skibum9
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DL May Have Cut CVG Too Much

Tue Mar 20, 2007 9:36 pm

In today's Cincinnati Enquirer, there is an article that discusses how the airport is conducting a study to determine how much traffic is leaking to neighboring airports such as DAY. This is being done to lure a LCC to the market. Last year it was estimated that nearly 19%, or almost 1,500 passengers, were leaking to other airports. IMHO that number has probably risen since last year's study as since that time DL has raised the airfares out of CVG to a point where it is the most expensive airport in the nation.

http://news.enquirer.com/apps/pbcs.d...icle?AID=/20070320/BIZ01/703200354

In the same aritcle, DL admits that they may have cut CVG back too much. So to all my kool-aid drinking a.net buddies who continue to say that DL cut CVG back to the appropriate size, what is your response? even using last year's numbers, 1,500 passengers is a large number. Will we see a small build up of mainline flights out of CVG, which was cut to under 60 mainline flights from a high of over 200 a few years ago? Will we see DL relax the rediculous pricing that they set at CVG? Will the airport be successful at attracting an LCC?

I don't know how DL will respond, but IMO I think the airport may be successful at attracting an LCC. In the past, the airport was in bed with DL and really didn't make a serious attempt. However with the 'rightsizing' of CVG, the airport is no longer receiving the landing fees it once did from DL. And with the bankruptcy and subsequent re-negotiation of leases with DL, the airport is not receiving nearly the same lease income from DL. Finally, with the reduced traffic and leaking to other airports, the airport is no longer receiving money from vendors or parking that they once did. So I would think they are pretty serious this about going after a legitimate LCC because the airport needs the money. This was not the case in the past.
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deltadawg
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 9:54 pm

1,500 is ludicrous! It's probably more like 10,000-15,000. I fly into DAY on DL, FL and US at least twice a month and drive into Cincinnati for business. DAY lives off of Cincinnati customers. Not only is DAY luring customers away so is Louisville for those that live in the Northern Kentucky area and even Columbus for those living in the N. Eastarn area of Cincy.

I have long dealt with a Kroger and P&G as customers there in Cincinnati and in the last 10 years when traveling those folks have been told to fly out of DAY if the fares at CVG were more than 15% higher than DAY - which is most of the time.

I am surprised that CVG has not actively gone out to lure some other carriers to either come in or increase service by now. FL, F9 and WN could do very well with just limited service.
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Delta787
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 9:56 pm

I certainly agree that they cut CVG back to much. I can never get a decent connection through there which is a shame since it is much nicer connecting throught CVG than ATL.
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jetlanta
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:02 pm

Quoting DeltaDAWG (Reply 1):

I am surprised that CVG has not actively gone out to lure some other carriers to either come in or increase service by now. FL, F9 and WN could do very well with just limited service.

You are wrong on both accounts.

CVG has actively pursued LCC service, though they are very sensitive to Delta's situation and clearly don't want to do anything that negatively affects their status as a hub.

In addition, the perception that an LCC would do well is by no means a fact. Clearly, if any LCC thought they could go into CVG and be successful, they would have done it by now. They have invaded every single other hub, why not CVG? Perhaps the potential reward is not worth the heavy risk.
 
SkyyMaster
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:25 pm

I recall sitting in a gate area at CVG a year before the cutback reading an article from this newspaper predicting DL was going to either make huge cuts or drop the hub altogether (it also predicted the demise of the DHL hub). It quoted various "city and airport leaders" in saying CVG was actively seeking out LCC alternatives. Either they didn't follow through or no one has had the willingness to take on DL, regardless of hub size. It's no secret CVG has the highest airfares in the nation, a trend mirrored by most one carrier, hub dominated airports. My company has started booking our people flying DL through ATL (from BNA) regardless of destination since there are fewer connection options available at CVG. Somewhat a shame too. I like CVG (well perhaps not the Comair terminal) as a connecting point. I'd like to see DL rebuild some frequencies there. They don't have to go back to their former size, but at least offer more convenient options. (No, I'm not a DL basher either - they are my #1 preferred carrier).
 
skibum9
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:27 pm

Quoting Jetlanta (Reply 3):
CVG has actively pursued LCC service, though they are very sensitive to Delta's situation and clearly don't want to do anything that negatively affects their status as a hub.

CVG has pursued small LCCs that have no real network, like Vanguard. How can you say this is a serious attempt when the airline flew to very few destinations? In the past the statement of protecting the hub status is true, however given the diminishing returns of a shrinking hub, this position is weakening. Also, the airport can't ignore the fact that 20%, or more, of its passsengers are going elsewhere.

Quoting Jetlanta (Reply 3):
In addition, the perception that an LCC would do well is by no means a fact. Clearly, if any LCC thought they could go into CVG and be successful, they would have done it by now. They have invaded every single other hub, why not CVG? Perhaps the potential reward is not worth the heavy risk.

This is just speculation. LCCs have invaded other fortress hubs, like WN in DTW, so there is no reason to believe that an LCC can't succede at CVG. Again, I go back to the fact that in the past, the airport has not pursued an LCC that has a real network. The leakage alone is enough to fill up at least 10 flights a day. But those people need to go to places other than Myrtle Beach or MSP.
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toltommy
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:34 pm

Quoting Skibum9 (Reply 5):
LCCs have invaded other fortress hubs, like WN in DTW, so there is no reason to believe that an LCC can't succede at CVG.

The currently vacant T1 is perfect to attract a new carrier. CVG O&D traffic is used to regional equipment, so I'd think a JetBlue 190 would be seen as a major upgrade. It's not fancy, but it could be a good starting point for a CVG operation.
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SLCUT2777
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:50 pm

Quoting Skibum9 (Reply 5):
This is just speculation. LCCs have invaded other fortress hubs, like WN in DTW, so there is no reason to believe that an LCC can't succede at CVG. Again, I go back to the fact that in the past, the airport has not pursued an LCC that has a real network. The leakage alone is enough to fill up at least 10 flights a day. But those people need to go to places other than Myrtle Beach or MSP.

I think that CVG would do much better in it's O&D numbers if WN did in fact come in and set up shop. I think DL has driven many potential customers to the likes of DAY, IND, CMH & SDF over the years the way they have gouged people at the Northern Kentucky Airport. what has made SLC work is the presence of WN more than anything. the prices to all of the high O&D markets from SLC such as LAX, PHX, SEA, DEN have all been kept within reason due to WN offering competing service.
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jetlanta
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 10:50 pm

Quoting Skibum9 (Reply 5):

CVG has pursued small LCCs that have no real network, like Vanguard. How can you say this is a serious attempt when the airline flew to very few destinations? In the past the statement of protecting the hub status is true, however given the diminishing returns of a shrinking hub, this position is weakening. Also, the airport can't ignore the fact that 20%, or more, of its passsengers are going elsewhere.

I know first-hand that CVG has had active discussions with every major LCC on numerous occasions. They have put significant efforts into this. They don't broadcast it out of respect for Delta, but they do it. And Delta is well aware of it.

Quoting Skibum9 (Reply 5):
This is just speculation. LCCs have invaded other fortress hubs, like WN in DTW, so there is no reason to believe that an LCC can't succede at CVG. Again, I go back to the fact that in the past, the airport has not pursued an LCC that has a real network. The leakage alone is enough to fill up at least 10 flights a day. But those people need to go to places other than Myrtle Beach or MSP.

Its not speculation. In an era when AirTran flies PWM-BWI, explain to my why they wouldn't do ATL-CVG. If it is such a sure-thing, it would be an easy decision. Clearly the planners at AirTran, Southwest, JetBlue and every other LCC have serious concerns about their potential for success at CVG.

Also, just because WN flies to DTW, doesn't mean they have success there. How much growth have you seen out of them over the years? The fact is that LCC's typically don't do well from a financial perspective in other carriers' fortress hubs. WN doesn't do well historically in SLC, despite their scale there.

I'm not arguing that a LCC can't find success. I'm arguing that they themselves have significant concerns about that likelihood. Otherwise they would have been in CVG years ago. They certainly have had an open invitation from CVG. (Which they do not even need, in order to serve such a "lucrative" potential market)
 
FlyPNS1
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 11:19 pm

While DL is currently making profits at CVG, the airport is now getting caught in a vicious spiral. As DL cuts capacity to balance out the O+D versus connecting mix and raises fares, it is driving O+D traffic away. As more O+D traffic is driven away, DL makes further cuts (and raises fares) to keep up the O+D mix. This drives more O+D customers away and the cycle continues.

Even worse, the decline in passenger numbers (and flights) is costing the CVG airport revenue. To offset those revenue loses, the CVG airport is forced to raise landing fees (they're going up by ~35% in 2007). These increased fees eat further away at DL's profits at CVG and causes DL to raise fares....the cycle continues.

The long-term future for CVG as a major hub is very uncertain. I would say there's about 50/50 odds that CVG gets downgraded to large focus city (ala PIT or STL) sometime in the next 5-10 years.
 
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 11:21 pm




Quoting FlyPNS1 (Reply 9):
I would say there's about 50/50 odds that CVG gets downgraded to large focus city (ala PIT or STL) sometime in the next 5-10 years.

Good thing they built that new runway, eh?


2H4


Intentionally Left Blank
 
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SLCUT2777
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RE: DL May Have Cut CVG Too Much

Tue Mar 20, 2007 11:38 pm

Quoting Jetlanta (Reply 8):
The fact is that LCC's typically don't do well from a financial perspective in other carriers' fortress hubs. WN doesn't do well historically in SLC, despite their scale there.

WN covers about 15% of the flights and passengers at SLC, whereas at other western U.S. airports their numbers are closer to 25%-32%.
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skibum9
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 1:03 am

Quoting FlyPNS1 (Reply 9):
The long-term future for CVG as a major hub is very uncertain. I would say there's about 50/50 odds that CVG gets downgraded to large focus city (ala PIT or STL) sometime in the next 5-10 years.

So when DL says that they may have cut traffic too much, are you suggesting that they accidentally set in motion this downward spiral that may ultimately kill CVG as a hub? Will they continue this downward spiral with ever increasing and absurd pricing, or will they attempt to regain the O&D they are forcing away? It seems to me that they are opening the door to competition, which will put a nail in the coffin.
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FlyPNS1
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 1:17 am

Quoting Skibum9 (Reply 12):
So when DL says that they may have cut traffic too much, are you suggesting that they accidentally set in motion this downward spiral that may ultimately kill CVG as a hub?

I don't think it was accidental. It was very intentional. DL took a calculated risk that they could shrink CVG back into profitability. In the short term, it has worked. However, the long-term result may be the downward spiral I described before.

Quoting Skibum9 (Reply 12):
Will they continue this downward spiral with ever increasing and absurd pricing, or will they attempt to regain the O&D they are forcing away?

That's kind of the $64,000 dollar question? I don't know how high the pricing goes before either the hub collapses OR an LCC gets brave enough to enter.

Of course, an economic recession could be the last straw too. DL may just keep CVG on life support long enough until the next recession starts up another round of consolidation. A merger between DL and NW would mean the end of CVG as a major hub as it would lose out to DTW and MSP.
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 1:22 am

Quoting Skibum9 (Reply 12):

So when DL says that they may have cut traffic too much, are you suggesting that they accidentally set in motion this downward spiral that may ultimately kill CVG as a hub? Will they continue this downward spiral with ever increasing and absurd pricing, or will they attempt to regain the O&D they are forcing away? It seems to me that they are opening the door to competition, which will put a nail in the coffin.

This whole premise is actually quite debatable. The scenario now is not too far removed to the situation in CVG prior to 9/11. Though it was a much larger hub than today, it was solidly profitable with extremely high O&D fares. 9/11 knocked the traffic base down and CVG started gushing red ink for DL.

They attempted to do what every armchair expert suggested, the created a seemingly more rational fare structure. It was called SimpliFares and it had a huge impact on the the local O&D market. People stopped driving to SDF and DAY and local CVG traffic went through the roof.

The problem was that fares had to be cut so much to stimulate and recapture that traffic, that RASM fell through the floor and Delta actually generated LESS revenue with significantly more local passengers.

The ultimate answer was that CVG's location close to DAY and SDF required an all-or-nothing approach. Either you are a low-fare, low-RASM, volume carrier or you are a high-fare, high-RASM, low-volume carrier. Delta's cost structure, including Comair, cannot support the low-fare model at CVG. Its been tried and proven, they won't be going back.

So for Delta, the answer has been to move back to the traditional model at CVG. The result has been very strong operating margins. Hence, you are not likely to see much change in CVG fares until an LCC takes a stab at the market.

I respectfully disagree with FlyPNS1 in one area, I don't see CVG being downgraded to a focus city, UNLESS Delta merges with a carrier that operates a stronger Midwest hub. CVG is too important to the DL network and frankly is too profitable to dismantle without a merger. On the contrary, I think you will see capacity at CVG grow slowly as more efficient 76-100 seat aircraft are acquired. These aircraft were built for markets like CVG.
 
skibum9
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 1:41 am

It will still be interesting to see what this new study shows. I would gather that the leaking of CVG passengers to other airports is probably well above 25%, and continuing to rise as the fares at CVG become more and more absurd. There has to be a threshold of where a number of options will happen, 1) DL forces out so much O&D that profitability starts to fall and they pull down the hub, 2) DL sees the lost revenue of people from CVG driving to DAY to hop on a connecting flight back to CVG and reduces their price so that it is market-based not cost-plus, like they do at ATL and other hubs, 3) a quality LCC jumps in, significantly lowering the costs, in which case DL shuts down the hub but keeps it a focus city. DL will only continue to see CVG as strategically important as long as they can extort the RASM they are. So in all the scenarios, I agree that with FllyPNS1 that the long-term viability is not good for CVG.
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atlaaron
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 1:47 am

Quoting SkyyMaster (Reply 4):
I recall sitting in a gate area at CVG a year before the cutback reading an article from this newspaper predicting DL was going to either make huge cuts or drop the hub altogether (it also predicted the demise of the DHL hub).

I don't think DHL uses CVG as a hub. I always thought DHL used Wilmington or something like that, I certainly could be wrong though.
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:05 am

Quoting Skibum9 (Reply 15):
So in all the scenarios, I agree that with FllyPNS1 that the long-term viability is not good for CVG.

But those really aren't all the scenarios. As I mentioned, CVG means too much to Delta strategically. Besides, those high margins give Delta a lot more room to play around than they used to have.

Plus I am extremely skeptical that any quality LCC is going to come into CVG and find significant success. DL will pound them, and there is no spill in CVG like ATL. All of the LCC's know this. Its why they aren't there today.

Any opportunities for LCC success are narrow and limited in scope. Nothing that will fundamentally change the equation at CVG for Delta.
 
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:16 am

Quoting ATLAaron (Reply 16):
I don't think DHL uses CVG as a hub. I always thought DHL used Wilmington or something like that, I certainly could be wrong though.

Which is the point Skyymaster made. CVG build this large new sorting facility just for DHL, and what happened a few months before the new facility opened? DHL suddenly said "oops, we're taking over ABX Air and their ILG facility, looks like you have just wasted hundreds of millions of dollars on a facility that no one will use, well, tough luck CVG" and left for ILG.
 
FlyPNS1
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:21 am

Quoting Jetlanta (Reply 17):
As I mentioned, CVG means too much to Delta strategically.

Not as much as it used to. CVG is becoming increasingly less important in the DL network. As a percentage of DL's overall network, CVG is approaching a new low as DL grows ATL, SLC, JFK and LAX. And while the margins are good now, how long will those last? CVG has had good margins in the past, but even a slight perturbation can cause it's financials to crumble.

I'll agree that that more aircraft in the 70-100 seat range could help keep CVG going as a hub. However, those same intermediate size aircraft are also needed at ATL, SLC, JFK, etc? So far, DL has assigned all of it's E170's/CR9's to SLC, ATL and JFK/LGA.

I'll also agree that I don't see any LCC going into CVG in the near-term. They will wait it out to see how far DL will shrink the CVG hub.

As an aside, CVG-MGM is the next route to get the axe....joining CVG-SHV which was dropped a few weeks ago.
 
skibum9
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:46 am

Quoting FlyPNS1 (Reply 19):
As an aside, CVG-MGM is the next route to get the axe....joining CVG-SHV which was dropped a few weeks ago.

The original rightsizing activity was a reduction of 25%, do you have any idea on how many seats have been removed from CVG since they started the reduction? I'm talking seats, not flights, as many of the mainline flights have been replaced with RJs, thus movements wouldn't be an accurate indicator or the actual reduction.
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jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:48 am

Quoting FlyPNS1 (Reply 19):
Not as much as it used to. CVG is becoming increasingly less important in the DL network. As a percentage of DL's overall network, CVG is approaching a new low as DL grows ATL, SLC, JFK and LAX. And while the margins are good now, how long will those last? CVG has had good margins in the past, but even a slight perturbation can cause it's financials to crumble.

True, but relatively speaking, CVG outperforms all of them. So while DL is now more diverse, it relies even more on ATL and CVG to pay for the "investments" in JFK and LAX.

You ask how long CVG's performance can last. Well, it was actually quite solid historically until 9/11. Its always been the 2nd most consistent performing hub for Delta. So, while there were a few rough years after 9/11, and where wasn't that the case, there is not really any reason to believe that a right-sized CVG can't be as consistent of a performer as any other hub.

Frankly, CVG got hit by a Tsunami. The OH pilot strike, 9/11, and a huge capacity jump created by the over-ordering of RJs really damaged the hub. Its taken a while to get those problems resolved, but I think they are now much closer to "natural" hub performance.

We both agree that LCC's aren't a big part of CVG's future, so DL ought to be able to control its own destiny. If the industry goes south, DL will feel the pain everywhere else before CVG. That is the insurance the high margins buy.

Part of the reason you don't see any growth at CVG right now is the old argument that is "it ain't broke, don't fix it". Plus, Delta needs aircraft to fund its international growth, as well as JFK and LAX growth. In other circumstances, I think you might see a little bit of growth at CVG. (Nothing major, but certainly in the 3-5% range at least)

And those 76-100 seaters will make it to CVG eventually, certainly well before the financial performance deteriorates to the point of hub closure. One of Delta's priorities today is to use those aircraft in AirTran competitive markets where they need the F cabin. Also, a bunch of the airplanes are assigned to markets where their operational performance is required. CVG's geographic location is such that you don't have to stretch the envelope to serve the markets you want to be in. SLC, on the other hand, requires E170's and CR7/CR9's to get to the Midwest. (There really aren't many midsize markets like that in the mountain states that you'd want to serve from CVG, so the flip doesn't really apply.)
 
727forever
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 2:56 am

Skibum9, I amazed. Twice in the same month I agree with you on something. This time in its entirety.

If done properly, and now would be the right time to do it, just about any LCC could come into CVG and do well if they advertise their presence. The original FL did quite well on CVG-MCO in the early and mid 90's.

727forever
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jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 3:21 am

Quoting 727forever (Reply 22):
If done properly, and now would be the right time to do it, just about any LCC could come into CVG and do well if they advertise their presence. The original FL did quite well on CVG-MCO in the early and mid 90's.

Delta will squash anything that an LCC puts in CVG. There will be no breathing room for the LCC. And unlike many bigger markets, such as ATL, there is no "spill" traffic demand for the LCC to live off of.

I feel like a broken record....

If CVG were a no-brainer LCC market, an LCC would be there today. That is not the case. The network planners at WN, B6, FL and F9 are very good at what they do. They would rather defer deliveries than fly to CVG (which is exactly what B6 and FL have done.)

If it walks like a duck....

[Edited 2007-03-20 20:25:44]
 
skibum9
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 3:31 am

Quoting 727forever (Reply 22):
Skibum9, I amazed. Twice in the same month I agree with you on something. This time in its entirety.

Wow...the Red Sea must be parting! Just kidding.
Tailwinds!!!
 
avconsultant
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 3:51 am

Quoting Skibum9 (Thread starter):
In the past, the airport was in bed with DL

I would call it a partnership. The airports goal is to grow and maintain revenue. In order to be successful, CVG must partner with their largest customer.

Quoting DeltaDAWG (Reply 1):
1,500 is ludicrous! It's probably more like 10,000-15,000. I fly into DAY on DL, FL and US at least twice a month and drive into Cincinnati for business

I would agree. I predict "destination" out weighs "origination" traveler flying into DAY over CVG.

Quoting Delta787 (Reply 2):
it is much nicer connecting through CVG than ATL

Very true! Concourse B is very nice and open with the high ceilings unlike ATL.

Quoting Jetlanta (Reply 8):
Otherwise they would have been in CVG years ago.



Quoting Delta787 (Reply 2):
I certainly agree that they cut CVG back to much.



Quoting Jetlanta (Reply 3):
They have invaded every single other hub, why not CVG? Perhaps the potential reward is not worth the heavy risk.



Quoting DeltaDAWG (Reply 1):
FL, F9 and WN could do very well with just limited service.

CVG falls into a unique category, airports draw a large circle around their airports creating a boundary called a "Catchment Area". This area encompasses people who are thought to travel/use the airport. The Catchment Area can be expanded based on consumer information (i.e. - number of license plates from a certain counties/states in long term parking or a request for a phone number including area code or zip code when purchasing items).

CVG shares a catchment area with DAY, LEX, SDF and IND. Recently, CMH has cut into the north eastern portion of the CVG catchment area. When people leave a catchment area for another airport this is called "Leakage". Considering 4 out 5 of CVG shared catchment areas are served with LCC, there would have to be one hell of business plan to support a LCC to enter the market. There is no need for LCC's to expand into an area where their customers are already driving.

The Cincinnati MSA has declined over the years. Cinci is shrinking, at one time the airport could support a hub and multiple carriers. The population has shifted thus impacting the amount of travelers. I do not think there is enough demand in CVG to support a LCC and DL. The LCC know the routine when entering a hub. Legacy carrier under cuts fares $10 - $20 r/t and provides triple frequent flyer miles on competing lane segments. Some pax travel other take advantage of FF miles. Certain markets can support this, I do not think CVG is one of those markets.

Quoting Jetlanta (Reply 8):
They have put significant efforts into this. They don't broadcast it out of respect for Delta, but they do it

Exactly, airport boards are very political and reactionary. Everytime the airport receives media attention "they're the nations most expensive airport", I'm sure the marketing department is doing everything possible to lure someone. It's a tough business!! Although, I think some times the airport is old school in its thinking. I remember reading, in late '05 CVG told B6 they would not cut deals on leases or revenue guarantee's. A few days afterwards, DL announced they were scaling back the hub.

Quoting DAL767400ER (Reply 18):
looks like you have just wasted hundreds of millions of dollars on a facility that no one will use

En light to my post above, the airport is reactionary. There is a multi-million dollar cargo facility that's state of the art sitting empty. Our firm approached the airport on behalf of a small air cargo carrier wanting to sublease a portion of the facility. The lead partner was told CVG was not interested in increasing possible noise complaints.
 
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mariner
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:02 am

Quoting Jetlanta (Reply 17):
Any opportunities for LCC success are narrow and limited in scope.

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I'm not sure why any LCC would want to set up shop at CVG. Even if it was just a couple of routes Delta would go nuclear - and is it worth the battle?

I suppose Airtran might be looking for another war with Delta, but I be surprised. JetBlue? Maybe, but only to their own hub(s) and PIT hasn't worked out to well for them against US. Frontier serves DAY, SDF and IND. I think they'd go to CMH before CVG and even that's a question mark.

Southwest is big enough - and has a specific passenger base - to be a contender, I guess. Maybe.

I'd be happy to be proved wrong.

mariner
aeternum nauta
 
jbmitt
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:11 am

Quoting ATLAaron (Reply 16):
I don't think DHL uses CVG as a hub. I always thought DHL used Wilmington or something like that, I certainly could be wrong though.

DHL built a huge facility at CVG. They merged with Airborne, and within months of completing the facility, consolidated all operations at ILN. There are a few strored DC9s and Comair CRJs there now.
 
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deltadawg
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:22 am

Quoting Jetlanta (Reply 23):
Delta will squash anything that an LCC puts in CVG.

Much like they have squashed FL at ATL & MCO, oh and B6 at BOS & JFK, oh and WN at SLC along with B6 at SLC (albeit small presence).

While there are LCC's surrounding CVG I still believe that if a certain % of customers in a defined area (Cincinnati) are given a choice of other carriers with competing fares to fly on then at minimum the certain % will fly the alternative. Somebody like FL could run an CVG-ATL route 4-5 per day along with a CVG-BWI/MCO/LGA eventually and do fairly well. People like new and alternatives, given a choice people in Cincinnati would suport a LCC, even albeit a limited scale.
GO Dawgs, Sic' em, woof woof woof
 
EXAAUADL
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:27 am

Quoting Skibum9 (Thread starter):
In the same aritcle, DL admits that they may have cut CVG back too much. So to all my kool-aid drinking a.net buddies who continue to say that DL cut CVG back to the appropriate size, what is your response?

My response is you live in CVG and it is painful to see reduced airservice for your community....


If indeed DL is profitable in CVG, then they didnt cut too much......as they lower their cost, they can look at restoring some flights...my bet would be is that most if not al lthe Comair flights to middlesized midwest coommunities are horribly unprofitable, such as DSM, CID, MSN etc as there is no local market.
 
DAL767400ER
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:31 am

Quoting AvConsultant (Reply 25):
En light to my post above, the airport is reactionary. There is a multi-million dollar cargo facility that's state of the art sitting empty. Our firm approached the airport on behalf of a small air cargo carrier wanting to sublease a portion of the facility. The lead partner was told CVG was not interested in increasing possible noise complaints.

Hmm, and yet they wouldn't have had a problem with DHL's non-too-quiet 727s  scratchchin  . Excellent logical thinking by the CVG airport authority...
 
skibum9
Topic Author
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:45 am

Quoting EXAAUADL (Reply 29):
If indeed DL is profitable in CVG, then they didnt cut too much

That is not entirely true. On simplistic terms, you can maintain a certain level of profitability by simply raising your margin while cutting seats. This in theory could go on forever until there is one seat. However, cutting seats and raising prices to maintain profitability is one thing while revenue management and maximizing profits is entirely different, and much more complicated to manage. Thus it is very plausable that they have cut the market too much, to a point where profits are not being maximized.
Tailwinds!!!
 
DAYflyer
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:51 am

Quoting Skibum9 (Thread starter):
In the same aritcle, DL admits that they may have cut CVG back too much. So to all my kool-aid drinking a.net buddies who continue to say that DL cut CVG back to the appropriate size, what is your response? even using last year's numbers, 1,500 passengers is a large number. Will we see a small build up of mainline flights out of CVG, which was cut to under 60 mainline flights from a high of over 200 a few years ago? Will we see DL relax the rediculous pricing that they set at CVG? Will the airport be successful at attracting an LCC?

Quite frankly, DL will need to relax pricing AND increase mainline freq on a permanent basis to retain a large market share here. The stupidity of CVG pricing (Its cheaper to fly out of DAY and connect through CVG than to do a CVG non-stop) is just absurd. Plus, FL is a huge draw to DAY; there are also less crowds, quicker security, cheaper parking, and more choices.
One Nation Under God
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:53 am

Quoting DeltaDAWG (Reply 28):
Quoting Jetlanta (Reply 23):
Delta will squash anything that an LCC puts in CVG.

Much like they have squashed FL at ATL & MCO, oh and B6 at BOS & JFK, oh and WN at SLC along with B6 at SLC (albeit small presence).

Now they aren't exactly the same thing, are they?

I clearly stated that CVG is too small a market for an LCC to live off of Delta spill. This is clearly not the case in ATL.

MCO and BOS are not Delta fortress hubs and never have been. Plus they are two of the largest O&D markets.

WN presence in SLC was inherited and they haven't exactly thrived there. They significantly underperform Delta in competitive markets. Its one thing to continue in SLC after an acquisition. Its quite another to start from scratch in CVG.

Of all the carriers who could make it work, WN might be it. However, they are already in SDF, IND and CMH, so what would the point be?
 
dbo861
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 4:58 am

Quoting EXAAUADL (Reply 29):
my bet would be is that most if not al lthe Comair flights to middlesized midwest coommunities are horribly unprofitable, such as DSM, CID, MSN etc as there is no local market.

Could you elaborate on this? It has been my experience that flights into DSM and CID are mostly full on Comair. Granted full doesn't always mean profitable, but i'm just curious what makes you say they these midwest comunities are "horribly unprofitable."
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 5:29 am

Quoting EXAAUADL (Reply 29):
my bet would be is that most if not al lthe Comair flights to middlesized midwest coommunities are horribly unprofitable, such as DSM, CID, MSN etc as there is no local market.

Right idea, but perhaps the wrong markets. And it depends if you define "horrible" on a segment or system basis, doesn't it?
 
EXAAUADL
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 6:04 am

I agree, those midwest markets dont produce any segment contribution but might on a system basis...I do happen to know that MLI-CVG was pretty bad and FSD-CVG was awful
 
avconsultant
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 6:45 am

Quoting DAL767400ER (Reply 30):
Hmm, and yet they wouldn't have had a problem with DHL's non-too-quiet 727s

Agree. Although I think they were fearful of the the 727 making a return. The other week my flight diverted into CVG, I noticed a FedEx A310 instead of the 727.

Quoting Jetlanta (Reply 33):
I clearly stated that CVG is too small a market for an LCC to live off of Delta spill.

My point earlier.

Quoting EXAAUADL (Reply 36):
FSD-CVG was awful

Come on!! I connected through CVG enroute pheasant hunting in South Dakota. My ticket was over $700 and I purchased my ticket 4 months in advance. OH had to bump bags, the flight was full.
 
CIDFlyer
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 7:18 am

Quoting EXAAUADL (Reply 36):
FSD-CVG was awful

I would have to disagree, if it was so bad why would they still operate this route? In fact FSD is a relatively new city in the DL network and has service to all 3 main hubs (SLC, ATL, CVG). Perhaps you are thinking of the CVG-BIL route???

[Edited 2007-03-21 00:26:02]
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 8:18 am

Quoting CIDflyer (Reply 38):
I would have to disagree, if it was so bad why would they still operate this route? In fact FSD is a relatively new city in the DL network and has service to all 3 main hubs (SLC, ATL, CVG). Perhaps you are thinking of the CVG-BIL route???

There are lots of reasons to operate bad markets. EXAAUADL has got the number here.
 
syncmaster
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 8:54 am

Quoting Delta787 (Reply 2):
I certainly agree that they cut CVG back to much. I can never get a decent connection through there which is a shame since it is much nicer connecting throught CVG than ATL.

I simply could not agree more.
 
B4REAL
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 9:05 am

Quoting Skibum9 (Thread starter):
Will we see a small build up of mainline flights out of CVG,

Not possible, DL has hemorraghed mainline aircraft for efficiency (removing 732s, 733s, 762s, 4x763D's with no entrants to the fleet). And the International expansions have taken many 738.

Quoting TOLtommy (Reply 6):
The currently vacant T1 is perfect to attract a new carrier.

I believe that terminal has a date with demolition ball.

Quoting FlyPNS1 (Reply 9):
While DL is currently making profits at CVG, the airport is now getting caught in a vicious spiral.

Yes, eerie pattern to DL DFW hub. DL @ DFW proves that DCI cannot float a hub forever.

Quoting Jetlanta (Reply 21):
Frankly, CVG got hit by a Tsunami. The OH pilot strike, 9/11, and a huge capacity jump created by the over-ordering of RJs really damaged the hub.

I agree with you here. And if CVG fails for DL, it will be the CRJ's fault.

Quoting Jetlanta (Reply 21):
Its taken a while to get those problems resolved, but I think they are now much closer to "natural" hub performance.

And now I disagree with you here. I do not feel CVG is closer to a natural hub performance wiht DL for the following reasons:
-DL moves most passengers through terminal C and there is no Crown Room Club
-The B gates maybe do 2 or 3 flights a day each
-Service to the smaller markets keeps getting cut. The smaller markets are what can make or break DL as a hub.
-There are too few mainline flights due to limited aircraft with the airline
-Too many routes from CVG on DCI are all RJ for too long of a flight time non-stop to be attractive to certain customers: CVG-IAH/DFW/AUS/OKC/MSY/SAT as examples.
-Too many routes from CVG on DCI are all RJ to cities where mainline really should be served: CVG-PHL/PWM/MHT/EWR/PIT/CLT/JFK/IAD
B4REAL, spelled like it sounds & @RickVanover on Twitter
 
rafflesking
Posts: 133
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 9:08 am

What's Delta at now? 50 mainline? That's on par now with Pittsburgh (which US officially calls a focus city now) sans the RJs.

I'll often find nowadays the Crown Room club in Concourse A just closed in the middle of the day because it's so dead there.
 
herbie99
Posts: 50
Joined: Thu May 03, 2001 4:43 am

RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 9:08 am

Quoting B4REAL (Reply 41):
I agree with you here. And if CVG fails for DL, it will be the CRJ's fault.

You could also say that without the CRJ, CVG would never had been the hub that it was.
 
jetlanta
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 9:14 am

Quoting B4REAL (Reply 41):
Quoting Jetlanta (Reply 21):
Its taken a while to get those problems resolved, but I think they are now much closer to "natural" hub performance.

And now I disagree with you here. I do not feel CVG is closer to a natural hub performance wiht DL for the following reasons:
-DL moves most passengers through terminal C and there is no Crown Room Club
-The B gates maybe do 2 or 3 flights a day each
-Service to the smaller markets keeps getting cut. The smaller markets are what can make or break DL as a hub.
-There are too few mainline flights due to limited aircraft with the airline
-Too many routes from CVG on DCI are all RJ for too long of a flight time non-stop to be attractive to certain customers: CVG-IAH/DFW/AUS/OKC/MSY/SAT as examples.
-Too many routes from CVG on DCI are all RJ to cities where mainline really should be served: CVG-PHL/PWM/MHT/EWR/PIT/CLT/JFK/IAD

You are free to disagree with me, but you really have no idea what you are talking about.

All of your points have some degree of validity, but none of them change the fact that CVG currently is performing stronger for Delta than just about any time in its history. The combination of Delta's service, schedules and fares are optimized better than ever before, in terms of profitability.

You could come up with a similar list for every hub in the country. It really is irrelevant. The place performs. Other hubs should have such problems.
 
Cubsrule
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 9:37 am

Quoting Jetlanta (Reply 8):
Also, just because WN flies to DTW, doesn't mean they have success there.

The relatively small size of their station when so much of the system grows so explosively should say something about their success at DTW. They aren't about to pull out, but they are equally clearly not going to have 100 daily flights there any time soon.

Quoting B4REAL (Reply 41):
CVG-PHL/PWM/MHT/EWR/PIT/CLT/JFK/IAD

I'm not sure these cities should have mainline. Several of them have competition which is all express (PHL, IAD, EWR, PHL). Why should DL have mainline when larger hubs at the other end cannot support it?
I can't decide whether I miss the tulip or the bowling shoe more
 
skibum9
Topic Author
Posts: 862
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 10:19 am

Quoting B4REAL (Reply 41):
I agree with you here. And if CVG fails for DL, it will be the CRJ's fault.

Amen, CVG was profitable before the RJ ramp-up. Then is crashed. By the way, what ever happened to the RJ Defense Coallition? Weren't they spouting how economical RJs were and that translated into the need to pay RJ pilots on par with mainline pilots?

Quoting RafflesKing (Reply 42):
What's Delta at now? 50 mainline? That's on par now with Pittsburgh (which US officially calls a focus city now) sans the RJs.

The real question should be how many seats go out of CVG these days? The original rightsizing was 25%. With the shift to mostly RJs at CVG, the amount of seats cut at CVG has to be well south of 25%

Quoting Jetlanta (Reply 44):
All of your points have some degree of validity, but none of them change the fact that CVG currently is performing stronger for Delta than just about any time in its history.

It may be performing stronger than it ever has, but that is only because DL is gouging the heck out of the O&D passengers. An 89% premium is rediculous. However, going with FLyPNS1's theory, as they keep forcing more and more O&D to other airports, DL keeps raising prices to make up for the loss of traffic. Eventually it will come crashing down. I would like to see how much contribution CVG gives to DL's bottom line, as it probably helps offset the lower prices at its other hubs, like ATL. If things do crash at CVG and they no longer have it as a cash cow, I wonder what it would mean to DL's overall finances. I imagine it would not be significant as the volume at CVG is well below the likes of ATL, but still it would be a hit to EPS.
Tailwinds!!!
 
jetlanta
Posts: 1657
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 10:39 am

Quoting Skibum9 (Reply 46):
However, going with FLyPNS1's theory, as they keep forcing more and more O&D to other airports, DL keeps raising prices to make up for the loss of traffic. Eventually it will come crashing down. I would like to see how much contribution CVG gives to DL's bottom line, as it probably helps offset the lower prices at its other hubs, like ATL. If things do crash at CVG and they no longer have it as a cash cow, I wonder what it would mean to DL's overall finances. I imagine it would not be significant as the volume at CVG is well below the likes of ATL, but still it would be a hit to EPS.

That's if you go with his theory. The people that manage the hub and see the proprietary data have a different theory.
 
FlyPNS1
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RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 10:43 am

Quoting Jetlanta (Reply 44):
You are free to disagree with me, but you really have no idea what you are talking about.

All of your points have some degree of validity, but none of them change the fact that CVG currently is performing stronger for Delta than just about any time in its history. The combination of Delta's service, schedules and fares are optimized better than ever before, in terms of profitability.

You could come up with a similar list for every hub in the country. It really is irrelevant. The place performs. Other hubs should have such problems.

But you are missing the bigger point. DL's short-term moves to prop up CVG could have very negative long-term consequences. The short-term profits from the down-sizing of CVG could very well be setting the hub up for long-term losses.

Is DL managing CVG just to survive in the present or are they building the hub to last for the long-haul? Of course, the same question could be asked about much of DL's recent network restructuring.
 
rafflesking
Posts: 133
Joined: Thu Mar 15, 2007 10:08 am

RE: DL May Have Cut CVG Too Much

Wed Mar 21, 2007 10:52 am

Quoting Jetlanta (Reply 47):
That's if you go with his theory. The people that manage the hub and see the proprietary data have a different theory.

To that point, if carriers are really flying with higher and higher load factors in the US, then do you really want to lower your prices at a hub when stimulated demand can't be supplied? DL will always run feeders from DAY to CVG (please nobody ever tell me they've done this flight as an O&D), so they can increase their catchment area. If a passenger wants to make the effort to drive up there to fly back through CVG, but the biz traveler couldn't care with the $600 fare - that sounds like a working revenue model to me.

Just a thought - I'm clearing not addressing if DL loses passengers at CMK or SDF to the WNs of the world.

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