like to do the same out of MKE but that appears to be less and less possible...Seems like we are headed towards a GRB type airport with everything connecting through a hub. Not good...

These mergers are terrible news for consumers, however, I think there are a few airlines that could fill the gaps. On the low end are NK and G4 - both horrible airlines that MKE is better without. Still, there are a lot of dirt cheap people in Wisconsin who buy package deals to Florida for the lowest possible price. Those airlines could easily compete with WN in that regard. On the high end are VX and B6. Both sadly unlikely to serve MKE any time soon, but frankly someone should still work on lobbying them. A midwest hub could make sense in the long term. On the legacy end, of course, is DL. They have a strong following at MKE - I'm told it's the largest non-hub market for skymiles members in the US. If DL slowly adds a few flights and brings the 717s in to replace those awful regional jets, then I'd put money on them maintaining the highest level of loyalty around here.

[Edited 2013-04-13 16:48:11]
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sat Apr 13, 2013 11:56 pm

Quoting IllinoisMan (Thread starter):
Good article and very realistic, I'm afraid.

I disagree. The "doctors" have misdiagnosed the patient.

The reason capacity and traffic are down substantially at MKE versus several years ago is not consolidation. The reason capacity and traffic are down substantially at MKE is that MKE should never have had that much capacity in the first place. Several carriers got overzealous adding capacity to try and buy market share, and bought into the hype about MKE being "Chicago's third airport."

The reality is that capacity at MKE was going to come down one way or another - having a true "hub" there was never going to be viable long-term. It worked in the 1990s and early 2000s when the economy was booming and business travel was sufficient to justify that many seats in and out of a relatively small market like MKE.

Quoting IllinoisMan (Thread starter):
These mergers are terrible news for consumers

Well, it depends. Fares will surely rise - but they will anyway. But, on the other hand, airlines seem to now be consistently earning money for the first time in decades. And to me, that's a good thing for consumers in the long-run, not a bad thing. Just look at the amount of investment AA, DL, etc. are making in their onboard product.
 
slcdeltarumd11
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 12:35 am

There were simply too many hubs and the strongest ones survived. I think Milwaukee is incredibly lucky to have such good southwest coverage still and they shouldn't take it for granted. I would be very nice to southwest seems if i were running that airport you need them alot more than they need you.

MCI really needs to consider how hard it is to bring in new flights these days before spending money on redoing its terminal. Even southwest is looking more like a hub and spoke carrier and increased fees will make southwest shrink.
 
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mayor
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 12:38 am

Quoting slcdeltarumd11 (Reply 2):
MCI really needs to consider how hard it is to bring in new flights these days before spending money on redoing its terminal.

Do you mean MKE?  
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Bobloblaw
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 2:18 am

Quoting commavia (Reply 1):
The reason capacity and traffic are down substantially at MKE versus several years ago is not consolidation. The reason capacity and traffic are down substantially at MKE is that MKE should never have had that much capacity in the first place.

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PHX787
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 2:35 am

MKE is falling by the ways of CVG and MEM, and in other senses, CLE, PIT, and other midwestern hubs.

As much as I hate seeing this happen, it is a product of such mergers.

Mergers tend to serve the midwestern market quite poorly, with the exception of the 2 big midwestern cities and MSP...a big midwestern city. But in all realities, It has done nothing but abandon a large portion of the population of the US. We are relegated to connections far out of our way or to jam-packed airports in order to get where we need to be. Often times, standby- lists are 3 or 4 pages long (this is my direct observation and the observations of many who travel out of CVG, MKE, and PIT, according to what's been told to me).

The issue is not the "pricing" or "yields" but rather how the airline can turn a profit while still operating out of their already-successful hubs, which leaves midwestern cities in the dust.

This is partially why the creation of a 5th so-called "legacy" may be the best bet, to focus on midwestern interests.

Quoting commavia (Reply 1):
It worked in the 1990s and early 2000s when the economy was booming and business travel was sufficient to justify that many seats in and out of a relatively small market like MKE.

So your basis here is that the economy is going to eternally suck and all people should be relegated to connecting flights. Yeah, both those arguments are amazing  

When the economy picks up, there's gonna be a demand again, you know. And what can possibly help businesses do their business is better service at airports.

A number of business people told me at an ACG event in Cincinnati last month that they have contemplated moving out of the region to Charlotte or Minneapolis because they needed those flights from the DL hub in order to profitably operate. They don't have time for long layovers or extreme hours. Business travel revolves around 1 thing- get there, get done, get home, ASAP.

This is why mergers aren't doing anything for anyone else really.
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slcdeltarumd11
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 2:43 am

Quoting mayor (Reply 3):
Quoting slcdeltarumd11 (Reply 2):
MCI really needs to consider how hard it is to bring in new flights these days before spending money on redoing its terminal.

Do you mean MKE?  

No i meant Kansas City. Its an interesting thing to use MKE as an example of why Kansas City wont get new service with new terminals. They want to spend a ton of money to build a new terminal and are basically saying it will bring in new service. I think its a horrible idea given how many airports have great facilities and are struggling with incentives in place to get carriers to fly to non-hub locations.
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 2:50 am

Quoting PHX787 (Reply 5):
So your basis here is that the economy is going to eternally suck and all people should be relegated to connecting flights.

No, that was never my "basis here," but I realize I often have to spell my points out repeatedly.

   is right.

The point I was making is that with the variable (and arguably also fixed) costs of operating an airline rising, the threshold for what makes economic sense for a legacy/full-service/high-cost (whatever you want to call it) carrier has risen.

There will always be a place for nonstop flights in markets where demand is sufficient. But, airlines are finally focusing on making sustainable profits, and that can only be done through efficiency, and that efficiency comes from maximizing the enormous economies of scale that only huge hubs can bring. Relatively smaller, or relatively weaker, or relatively lower-yielding, or relatively poorly-located hubs simply are no longer economic viable.

Quoting PHX787 (Reply 5):
A number of business people told me at an ACG event in Cincinnati last month that they have contemplated moving out of the region to Charlotte or Minneapolis because they needed those flights from the DL hub in order to profitably operate. They don't have time for long layovers or extreme hours. Business travel revolves around 1 thing- get there, get done, get home, ASAP.

Well, that's life. Look around - again, the threshold for hubs has risen. Hubs in relatively small cities that were largely built around 50-seat RJs simply do not work in 2013, and are unlikely to work in the future, for a variety of economic reasons. They were a nice alternative to the megahubs in 1996, but in 2013, airlines simply cannot justify them to shareholders. Thus why in the last decade airline hubs have generally consolidated around the largest metro areas in the U.S., with the main exceptions being pretty much just in places with unique geography.

Quoting PHX787 (Reply 5):
This is why mergers aren't doing anything for anyone else really.

Well, as "someone else" - namely, a paying traveler - I would much rather have a stable, sustainably profitable airline industry that is built around a few large competitors than one that keeps operating non-viable small hubs for no logical economic reason. It's remarkable to me that in so many other industries - from communications, to banks, to national defense equipment - the world seems to go round and round just fine with just a few (3-4 or less) large national competitors, and yet for some reason some constantly complain about such oligopolistic market efficiency being applied to the airline industry.
 
Cubsrule
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 3:08 am

Quoting commavia (Reply 7):
There will always be a place for nonstop flights in markets where demand is sufficient. But, airlines are finally focusing on making sustainable profits, and that can only be done through efficiency, and that efficiency comes from maximizing the enormous economies of scale that only huge hubs can bring. Relatively smaller, or relatively weaker, or relatively lower-yielding, or relatively poorly-located hubs simply are no longer economic viable.

I don't disagree with any of this, but what does it have to do with MKE? The only even arguable analog to the YX hub in MKE is F9 in DEN, and it has obviously survived. The MKE hub died because YX died, not because of some enormous structural changes in the industry.

Quoting commavia (Reply 1):
The reality is that capacity at MKE was going to come down one way or another - having a true "hub" there was never going to be viable long-term. It worked in the 1990s and early 2000s when the economy was booming and business travel was sufficient to justify that many seats in and out of a relatively small market like MKE.

This applies much more to the loss of legacy capacity at MKE (and most other outstations) than to the loss of the YX/F9 hub at MKE.

YX had trouble filling airplanes for a long time. That's why saver service didn't really work. Eventually, the costs of flying empty airplanes caught up with them. It doesn't really have much to do with the economy. Remember that YX came within days (maybe hours) of filing Chapter 11 in 2003, and the wheels were coming off the second time by the middle of 2008. Probably the first sign of that was the missed payment to OO, which I think was in June, 2008.
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BestWestern
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 3:11 am

Excellent comments Commavia.
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 3:42 am

Quoting commavia (Reply 7):
The point I was making is that with the variable (and arguably also fixed) costs of operating an airline rising, the threshold for what makes economic sense for a legacy/full-service/high-cost (whatever you want to call it) carrier has risen.

There will always be a place for nonstop flights in markets where demand is sufficient. But, airlines are finally focusing on making sustainable profits, and that can only be done through efficiency, and that efficiency comes from maximizing the enormous economies of scale that only huge hubs can bring. Relatively smaller, or relatively weaker, or relatively lower-yielding, or relatively poorly-located hubs simply are no longer economic viable.

In addition, by consolidating flights, the economy of scale of connecting flights improves, frequency (connection opportunities) or gauge (lower CASM) will be improved.

As you note, the old economy of scale (e.g., 50 seat CASM) does not work anymore. Better efficiency is required and that forces consolidation.

And the business cycle shall improve and MKE will sell more Harleys and machine tools giving a boon to MKE air travel. Last I looked, Beer is counter-cyclical.    Although I suspect Manpower would in good times buy a huge number of flights. But you are right, MKE is done as a hub.

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FL787
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 4:25 am

Quoting Cubsrule (Reply 8):
I don't disagree with any of this, but what does it have to do with MKE? The only even arguable analog to the YX hub in MKE is F9 in DEN, and it has obviously survived. The MKE hub died because YX died, not because of some enormous structural changes in the industry.

I don't see the analogy. A hub with over 100 A32x departures isn't going to have the same economies of scale problems as a hub with 88 seat 717s and RJs. And I would consider the higher fuel costs that helped kill YX and the MKE hub to be an enormous structural change in the industry. The commitment to capacity discipline in the industry is evidence of that IMO.
 
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illinoisman
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 5:39 am

Quoting Cubsrule (Reply 8):

YX had trouble filling airplanes for a long time. That's why saver service didn't really work. Eventually, the costs of flying empty airplanes caught up with them. It doesn't really have much to do with the economy. Remember that YX came within days (maybe hours) of filing Chapter 11 in 2003, and the wheels were coming off the second time by the middle of 2008. Probably the first sign of that was the missed payment to OO, which I think was in June, 2008.

And one more story to add to Tim Hoeksema's "As the Cookie Crumbled" saga, as he hangs out in the lagoon pool on the spread in Florida. Just couldn't quite keep it together; never mind loyal employees, etc. The loss of YX was the beginning of the end. I paid more for service and comfort. Now I pay more for less.
 
PHX787
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 7:07 am

Quoting commavia (Reply 7):
Well, that's life. Look around - again, the threshold for hubs has risen. Hubs in relatively small cities that were largely built around 50-seat RJs simply do not work in 2013, and are unlikely to work in the future, for a variety of economic reasons. They were a nice alternative to the megahubs in 1996, but in 2013, airlines simply cannot justify them to shareholders. Thus why in the last decade airline hubs have generally consolidated around the largest metro areas in the U.S., with the main exceptions being pretty much just in places with unique geography.

Well going along wit this argument, then I can throw these arguments at you right now:
1) Who here honestly thinks that CLT, DTW, LAX, ATL, and NYC are in good enough "geography" for the most efficient aviation industry possible?
2) Who here honestly thinks that a tripartite aviation industry is actually good for the health of the business industry in the USA? Businesses and travelers want more options with the lowest price, best service possible.
3) Who here honestly thinks that the "megahubs" are the most efficient way to travel in the USA this day in age? No one I know wants to connect in LAX, NYC, or ORD for any reason simply because those airports are too crowded with O&D traffic. Every single contact I refer to, every friend I have from both Japan and in the USA, and my family members always choose to fly from smaller hubs rather than the "megahubs" because it is much more efficient. Plain and simple. A better product for the customer.
4) Who here honestly thinks that commavia and others should seriously stop throwing the 50-seater card out here, because that argument is irrelevant these days in age? Airlines are able to turn a much better profit with aircraft like the A319/20 and 737, along with the 717 entering DL service, the E-jet series, and the entry of the C-series and the MRJ at the end of the decade. You all honestly think that these aircraft, while larger than the CRJ 50-seater, can't turn a profit by operating out of smaller airports and hubs? That's why these planes are being designed in the first place- for a better customer experience.
5) The USA is NOT Europe, Japan, or what have you- places that can operate very smoothly with mega hubs. This is why big cities like PHX and RDU have a flight to LHR, and a demand for a flight to NRT, and even why CVG, PIT, and other cities have DL service to CDG or AMS. BA and AA know that service to LHR from bigger (but not huge) cities in the US is extremely profitable (The BA flight to PHX recently became 1x daily and is consistently full) and DL knows that operating to Europe from these smaller cities (non-hub cities even) can turn a profit over having to connect in a huge, crowded, inefficient O&D hub like NYC.

TO Summarize all of this- Cities in the midwest are essentially screwed by all these mergers. Businesses can't thrive when the airlines have a stranglehold on their money. Underserviced cities aren't "fine" with the service they have.
When JAS and JAL merged in the early 2000s, the Japanese aviation industry essentially became a duopoly. Prices went haywire, and service began to lag, until it began to hurt the airline itself (JL's bankruptcy), which sparked a huge boom in LCCs here in Japan. I know I said that the US isn't Japan but that isn't the case when it comes to aviation service- I have a strong feeling that after the US/AA merger is finalized, airlines like B6, F9, VX, and many others (Like CP Air, if they ever get off the ground) will begin to thrive big-time, as they will probably begin to fill the void left over by all these mergers. Other airlines may be founded as well.
As much as people claim there isn't a "demand," there is always a demand for businesses to fly somewhere to expand their business. Let's stop talking about the recession-the more we talk about it, the longer it's going to last....which is why businesses and airlines need to be able to expand, especially at smaller airports.

Quoting commavia (Reply 7):
Well, as "someone else" - namely, a paying traveler - I would much rather have a stable, sustainably profitable airline industry that is built around a few large competitors than one that keeps operating non-viable small hubs for no logical economic reason

Really? My first priority as a pax is this: Am I going to get there in due time and comfortably?
Here's my last few domestic flights.
CVG-MSP-PHX- The CVG flight was delayed upon departure because DL didn't staff enough ground crew at CVG. The ground crew had to walk about 1/2 a mile to get to the de-icing trucks. We were supposed to leave at 7:30, and we were wheels up at almost 8:15. We got to MSP, and I had to literally run out of the plane, and sprint as fast as I could to get to the other gate. Me and 8 others from my last flight from CVG were the last to board our connection to CVG. On the CVG flight, they didn't put enough food on board for everyone. The pax sitting in the back had no options for snack service. Seriously unacceptable.
Would I fly this route again? Well I'm forced to! If I need to go from PHX to CVG, I don't want to fly to CLT and turn west to go to CVG. I'll never fly AA until post-merger because I already had enough bad experiences with them.

I'm sorry for the lengthy post, but you all seem to fail to realize what the real picture is. I've only been here on Airliners for a year, and my "rr" isn't as high as some, but that gives no excuse to hide behind your tenure and rr here when faced with the real truth- The real victim here is the customers. Customers are what make an airline actually work.
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joeman
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 10:36 am

PHX787 your post(s) are right on!!!!!!

The a.netter geniuses rooting for their megahub ivory towers (this one has endless O&D and yield, oh that one's in a good location, um, the next one is a megahub simply because...hey it's city "X") ignore the fact that medium size city service has been corrupted.
 
MSJYOP28Apilot
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 11:11 am

Why should airlines maintain hubs in cities where they dont see a strong enough local market? Airlines are not a charity. They are not public transport. They are a business. If you want the Feds to nationalize the airlines and make it a public service that is a valid viewpoint to hold. But airlines as a business are not responsible for economic growth nor are they responsible for providing everyone service to everywhere. An airline as a business needs to maximize profits to survive.

Mergers are meant to provide stability and even out the problem of excess supply in the market. The excess supply of seats was making it impossible to run a consistently profitable airline. Too much competition and supply and not enough demand.

If losing a hub causes local companies to leave the local market is the issue not the airline. RDU lost a hub or two yet its a growing region and all the businesses didnt leave because AA abandoned the hub. BNA is another example.

Where there is good money to be made, airlines will chase after it. This isnt some kind of conspiracy. The local market in many Midwest cities simply isnt strong enough today to support a hub. There is more money to be made flying those planes in other markets. If those Midwest cities have a market that can make money someone else will come in and try and make money.
 
MSJYOP28Apilot
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 11:17 am

Quoting PHX787 (Reply 13):

You arent forced to fly anyone or anywhere. Not only do you have a choice who you can fly, you can choose to drive or not travel at all. You choose to not fly the competition. You are not forced to fly Delta through MSP. That is a personal choice you make.
 
9w748capt
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 12:15 pm

Quoting PHX787 (Reply 13):
1) Who here honestly thinks that CLT, DTW, LAX, ATL, and NYC are in good enough "geography" for the most efficient aviation industry possible?

Well apparently US (profitable) thinks CLT is in good enough geography. Likewise I'm sure DL (also profitable) thinks DTW and ATL are "in good enough geography" also. AA thinks enough of LAX that they're adding flights left and right. I'm sure premerger CO and PMUA have no qualms about maintaining their EWR (does that count as NYC?) hub. I like how you conveniently left out ORD, like that's not in the midwest. Rant all you want about how hubs at ORD, DTW, and MSP signal an impending total withdrawal of service by the legacies from the midwest, but I'm sure these few airports feel differently.

Quoting PHX787 (Reply 13):
2) Who here honestly thinks that a tripartite aviation industry is actually good for the health of the business industry in the USA? Businesses and travelers want more options with the lowest price, best service possible.

Do businesses and travelers want to pay artificially low fares that aren't sustainable for the industry and then make up the difference when their tax dollars are used toward government bailouts?

Quoting PHX787 (Reply 13):
3) Who here honestly thinks that the "megahubs" are the most efficient way to travel in the USA this day in age? No one I know wants to connect in LAX, NYC, or ORD for any reason simply because those airports are too crowded with O&D traffic. Every single contact I refer to, every friend I have from both Japan and in the USA, and my family members always choose to fly from smaller hubs rather than the "megahubs" because it is much more efficient. Plain and simple. A better product for the customer.

Well first off LAX and NYC (with the exception of EWR) aren't truly intended for connections anyway, it just so happens that they're such huge O&D markets that they're by default going to be useful to connect at times. ORD is quite different, being set up well for both O&D and connections. And I'm sorry but LOL at ORD being too crowded. Maybe I'm just biased (my favorite place to connect in the USA), but seriously, LOL. It's a busy airport - suck it up. If you want to connect through an empty terminal, by all means fly through CVG. What the hell did you expect - for airports with flights to points all around the globe to not be crowded?

Quoting PHX787 (Reply 13):
TO Summarize all of this- Cities in the midwest are essentially screwed by all these mergers. Businesses can't thrive when the airlines have a stranglehold on their money. Underserviced cities aren't "fine" with the service they have.

Well are they really underserviced if the service they had wasn't economically sustainable? MKE had an artificially high level of service for years with the F9/FL/somewhat WN dogfight, and for what? Notice that the legacies added few, if any - flights to MKE the last few years. The yields just aren't there.

And yeah, cities in the midwest are really screwed. Tell that to DTW (in the midwest), or MSP (also in the midwest), or even ORD (in the midwest), which is going to get nothing but more service with a stronger post-merger AA and a UA that will not want to give up any ground. If people in MKE aren't satisfied with their service, they are more than welcome to drive the ONE HOUR it takes to reach ORD and hop on a nonstop flight anywhere in the world. I did it multiple times when I lived there. Just the way life goes sometimes.
 
9w748capt
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 12:25 pm

Quoting PHX787 (Reply 13):
Who here honestly thinks that commavia and others should seriously stop throwing the 50-seater card out here, because that argument is irrelevant these days in age? Airlines are able to turn a much better profit with aircraft like the A319/20 and 737, along with the 717 entering DL service, the E-jet series, and the entry of the C-series and the MRJ at the end of the decade. You all honestly think that these aircraft, while larger than the CRJ 50-seater, can't turn a profit by operating out of smaller airports and hubs? That's why these planes are being designed in the first place- for a better customer experience.

Haha - I think you just answered your own question? If airlines are able to turn a much better profit with the A320/737/Ejet than CRJ (your words not mine), then should they not focus their operations on cities/hubs where flights with these aircraft are sustainable? Should they continue to operate CRJ hubs like CVG even when economics have made them obsolete and unprofitable? And if they had made the decision that large hubs at places like CVG and MEM were only sustainable by extensively using the 50 seater, should they consciously make the decision to fly planes that are too large for the market they're serving knowing full well that they'll lose money? Does that honestly sound like a good idea to you? And while I can agree that the customer experience worlds better on a mainline jet than a CRJ, how do you think the customer experience would be if airlines flew those planes at a loss, just to say for sh!ts and giggles that they still have their hub at CVG, just with airplanes that they can't make a profit with?
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 12:39 pm

Quoting Cubsrule (Reply 8):
but what does it have to do with MKE?
MKE was a small hub in a relatively small city, and it was being fought over by two airlines, and that artificially increased the amount of capacity being flowed through the hub.

Quoting PHX787 (Reply 13):
Who here honestly thinks that CLT, DTW, LAX, ATL, and NYC are in good enough "geography" for the most efficient aviation industry possible?

Me!

CLT is the second best hub for serving the Atlantic Southeast, right in the heart of a growing region (demographically and economically).

DTW is in a perfect location to not only handle connections in/out of the northeast, but also between the east coast and Asia and between the Midwest and Europe.

LAX isn't a megahub, so not sure why it was included with this list, but LAX is geographically effective not because of its geography for connections, but because of its geography for local O&D. Los Angeles is one of the largest population centers on earth - that alone justifies its capacity.

ATL speaks for itself - not only is its geography perfect for connections to/from the Atlantic Southeast, and up and own the east coast, but it's also in a great location for connections to/from Europe and Latin America.

NYC - see LAX, except that NYC does actually have one megahub, EWR, and also that NYC actually is in a fine location for connections to/from the northeast, and to/from Europe.

Quoting PHX787 (Reply 13):
Who here honestly thinks that a tripartite aviation industry is actually good for the health of the business industry in the USA?

Me!

Over the long-run, nobody - including business or leisure travelers - benefit from an airline industry that is constantly unstable and constantly bereft of financial turmoil, bankruptcies, etc.

Quoting PHX787 (Reply 13):
Businesses and travelers want more options with the lowest price, best service possible.

Okay well ... you've just kind of highlighted the fundamental disconnect in the desires of all air travelers - business and leisure - that has plagued this entire industry since deregulation. "Lowest price" and "best service possible" are hard to pull off simultaneously - so which one is it? That is the fundamental question - what is the balance struck between "lowest price" and "best service?" For much of the last decade, due to excessive capacity, poor management and airline bankruptcies, it's been all about "lowest price." But that produced a weak and inefficient airline industry. A more balanced offering between "lowest price" and "best service" (again, see the investments AA, DL, etc. are making in their onboard product) is in the long-term interests of U.S. business travlers.

Quoting PHX787 (Reply 13):
Who here honestly thinks that the "megahubs" are the most efficient way to travel in the USA this day in age?

Me!

The argument you keep making is the one that people have been making for decades since deregulation - and it still hasn't worked out yet.

Airlines fight over such narrow margins that if it really was more efficient to deemphasize large hubs and instead focus on small hubs and point-to-point, they would be doing it. But the economic reality is that this is horribly inefficient. The number of markets that can be connected on a nonstop basis with a fixed amount of assets (airplanes, etc.) is tiny compared to the number that can be connected with that same amount of fixed assets through one enormous connecting complex, and that's assuming that there was even sufficient demand to warrant those nonstop point-to-point flights in the first place.

You seem to be disputing the economics of huge airline hubs, but that memo came out 30 years ago - they work.

Quoting PHX787 (Reply 13):
No one I know wants to connect in LAX, NYC, or ORD for any reason simply because those airports are too crowded with O&D traffic.

Okay, well good for the people you know. But the reality is that millions of people every day connect in hubs because the markets they are flying between simply cannot justify a nonstop flight economically.

Again, this is deregulation airline industry economics 101 - settled stuff for 30 years. Airline after airline has tried to in some way blow up, get around, undermine or overturn this model - and it has not worked yet. Even Southwest - long the darling of the point-to-point model - has gradually but steadily moved more towards a hub and spoke model because, again, an efficient, national system requires it.

Quoting PHX787 (Reply 13):
Every single contact I refer to, every friend I have from both Japan and in the USA, and my family members always choose to fly from smaller hubs rather than the "megahubs" because it is much more efficient.

Sure, again, it was nice while it lasted. Small hubs are quieter, less chaotic, more convenient, faster to walk between gates, etc. But they just do not work. Given the rising cost (fuel, labor, aircraft depreciation, etc.) of operating an airline these days, the economic returns of those smaller hubs simply no longer rise over the threshold of what is required. Thus why there are virtually none of them left.

Look at the number of small hubs in the U.S. in 1983, and compare that to the number in 2013. The numbers speak for themselves. If there was really supposedly so much money to be made in small hubs, somebody would be making so much money in them right now.

Quoting PHX787 (Reply 13):
Who here honestly thinks that commavia and others should seriously stop throwing the 50-seater card out here, because that argument is irrelevant these days in age?

Well, much as you seem to want to wish away arguments that you don't like, I think the dynamic of 50-seater retirements is very relevant here since many of the smaller hubs in question rely (or relied, past tense) on 50-seaters. That only further reinforced the economic inefficiency of the hub. Why fly 3 50-seat RJs per day MEM-PNS, when you could simply just add another MD80 ATL-PNS, or even just upgauge an existing flight? Again: it's called efficiency.

Quoting PHX787 (Reply 13):
You all honestly think that these aircraft, while larger than the CRJ 50-seater, can't turn a profit by operating out of smaller airports and hubs? That's why these planes are being designed in the first place- for a better customer experience.

Who ever said that? I never said that large RJs couldn't make money in small or mid-size markets.

On the contrary, I think what we're seeing is that those 70-90-seaters are the savior of capacity, and in particular First Class capacity, in these smaller markets that can no longer support mainline.

The point I was making was that you can't build a hub around these regional jets. You have to have a solid enough market that it can support a sufficient amount of mainline - RJs alone will not do it. Put another way: in this day and age, if a market is only big enough to support a hub built on RJs, then it's not big enough to support a true hub.

Quoting PHX787 (Reply 13):
This is why big cities like PHX and RDU have a flight to LHR, and a demand for a flight to NRT, and even why CVG, PIT, and other cities have DL service to CDG or AMS. BA and AA know that service to LHR from bigger (but not huge) cities in the US is extremely profitable (The BA flight to PHX recently became 1x daily and is consistently full) and DL knows that operating to Europe from these smaller cities (non-hub cities even) can turn a profit over having to connect in a huge, crowded, inefficient O&D hub like NYC.

As I said earlier, markets certainly can be served on a nonstop basis, overflying hubs, if the local market is sufficiently strong, but only then - otherwise it's through a hub.

Thus why places like PHX and RDU have flights to LHR - it's not because of the presence of a hub (at least not in the U.S.), but rather because of a megahub at the other end, and because they are strong local markets.

Quoting PHX787 (Reply 13):
but you all seem to fail to realize what the real picture is.

Thank you so much for explaining to me what the "real picture" is.   

Quoting PHX787 (Reply 13):
but that gives no excuse to hide behind your tenure and rr here when faced with the real truth

Hiding? "Real truth?" Oh boy. I'm right here!

[Edited 2013-04-14 05:42:14]
 
MIflyer12
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 2:33 pm

Quoting PHX787 (Reply 13):
Summarize all of this- Cities in the midwest are essentially screwed by all these mergers.

It's not a midwest thing or necessarily a merger - it's a 3rd-tier hub thing, and the rationalization has been going on for about two decades, in fits and spurts.

The AA hub at SJC didn't work, in spite of location in a high income and high population growth area. Proximity to SFO killed it.

MEM isn't the midwest, but it was killed by competition from DFW/ORD/IAH and its duplication of the ATL mega-hub destinations.

BNA and RDU didn't work for AA; they're too close to CLT and ATL (and ORD).

The economics of geography mean the phenomenon isn't limited to the U.S.A. MXP has been drawn down; the Sabena hub at BRU evaporated and was replaced only to a small extent; Malev is gone...
 
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mayor
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 3:13 pm

Quoting PHX787 (Reply 13):
Really? My first priority as a pax is this: Am I going to get there in due time and comfortably?

Where do you think the money comes from to improve service, new a/c, etc? The airlines HAVE to turn a profit, can't you see that?

Quoting PHX787 (Reply 13):
When JAS and JAL merged in the early 2000s, the Japanese aviation industry essentially became a duopoly.

You said it yourself:

Quoting PHX787 (Reply 13):
The USA is NOT Europe, Japan, or what have you

So, which argument would you like to use?

Quoting PHX787 (Reply 13):
TO Summarize all of this- Cities in the midwest are essentially screwed by all these mergers.

Even though three of the biggest hubs in the country are in the midwest?




Hubs, from the beginning, served a purpose.....it enable the airlines to provide service to small and medium sized cities, profitably, by using a larger city as a connecting point to provide that service. If the concept hadn't been used, I wonder how many of those cities would even have airline service, today. Every route can't be a non-stop.........simply not enough room in the sky for all the a/c that would be required to do that. The only way to do it would be with LESS service and I don't think you're going to see that. Just as an example, how many pax do you think, on any given day, on one flight, go from BIL to ATL? I would think there wouldn't be enough to profitably run a flight, so, you have a hub. Collect those ATL pax from different flights and put them on a SLC-ATL flight, which is probably jammed full of paying pax, who will reverse the process in ATL and connect from there.
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commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 3:35 pm

Quoting MIflyer12 (Reply 20):
It's not a midwest thing or necessarily a merger - it's a 3rd-tier hub thing, and the rationalization has been going on for about two decades, in fits and spurts.

  

Precisely.

This has nothing to do with the the Midwest. There have been numerous smaller hubs all over the U.S., and indeed, all over the advanced world, that have shrunk or ceased to exist in the last 20-30 years just by virtue of economic reality.

The only component of this dynamic that could arguably be pinpointed specifically to the U.S. Midwest in the last few decades is the general decline in the relative demographic and economic power of that region over that time period. At the time of deregulation, an enormous amount of the population and manufacturing output of the U.S. was centered in the Upper Midwest belt stretching from western Pennsylvania to Missouri. In the last few decades, that demographic and economic center of gravity for the U.S. has shifted south and west. To be sure, the Midwest is still a huge place with lots of people and lots of commerce, but it makes up a somewhat smaller share of the overall pie than it did in, say, 1980.

Thus why the Upper Midwest and former industrial heartland region has - by my count - gone from having, over the years, well over a dozen hubs or connecting centers (ORD, DTW, MSP, CLE, CMH, DAY, CVG, PIT, IND, MKE, STL, etc.) in some form or fashion operated by as many as nine different airlines (AA, CO, DL, NW, TW, WN, UA, US, YX) down to the present set up of six large megahubs (ORD x2, MDW, DTW, MSP, CLE) operated by four different airlines (AA, DL, WN, UA).

But again, all that being said, the trend of fewer, larger hubs was going to be coming to the Midwest one way or another anyway. The region's demographic and economic changes have, if anything, only sped up that evolution.

Quoting mayor (Reply 21):
Where do you think the money comes from to improve service, new a/c, etc? The airlines HAVE to turn a profit, can't you see that?

  

Exactly. Airlines aren't charities. They have to make money somehow.

And the lessons of history for now over three decades has shown time and time again that, particularly as costs rise, hubs are more efficient than building networks around point-to-point flying. Small and mid-size markets are better served by hubs which at least provide enormous connectivity to lots of places with 1-stop as opposed to nonstop connectivity to a relatively small number of places otherwise.

Thankfully, now that airlines are starting to actually make money again, they are now able to invest in things that improve the customer experience and address some of the legitimate complaints about service people have had in recent years. They can pay and motivate employees better. They can install onboard entertainment and connectivity systems. They can upgrade seating, cabin interiors, and in some cases food service. And they can invest in information technology systems to smooth customer booking and schedule disruptions.

All of that is good, not bad, but all of that is impossible without the economies of scale produced by hubs.

Now back into hiding ...

  

[Edited 2013-04-14 08:36:48]
 
steex
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 4:02 pm

Quoting commavia (Reply 22):
The only component of this dynamic that could arguably be pinpointed specifically to the U.S. Midwest in the last few decades is the general decline in the relative demographic and economic power of that region over that time period.

I wholeheartedly agree with your points, but I would add that hub service in the Midwest was simply a balloon waiting to pop. Because it is in the center of the country and has long been identified as a great place to build a connecting hub to serve the domestic market, it held onto oversized hubs much longer than other areas. MKE just held on a lot longer than the likes of DAY, CMH, PIT, etc. because it had a hometown carrier that kept itself alive, whereas most of those other airports had hubs from airlines with more diverse operations that made the low-O&D connecting centers easier to cut.
 
EricR
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 4:26 pm

Quoting commavia (Reply 22):
Thus why the Upper Midwest and former industrial heartland region has - by my count - gone from having, over the years, well over a dozen hubs or connecting centers (ORD, DTW, MSP, CLE, CMH, DAY, CVG, PIT, IND, MKE, STL, etc.) in some form or fashion operated by as many as nine different airlines (AA, CO, DL, NW, TW, WN, UA, US, YX) down to the present set up of six large megahubs (ORD x2, MDW, DTW, MSP, CLE) operated by four different airlines (AA, DL, WN, UA)..



I think it is also important to point out that even the new entrants into the industry such as B6, VX, NK have opted for hubs in major metropolitan airports over smaller second tier hubs for a reason. Second tier hubs are relics of the past that airlines have moved away from (even though certain people have not). There are significantly more operational and financial efficiencies gained for airlines focusing on a fewer, but larger hubs. Furthermore, this approach reinforces or strengthens existing hubs as they are developed into secure fortress hubs.

The sole exception being LCLF carriers that purposely opt for alternative hubs with lower costs so they can pass the cost savings on to their customers in the form of lower fares. However, LCLF carriers do not find these types of hubs in former legacy hub locations, but rather in places such as TTN, AZA, SFB, BLI, etc.
 
777fan
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 4:57 pm

Quoting steex (Reply 23):
MKE just held on a lot longer than the likes of DAY, CMH, PIT, etc. because it had a hometown carrier that kept itself alive

PIT arguably is an exception; they had a viable hometown carrier in US that built a sizable hub only to bolt after costs ran out of control. Like Pittsburgh, Milwaukee is in the midst of a renaissance, of sorts, but no doubt lacks the prestige, or economic pull of its neighbors ORD and MSP.

Quoting commavia (Reply 22):
This has nothing to do with the the Midwest. There have been numerous smaller hubs all over the U.S., and indeed, all over the advanced world, that have shrunk or ceased to exist in the last 20-30 years just by virtue of economic reality.

No doubt, and it's a shame for aficionados, spotters, and fans of yesteryear; unless your hometown airport is located in a megapolis, or a major carrier's hub (SEA, LAX, SFO, PHX, DFW, IAH, DEN, ORD, MSP, MIA, ATL, CLT, Baltimore-DC, DTW, PHL, BOS, New York-metroplex), you're probably relegated to mostly WN or major carrier-linked RJ service. I used to love pulling up to the ORD departure drop off area as a kid (early to mid 80s) and run down the list of signs outside of the concourse doors, as it was a who's-who of who's not today: Ozark, Northwest Orient, Republic, Piedmont, TWA, Air Wisconsin, Pan Am, Eastern, Western...the list goes on a on and you could rest assured there was some carrier offering a nonstop flight to practically every city in the continental U.S. at the time (on some exotic equipment, no less).

It took 30+ years, a major terrorist attack, fuel spikes, bankruptcies, some major demographic shifts and several economic roller coasters, but I suspect the commercial aviation industry has finally 'right-sized' itself for the long haul.

777fan
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steex
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 5:05 pm

Quoting 777fan (Reply 25):
PIT arguably is an exception; they had a viable hometown carrier in US that built a sizable hub only to bolt after costs ran out of control. Like Pittsburgh, Milwaukee is in the midst of a renaissance, of sorts, but no doubt lacks the prestige, or economic pull of its neighbors ORD and MSP.

While US was a hometown carrier to PIT, US already had other major hubs to absorb the closure of PIT. My point was more that YX had very little beyond MKE (the operation at MCI was always smaller), and the closure of MKE for YX would've ostensibly meant the closure of YX itself.
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 5:06 pm

Quoting steex (Reply 23):
I wholeheartedly agree with your points, but I would add that hub service in the Midwest was simply a balloon waiting to pop. Because it is in the center of the country and has long been identified as a great place to build a connecting hub to serve the domestic market, it held onto oversized hubs much longer than other areas.

Very true.

Quoting 777fan (Reply 25):
No doubt, and it's a shame for aficionados, spotters, and fans of yesteryear

Agreed. I, too, miss some of the names that I grew up with that are now gone. But then again, we still have plenty of variety in this country when it comes to airlines, it's just that some of them are different. We have gone (or are going) from a system with six nationwide carriers (AA, CO, DL, NW, UA, US) and lots of regional players to a more consolidated system with four nationwide carriers (AA, DL, UA, WN) plus fewer, larger regional and/or specialized players (AS, B6, F9, NK, G4). Perhaps slightly less variety than we once had, but plenty of variety nonetheles.

Quoting 777fan (Reply 25):
unless your hometown airport is located in a megapolis, or a major carrier's hub (SEA, LAX, SFO, PHX, DFW, IAH, DEN, ORD, MSP, MIA, ATL, CLT, Baltimore-DC, DTW, PHL, BOS, New York-metroplex)

Well yes, except it's not if your airport is in a major metro area or a major carrier's hub. That's the key - that is not "or" anymore - it's now "and." They've largely become one in the same as the airlines have consolidated their large hubs precisely in the largest metro areas.

Quoting 777fan (Reply 25):
It took 30+ years, a major terrorist attack, fuel spikes, bankruptcies, some major demographic shifts and several economic roller coasters, but I suspect the commercial aviation industry has finally 'right-sized' itself for the long haul.

  

There are very few industries as large and dynamic as the airline industry that sustain as many large competitors as the airline industry did, nor for as long. Most industries long ago consolidated into a more economically optimal, efficient structure with a dynamic oligopoly among a relatively smaller number (usually 3-4) of major national competitors. Because of the highly regulated nature of the supposedly-"deregulated" airline industry, among other factors, this phenomenon just took longer with the airlines.

But the airlines have now largely gotten there - i.e., where they should have been heading all along.

[Edited 2013-04-14 10:08:26]
 
RDUDDJI
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 5:35 pm

Quoting MIflyer12 (Reply 20):

BNA and RDU didn't work for AA; they're too close to CLT and ATL (and ORD).

False. BNA and RDU were shuttered when AA got the MIA hub and no longer needed BNA for East-West flow and RDU for North-South flow from FL. Had nothing to do with ATL or CLT. RDU actually has a higher O&D market than CLT. I'm not as familiar with BNA, but I know it is also very close (might be higher than CLT or RDU too).
Sometimes we don't realize the good times when we're in them
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 5:40 pm

Quoting RDUDDJI (Reply 28):
Had nothing to do with ATL or CLT.

It did, indeed, have something to do with ATL and CLT. Hubs don't operate in isolation - they constantly interact with the other hubs near them.

In the case of RDU, the reality was that the Atlantic Southeast region was big enough to support 2 full-fledged network airline hubs, not 3. AA at RDU and US at CLT were playing for second place behind ATL, which was then and will always be the economic, demographic, cultural and political hub of the region. CLT won, RDU lost.

[Edited 2013-04-14 10:41:08]
 
masseybrown
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 6:47 pm

Quoting commavia (Reply 7):
airlines are finally focusing on making sustainable profits, and that can only be done through efficiency, and that efficiency comes from maximizing the enormous economies of scale that only huge hubs can bring.

You are certainly correct, qualified by "for now." The cyclic tendency is for huge oligopolies (what else to call the four US majors?) to grow beyond profit-maximizing economies of scale to a state of ineffective competition and diseconomies of scale, where additional business comes only at reduced unit profitability until eventually capital investment in inefficient. Eventually some a new idea will come along and blow them away.
 
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mke717spotter
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 7:07 pm

Quoting IllinoisMan (Reply 12):
And one more story to add to Tim Hoeksema's "As the Cookie Crumbled" saga, as he hangs out in the lagoon pool on the spread in Florida. Just couldn't quite keep it together; never mind loyal employees, etc. The loss of YX was the beginning of the end. I paid more for service and comfort. Now I pay more for less.

When YX cut back on the luxury, they saved money but at the same time lost their identity. When that happened there was no reason to chose them over cheaper airlines, and not even the fresh-baked chocolate chip cookies were enough of a draw. There were indeed some bad decisions made by YX, mostly concerning fleet choice, but I think that the end result of a YX/FL merger probably would have been the same as it is now, FL merged with WN. I fly WN quite a bit and I think we in MKE should be glad to have them. Their product might not equal first class on a mainline carrier, but as a business model they have defined their niche and do it better (when measured by revenue and profits) than any other domestic carrier.

[Edited 2013-04-14 12:08:50]
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FlyPNS1
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 7:29 pm

Quoting commavia (Reply 22):
Thankfully, now that airlines are starting to actually make money again, they are now able to invest in things that improve the customer experience and address some of the legitimate complaints about service people have had in recent years. They can pay and motivate employees better. They can install onboard entertainment and connectivity systems. They can upgrade seating, cabin interiors, and in some cases food service. And they can invest in information technology systems to smooth customer booking and schedule disruptions.

In theory you are right, but in reality customers will not see much of an improvement even though the airlines will be more profitable. Why? Consolidation means less choice, less flexibility and as the airlines gain a greater stranglehold they'll become even more indifferent to their customers.

Example: DL used to offer PNS-DFW and PNS-MCO (and PNS-MEM after the NW merger). Now, all those are gone. Everyone goes to ATL. So when things go bad in ATL, those in PNS are screwed. DL can't reroute anyone around ATL. All the fancy investment does nothing when you leave customers now stuck for hours and sometimes days. Not to mention, the connecting experience in ATL (and other megahubs) isn't great. The gate areas are overcrowded, the gate agents are mostly clueless and the lines to do anything (eat, go to the bathroom, etc) are long. Those fancy SkyClubs are so crowded that they're only marginally better than the terminal.

Not to mention this consolidation further undermines our already stressed ATC system. Putting more and more eggs in fewer and fewer baskets isn't going to make ATC work more efficiently. Not to mention the FAA has wasted billions on improving hubs only to have airlines turn around and shut them down. While I understand why the airlines shut the hubs down, it's a lot of government wasted trying to make airlines happy.

So while you are correct that consolidation will be good for the airlines bottom line, I don't think customers will see much benefit. The same has largely played out in other industries as well. You earlier mentioned banks, defense companies, telecom and I doubt anyone would hold those companies up as examples of good consolidation. The banking industry is a mess with abysmal customer service from the big banks. Fortunately, consumers still have many smaller banks and credit unions. The defense business has become so bloated they can't produce anything without 200-300% cost overruns.
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 9:13 pm

Quoting FlyPNS1 (Reply 32):
but in reality customers will not see much of an improvement

Well I suppose it's all in what you value. Personally, I value airlines - or really any companies I'm buying a good or service from - to be making money. It means they have more money to invest, and I can have a bit more stability in my purchasing decisions. Besides, again, I look at the investments U.S. carriers are now making and I am genuinely excited that - for the first time in years - airlines are beginning to compete on something other than price.

Quoting FlyPNS1 (Reply 32):
Consolidation means less choice, less flexibility and as the airlines gain a greater stranglehold they'll become even more indifferent to their customers.

I just don't see how you figure. Again - take a look at what the cabins of Delta's 767s or AA's new A321s or 777s look like. That doesn't look to me like airlines indifferent to their customers. Quite the opposite - it looks to me like airlines finally being able to deploy free cash flow into their product again.

Either way, U.S. consumers enjoyed excessive choice and competition for years, to the point that it largely contributed to much of the industry going bankrupt. I, personally, do not view that in my interests as a paying customer. There has to be more balance. If all the benefits of economic efficiency accrue solely to consumers, and not also to producers, that is only sustainable in the short-term, and will not help customers in the long-term.

The only reason people got to enjoy that excessive choice and competition for as long as they did is because regulation, bankruptcy laws and stupid money meant that airlines were artificially kept going for longer, and weren't allowed to consolidate as they naturally would in other industries.

Besides - there is still lots of choice in this country for air travel. There are now (or soon will be) four huge, nationwide airline networks that serve virtually every single major and even mid-sized market in the country and connect it with any other. That has enormous value to consumers in and of itself.
 
Cubsrule
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 9:20 pm

Quoting FL787 (Reply 11):
. And I would consider the higher fuel costs that helped kill YX and the MKE hub to be an enormous structural change in the industry.

YX was in trouble long before fuel costs started increasing.

Quoting commavia (Reply 19):
MKE was a small hub in a relatively small city, and it was being fought over by two airlines, and that artificially increased the amount of capacity being flowed through the hub.

YX was in trouble long before FL came to town (and remember that they had successfully fought off NW in 2003 and 2004).

Quoting FL787 (Reply 11):
I don't see the analogy. A hub with over 100 A32x departures isn't going to have the same economies of scale problems as a hub with 88 seat 717s and RJs.

It's an imperfect analogy, but it's the closest one there is.

Quoting EricR (Reply 24):
I think it is also important to point out that even the new entrants into the industry such as B6, VX, NK have opted for hubs in major metropolitan airports over smaller second tier hubs for a reason. Second tier hubs are relics of the past that airlines have moved away from (even though certain people have not). There are significantly more operational and financial efficiencies gained for airlines focusing on a fewer, but larger hubs. Furthermore, this approach reinforces or strengthens existing hubs as they are developed into secure fortress hubs.

Yet, WN operates smaller second tier hubs in places like BNA and STL, and even arguably MCI, SAT and AUS.
I can't decide whether I miss the tulip or the bowling shoe more
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 9:23 pm

Quoting Cubsrule (Reply 34):
YX was in trouble long before FL came to town (and remember that they had successfully fought off NW in 2003 and 2004).

Thus my point. MKE made less and less sense as a hub as time went on - even before AirTran came along. But the article specifically compared today's traffic levels to several years ago at the peak of the market share battle that artificially inflated MKE's numbers.

Quoting Cubsrule (Reply 34):
Yet, WN operates smaller second tier hubs in places like BNA and STL, and even arguably MCI, SAT and AUS.

... alongside huge hubs in PHX, LAS, MDW, BWI, DEN, etc.
 
EricR
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 9:40 pm

Quoting Cubsrule (Reply 34):
Yet, WN operates smaller second tier hubs in places like BNA and STL, and even arguably MCI, SAT and AUS..



That is because WN does not operate a hub and spoke network, but rather uses a quasi P2P type structure which makes it unique to any other carrier.

[Edited 2013-04-14 14:46:10]
 
Cubsrule
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 9:50 pm

Quoting EricR (Reply 36):
That is because WN does not operate a hub and spoke network, but rather uses a quasi P2P type structure which makes it unique to any other carrier.

I agree. It shows, though, that at least in some networks, smaller hubs can have value.
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deltal1011man
Posts: 4752
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 10:00 pm

Quoting commavia (Reply 1):
The reason capacity and traffic are down substantially at MKE versus several years ago is not consolidation. The reason capacity and traffic are down substantially at MKE is that MKE should never have had that much capacity in the first place. Several carriers got overzealous adding capacity to try and buy market share, and bought into the hype about MKE being "Chicago's third airport."

This

Quoting commavia (Reply 1):
Well, it depends. Fares will surely rise - but they will anyway. But, on the other hand, airlines seem to now be consistently earning money for the first time in decades. And to me, that's a good thing for consumers in the long-run, not a bad thing. Just look at the amount of investment AA, DL, etc. are making in their onboard product.

this
spot on post.

Quoting PHX787 (Reply 5):
As much as I hate seeing this happen, it is a product of such mergers.

No its a product of stupidity. 500 flights a day on 50 seats RJs isn't going to work. Sorry. Your beloved CVG died long before the merger

Quoting PHX787 (Reply 5):
We are relegated to connections far out of our way or to jam-packed airports in order to get where we need to be. Often times, standby- lists are 3 or 4 pages long (this is my direct observation and the observations of many who travel out of CVG, MKE, and PIT, according to what's been told to me).

So don't fly. Start an airline. You are so much smarter than the people running the airlines now, so get on it boss

Quoting PHX787 (Reply 5):

The issue is not the "pricing" or "yields" but rather how the airline can turn a profit while still operating out of their already-successful hubs, which leaves midwestern cities in the dust.

uh. duh. Simple math. Why operate 200 flights a day at CVG and DTW when Delta can fly 350 from DTW? It decreases cost.

Quoting PHX787 (Reply 5):
This is partially why the creation of a 5th so-called "legacy" may be the best bet, to focus on midwestern interests.

So do it. Have fun when it fails. Get Leo Mullen to help. He loved CVG and 50 RJs.

Quoting PHX787 (Reply 5):
When the economy picks up, there's gonna be a demand again, you know. And what can possibly help businesses do their business is better service at airports.

uh profitable airlines?

Quoting PHX787 (Reply 5):
A number of business people told me at an ACG event in Cincinnati last month that they have contemplated moving out of the region to Charlotte or Minneapolis because they needed those flights from the DL hub in order to profitably operate. They don't have time for long layovers or extreme hours. Business travel revolves around 1 thing- get there, get done, get home, ASAP.

your post has my bull crap detector going off.

Quoting PHX787 (Reply 5):
This is why mergers aren't doing anything for anyone else really.

lol. I hope that where ever you work you get screwed as bad as airline employees have over the last 15 years. Then lets see how you feel with no time off, a ton of outsourcing, high heath care cost and working till you die. Oh and 50% pay cut.
Something tells me you will learn quickly why profits are important.

Quoting commavia (Reply 7):
Well, as "someone else" - namely, a paying traveler - I would much rather have a stable, sustainably profitable airline industry that is built around a few large competitors than one that keeps operating non-viable small hubs for no logical economic reason. It's remarkable to me that in so many other industries - from communications, to banks, to national defense equipment - the world seems to go round and round just fine with just a few (3-4 or less) large national competitors, and yet for some reason some constantly complain about such oligopolistic market efficiency being applied to the airline industry.

and you don't think employees don't love Delta making nearly 2 Billion and getting at least 1 pay raise every year? Profitable airlines mean better products and happy crews.

Quoting PHX787 (Reply 13):
1) Who here honestly thinks that CLT, DTW, LAX, ATL, and NYC are in good enough "geography" for the most efficient aviation industry possible?

anyone who can look at a map. cute how you leave out other hubs though. (nearly 1,000 flights at ORD for UA/AA plus what 300 or so from WN at MDW, 500 flights for Delta at MSP etc.etc.)

Quoting PHX787 (Reply 13):
2) Who here honestly thinks that a tripartite aviation industry is actually good for the health of the business industry in the USA? Businesses and travelers want more options with the lowest price, best service possible.

anyone who has taken an ECON1101 class? pick, billions in bailouts again or profitable airlines.

Quoting PHX787 (Reply 13):
3) Who here honestly thinks that the "megahubs" are the most efficient way to travel in the USA this day in age?

again, Economics and simple math. Why have two of everything at CVG/DTW when Delta can have 50% less and a single hub at DTW.
or in other words. DTW cost you 50 bucks, DTW/CVG cost you 100. You really expect Delta to pay the 100?

Quoting PHX787 (Reply 13):
4) Who here honestly thinks that commavia and others should seriously stop throwing the 50-seater card out here, because that argument is irrelevant these days in age?

it is? IIRC DL/AA/UA have nearly 1000 50 seaters and they can just start replacing them however they want. It takes capital and possibly more outsourcing employees wont allow.

Quoting PHX787 (Reply 13):
You all honestly think that these aircraft, while larger than the CRJ 50-seater, can't turn a profit by operating out of smaller airports and hubs? That's why these planes are being designed in the first place- for a better customer experience.

Um no. people don't tend to piss away money. Do you honestly think you are smarter than the people running our airlines? Remind me what company you have ran that has made 3B the last three years?

Quoting PHX787 (Reply 13):
As much as people claim there isn't a "demand," there is always a demand for businesses to fly somewhere to expand their business. Let's stop talking about the recession-the more we talk about it, the longer it's going to last....which is why businesses and airlines need to be able to expand, especially at smaller airports.

what an amazingly stupid post. "close your eyes! its not there. It'll just go away"  
Quoting PHX787 (Reply 13):
Really? My first priority as a pax is this: Am I going to get there in due time and comfortably?

and my first priority as someone running a company is to make money. You want them not to do that because in your crazy mind you think CVG should have all kinds of flights like it did 20 years ago. You seem to forget that fuel was all .50 cent a gallon.

Quoting PHX787 (Reply 13):
The CVG flight was delayed upon departure because DL didn't staff enough ground crew at CVG.

prove this. Hard numbers

Quoting MSJYOP28Apilot (Reply 16):
You arent forced to fly anyone or anywhere. Not only do you have a choice who you can fly, you can choose to drive or not travel at all. You choose to not fly the competition. You are not forced to fly Delta through MSP. That is a personal choice you make.

this. you picked the flight. fly or drive with another carrier

Quoting 9w748capt (Reply 17):
Do businesses and travelers want to pay artificially low fares that aren't sustainable for the industry and then make up the difference when their tax dollars are used toward government bailouts?

this.

Quoting mayor (Reply 21):
Where do you think the money comes from to improve service, new a/c, etc? The airlines HAVE to turn a profit, can't you see that?

no he cant. I think he thinks its a public service. Airlines aren't. (but at the end of the day its a political thing. I wont go there though)
New airliners.net web site sucks....
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capitalflyer
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 11:59 pm

Quoting 9w748capt (Reply 17):
LOL at ORD being too crowded

ORD is a clusterf***. Connections on UA are a pain in the butt, forcing you often to take a crappy bus to switch terminals. If ORD wasn't overcrowded, UA could operate efficiently from T1.

Why else also would they be adding so many runways if the city didn't realize that it was at capacity with no room to grow? The frequent delays for traffic, not to mention if there is a drizzle good luck getting out, are a symptom of overcrowding.

DTW is a far superior hub, despite Detroit's dire straits economically.

Quoting Cubsrule (Reply 34):
Yet, WN operates smaller second tier hubs in places like BNA and STL, and even arguably MCI, SAT and AUS.

This is why WN kicks UA's butt in on time. It isn't crippled by weather since all its east-west traffic doesn't bottleneck in one place.

BUT, WN also doesn't fly to places like SBN, CVG, SPI..., hell they don't even fly to all 50 states. So WN is a whole different animal (ha ha F9) when looking at hubs as they don't try to fly to small communities.



In addition, MKE is behind places like CMH and IND in terms of GDP, so yes likely MKE was due for correction in terms of air service. That plus a big part of the service was on struggling airlines like YX/F9. So if they suffer, then MKE suffers. Indeed this is the risk with being a hub, that if your hub airline takes a nosedive your air service goes with it.
 
EricR
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RE: Mergers Resulting In Decreased Service At MKE

Sun Apr 14, 2013 11:59 pm

Quoting Cubsrule (Reply 37):
I agree. It shows, though, that at least in some networks, smaller hubs can have value..




There is an exception to every rule and WN is the exception if you consider cities with 70 or less flights a day on the same level as former hubs in STL, PIT, etc.

This works when you have a southwest type route structure AND low costs. However, as WN's costs have risen over the past several years, I've noticed a pullback back on some of their P2P flying in favor of routing over their larger hubs/focus cities. I think we will see this continue and accelerate as WN copes with a cost structure that is much more on par with its rivals.
 
FlyPNS1
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 12:38 am

Quoting commavia (Reply 33):
I just don't see how you figure. Again - take a look at what the cabins of Delta's 767s or AA's new A321s or 777s look like. That doesn't look to me like airlines indifferent to their customers.

But that's just fancy window dressing that won't make up for unhappy employees, long connection times, fewer flights, higher fares and more delays. Despite some recent pay raises, the legacy employees as a group are still abysmal in customer service...whether it be DL, UA or AA.

Not to mention that those fancy cabins will be enjoyed by fewer customers as the airlines continue to shrink to profitability. If you look at the Big 4 carriers plans, none of them have any plans to significantly grow and most will likely continue shrinking in the years to come. As they push higher fares and more customers cut down on flying.

Quoting commavia (Reply 33):
Either way, U.S. consumers enjoyed excessive choice and competition for years, to the point that it largely contributed to much of the industry going bankrupt.

But what drove most of the legacy carriers into bankruptcy wasn't too much competition, it was just bloated costs.
 
commavia
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 12:51 am

Quoting FlyPNS1 (Reply 41):
fancy window dressing

Pretty fancy indeed.

Quoting FlyPNS1 (Reply 41):
that won't make up for unhappy employees, long connection times, fewer flights, higher fares and more delays.

In the long-run, I think it will.

Airlines aren't just investing in new cabins. They're investing in airport facilities, infrastructure, larger/better small jets, better IT systems, etc. All of that will - in time - improve the overall customer experience.

Quoting FlyPNS1 (Reply 41):
Despite some recent pay raises, the legacy employees as a group are still abysmal in customer service...whether it be DL, UA or AA.

Customer service and employee morale and attitudes will continue to improve as the financial health of the industry improves - and their paychecks go up.

Quoting FlyPNS1 (Reply 41):
Not to mention that those fancy cabins will be enjoyed by fewer customers as the airlines continue to shrink to profitability. If you look at the Big 4 carriers plans, none of them have any plans to significantly grow and most will likely continue shrinking in the years to come. As they push higher fares and more customers cut down on flying.

As it should be for a profit-seeking enterprise - airlines were catering to too many customers, driven by too low of fares.

That's a large part of the reason they were loosing so much money. In the pursuit of delivering consistent returns to shareholders, revenue needs to go up, and such is the most basic law of economics - supply and demand - that when the price of a good goes up, all else being equal, quantity demanded will go down.

Again - if a profitable industry is the goal - that's not a bad thing.

Quoting FlyPNS1 (Reply 41):
But what drove most of the legacy carriers into bankruptcy wasn't too much competition, it was just bloated costs.

It was both.
 
Cubsrule
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 1:05 am

Quoting commavia (Reply 42):
Customer service and employee morale and attitudes will continue to improve as the financial health of the industry improves - and their paychecks go up.

Certainly, I haven't seen Delta's customer service get any better over the past two-three years as their financial situation has improved pretty much continually. Have you?

Quoting EricR (Reply 40):
However, as WN's costs have risen over the past several years, I've noticed a pullback back on some of their P2P flying in favor of routing over their larger hubs/focus cities. I think we will see this continue and accelerate as WN copes with a cost structure that is much more on par with its rivals.

Some point to point cities have gotten smaller; others have stayed fairly static in size while adding destinations (e.g. MCI and BNA) and others have gotten larger (e.g. STL). If larger costs kill point to point, how do we explain what is going on in those places?
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User avatar
mayor
Posts: 6218
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 1:06 am

Quoting FlyPNS1 (Reply 41):
But that's just fancy window dressing that won't make up for unhappy employees, long connection times, fewer flights, higher fares and more delays. Despite some recent pay raises, the legacy employees as a group are still abysmal in customer service...whether it be DL, UA or AA.

I guess that's $3billion in "fancy window dressing", then. As far as recent pay raises, at DL there was that PLUS at least two years worth of profit sharing, maybe more. I doubt if they're as unhappy as you say. As far as "long connection times" is concerned, I'm not sure what you mean. Too long? Too short? Or are things just not right, down there in the panhandle of Florida? I think many on here agree that fares are too low.....certainly not as high as they should be OR are you one of those that say that fares should be rock bottom, profitablility be damned?

Quoting FlyPNS1 (Reply 41):
Not to mention that those fancy cabins will be enjoyed by fewer customers as the airlines continue to shrink to profitability. If you look at the Big 4 carriers plans, none of them have any plans to significantly grow and most will likely continue shrinking in the years to come. As they push higher fares and more customers cut down on flying.

Don't know how you can say this. The airlines are certainly ordering more a/c and not just to maintain capacity, either, although it's the airline analysts that keep complaining that there's too much capacity out there.
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Cubsrule
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 1:14 am

Quoting mayor (Reply 44):
As far as "long connection times" is concerned, I'm not sure what you mean. Too long? Too short?

I don't want to speak for him, but at least ex-BNA, DL is selling a lot of 2-3 hour connections, many more than 5 or 10 years ago.

Quoting Deltal1011man (Reply 38):
Simple math. Why operate 200 flights a day at CVG and DTW when Delta can fly 350 from DTW? It decreases cost.

The math is quite a bit more nuanced than that for a couple of reasons. First, once a hub gets to be a certain size, adding flights doesn't really reduce costs that much. Had DL and US merged, would collapsinig CLT in to ATL have markedly reduced costs? Probably not.

Also, revenue tends to be a bit better with two hubs since there is the possibility of capturing two local markets.

No one is suggesting that UA should consolidate IAD and EWR.
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commavia
Posts: 10071
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 1:20 am

Quoting Cubsrule (Reply 43):
Certainly, I haven't seen Delta's customer service get any better over the past two-three years as their financial situation has improved pretty much continually. Have you?

I'm not the right one to ask. I haven't flown Delta enough, or consistently, to fairly compare. But I'll say this - the pictures and reports I've seen about, for example, Delta's new longhaul J product and its new premium transcon product are impressive.

As for an airline I do fly regularly and consistently and have for years - AA - the answer is decidedly "yes" from my perspective. AA in the last few years has done several things to improve the customer experience from where it was, say, 5-6 years ago. I have found the F food better, the onboard technology markedly better, and the customer-facing IT (AA.com, self-service kiosks, etc.) consistently improving. And that's before we even get to the nearly 500 new jets AA is taking delivery of that look incredible and have gotten extremely positive reviews (that I have seen).

Quoting Cubsrule (Reply 43):
If larger costs kill point to point, how do we explain what is going on in those places?

It's explained by the fact that Southwest's point-to-point network is growing slower than the growth in its hub network. In the last decade a very large portion of Southwest's growth has been in its hub markets - PHX, LAS, MDW, BWI, DEN.

Quoting Cubsrule (Reply 45):
No one is suggesting that UA should consolidate IAD and EWR.

That's because the WAS and NYC markets are sufficiently large in their own right that they can exist on their own and justify their own existence as hubs coexisting within a single airline system. CVG and DTW were not the same - CVG was simply not large enough to justify its own existence alongside DTW. Same story with STL/ORD, PIT/PHL, MEM/ATL, etc.
 
Cubsrule
Posts: 11633
Joined: Sat May 15, 2004 12:13 pm

RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 1:31 am

Quoting commavia (Reply 46):
I'm not the right one to ask. I haven't flown Delta enough, or consistently, to fairly compare. But I'll say this - the pictures and reports I've seen about, for example, Delta's new longhaul J product and its new premium transcon product are impressive.

The hard product has gotten better, no question. The soft product is about the same, or maybe a bit worse. Customer service on the ground, especially at ATL, is atrocious.

You seem to be conflating hard product--which is getting better most places--with soft product--which you contend gets better with better financial results. I agree with you on the first point, but I don't see the evidence on the second.

Quoting commavia (Reply 46):
It's explained by the fact that Southwest's point-to-point network is growing slower than the growth in its hub network. In the last decade a very large portion of Southwest's growth has been in its hub markets - PHX, LAS, MDW, BWI, DEN.

Isn't that a given when most of the growth is coming from new stations? Should ICT open with STL/BNA/MCI/SAT or DAL/MDW/DEN/BWI?

Quoting commavia (Reply 46):
That's because the WAS and NYC markets are sufficiently large in their own right that they can exist on their own and justify their own existence as hubs coexisting within a single airline system. CVG and DTW were not the same - CVG was simply not large enough to justify its own existence alongside DTW. Same story with STL/ORD, PIT/PHL, MEM/ATL, etc.

You are proving my point, I think. There's more to it than "the larger the hub, the better." After all, at one point in the early 2000s, STL, CVG and CLT were around the same size.
I can't decide whether I miss the tulip or the bowling shoe more
 
RDUDDJI
Posts: 1717
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 2:35 am

Mergers have resulted in dehubbing for many airports. Nary a merger goes by that some hub isn't affected sooner or later.

Quoting commavia (Reply 29):

It did, indeed, have something to do with ATL and CLT. Hubs don't operate in isolation - they constantly interact with the other hubs near them.

Perhaps a small "contributing" factor, but miniscule in comparison to the acquisition of the MIA hub. In fact, one could argue that CO at GSO was a larger influence (and it was at the time), but nonetheless MIA negated the need for the two low revenue connecting hubs. AA (wisely) realized the $ was in MIA, not in having two low rev connecting hubs.
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flyguy89
Posts: 2004
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RE: Mergers Resulting In Decreased Service At MKE

Mon Apr 15, 2013 2:57 am

Quoting IllinoisMan (Thread starter):

It's not really shocking or merger-related IMO, most on here recognized what was happening in MKE with FL and F9/YX was a bubble and that a correction was inevitable. There were only a handful claiming the growth would continue.

Quoting IllinoisMan (Thread starter):
Seems like we are headed towards a GRB type airport with everything connecting through a hub. Not good...

MKE (or any other airport for that matter) will almost definitely receive non-stop service to any market it can profitably support, but that probably won't include service to the likes of SAT, SDF or OMA.

Quoting PHX787 (Reply 5):
Mergers tend to serve the midwestern market quite poorly

Only because the region was massively over-hubbed. Consolidation will necessarily most affect markets that are the most over-saturated.


Quoting PHX787 (Reply 5):
But in all realities, It has done nothing but abandon a large portion of the population of the US.

No one has been abandoned (with the probable exception of those who won't pay more than $150 for a r/t ticket). Numerous Midwestern cities support point-to-point service to cities they can sustain profitably (CUN, BOS, LGA, DCA, LAX...etc).

Quoting PHX787 (Reply 5):

When the economy picks up, there's gonna be a demand again, you know. And what can possibly help businesses do their business is better service at airports.

...but there have to be enough businesses who take the flight often enough to support the flight, airlines aren't a charity. Additionally, mega-hubs aren't a necessity for booming business growth, look at AUS, RDU, CMH and OKC, none of them are hubs with hundreds of flights to dozens of cities, yet they're all some of the fastest growing cities in the US.

Quoting PHX787 (Reply 5):
A number of business people told me at an ACG event in Cincinnati last month that they have contemplated moving out of the region to Charlotte or Minneapolis because they needed those flights from the DL hub in order to profitably operate.

I sincerely doubt that is the case, any business whose profitability depends on DL operating a single daily non-stop to GSO is one I would run from when it comes to investing, these were probably some of the same businesses complaining about CVG's astronomical fares and flying their employees out of DAY, LEX and SDF even when the DL hub was massive. Referring back to my above post, I think you're placing too much value on flights, hubs can be important economic drivers to be sure, but if having all those flights were as valuable and necessary to business as you're trying to say, then all businesses in the US would be solely based in hub cities, which is definitely not the case.

Quoting PHX787 (Reply 13):
Businesses can't thrive when the airlines have a stranglehold on their money.

Again, someone should tell all those companies in Omaha, Raleigh and Austin that their businesses aren't supposed to thrive then since they don't have hubs and all the flights they could need.

Quoting FlyPNS1 (Reply 41):
Quoting commavia (Reply 33):
Either way, U.S. consumers enjoyed excessive choice and competition for years, to the point that it largely contributed to much of the industry going bankrupt.

But what drove most of the legacy carriers into bankruptcy wasn't too much competition, it was just bloated costs.

...and fuel prices, and flyers not wanting to actually pay the premium necessary for the services they were demanding.

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