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T773ER
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Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:14 pm

American CEO Doug Parker says "Atlanta and Charlotte both produce high margins. Too bad for United, which lacks a Southeast hub".

The link to the article below.

https://www.thestreet.com/story/1436846 ... t-hub.html

"Margins by region come and go, margins by hub come and go, but what I can tell you right now is Delta has an airline that flies over 40% of their flights in and out of Atlanta, which is a really, really good hub," Parker responded. "And if American flew 40% of its flights in and out of Charlotte, we would have a margin advantage there in the business because Charlotte's a really, really good hub.

"It's not about mismanagement or anything close to it. It's about the networks that are currently in place at the airlines," Parker said. "[And] they have that advantage, by the way, in valuation."


This brings up a more general discussion on the cost per enplaned passenger at each major airport. It seems as United faces a structural issue in its network operating major hubs out of the most expensive in the country while not reaping the benefits of a "cheap" hub.
https://dwuconsulting.com/airport-finan ... -passenger

Cost Per Enplaned Passenger (CPE)

CLT 1.35
ATL 2.38
SLC 3.69
FLL 3.94
MCO 4.66
TPA 5.02
PHX 5.79
MSP 6.32
MDW 7.61
DFW 9.50
BWI 9.51
DTW 10.01
SEA 10.10
IAH 10.62
PDX 10.68
SAN 10.71
DEN 10.80
LAS 11.05
HNL 11.36
DCA 13.44
BOS 13.45
PHL 14.58
LAX 14.83
ORD 15.16
SFO 16.67
LGA 18.68
MIA 19.87
IAD 21.00
JFK 25.45
EWR 28.05

Obviously this number (CPE) is greatly influenced on the size of the hub and the number of passengers passing through, but nevertheless it does represent inherent strengths and weaknesses of each hub.
 
flyguy84
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Re: Doug Parker on United Lack of a Southeast Hub

Wed Nov 01, 2017 3:34 pm

Might want to check that quote. Parker didn’t say “too bad for United...”
SFO
 
AAvgeek744
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:37 pm

I don't think the lack of a SE hub is going to kill UA. They've really never had one. IMO, Miami didn't count went they took the PA Latin routes because the feed into MIA was minimal. Besides, there really isn't a viable option in the SE to build a hub.
 
mikejepp
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:38 pm

CLT has a lot of construction planned. New concourse under construction, terminal expansion, terminal interior improvements, a new control tower, a new runway planned, etc.

What will this do to CLT's cost per passenger?
 
catiii
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:40 pm

T773ER wrote:
American CEO Doug Parker says "Atlanta and Charlotte both produce high margins. Too bad for United, which lacks a Southeast hub".

The link to the article below.

https://www.thestreet.com/story/1436846 ... t-hub.html

"


Where did he say "too bad for United?"
 
CHI87LG
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:41 pm

It (construction at CLT) might move the cost up a bit, but it's definitely not going to put it in line with the really expensive ones. I assume a lot of those costs come from state law and other "legacy" costs.

Interesting to note that United has a lot of hubs at the bottom of that list (which are also the major business and society centers of the United States).

Theoretically - there are other, more important factors to be included in the calculation of where to put a hub. A cheaper airport to operate from doesn't create a desirable destination.
 
MIflyer12
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:48 pm

T773ER wrote:
This brings up a more general discussion on the cost per enplaned passenger at each major airport. It seems as United faces a structural issue in its network operating major hubs out of the most expensive in the country while not reaping the benefits of a "cheap" hub.


Are we now expecting the UA CEO or CFO to offer this is as the next excuse for underperformance? It's more of 'The dog ate my homework.' One reason ATL and CLT are cheap is that they have a lot of passengers over which to spread costs. If UA ran more/bigger planes planes from IAD, IAD costs per enplanement would decline. WAS further has the problem of duplicate expenses at 3 airports (same problem with LGA/JFK/EWR, and at SFO/OAK/SJC). CLT and ATL, as single-airport metros, are more efficient in overhead and build better connecting possibilities, which begets more traffic and yet lower costs per passenger.

UA chooses the airports at which it hubs. It bailed on CLE. DL bailed on MEM and CVG to focus traffic at ATL and DTW/MSP.
 
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Rajahdhani
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 3:52 pm

mikejepp wrote:
CLT has a lot of construction planned. New concourse under construction, terminal expansion, terminal interior improvements, a new control tower, a new runway planned, etc.

What will this do to CLT's cost per passenger?


I too wonder where it will all settle out. I have to hope that those ultimate enplanement costs remain lower than ATL (however the vanity of that is truly tempered by a few ideas regarding how CLT can and will grow, and perhaps increase yields to compensate). In order to accomplish that, they will have to offset the costs of the physical assets by increasing utility rates, and adding better premium yield capacity.

Considering that CLT's low costs were managed essentially to AA's liking thus far, I cannot imagine that the new 'improvements' were un-noticed, and/or costs not approved by AA management.
As is, if the costs were doubled - the cost would not be far over ATL's and theoretically - AA would have an increase of capacity, to put there to rival (potentially 40%) a la DL at ATL. Admitttedly, DL's operation at ATL is mightily impressive, and kudos to them for accomplishing that.

Backing to a more main discussion, it begs the question of how AA will now leverage itself going forward. Within the current phase of consolidation, and building upon the strengths of the merger - AA will be emerging in the coming years to bank on that advantage. CLT certainly seems to have not only their costs, but their advantageous location to maximize a future advantage. AA will couple that with either low-costing (nearly fully, if not well, amortized) aircraft on the trunk routes where the ranges are not as necessary as capacity and frequency. The addition of newer, higher costing aircraft to service longer routes also pairs a bit well with the lower costs (and thus pressures of performance). What Doug Parker has directly hinted at here is that CLT seems ripe for expansion.
 
TWFlyGuy
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:03 pm

mikejepp wrote:
CLT has a lot of construction planned. New concourse under construction, terminal expansion, terminal interior improvements, a new control tower, a new runway planned, etc.

What will this do to CLT's cost per passenger?


Very good info on the future of CLT here:

http://www.cltairport.com/News/Pages/De ... jects.aspx

From all I have read, the goal is to impact costs as little as possible as that is a huge driver behind the existence of a hub here given the population of the city (only one city with less population, SLC, supports a hub). While the city is growing, we probably need at least a population of 3+ million to feel comfortable with keeping the hub and that will be years away to pass that milestone.
 
VictorKilo
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:03 pm

T773ER wrote:
It seems as United faces a structural issue in its network operating major hubs out of the most expensive in the country while not reaping the benefits of a "cheap" hub.


That's the wrong conclusion to take from the data, because it neglects to include revenue per enplaned passenger.

Just because a Lexus may be more expensive to make than a Toyota doesn't mean Lexus doesn't make money, and there's not a strategy that can make you a lot of money making Lexus cars to people who can afford Lexus prices. It may mean that you'll lose money selling Lexus cars to people who can only afford to pay Toyota prices.

So a strategy that works for an airline based out of high-cost hubs would be to focus on the high revenue portion of the traffic - O&D - while at the same time other airlines operating out of very low-cost hubs can make money on volume with lower revenue connecting traffic.

Both strategies can work and make money at the same time for different airlines, as long as each airline chooses the right strategy for them.
 
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:04 pm

Where would UA go in the Southeast though? ATL has DL, MCO is basically growing into a DL focus city, MIA has AA while FLL has Spirit, Southwest, and JetBlue, I wonder who would make the most sense if UA ever did build a Southeastern hub or focus city.
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fightforlove
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:10 pm

flymco753 wrote:
Where would UA go in the Southeast though? ATL has DL, MCO is basically growing into a DL focus city, MIA has AA while FLL has Spirit, Southwest, and JetBlue, I wonder who would make the most sense if UA ever did build a Southeastern hub or focus city.


They should go grab Northwest's old Memphis hub, or Nashville.
 
izbtmnhd
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:13 pm

I don't see how UA could replace one of existing hub to move into the Southeast. The only viable non-hub Southeast city is BNA and UA can't replace either IAD's or IAH's ops at BNA. So BNA would have to become an additional hub which doesn't seem practical either. I don't see MIA, FLL or MCO as Southeast hubs, they're too far south for the connectivity that ATL/CLT handles.

UA people argue IAH/IAD combined is the Southeast hub. I can agree with that somewhat.
 
Italianflyer
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:14 pm

Unfortunately that ship sailed long ago. Heck, it sailed, returned and has ben decommissioned. The only 'viable' candidate is RDU; a growing metro but already well served by an entrenched AA, growing DL and competitive WN. IAD, for better or worse, is UAs southeast nexus. The challenge is to make it work.
 
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Super80Fan
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:14 pm

It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.
RIP McDonnell Douglas
RIP US Airways
 
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Rajahdhani
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:18 pm

T773ER wrote:
This brings up a more general discussion on the cost per enplaned passenger at each major airport. It seems as United faces a structural issue in its network operating major hubs out of the most expensive in the country while not reaping the benefits of a "cheap" hub.
https://dwuconsulting.com/airport-finan ... -passenger

Cost Per Enplaned Passenger (CPE); Obviously this number (CPE) is greatly influenced on the size of the hub and the number of passengers passing through, but nevertheless it does represent inherent strengths and weaknesses of each hub.


Break that down, though - and here's (more or less, with a few cities arguably in shared by a few, or two carriers (a la ORD for UA and AA) that break down;

As a major caveat first, and the true crux of how these hubs are developed is "is greatly influenced on the size of the hub and the number of passengers passing through"

For AA:
CLT 1.35
PHX 5.79
DFW 9.50
DCA 13.44
BOS 13.45
PHL 14.58
LAX 14.83
ORD 15.16
LGA 18.68
MIA 19.87
JFK 25.45

For DL:
ATL 2.38
SLC 3.69
MCO 4.66
MSP 6.32
DTW 10.01
SEA 10.10
PDX 10.68
LAX 14.83
LGA 18.68
JFK 25.45

For UA:
IAH 10.62
DEN 10.80
HNL 11.36
LAX 14.83
ORD 15.16
SFO 16.67
IAD 21.00
EWR 28.05

Others:
FLL 3.94
MCO 4.66
TPA 5.02
MDW 7.61
BWI 9.51
SAN 10.71
LAS 11.05

For this reason, I see your point. Not only does not having a "South East" hub hurt physically - there is the realty of what both CLT and ATL represent - serving major metropolitan markets (rich O/D) and with low costing airports due to their size, dates of development and respective geographic monopoly over their relative ranges.

As is, UA's least expensive hub is at Houston (which will now need time to further recover - not only from a depressed petrochemical industry in the area, but also by Hurricane damage).

AA's recent 'scaling back' from JFK to PHL for specific markets represents 10.9 ins savings per enplanement. Where as for the same market, EWR's high costs must be atrocious. That said, UA does very well in extracting premium yields and has a stellar operation here. So, I can see UA needing to work on all hubs, in ways to lower costs in the upcoming years.
 
2travel2know2
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:23 pm

MIA isn't well situated to be a UA South East USA hub (again?) and its current operations in/out MIA aren't timed to be really hub friendly, except perhaps for UA late evening arrivals and early morning departure (and those flights aren't to all UA hubs).
However, there are important MIA international routes where Star Alliance doesn't have a carrier, maybe those could be flown by UA plus some very premium USA non-UA hub markets. Also, it seems MIA has enough gates available now for such a petite hub operation.
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UAL777UK
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:26 pm

Super80Fan wrote:
It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.


Not sure if you are having a laugh or what? What are you going on about inaccessible, you contradict your argument by stating they rely on an express network. Find me a major that does not. Hub and spoke mean anything?

Back to the topic, I would love to see UA open up a south east hub but for the reasons many posters have mentioned I think that there is more chance of hell freezing over first at this point.
 
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Super80Fan
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:31 pm

UAL777UK wrote:
Super80Fan wrote:
It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.


Not sure if you are having a laugh or what? What are you going on about inaccessible, you contradict your argument by stating they rely on an express network. Find me a major that does not. Hub and spoke mean anything?

Back to the topic, I would love to see UA open up a south east hub but for the reasons many posters have mentioned I think that there is more chance of hell freezing over first at this point.


Delta and American have hubs located in major parts of the US, not only for hub and spoke operations but also for O&D. UA's hubs for the most part are inaccessible unless you happen to live in the area or take a regional jet flight from somewhere else. UA also doesn't have a "cheap" hub like CLT/ATL that they can funnel people through, so they are always going to be more expensive for the most part. UA's lack of a Southeast hub is ignorance by corporate for not looking at what's right in front of them and they are missing many, many passengers who now are going to AA and DL through CLT and ATL.
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flyguy84
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:31 pm

United wants a SE hub it’s gojng to need to acquire either B6 or NK. It’s very unlikely to happen but that’s how they get themselves a hub.
SFO
 
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tlecam
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:38 pm

I think that discussion about network advantages / disadvantages relative to a southeast hub and discussion about CPE aren't necessarily the same thing. CLT and ATL happen to be in the southeast region, but I'm not sure that I follow the logic of "CLT and ATL are hubs in the southeast region. CLT and ATL have good margins. CLT and ATL have low CPE. Therefore hubs in the southeast region will have good margins and low CPE."
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TWFlyGuy
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:38 pm

flymco753 wrote:
Where would UA go in the Southeast though? ATL has DL, MCO is basically growing into a DL focus city, MIA has AA while FLL has Spirit, Southwest, and JetBlue, I wonder who would make the most sense if UA ever did build a Southeastern hub or focus city.


It would depend on the purpose of the hub. RDU, which has grown considerably since it was an AA or Midway Airlines hub, could be an option, but is still a relatively small city to support service and would rely heavily on connections thus requiring costs similar to what CLT offers. Greensboro could also be an option but that's an even smaller city although it can draw from northern Charlotte (Huntersville and Mooresville) and parts of the RDU area.
 
evank516
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:45 pm

What do they need a Southeast hub for? If we're talking about funneling passengers through a connecting point for passengers travling from the Northeast/Great Lakes to the Southeastern United States then UA already has a hub they can use for that: IAD. Dulles, although it serves Washington, DC and surrounding areas, is located in Virginia. Virginia is in the southeast. There's O&D, and it can be used for connections. I'm sure it has been used for connections like that in the past. I don't see why UA would need anything else on the east coast when they have EWR and IAD already in place. If they want to use a hub on the east coast the way DL uses ATL or the way AA uses CLT, they can use IAD. They don't use IAD for that as much as CLT and ATL are used in that matter, so UA obviously does not see the need for a hub like that. Having three hubs on the east coast all within 200-300 miles of each other isn't exactly the best idea either.
Last edited by evank516 on Wed Nov 01, 2017 4:46 pm, edited 1 time in total.
 
crazytoaster
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:45 pm

I think it would be really hard for UA to create a new southeast hub. ATL is such a beast that competing against without any real presence already would be extremely difficult. CLT is similar. Is there really enough passengers for another hub? Not even factoring in WN and B6 which both have focus cities in the region.

I think UA would be better served in beefing up DEN. It is there best hub location wise for connecting traffic. DFW is a good competitor for some of the traffic flows that go through DEN. But SLC and PHX pale in comparison to DEN. SLC being just a smaller metro and PHX being a little too far south. I think UA would do much better at making DEN their "cheap megahub". The new DEN expansion plans shed more light in that they want to expand their as well.
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T773ER
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:52 pm

catiii wrote:
T773ER wrote:
American CEO Doug Parker says "Atlanta and Charlotte both produce high margins. Too bad for United, which lacks a Southeast hub".

The link to the article below.

https://www.thestreet.com/story/1436846 ... t-hub.html

"


Where did he say "too bad for United?"


He didn't, that was my mistake and It's too late for me to edit it now. My apologies.
 
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:53 pm

flymco753 wrote:
Where would UA go in the Southeast though? ATL has DL, MCO is basically growing into a DL focus city, MIA has AA while FLL has Spirit, Southwest, and JetBlue, I wonder who would make the most sense if UA ever did build a Southeastern hub or focus city.


Maybe MEM but that’s too close to ORD. Anywhere else is too close to IAH. UA really had not much SE presence before it merged with CO.
 
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Super80Fan
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:53 pm

crazytoaster wrote:
I think it would be really hard for UA to create a new southeast hub. ATL is such a beast that competing against without any real presence already would be extremely difficult. CLT is similar. Is there really enough passengers for another hub? Not even factoring in WN and B6 which both have focus cities in the region.

I think UA would be better served in beefing up DEN. It is there best hub location wise for connecting traffic. DFW is a good competitor for some of the traffic flows that go through DEN. But SLC and PHX pale in comparison to DEN. SLC being just a smaller metro and PHX being a little too far south. I think UA would do much better at making DEN their "cheap megahub". The new DEN expansion plans shed more light in that they want to expand their as well.


Denver only works for parts of the Mid-West and West Coast. Doesn't work at all for the East Coast unless you are traveling West of the Rockies.
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Prost
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:55 pm

Geographically Birmingham, AL would be a good SE hub, but there economic and social issues that might make it more challenging to get established.
 
T773ER
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 4:57 pm

VictorKilo wrote:
T773ER wrote:
It seems as United faces a structural issue in its network operating major hubs out of the most expensive in the country while not reaping the benefits of a "cheap" hub.


That's the wrong conclusion to take from the data, because it neglects to include revenue per enplaned passenger.

Just because a Lexus may be more expensive to make than a Toyota doesn't mean Lexus doesn't make money, and there's not a strategy that can make you a lot of money making Lexus cars to people who can afford Lexus prices. It may mean that you'll lose money selling Lexus cars to people who can only afford to pay Toyota prices.

So a strategy that works for an airline based out of high-cost hubs would be to focus on the high revenue portion of the traffic - O&D - while at the same time other airlines operating out of very low-cost hubs can make money on volume with lower revenue connecting traffic.

Both strategies can work and make money at the same time for different airlines, as long as each airline chooses the right strategy for them.


I agree, but the fact is that United isn't charging a premium for their product like Lexus does over Toyota, In fact it's the other way around, Delta is the carrier charging a premium for their product. You can clearly see this in each companies operating margins, so this strategy really isn't working for United.
 
jbs2886
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:00 pm

flyguy84 wrote:
United wants a SE hub it’s gojng to need to acquire either B6 or NK. It’s very unlikely to happen but that’s how they get themselves a hub.


NK doesn't really have hubs and B6 doesn't have an SE hub (FLL is not really SE).
 
T773ER
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:09 pm

tlecam wrote:
I think that discussion about network advantages / disadvantages relative to a southeast hub and discussion about CPE aren't necessarily the same thing. CLT and ATL happen to be in the southeast region, but I'm not sure that I follow the logic of "CLT and ATL are hubs in the southeast region. CLT and ATL have good margins. CLT and ATL have low CPE. Therefore hubs in the southeast region will have good margins and low CPE."


I see what you're getting at but I don't think the two are mutually exclusive either. The point is that the SE offers a large and growing population center that isn't expensive to operate out of (for a variety of reasons) or has virtually no room to expand i.e. NYC, LA, ORD, IAD etc.
 
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FA9295
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:12 pm

UA should possibly invest in:

RDU (attempt to oust Delta out of there) - in attempt to compete with AA's CLT hub
Lots of options in Florida including: (to compete with AA's MIA hub)
- TPA (most likely option since FLL and MCO are being dominated by LCC's)
- FLL
- MCO
...and the list goes on...
 
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:14 pm

Prost wrote:
Geographically Birmingham, AL would be a good SE hub, but there economic and social issues that might make it more challenging to get established.


What social issues?

In any case, how do you make a hub out of a relatively small airport with 19 gates, with almost half of them used by DL?
United Airlines: $#!ttin' On Everyone Since 1931
 
allegiantflyer
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:14 pm

Even without a Southeast hub, I still think in terms of Geography and location, UA has the best hubs. EWR,ORD,DEN,SFO,IAH &LAX are geographically very well positioned. We know PHL is AA's "Crown Jewel" but what would UA's jewel be? Im thinking SFO.
Last edited by allegiantflyer on Wed Nov 01, 2017 5:16 pm, edited 1 time in total.
 
T773ER
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:18 pm

evank516 wrote:
What do they need a Southeast hub for? If we're talking about funneling passengers through a connecting point for passengers travling from the Northeast/Great Lakes to the Southeastern United States then UA already has a hub they can use for that: IAD. Dulles, although it serves Washington, DC and surrounding areas, is located in Virginia. Virginia is in the southeast. There's O&D, and it can be used for connections. I'm sure it has been used for connections like that in the past. I don't see why UA would need anything else on the east coast when they have EWR and IAD already in place. If they want to use a hub on the east coast the way DL uses ATL or the way AA uses CLT, they can use IAD. They don't use IAD for that as much as CLT and ATL are used in that matter, so UA obviously does not see the need for a hub like that. Having three hubs on the east coast all within 200-300 miles of each other isn't exactly the best idea either.


The whole point is that United, Unlike AA and DL does not have a hub in their system thats is as inexpensive as CLT and ATL (which happen to be the SE for a whole host of reasons). The cheapest airport in their system is IAH and it costs almost 5 times as much per passenger than CLT/ATL.
 
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william
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:19 pm

Italianflyer wrote:
Unfortunately that ship sailed long ago. Heck, it sailed, returned and has ben decommissioned. The only 'viable' candidate is RDU; a growing metro but already well served by an entrenched AA, growing DL and competitive WN. IAD, for better or worse, is UAs southeast nexus. The challenge is to make it work.


Agreed. There are no good candidates for a SE hub other than Nashville and Raleigh. Cincinnati would be to close to ORD and definately IAD. If one is flying from Florida to the mid atlantic region there is a good chance you are not flying United.
 
Adipocere
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:27 pm

I can't see United building a new hub in the SE given current dynamics and saturation. The only move I can foresee them making, hub wise, is probably making a go for PHX - once(if?) AA de hubs and WN drastically scales back PHX to shift traffic to HOU/DAL.
 
DoctorVenkman
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:33 pm

T773ER wrote:
The whole point is that United, Unlike AA and DL does not have a hub in their system thats is as inexpensive as CLT and ATL (which happen to be the SE for a whole host of reasons). The cheapest airport in their system is IAH and it costs almost 5 times as much per passenger than CLT/ATL.


I don't see why everyone is focusing on the cost per passenger metric while ignoring the other half of the equation: revenue per passenger. Two of UA's fortress hubs (EWR, SFO) are located in incredibly rich, business-heavy regions. The amount of premium passengers in NYC and the Bay Area is much higher than the relatively poor Southeast.
 
Runway28L
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:34 pm

I doubt UA is desperate to have a southeastern hub at the moment. They can continue to focus on their strengths (NYC, TATL, TPAC, ORD, and DEN) which are already bringing in big profits for UA anyway.

All airlines are going to have geographical advantages over one another that make them competitive and they should know that. That's just the nature of the business.
 
TWFlyGuy
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:40 pm

I don't see BNA as an option given WN's entrenchment. Yes they compete with WN in Chicago but Chicago is a much bigger based of traffic. Plus BNA is too far West. The reason CLT & ATL work really well is that they are both far East enough to move traffic between the NE & SE as well as NE/SE to the West. BNA moves people to the West really well but not NE to SE. RDU has the exact opposite problem. That is why AA had hubs in both. Especially given the 727 & M80 fleets at the time. Today's aircraft make RDU more realistic but it still has issues.
 
catiii
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:43 pm

Super80Fan wrote:
UAL777UK wrote:
Super80Fan wrote:
It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.


Not sure if you are having a laugh or what? What are you going on about inaccessible, you contradict your argument by stating they rely on an express network. Find me a major that does not. Hub and spoke mean anything?

Back to the topic, I would love to see UA open up a south east hub but for the reasons many posters have mentioned I think that there is more chance of hell freezing over first at this point.


Delta and American have hubs located in major parts of the US, not only for hub and spoke operations but also for O&D. UA's hubs for the most part are inaccessible unless you happen to live in the area or take a regional jet flight from somewhere else. UA also doesn't have a "cheap" hub like CLT/ATL that they can funnel people through, so they are always going to be more expensive for the most part. UA's lack of a Southeast hub is ignorance by corporate for not looking at what's right in front of them and they are missing many, many passengers who now are going to AA and DL through CLT and ATL.


Huh?

United has hubs in New York, Houston, San Francisco, Cleveland (sorta), Chicago, and Denver. Those are "hub and spoke operations and also for O&D." How are they inaccessible unless you happen to live in the area? For that matter, how are AA's and DL's hubs any more accessible?

Sorry, you're trying to make an argument that just doesn't make sense.
 
gwrudolph
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:47 pm

Super80Fan wrote:
UAL777UK wrote:
Super80Fan wrote:
It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.


Not sure if you are having a laugh or what? What are you going on about inaccessible, you contradict your argument by stating they rely on an express network. Find me a major that does not. Hub and spoke mean anything?

Back to the topic, I would love to see UA open up a south east hub but for the reasons many posters have mentioned I think that there is more chance of hell freezing over first at this point.


Delta and American have hubs located in major parts of the US, not only for hub and spoke operations but also for O&D. UA's hubs for the most part are inaccessible unless you happen to live in the area or take a regional jet flight from somewhere else. UA also doesn't have a "cheap" hub like CLT/ATL that they can funnel people through, so they are always going to be more expensive for the most part. UA's lack of a Southeast hub is ignorance by corporate for not looking at what's right in front of them and they are missing many, many passengers who now are going to AA and DL through CLT and ATL.


Wait what? United has hubs in most of the largest metropolitan areas and business centers in the Country. Much more enviable from a business model perspective than how many passengers you can conveniently connect between Lexington and Colorado Springs.

Now, as a result of the attractiveness of those cities, they also have a lot more competitors at their hubs.

There would simply be no good justification for setting up a new SE hub by pulling down something else from somewhere else. They are just starting to rebuild their market strengths at their key hubs--that needs to continue to be the focus, in my opinion

By the way, both DL and AA have their weak regions as well
 
DoctorVenkman
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:49 pm

DoctorVenkman wrote:
T773ER wrote:
The whole point is that United, Unlike AA and DL does not have a hub in their system thats is as inexpensive as CLT and ATL (which happen to be the SE for a whole host of reasons). The cheapest airport in their system is IAH and it costs almost 5 times as much per passenger than CLT/ATL.


I don't see why everyone is focusing on the cost per passenger metric while ignoring the other half of the equation: revenue per passenger. Two of UA's fortress hubs (EWR, SFO) are located in incredibly rich, business-heavy regions. The amount of premium passengers in NYC and the Bay Area is much higher than the relatively poor Southeast.


To further elaborate on this point: the difference between the most expensive on that list, EWR, and the cheapest, CLT, is $28.05 - $1.35 = $26.70. That means EWR would just need to have an average fare that is $26.70 higher than CLT in order to have the same profitability, all else being equal. That is easily covered by the higher supply of premium passengers in the richer, business-heavy regions that UA serves.
 
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TWA772LR
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:51 pm

Super80Fan wrote:
UAL777UK wrote:
Super80Fan wrote:
It's funny, I was just talking about UA's lack of Southeast presence and their ignorance toward opening up more routes down here, even if they don't open a hub. UA's hubs are terrible for the most part and unless you live near them, they are inaccessible to most people and rely on a large Express network. Shameful, hopefully the blind corporate heads wake up.


Not sure if you are having a laugh or what? What are you going on about inaccessible, you contradict your argument by stating they rely on an express network. Find me a major that does not. Hub and spoke mean anything?

Back to the topic, I would love to see UA open up a south east hub but for the reasons many posters have mentioned I think that there is more chance of hell freezing over first at this point.


Delta and American have hubs located in major parts of the US, not only for hub and spoke operations but also for O&D. UA's hubs for the most part are inaccessible unless you happen to live in the area or take a regional jet flight from somewhere else. UA also doesn't have a "cheap" hub like CLT/ATL that they can funnel people through, so they are always going to be more expensive for the most part. UA's lack of a Southeast hub is ignorance by corporate for not looking at what's right in front of them and they are missing many, many passengers who now are going to AA and DL through CLT and ATL.

All airlines have weaknesses in their networks. UA is weakest in the Southeast, AA is weakest in the Pacific Northwest, and DL is weakest in the Southwest and Texas. And of the US3, UA arguably has the most well-rounded international network of the that is served on their own metal (not counting JVs), and even in that realm they all have their weaknesses.
When wasn't America great?


The thoughts and opinions shared under this username are mine and are not influenced by my employer.
 
T773ER
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 5:52 pm

DoctorVenkman wrote:
T773ER wrote:
The whole point is that United, Unlike AA and DL does not have a hub in their system thats is as inexpensive as CLT and ATL (which happen to be the SE for a whole host of reasons). The cheapest airport in their system is IAH and it costs almost 5 times as much per passenger than CLT/ATL.


I don't see why everyone is focusing on the cost per passenger metric while ignoring the other half of the equation: revenue per passenger. Two of UA's fortress hubs (EWR, SFO) are located in incredibly rich, business-heavy regions. The amount of premium passengers in NYC and the Bay Area is much higher than the relatively poor Southeast.


Good point, obviously there is the revenue side to consider as well. However, not all of that Hub traffic is O&D so even though the hub is located in those "rich areas" doesn't mean all the passengers are coming from them. Secondly, even though ticket prices may be higher, it doesn't negate the fact that it costs almost 10 times as much to enplane those passengers, fare prices alone can't and don't make up for that. Finally, the volume out of ATL and CLT is even higher than EWR and SFO, even in those densely populated places circling back to my first point.
 
ScottB
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 6:01 pm

MIflyer12 wrote:
WAS further has the problem of duplicate expenses at 3 airports (same problem with LGA/JFK/EWR, and at SFO/OAK/SJC). CLT and ATL, as single-airport metros, are more efficient in overhead and build better connecting possibilities, which begets more traffic and yet lower costs per passenger.


Nah, the problem in WAS is not duplicate expenses between the three airports. BWI's costs are the lowest by a fairly wide margin over all other large airports in the Northeast, including PHL which is the only airport in its metro. DCA's costs aren't out-of-line either considering the high costs of the region. The blame for IAD's high costs can be placed squarely on MWAA for expensive capital projects without the traffic existing to pay for them.

ATL is cheap not because it's a single-airport metro, but because most of the terminal complex was built 40 years ago and has long since been paid-for apart from incremental construction projects and periodic interior refreshes. Plus it's in a part of the country where construction costs tend to be moderate. CLT's costs have stayed low for similar reasons, coupled with smart airport managers who understood that one of the key reasons why CLT has been a successful hub has been its low costs.
 
T773ER
Topic Author
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 6:02 pm

DoctorVenkman wrote:
DoctorVenkman wrote:
T773ER wrote:
The whole point is that United, Unlike AA and DL does not have a hub in their system thats is as inexpensive as CLT and ATL (which happen to be the SE for a whole host of reasons). The cheapest airport in their system is IAH and it costs almost 5 times as much per passenger than CLT/ATL.


I don't see why everyone is focusing on the cost per passenger metric while ignoring the other half of the equation: revenue per passenger. Two of UA's fortress hubs (EWR, SFO) are located in incredibly rich, business-heavy regions. The amount of premium passengers in NYC and the Bay Area is much higher than the relatively poor Southeast.


To further elaborate on this point: the difference between the most expensive on that list, EWR, and the cheapest, CLT, is $28.05 - $1.35 = $26.70. That means EWR would just need to have an average fare that is $26.70 higher than CLT in order to have the same profitability, all else being equal. That is easily covered by the higher supply of premium passengers in the richer, business-heavy regions that UA serves.


But CLT/ATL enplane more passengers than EWR and SFO so every passenger transiting those airports represents a savings to AA and DL which may otherwise have them go through NYC or some other expensive hub. Keep in mind that AA/DL both have hubs in these "rich" markets already whereas UA isn't currently able to capitalize on an inexpensive SE hub.

I get your argument t and I agree that you can't ignore the areas you mention, or the higher revue they generate, but AA and DL already have a sizable presence those markets. The point of this though is that UA's cheapest hub per passenger isn't nearly as inexpensive on a passenger basis than AA's or DL's, no matter the revenue they generate this still represent a cost benefit to them, especially considering the scope of each (ATL/CLT).
 
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TWA772LR
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 6:03 pm

allegiantflyer wrote:
Even without a Southeast hub, I still think in terms of Geography and location, UA has the best hubs. EWR,ORD,DEN,SFO,IAH &LAX are geographically very well positioned. We know PHL is AA's "Crown Jewel" but what would UA's jewel be? Im thinking SFO.

Exactly. EWR satisfies the NYC market as well as a general Eastern Time Zone hub like IAD, ORD and IAH are 2 powerhouse Central Time Hubs one in the North and the other in the South, DEN is the best placed geographically of any Mountain Time Zone hub, and LAX to satisfy the LA market and Pacific Time Zone hub along with SFO.

For comparison:
DL: 4 (6 including BOS and RDU) Eastern Time hubs, 1 Central Time hub, 1 Mountain Time hub, and 2 Pacific Time hubs
AA: 4 Eastern Time hubs, 2 Central Time hubs, 1 hub that fluctuates between Mountain and Pacific Time, and 1 Pacific Time hub

Even before the mergers, UA still had the best hub city spread geographically speaking, being the only airline to still be in all time zones.

And ALL UA hubs in the US will have at least 1 flight to London and 1 flight to Tokyo on UA metal when DEN-LHR comes online next year, giving all parts of the US more convenient access to 2 of the most important cities in the world.
When wasn't America great?


The thoughts and opinions shared under this username are mine and are not influenced by my employer.
 
jumbojet
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 6:07 pm

The lack of UA having a SE hub cant be the reason for these abysmal UA forecasts for the current quarter.

In the current quarter, Delta foresees a unit revenue gain between 2% and 4% with margin between 11% and 13%. American sees unit revenue rising 2.5% to 4.5%, with margin between 4.5% and 6.5%. United sees a unit revenue decline between minus 1% and minus 3%, with margin between 3% and 5%.
 
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STT757
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Re: Doug Parker on United's Lack of a Southeast Hub

Wed Nov 01, 2017 6:11 pm

RDU is their best bet if this were something they wanted to address.
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