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Midwestindy
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How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 11:39 am

Something I have noticed is that namely UA and DL run quite a few routes to MCO, even daily or multiple daily routes like CLE-MCO, RDU-MCO, IND-MCO, e.t.c. However, without hub feed and with more ULCC pressure than almost any other US market, how profitable is this flying for the majors?

For example, on most of these routes DL/UA competes with G4, F9, WN, and NK which of course puts huge pressure on fares. Its not uncommon to see Basic Economy fares around $50 pretty close-in to departure, and main economy fares aren't necessarily that much higher.

The economics obviously change around Christmas and Spring Break, but my main question is whether or not the airlines view these routes as loss leaders during the other times of the year in order to retain FFs? Or is this flying lucrative in other ways?
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MIflyer12
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 11:49 am

Midwestindy wrote:
For example, on most of these routes DL/UA competes with G4, F9, WN, and NK which of course puts huge pressure on fares. Its not uncommon to see Basic Economy fares around $50 pretty close-in to departure, and main economy fares aren't necessarily that much higher.


Why the a.net fascination with lowest fares? The important metric is average fare (per mile, and some skepticism where distance adjustments are used). DOT data show MCO yields about the same as LAX, and higher than SAN or SEA. Is anybody arguing that LAX/SAN/SEA are greatly overserved?

See Table 2, 4Q2018 avg yield. https://www.transportation.gov/sites/do ... 018-q4.pdf

Go into the DOT-100s and look at the specific route pairs. Try arguing that a Saturday flight xxx-MCO doesn't cover marginal costs when the aircraft would otherwise be parked because business demand doesn't support a full schedule to LGA on Saturday.
 
GalaxyFlyer
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 12:28 pm

I’d bet frequent flyers use a lot of points earned on expensive business travel on MCO legs. Offering non-stops is important for families especially high miler families. So, some of the profit on MCO legs is earned elsewhere in the system
 
cledaybuck
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 12:33 pm

If they weren't profitable, they wouldn't be running them. Those routes aren't important to the network, and it is hard to imagine UA, for instance, losing money on something like CLE-MCO just to make CLE flyers happy.
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SaschaYHZ
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 12:48 pm

People go on vacation.
 
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Midwestindy
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 1:48 pm

MIflyer12 wrote:
Go into the DOT-100s and look at the specific route pairs. Try arguing that a Saturday flight xxx-MCO doesn't cover marginal costs when the aircraft would otherwise be parked because business demand doesn't support a full schedule to LGA on Saturday.


I specifically excluded Saturday flights and other peak travel times from the equation

GalaxyFlyer wrote:
I’d bet frequent flyers use a lot of points earned on expensive business travel on MCO legs. Offering non-stops is important for families especially high miler families. So, some of the profit on MCO legs is earned elsewhere in the system


This is what I am kind of getting at, as I would assume MCO flights have a larger percentage of passengers who are using miles, in addition to the lower fares compared to the station average.

cledaybuck wrote:
If they weren't profitable, they wouldn't be running them. Those routes aren't important to the network, and it is hard to imagine UA, for instance, losing money on something like CLE-MCO just to make CLE flyers happy.


FFs are FFs no matter where they are based.

If an airline is going after profits, running a p2p flight to MCO vs a plethora of ULCC carriers in September and other off-peak months is an odd way to do it.
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drdisque
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 4:21 pm

CLE-MCO is literally UA's only P2P route from MCO.
 
KFTG
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 8:29 pm

Because it's the top tourist destination in the world?
 
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 8:52 pm

I know that during certain times of year DL also operates MCO-GRR.
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BenflysDTW
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Re: How lucrative is P2P MCO flying for the Legacies?

Fri Aug 02, 2019 11:45 pm

DL ops at MCO on Saturday’s in the winter must be a mad house. I wonder how they do their staffing for all the extra flights. DL has just one flight a week extra from GRR, MEM, BNA, MKE, BDL, STL... the list goes on. It’s got to be an extra 20 flights during that time. I also think that Delta sees this as a way to to increase aircraft efficiency as they would otherwise stay on the ground. At DTW where I work for example, I know that AA has an E175 that arrives in the early afternoon on Saturdays and stays overnight. And that’s only one example.
 
axiom
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 8:34 am

I think most of the reasons have been covered. Contrary to a.net myth, FL can and is profitably served quite well by legacies. Offering more p2p capacity to Florida is a nice perk for loyal customers, and is very often utilization flying. In other cases, eg RDU-MCO/TPA which see multiple daily frequencies, there is — shock — business demand for these routes.
 
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usxguy
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 9:04 am

Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...
xx
 
BrianDromey
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 9:45 am

Holiday routes can be very profitable. Look at Malaga, Alicante, Palma, Faro, Bodrum, etc in Europe. Virtually zero business demand but multiple flights to every major UK and European airport. Girls can be great too as Passengers will pay for convenience of non-stop on these routes, with children and family in tow. Commerce in Italy virtually shuts down for August, but UK-Italy prices are very high, well over £200 for direct flights in August. The ancillary revenue can be strong too, seat selection, baggage and BoB charges all add up.
 
myki
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 10:13 am

KFTG wrote:
Because it's the top tourist destination in the world?


I thought that was Bangkok
 
deltalaw
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 10:43 am

myki wrote:
KFTG wrote:
Because it's the top tourist destination in the world?


I thought that was Bangkok


Bangkok has the most international visitors in the world, but it terms of total number of visitors to the city (domestic included)...Orlando has close to 4x the amount of tourists. 75m compared to 20m.
 
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tistpaa727
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 4:19 pm

You also have to realize MCO is a very large business destination for conferences/conventions. Besides the Orlando Convention Center the sheer number of large all-in-one hotel / conference centers is mind-boggling. Many organizations / associations and companies plan events in Orlando because they bet on getting a bump in attendance as people will bring their families along and extend a 2 or 3 day conference into a week-long vacation. When you have that many business travelers your average ticket price for a flight goes up. Everyone always goes right to the tourist angle (which is the vast majority no doubt) but the conference business in and around Orlando is crazy big.
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flymco753
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 4:40 pm

Most people are moving here simply because of the climate. The climate is ideal for outdoor sports/recreational activities year round, and basic jobs are very easy to find because of the tourism. When you have this many people come to visit, the hotels, restaurants, resorts, conference centers, theme parks, etc are going to provide a lot of work opportunities. We have an emerging tech and medical industry that is beginning to create jobs as well. There's a few Orlando tech companies helping fuel autonomous vehicle production in Michigan, so you're getting business traffic there as well.

To add onto jobs at resorts/theme parks, it adds to people moving in from out of country to offer bilingual services. Disney has been huge on offering jobs to bilingual people.
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KMCOFlyer
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 4:40 pm

usxguy wrote:
Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...


This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.
 
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 4:47 pm

KMCOFlyer wrote:
usxguy wrote:
Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...


This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.


LAS says hi and welcome to the A'Net myth club, the two largest convention cities in the US a both low yielding tourist hubs....Not so much.
 
by738
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 6:23 pm

I wonder why BA have always kept MCO at LGW, no First and often an older product...
 
Cubsrule
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 7:31 pm

jetwet1 wrote:
KMCOFlyer wrote:
usxguy wrote:
Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...


This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.


LAS says hi and welcome to the A'Net myth club, the two largest convention cities in the US a both low yielding tourist hubs....Not so much.


Doubtless Las Vegas and Orlando have a lot more going on economically than 15 or 20 years ago, but I'm not sure these things explain the air service about which MidwestIndy is asking. After all, Chicago has a ton of people and is a major convention city, and we don't see DL doing p2p to Chicago. I suppose a retort to that might be that Chciago is not underserved and Orlando is, but between the hub capacity and the p2p on B6, WN, NK, and G4, I'm not sure that the idea that Orlando is underserved passes the sniff test.
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airtechy
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Re: How lucrative is P2P MCO flying for the Legacies?

Sat Aug 03, 2019 8:06 pm

And to think when I first flew in here from Atl in '66 on a Delta DC-9 (probably a 10) .. amongst the B52's ... the 'terminal' was basically a Quonset hut, you walked under two outside awnings to the planes, and parking .. what little there was .. was free out front. How things have changed!

Jim

To add .. today Delta had 15 flights from Atl ....
 
KFTG
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Re: How lucrative is P2P MCO flying for the Legacies?

Sun Aug 04, 2019 12:20 am

by738 wrote:
I wonder why BA have always kept MCO at LGW, no First and often an older product...

It's not a business market. It's a tourism/"beach" market.
 
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Super80Fan
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Re: How lucrative is P2P MCO flying for the Legacies?

Sun Aug 04, 2019 12:24 am

Lucrative but not so when you're competing against B6/WN/F9/NK.
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johns624
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Re: How lucrative is P2P MCO flying for the Legacies?

Sun Aug 04, 2019 12:24 am

flymco753 wrote:
Most people are moving here simply because of the climate. The climate is ideal for outdoor sports/recreational activities year round.
That's a personal opinion. I'll take 4 seasons over FL's heat, humidity and bugs anytime.
 
luckyone
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Re: How lucrative is P2P MCO flying for the Legacies?

Sun Aug 04, 2019 12:44 am

johns624 wrote:
flymco753 wrote:
Most people are moving here simply because of the climate. The climate is ideal for outdoor sports/recreational activities year round.
That's a personal opinion. I'll take 4 seasons over FL's heat, humidity and bugs anytime.

Agreed. I’ve never shared the fascination with Florida—and I say this as someone who grew up just a few hours north of Orlando and went there regularly for family and church trips. In the summer time, everyone would pack up the kids and leave the sticky Georgia summer for the even stickier Orlando and the beaches where the tap water reeked (which hasn’t changed as of my last visit in November for a conference), and my pasty white skin goes from Casper the Friendly Ghost to Sebastian the lobster in less than an hour no matter what SPF—and then we get sandy and salty at the beach! I get it, kids love the parks and Disney makes it easy for families the visit. But you’d have to double what I get paid up north to convince me to move to Florida. And that’s a-okay because I have friends who live in Florida who don’t ever want to see winter again.

It’s great that Disney is able to support growth. What bugs me and a lot of others is why so many people think that’s an ideal vacation. To each their own I guess.

It’s also worth pointing out that although UA no longer has a hub in Cleveland, they have a decent sized operation there, serving about a third of the airports traffic being the largest airline at the airport. And they have pilot and cabin crew bases at the airport. They have decent numbers at Hopkins.
 
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Midwestindy
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Re: How lucrative is P2P MCO flying for the Legacies?

Sun Aug 04, 2019 2:34 am

axiom wrote:
There is — shock — business demand for these routes.


To what extent though? There is business demand on most routes, but the question is how much. I have travelled to MCO a few times this year, and every time the entire upgrade list has cleared with some seats left over, but take that FWIW. TPA is quite different than MCO, so not sure it should be considered in this discussion.

Super80Fan wrote:
Lucrative but not so when you're competing against B6/WN/F9/NK.


What I was thinking, I am going to go with FF retention as to why these routes exist.

In terms of opportunity cost, there are better uses of an aircraft for DL than running IND-MCO on a Tuesday in September against F9/NK/G4/WN/e.t.c.

Obviously its a no brainer on Most Saturdays and Spring/Winter Break, but during the off-peak times these routes noticeably lag financially

Cubsrule wrote:
jetwet1 wrote:
KMCOFlyer wrote:

This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.


LAS says hi and welcome to the A'Net myth club, the two largest convention cities in the US a both low yielding tourist hubs....Not so much.


Doubtless Las Vegas and Orlando have a lot more going on economically than 15 or 20 years ago, but I'm not sure these things explain the air service about which MidwestIndy is asking.

Thank you for saving me the breath

KMCOFlyer wrote:
usxguy wrote:
Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...


This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.


jetwet1 wrote:
KMCOFlyer wrote:
usxguy wrote:
Orange, Seminole, and Polk Counties are some of the fastest growing areas *in North America* right now (there were some stats recently released) not all Orlando traffic is going to feed their hard earned money to The Mouse...


This post makes me wish A.net had a like button. Most on this site only see MCO as a low yielding tourist only destination when it's far from it. The MCO metro area has a population of over 2.5 million and that number will only continue to grow with all of the recent new development, that number will only continue to rise.


LAS says hi and welcome to the A'Net myth club, the two largest convention cities in the US a both low yielding tourist hubs....Not so much.



It is low yielding though, at least to the 3 markets I mentioned in my original post. I based my original post on the fact that prices on these routes are significantly lower than the station average at CLE, RDU, and IND, and yields are too, not whether the Orlando area is growing quickly or some other off topic reason.

Here is an example from Q3:
Image

I have data that backs up that these routes are lower yielding than normal, but I would love to see the evidence that they aren't

tistpaa727 wrote:
You also have to realize MCO is a very large business destination for conferences/conventions. Besides the Orlando Convention Center the sheer number of large all-in-one hotel / conference centers is mind-boggling. Many organizations / associations and companies plan events in Orlando because they bet on getting a bump in attendance as people will bring their families along and extend a 2 or 3 day conference into a week-long vacation. When you have that many business travelers your average ticket price for a flight goes up. Everyone always goes right to the tourist angle (which is the vast majority no doubt) but the conference business in and around Orlando is crazy big.


That alone does not make it high yielding though. Plenty of the conventions that occur in Orlando aren't business oriented. And when there are "business" related conventions, a lot of the time if people are bringing their family they will use miles(what I do).

No matter the business demand, its fairly difficult to command high fares/yields when you have 4-5 other carriers competing in relatively medium sized routes that overwhelmingly lean leisure in nature.
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