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ldvaviation
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RE: AA/US Merger Impact: Hubs (Part 2)

Mon Mar 18, 2013 4:38 pm

Quoting aaway (Reply 143):
Install one-way, automatic doors (similar to what's installed at the claims area end of the T4 tunnel), and use the current FIS baggage claim devices. No need to retain a T4 FIS if AA intends to clear all flights at TBIT.

Yup, I can see that going away. As with the T6 and T5 FIS, it was never staffed at all times to be a passenger-friendly facility.

As to the tunnel, that was always a long walk back to T4 and not a very pleasant one.

Speaking for myself, I don't mind the walks if there are things to see and do, which is why I think the connector will get a lot of use and not just by AA passengers connecting to oneworld flights. The great hall is going to be quite an attraction and the connector itself will provide quite a view of the airfield.

Given all that, the walk won't seem that long, particularly if you gate the AA flights at the gates nearest to the great hall. You know who would also like that, the mall operator. You can bet the mall operator is one of the biggest proponents of the connector. More shoppers, more diners, more foot traffic. Heck, if I were the mall operator, I would want AA to gate all their premium transcons (NYC and Miami) at TBIT.
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Mon Mar 18, 2013 8:56 pm

Quoting LAXdude1023 (Reply 147):
I dont see DFW getting flights to places like OAK, SBP, BFL, FLG, or the return of SBA or BUR. If DFW sees any new destinations out west, it will be GEG and BOI which PHX already serves. It would be in addition to, not in place of PHX service.

OAK could probably work from DFW - it's not a small market in the same way SBA or FLG are and it would be good to not cede the Bay Area to Star. BUR would compete directly with LAX so I could see that not restarting.
 
EricR
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 5:18 pm

An interesting twist developed yesterday during AA/US's Senate hearing on the merger. CEO Doug Parker revealed for the first time that the carrier now views its National operation as a hub.

Parker is trying to make a case for the combined carrier to keep as many slots as possible at DCA saying "the smaller cities can be served only because the hub operation augments local traffic with connecting traffic, so divestiture would likely turn over slots to airlines that would trim service to the smaller cities."

Also interesting to note is that while AA/US would have two-thirds of the slots, it only represents 50% of the seats out of DCA.

Parker does present a compelling case, but I wonder if it is a strong enough case to avoid any slot divestitures at DCA.

http://www.thestreet.com/story/11874...earing.html?puc=yahoo&cm_ven=YAHOO
 
point2point
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 5:24 pm

Quoting EricR (Reply 152):

It looks like a good plan on paper for Parker and the new AA/US. I just have to wonder how good of a plan on paper it is to all of the other domestic carriers?

How many hours now will it be before the other carriers start filing their objections?

 
 
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LAXintl
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 5:39 pm

Well airlines like JetBlue and Southwest are now on the record saying they believe AA/US must divest DCA slots.

Also a couple consumer groups shared their opinion with Congress that competition would be hurt and we could see higher fares at DCA.
From the desert to the sea, to all of Southern California
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 6:40 pm

Quoting EricR (Reply 152):
An interesting twist developed yesterday during AA/US's Senate hearing on the merger. CEO Doug Parker revealed for the first time that the carrier now views its National operation as a hub.

I think US started viewing DCA as a hub with the acquisition of the DL slots. DL did the same thing with LGA if I'm not mistaken.

Quoting EricR (Reply 152):
Also interesting to note is that while AA/US would have two-thirds of the slots, it only represents 50% of the seats out of DCA.

It's interesting that these numbers will normalize with the merger. Slot numbers will drop, but seats may well increase with average aircraft size.
 
austwin
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 6:46 pm

The Phoenix newspaper, The Arizona Republic, has an article on the meeting with details of how the they see using the Phoenix hub after the merger in this link:

http://www.azcentral.com/business/ne...wont-hurt-service-competition.html

It seems to put to rest the rumors regarding closing the hub or drastically reducing it, imho.
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 7:05 pm

“The Phoenix hub is a critical piece of US Airways’ profitability and will be a critical piece of American’s profitability. We will be able to provide more service to the people of Arizona. I feel very good about that.”
It's a critical piece I'm sure, and will even further drive profitability when flights are moved across more lucrative hubs.

I'm reading a lot of words like "expect"..."intend"..."anticipate". Words that at first glance look positive but in reality offer very little in the way of promise.
 
AeroWesty
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 7:10 pm

Quoting Austwin (Reply 156):
It seems to put to rest the rumors regarding closing the hub or drastically reducing it, imho.

Neither Parker or Horton promised to maintain the current level of service—a combined frequency of 288 flights per day—nor promised international service on either AA or US metal. All that was said was there would be some level of hub activity in the foreseeable future. That could be anything from maintaining current service, increasing it, or paring service down to feeding smaller western cities into flights originating at PHX.
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austwin
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 11:33 pm

Parker and Horton had this to say at the hearing:

“We gave the people of Arizona more opportunities to fly more places,” he said. “The Phoenix hub is a critical piece of US Airways’ profitability and will be a critical piece of American’s profitability. We will be able to provide more service to the people of Arizona. I feel very good about that.”

He said the Dallas hub is far enough away from Phoenix to not interfere with operations and that American uses its hub in Los Angeles for different types of connections, many to Asia, than what the combined airline will do with Phoenix.

Repeatedly during the testimony, Parker said the airlines intend to run the combined company much as the two are run today.

Horton added that because the combined airline will be a part of the Oneworld frequent-traveler alliance, it is possible that other Oneworld airlines could add flights to Phoenix to connect members to flights. Oneworld members include British Airways, Qantas, Finnair and several others.

Parker agreed.

“Growth is something in the future that is harder to predict,” he said. “Whatever opportunities exist in Phoenix today are even greater (with a merger). International possibilities that are very important to the state that we have not been able to accomplish on a standalone basis are much more viable than they were with US Airways as a standalone.”

Were promises made? No. Where flight schedules revealed? No. Does what they said squash all the reasoning posted on the forum about flights being shifted to DFW and LAX by the droves? Yes.
 
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 11:54 pm

Quoting LAXdude1023 (Reply 147):
Its for that reason that PHX will be needed even if it will not be as large as it currently is.

The PHX-Hawaii flights serve a purpose and will stay IMO. I'm not up on the yields in that market, but it is one of the few things PHX does better than just about any other hub. Hawaii is not all about coastal nonstops.
 
AeroWesty
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RE: AA/US Merger Impact: Hubs (Part 2)

Wed Mar 20, 2013 11:58 pm

Quoting Austwin (Reply 159):
Does what they said squash all the reasoning posted on the forum about flights being shifted to DFW and LAX by the droves? Yes.

Please justify how AA will need to continue to fly 6x/day between PDX and PHX in the post-merger era. PHX is an inconvenient transfer point for most of the U.S. from here. Right now it's justified because that's how one travels on the US system plus O&D traffic.

Please let us know how that traffic will continue to flow over PHX when other flows are more efficient for both the airline and passenger. Then rinse and repeat for any number of other cities in the combined network.
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nutsaboutplanes
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:01 am

Quoting HPRamper (Reply 155):
I think US started viewing DCA as a hub with the acquisition of the DL slots. DL did the same thing with LGA if I'm not mistaken.

This is correct. DCA is now included in all internal comparisons with CLT, PHL and PHX.
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usairways85
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:05 am

Quoting Austwin (Reply 159):

Horton added that because the combined airline will be a part of the Oneworld frequent-traveler alliance, it is possible that other Oneworld airlines could add flights to Phoenix to connect members to flights. Oneworld members include British Airways, Qantas, Finnair and several others.

This is purely PR jargon. Qantas is a long shot and Finnair is an exponentially longer shot.
 
SonomaFlyer
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:17 am

Quoting AeroWesty (Reply 161):
Please let us know how that traffic will continue to flow over PHX when other flows are more efficient for both the airline and passenger. Then rinse and repeat for any number of other cities in the combined network.

PHX can be a logical transfer point from the west coast to Mexican destinations, certainly places such as SJD, ACA, MZL etc on the Mexican Riviera. Beyond that, I'm not certain how much sense it would be to change planes in PHX to go to points further east when you can do the same via ORD or DFW.

Aside from PHL, the fate of PHX will be the most interesting to watch as the combined AA decide how to harmonize its network.
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:34 am

Quoting AeroWesty (Reply 161):
Please justify how AA will need to continue to fly 6x/day between PDX and PHX in the post-merger era. PHX is an inconvenient transfer point for most of the U.S. from here. Right now it's justified because that's how one travels on the US system plus O&D traffic.

Bingo.
Even though this is just an example, I could see PDX-PHX dropping to 3x easily. If AA adds a single PDX-LAX, I think the number could easily drop to 2x on PDX-PHX.
 
EricR
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:40 am

Quoting Austwin (Reply 159):
“Growth is something in the future that is harder to predict,” he said. “Whatever opportunities exist in Phoenix today are even greater (with a merger). International possibilities that are very important to the state that we have not been able to accomplish on a standalone basis are much more viable than they were with US Airways as a standalone.”.


Parker and Horton chose their words very carefully. Take the paragraph above as an example. What Parker said above is true whether or not PHX remains as a hub or not. The combined airline will offer US customers more international opportunities because AA flies to a lot of international destinations that US did not. Similarly, the combined airline will offer AA passengers a lot more domestic and international opportunities because US flew to many domestic cities and many secondary cities in Europe that AA did not fly to.

I think you are automatically assuming his comments mean more N/S flights out of PHX, but they purposely stopped short of saying this. They also clearly admitted that growth in the future is hard to predict.



Quoting Austwin (Reply 159):
"The Phoenix hub is a critical piece of US Airways’ profitability and will be a critical piece of American’s profitability. We will be able to provide more service to the people of Arizona. I feel very good about that.”.


Again, a true statement whether PHX remains as a hub or not. But pay special attention to the word profitable. They could potentially gut the hell out of PHX, but one thing they clearly state is that will it be profitable for AA. There is no mention that PHX will retain the same number of seats as they do today.
 
commavia
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 2:15 am

Quoting EricR (Reply 152):
An interesting twist developed yesterday during AA/US's Senate hearing on the merger. CEO Doug Parker revealed for the first time that the carrier now views its National operation as a hub.

Parker is trying to make a case for the combined carrier to keep as many slots as possible at DCA saying "the smaller cities can be served only because the hub operation augments local traffic with connecting traffic, so divestiture would likely turn over slots to airlines that would trim service to the smaller cities."

Also interesting to note is that while AA/US would have two-thirds of the slots, it only represents 50% of the seats out of DCA.

Parker does present a compelling case, but I wonder if it is a strong enough case to avoid any slot divestitures at DCA.

I think the specific terminology of "hub" or "focus city" is relatively unimportant in the scheme of things - especially to politicians on CSPAN who don't truly understand such words (nor much else in the airline industry) or regulators who don't much care. What I think is more notable is how both Horton and Parker - just as expected - repeatedly played up, again and again, in their statements regarding DCA the one argument most likely to gain political traction in Washington. And that is of course the loss of nonstop access to the nation's capitol from small and mid-size markets.

And, I think, that argument has real merit. Parker articulately laid out, including using the extremely relevant example of JetBlue, how these low-fare carriers lobbying for greater DCA access from confiscated AA slots are most likely to use those slots in large markets that are already more likely to have (more) competition. Southwest isn't going to be flying from DCA to LEX. JetBlue isn't going to be flying from DCA to CAK. And since any slots AA is forced to give up are certainly not going to come from DFW, ORD, MIA, CLT, etc., there are plenty of Senators and Congressman who are going to be concerned - for good reason - with their community's air access to DCA.

I think the minimum number of slots AA will have to give up at DCA will be those tied to the two DCA markets where they overlap - RDU and BNA. The combined schedules from both carriers includes 22 slot pairs (14 RDU, 8 BNA) - I would expect regulators will expect them to give up at least half of those slots, or around 11 pairs. I think AA and US should fight against anything greater than that, since anything greater than that will effectively mean reducing flights in already-non-overlapping markets, and that will absolutely mean cuts in small cities.

Quoting Austwin (Reply 156):
It seems to put to rest the rumors regarding closing the hub or drastically reducing it, imho.

It does seem to put such suggestions "to rest" - if you entirely ignore the near-verbatim statements made by other airline CEOs in other airline mergers, and then the subsequent hub closures or reductions those airlines pursued anyway. The words "willing suspension of disbelief" comes to mind.

Quoting sonomaflyer (Reply 164):
I'm not certain how much sense it would be to change planes in PHX to go to points further east when you can do the same via ORD or DFW.

  

It is difficult to understand why you need a hub in PHX - at least one of the same scale and scope as what US has there now - if you have so many other hubs capable of handling much of the traffic flows PHX now handles, and in many case doing so much more conveniently. When you skim away those connections, and of course account for the higher costs of the merged airline, and also the relatively high competition and low yields in the PHX local market, it's difficult to imagine how "new AA" can justify such a hub to shareholders - regardless of who is running the show or what statements where made in congressional hearings.
 
PHXFlyer16
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 3:55 am

Quoting commavia (Reply 167):
it is difficult to understand why you need a hub in PHX - at least one of the same scale and scope as what US has there now - if you have so many other hubs capable of handling much of the traffic flows PHX now handles, and in many case doing so much more conveniently. When you skim away those connections, and of course account for the higher costs of the merged airline, and also the relatively high competition and low yields in the PHX local market, it's difficult to imagine how "new AA" can justify such a hub to shareholders - regardless of who is running the show or what statements where made in congressional hearings.

I agree words were chosen carefully, but don't underestimate the importance of a PHX hub. Phoenix just climbed to number 13 on the list of largest US metros. Every other top 14 metro has a legacy hub except Boston but they have Jet Blue. Within 10 years Phoenix will crack the top 10 metro areas. You never want to walk in the short term from an area of increasing demand as rapidly as Phoenix is growing.

I travel for business to the west coast. I value a first class upgrade and assigned seat as well as redeeming miles for international travel, so southwest is not an option for me. Connecting in LAX or DFW would not be a viable option to get me to SJC, LAS, RNO, PDX, SFO, Etc... You get the point.

I'm not saying PHX doesn't shrink, but it doesn't go away. You cannot send someone flying from SJC or SNA to DFW to get them to PHX, LAS, PDX, etc. My point is giving up PHX would be to give up an any intrawest network and essentially focus your business on moving passengers from west to east or west to Midwest. AA would be abanndoning the west connecting market and conceding to WN, UA, and DL, which all have hubs in the region for that exact reason.
 
EricR
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:23 am

Quoting PHXFlyer16 (Reply 168):
Connecting in LAX or DFW would not be a viable option to get me to SJC, LAS, RNO, PDX, SFO, Etc... You get the point..


Why wouldn't LAX work? Each of the cities you mentioned are easily reachable from PHX via LAX with no backtracking (minor backtracking to get to LAS). Maybe AA keeps routes from PHX to DEN, SLC, ABQ, SNA, BUR, but pretty much all other western destinations from PHX can be reached via LAX. Also, something to note is that the aforementioned routes from PHX are low fare routes (I saw one way fares from PHX-DEN on WN for $59), so AA is not going to make any substantial profits by keeping these routes, and could quite possibly lose money should another carrier (WN) put up a fight.
 
PHXFlyer16
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:41 am

Quoting EricR (Reply 169):
Why wouldn't LAX work?

For the same reason's UA and DL have DEN and SLC. Because AA can't cram 300 daily flights into LAX.

Premium space means premium flights, trans-pacific or coast-to-coast. Not connecting smaller markets.
 
Flighty
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 5:22 am

Quoting Austwin (Reply 159):
Does what they said squash all the reasoning posted on the forum about flights being shifted to DFW and LAX by the droves? Yes.

They will do whatever makes money. What they say has no meaning at all

Quoting commavia (Reply 167):
Southwest isn't going to be flying from DCA to LEX. JetBlue isn't going to be flying from DCA to CAK. And since any slots AA is forced to give up are certainly not going to come from DFW, ORD, MIA, CLT, etc., there are plenty of Senators and Congressman who are going to be concerned - for good reason - with their community's air access to DCA.

I don't think they need ~18 flights to RDU, for example. It's laughable for them to even suggest they should keep increasing their market share at Reagan. Clearly there is limited capacity there. The capacity limitation should fall on the airline that already has greatest access to the facility. If Senators want to dictate where Americans can fly out of DCA with their own money, that is abhorrent. Let the low value flying go to IAD.

Quoting PHXFlyer16 (Reply 170):
Because AA can't cram 300 daily flights into LAX.

And they wouldn't want to, anyway.
 
commavia
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 11:13 am

Quoting PHXFlyer16 (Reply 168):
but don't underestimate the importance of a PHX hub.

I don't believe I am underestimating it.

My believe is that the hub is in a bad location for all but a very narrow set of connecting traffic flows, and that AA has other hubs that are in better locations to handle many of the same connecting traffic flows, the local O&D market is large but skews more leisure than other hubs, and it is a highly competitive market and thus relatively lower-yielding than many other hubs.

Nobody has yet to really argue with any of the above.

Quoting PHXFlyer16 (Reply 168):
Phoenix just climbed to number 13 on the list of largest US metros.

But that means little in terms of the hub, which also caters largely to connections. If you peel away some portion of the connections, and are left with just the O&D, you don't need nearly as large an operation as US has now, particularly since Southwest already caters so well for the local market.

Quoting PHXFlyer16 (Reply 168):
Every other top 14 metro has a legacy hub except Boston but they have Jet Blue.

And Phoenix has Southwest!

Quoting PHXFlyer16 (Reply 168):
I value a first class upgrade and assigned seat as well as redeeming miles for international travel, so southwest is not an option for me.

Sure, although I am not sure if there are enough people like you in PHX to justify the level of nonstop flying currently done, and the amount of capacity currently flying. If there is sufficient PHX premium demand to west coast markets, I could see at least some of that flying shifted to CR9s.

Quoting PHXFlyer16 (Reply 168):
Connecting in LAX or DFW would not be a viable option to get me to SJC, LAS, RNO, PDX, SFO, Etc.

Which is why none of us have said PHX will go down to just he hubs. But if you accept (and I realize plenty of people here don't) that PHX is a suboptimal connecting hub, and that many of those connections easily can and therefor likely in time will, shift to other hubs, than what you're left with is just the PHX local market. And while that market is large, true, it also tends to be relatively heavier on PHX-destination versus PHX-originating, and it also tends to be lower-yielding. So I think PHX will certainly retain flights to major western U.S. markets (LAX, SAN, SNA, SFO, SJC, PDX, SEA, possibly SMF), but I see that access being based on fewer frequencies, and in many cases likely smaller planes.

Quoting Flighty (Reply 171):
I don't think they need ~18 flights to RDU, for example.

I agree.

As I said, the basis for any slot divestiture should be focused on the two markets where this merger will actually lead to a material change in the competitive landscape (i.e., loss of a competitor compared to the current competitive dynamic). That means RDU and BNA.

Quoting Flighty (Reply 171):
It's laughable for them to even suggest they should keep increasing their market share at Reagan.

I don't think it's that laughable considering that the increased market share would come almost entirely from complimentary flying. If there was tons of overlap, I would totally agree. But if AA is forced to give up slots, all regulators will effectively be doing is transferring slots and capacity from small cities who already have only 1 choice to DCA to big cities that are more likely to already have more than 1 choice to DCA.
 
PHXFlyer16
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:01 pm

Quoting commavia (Reply 172):
And Phoenix has Southwest!

Note that I said "lagacy carrier."

Here is what you are missing... In order to compete with DL and UA, you must have a comparable network. I understand yields are lower, but that does not justify AA waiving the white flag to intra-west flying. A mountain hub is crucial to serving this market, it is crucial, that AA operate a network with strength in most regions, especially where their competition has a presence.

Do you think UA loves their yields in DEN? I bout it, competition from LCCs is even stronger there. Do they print money? I doubt it. BUT they realize to abandon DEN would be to leave a large hole in intrawest flying in their network. They too have hubs in ORD and Texas, along with SFO. Under your premise UA would be pulling down DEN dramatically be it has other hubs that could handle flows, has stiff competition, lower yields, etc.

Why don't they? Because many travelers, especially for business, are loyal. If you can't fly them from the Bay Area or the northwest to PHX, LAS, or DEN then your chances of them choosing your airline when it's time to go to the east coast or overseas is greatly diminished. They'll turn their loyalty toward someone with convenient connections, which for them spells a mountain hub.

My point is that you cannot isolate a hub when comparable networks are so important these days. You abandon a large region of the US and you often lose much more than just the in-region flights. Especially when you already have a huge FF base that you are essentially giving up.
 
commavia
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 12:20 pm

Quoting PHXFlyer16 (Reply 173):
Here is what you are missing... In order to compete with DL and UA, you must have a comparable network. I understand yields are lower, but that does not justify AA waiving the white flag to intra-west flying.

And here is what I believe you're missing: PHX does not give AA a "comparable" network with DL or UA anyway, and it certainly is not an "intra-west" hub. Where PHX is well-situated is for east-west connections coming in to and out of California. That's it. For everything else, including "intra-west," PHX is either entirely worthless or merely inferior to other AA hubs. So the argument that somehow PHX is necessary for AA to maintain network parity with DL or UA falls down on the simple reality that PHX - as it is, today - provides US with no such network parity whatsoever. Indeed, as I've long said, I doubt US would even have a legacy/network-style hub in PHX today if it weren't for the HP legacy there and, most importantly, the lack of any alternative. The "new AA," unlike the current US or old HP, has plenty of very, very good alternatives.

Quoting PHXFlyer16 (Reply 173):
A mountain hub is crucial to serving this market, it is crucial, that AA operate a network with strength in most regions, especially where their competition has a presence.

First off, PHX is not a "mountain hub." It's too far west, and too far south. Look at the network US operates from PHX to the Rocky Mountain region - it's really no more impressive that what AA already operates from hubs east of the region (DFW/ORD).

Second, the Mountain West region is hardly "crucial" - of all the major regions of the U.S., it's by far the least populated and least dense. If there's one region in the U.S. that is relatively the least important, that's it - particularly since it only has two viable entry (hub) points - DEN and then SLC - and both are well spoken for. PHX is not an alternative to DEN or SLC.

And finally, to the second point, it's not at all "crucial" for AA to have a strong presence in every region, just - as you say - in "most" regions. And AA will have an extremely strong presence in just about every region of the country except the mountain west and Pacific northwest. Can't win 'em all. DL has relatively little presence in TX and the south-central U.S., and that's a region that is far larger and faster-growing than the mountain west. But DL seems to be doing just fine nonetheless.

Quoting PHXFlyer16 (Reply 173):
Do you think UA loves their yields in DEN? I bout it, competition from LCCs is even stronger there. Do they print money? I doubt it. BUT they realize to abandon DEN would be to leave a large hole in intrawest flying in their network.

Again - you cannot compare PHX to DEN. DEN is the economic, political, cultural and transportation hub of the entire Rocky Mountain region. It is the equivalent of what ATL is to the southeastern U.S. DEN also has a huge premium/corporate travel base, and it's in an excellent, central location. For all of those reasons, DEN is far more worth fighting for than PHX.

Quoting PHXFlyer16 (Reply 173):
Why don't they? Because many travelers, especially for business, are loyal. If you can't fly them from the Bay Area or the northwest to PHX, LAS, or DEN then your chances of them choosing your airline when it's time to go to the east coast or overseas is greatly diminished. They'll turn their loyalty toward someone with convenient connections, which for them spells a mountain hub.

Losing some level of those customers may be a risk AA is willing to take - or may not even have a choice in. The merged airline will have higher costs, which is really going to challenge the economics of a relatively lower-yielding hub like PHX. Given that, and the diminished network relevant of PHX, AA may well calculate that the best return for shareholders is to give up the business of some PHX customers who demand fares too low to cover AA's costs.

Quoting PHXFlyer16 (Reply 173):
You abandon a large region of the US and you often lose much more than just the in-region flights.

Nobody is saying AA should "abandon" the southwest U.S., or for that matter even PHX. But you don't need a hub - or at least a hub of the current scale and scope - in PHX to serve that metro area and region, and particularly the business travel market thereof.

[Edited 2013-03-21 05:54:57]
 
PHXFlyer16
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:10 pm

Spare me. No use debating with someone who doesn't understand the region.

There are many W/E flows today because it is the only hub for US west of the Mississippi. Some of that will go away, but intrawest connections and hub will stay. NOBODY is connecting in DFW for intrawest flights. This is why US is complimentary to AA's network which is very weak in the west. AA has struggled for a number of reasons including domestic weakness in the NE, SW and NW. If AA was successful just running everything through DFW, LAX and ORD then they wouldn't be #3 and wouldn't have needed bankruptcy so badly.

AA and US are not merging to add more planes to existing hubs. There is a reason why that doesn't work and why nobody in the western US flies AA today.

Finally, DEN may have a higher % of business travelers, but PHX metro has nearly 2M more people, so there is actually more demand. I agree location isn't ideal but there is really no alternative, and there's a trade off to hubbing one of the largest and fastest growing areas in the US, even if it is not quite as convenient as SLC or DEN. It is still way more convenient than DFW if you are not crossing the country.
 
AeroWesty
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:29 pm

Quoting PHXFlyer16 (Reply 175):
I agree location isn't ideal but there is really no alternative

From PDX, there are few population centers in the west and midwest which are better served via PHX than on a nonstop or via SLC, DEN, MSP, ORD, DFW and IAH. There are some, for sure, but not many of high volume where there aren't other better opportunities as well.

What I don't understand is the appeal PHX boosters believe that PHX brings to the party which will be recognized by those outside the PHX metro area. Other than offering a cheap fare to drive demand up and yields down, what exactly does PHX offer to me better from PDX, and to where, other than the limited natural connections in the southwest which would cause 6 nonstops on US/AA to continue post-merger. (Recall, WN and AS are also in the marketplace with nonstops.)

Asked numerous times, no PHX booster has been brave enough to stick their neck out to answer, because it always ends up with 'unsustainable yield' as part of the equation. But give it a try, I'm honestly open to being sold on PHX.
International Homo of Mystery
 
flyguy89
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:32 pm

Quoting PHXFlyer16 (Reply 175):
Spare me. No use debating with someone who doesn't understand the region.

Then I guess it's no use debating someone who's deluding themselves that PHX is actually an inter-west or Mountain West hub on par with DEN and SLC. Outside of California, PHX is a very poor hub to connect Western US travelers to other destinations in the West.

Quoting PHXFlyer16 (Reply 175):
There are many W/E flows today because it is the only hub for US west of the Mississippi.

...more than likely it's because it's one of the few areas where PHX makes sense as a connecting point.

Quoting PHXFlyer16 (Reply 175):
but intrawest connections and hub will stay.

Precisely what intra-West connections through PHX, outside of SoCal, would AA be able to even remotely compete effectively with DL and UA?

Quoting PHXFlyer16 (Reply 175):
If AA was successful just running everything through DFW, LAX and ORD then they wouldn't be #3 and wouldn't have needed bankruptcy so badly.

And HP/US didn't need bankruptcy? Sounds like selective memory to me.

Quoting PHXFlyer16 (Reply 175):
but PHX metro has nearly 2M more people, so there is actually more demand

But at what yield? What difference do those 2M extra people make if they're only willing to pay crap fares?
 
Osubuckeyes
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:50 pm

Here is my 2 cents.

To think that PHX will be the same post merger is naive. Although I think that there may be something that people are missing. I feel that most of us are assuming that PHX will maintain the same destinations and play the same role in the new AA. Subscribing to this idea I would say that this is a redundant role in the network, and as many have said above the same flows can be served by other hubs and the amount of connecting traffic can be funneled through other hubs.

On the other hand if PHX can play a different role in the network it may serve as more of a unique strength to AA. The infrastructure is already there to handle a large operation so it would not take a huge effort to shift flying to unserved/underserved markets in the west. I think you would see a decrease in flying from PHX-East Coast except for routes with high O&D and strong AA/US markets, slight reduction to cities in Cali and on the West Coast along with increases in new destinations served to communities like BIL, EUG, COS, EGE, and possibly some other Mexican and Canadian destinations. I could see this happening bringing PHX from somewhere between 180-220 daily departures. The key would be maintaining current O&D levels combined with optimization of connecting flows to unique PHX destinations as well as unique geographic flows such as SEA-MEX.

Having said that Parker may not decide to give PHX a new role, where I could see capacity being cut and mainly focus on PHX O&D destinations with fewer flights, but maintaining a high concentration of mainline to fight low yields. I think this would leave PHX with anywhere from 130-160 daily departures.

To the point of PHX being a large city and needs two airline hubs. I don't think they should be loyal to a city just because there used to be a hub there. If the economics work they will stay and if the economics don't work they will cut. Currently there are leases on facilities and that plays a huge factor into what happens, but I think there is something to be said for PHX being a growing metro area with expanding business opportunities. I think anyone that has resided in the area over the past 10 years can see the shift in mainly tourism to a larger mix of business and tourism. So for US to completely de-hub PHX a la STL, PIT, CVG, MEM would be a mistake, in my opinion of course, due to a large FF base, a fast growing metro area, and a growing business community.

Just my two cents.
 
EricR
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 4:56 pm

Quoting AeroWesty (Reply 176):
Asked numerous times, no PHX booster has been brave enough to stick their neck out to answer, because it always ends up with 'unsustainable yield' as part of the equation. But give it a try, I'm honestly open to being sold on PHX.



That is because there is no logical answer to this. The pro-hub PHX folks only think about intra-west connectivity but fail to understand the limited value (in terms of connecting flows AND profitability) that the PHX hub has in the combined AA/US system. They also do not realize that with LAX and DFW, much of the connecting passengers that once traveled via PHX will now go through another hub thus creating a situation whereby PHX would have too much capacity under the combined carrier.

The remaining short haul intra-west flights from PHX (So. Cal, LAS, ABQ, DEN) are all very low fare routes and are marginally profitable at best. SEA and PDX is already handled via codeshare on AS. There is no doubt that AA will gut the hub.
 
commavia
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 5:10 pm

Quoting PHXFlyer16 (Reply 175):
Spare me. No use debating with someone who doesn't understand the region.

I'm glad all you guys in PHX "understand" your region so well that you have AA's entire domestic network figured out.

  

Quoting PHXFlyer16 (Reply 175):
but intrawest connections and hub will stay.

What "intra-west" connections? The only ones where PHX is well-positioned are California to the states east of PHX but west of DFW, and arguably between the west coast and TUS/FLG. That's it. Any other "intra-west" connections over PHX - say, PDX-SAN, or SEA-LAS - are likely being done at a steep yield discount. Why else would someone fly PDX-PHX-SAN when they could just fly nonstop? I do not believe such low-yielding (allegedly) "intra-west" flying is going to be sustainable at the higher costs of a merged airline.

Quoting PHXFlyer16 (Reply 175):
NOBODY is connecting in DFW for intrawest flights.

... and very few are connecting in PHX for "intra-west" flights, either.

Quoting PHXFlyer16 (Reply 175):
This is why US is complimentary to AA's network which is very weak in the west.

The network value of US is in the east, not the west. In the US, what US brings is essentially yet another hub that handles east-west connecting flows.

Quoting PHXFlyer16 (Reply 175):
AA and US are not merging to add more planes to existing hubs.

Sure they are.

Quoting PHXFlyer16 (Reply 175):
There is a reason why that doesn't work

According to who that doesn't work? Seems to have worked quite well for DL.

Quoting PHXFlyer16 (Reply 175):
and why nobody in the western US flies AA today.

  

So ridiculous.

AA today carries literally millions of people every year between the west and somewhere else, and even some within the west via LAX. US is in exactly the same competitive position.

US is not - today - a viable competitor in any way in the intra-west-coast market. PHX as a hub is horribly positioned for this, and any traffic US does carry as such is almost certainly sold at a yield discount to the ample nonstop and/or more convenient connections available via UA, AS, WN, etc.

PHX is a great hub to connect the west coast (California, specifically) with somewhere else - not "intra-west." The single only "intra-west" traffic flow - and indeed, the single only traffic flow, period, that I can think of - for which PHX is in a superior geographic location to another AA hub is for California-New Mexico/Colorado/west Texas. That's it.

For every single other traffic flow category for which PHX is now a large player, DFW, LAX and/or ORD are just as good if not better. You do not need PHX to handle those connecting flows.

Quoting PHXFlyer16 (Reply 175):
I agree location isn't ideal but there is really no alternative

Sure there's an alternative! There's actually several - at AA, and other airlines.

Quoting PHXFlyer16 (Reply 175):
there's a trade off to hubbing one of the largest and fastest growing areas in the US

But what's the point if a lower-cost competitor has an even larger hub catering to the same traffic?
 
eaglepower83
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 6:04 pm

Just throwing this out there.....would it be prudent for AA/US to eventually invade DEN or SLC?
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:02 pm

Quoting PHXFlyer16 (Reply 168):
I'm not saying PHX doesn't shrink, but it doesn't go away. You cannot send someone flying from SJC or SNA to DFW to get them to PHX, LAS, PDX, etc. My point is giving up PHX would be to give up an any intrawest network and essentially focus your business on moving passengers from west to east or west to Midwest.

Dehubbing PHX doesn't mean it would lose flights to the select important markets in the West that can survive on O&D alone.

Quoting PHXFlyer16 (Reply 168):
Connecting in LAX or DFW would not be a viable option to get me to SJC, LAS, RNO, PDX, SFO, Etc... You get the point.

What's the alternative? Other airlines who hub even further away? or there is always Southwest...

Quoting Flighty (Reply 171):
Clearly there is limited capacity there. The capacity limitation should fall on the airline that already has greatest access to the facility. If Senators want to dictate where Americans can fly out of DCA with their own money, that is abhorrent. Let the low value flying go to IAD.

So you are saying more unique destinations should be given up in favor of three or four airlines who all fly basically to ORD and MCO?

Quoting PHXFlyer16 (Reply 175):
AA and US are not merging to add more planes to existing hubs. There is a reason why that doesn't work and why nobody in the western US flies AA today.

The reason AA is weak in some areas - not the entire West Coast but arguably the PNW and northern California - is because they fly gas-guzzling planes and they proved unprofitable on long stage lengths to PDX, SEA etc from ORD and DFW. That said, they have codeshares with AS in place to address that very issue.

Quoting AeroWesty (Reply 176):
Other than offering a cheap fare to drive demand up and yields down, what exactly does PHX offer to me better from PDX, and to where, other than the limited natural connections in the southwest which would cause 6 nonstops on US/AA to continue post-merger. (Recall, WN and AS are also in the marketplace with nonstops.)

Not much, which is why I think PDX-PHX will drop to 3x if not fewer. The only markets that capacity will be needed for - if PDX-LAX appears on AA metal or on AS codeshare - will be PDX-PHX/TUS/ABQ/SLC/DEN/ELP and some smaller marginal markets. That's not enough for 6x.

Quoting osubuckeyes (Reply 178):
So for US to completely de-hub PHX a la STL, PIT, CVG, MEM would be a mistake, in my opinion of course, due to a large FF base, a fast growing metro area, and a growing business community.

Completely agree, although dehubbing to a spoke station is not the same as dehubbing to a focus city.

Quoting EaglePower83 (Reply 181):
Just throwing this out there.....would it be prudent for AA/US to eventually invade DEN or SLC?

Only if they wanted to provoke a fare war that nobody would win. AA doesn't need to be everywhere. Let the other legacies battle WN at the mountain hubs.
 
superjeff
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:22 pm

Quoting SCQ83 (Reply 20):
And I haven't said either that PHL would be closed... my point is that AA would carry whatever they can from PHL to JFK.
Quoting SCQ83 (Reply 20):
So we basically agree again... PHL is not that important market... if AA at JFK would be able to expand operations as pleased... PHL could be shut down or largely minimized. If PHL would be such relevant market, AA would not do that even if they could grow at JFK as they want.

First of all, who's driving the proverbial bus? Doug Parker is US Airways' president and he's engineered this reverse takeover of AA. I can see DFW over PHX, but Phoenix and PHL are vastly profitable for US, and I don't see them downsizing PHL much; PHX is also well positioned as a western hub (much like DL has SLC). Don't expect either PHL or PHX to go away or shrink in any major way.
 
AeroWesty
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:24 pm

Quoting superjeff (Reply 183):
but Phoenix and PHL are vastly profitable for US

But won't be as profitable at AA's higher payscale. (Don't people actually read the thread before posting a reply?)
International Homo of Mystery
 
BigGSFO
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:24 pm

Quoting EaglePower83 (Reply 181):
Just throwing this out there.....would it be prudent for AA/US to eventually invade DEN or SLC?

Probably not. SLC is one-hub city and DL has that wrapped up well. AA would lose their shirt if they tried to push their way in. With Denver, honestly the only way they could feasibly try and hub it was if they tried to acquire Frontier and even then UA, and WN will make it a bloodbath. That option won't happen either. They are better off building DFW and PHX to compete. They might not be able to serve every landing strip in Montana and would also be routing passengers south/southwest, but there is an acceptable loss of potential traffic when you simply don't have the resources (in this case, a centrally located mountain west hub) to compete.
 
Maverick623
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:25 pm

Quoting HPRamper (Reply 165):
Even though this is just an example, I could see PDX-PHX dropping to 3x easily.

I could see that.

Sad, as that route is a non-rev paradise... then again, that's probably why they would cut frequencies  
"PHX is Phoenix, PDX is the other city" -777Way
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 7:30 pm

Quoting superjeff (Reply 183):
I can see DFW over PHX, but Phoenix and PHL are vastly profitable for US, and I don't see them downsizing PHL much; PHX is also well positioned as a western hub (much like DL has SLC).

1. PHX is not "vastly" profitable - it's marginally profitable, and has much more value for US as a funnel for West Coast traffic than as any kind of moneymaking hub station.
2. PHX is terribly positioned as a western hub. It's in a good spot to serve the far Southwest - that's it.
 
BigGSFO
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 8:15 pm

Quoting AeroWesty (Reply 184):
But won't be as profitable at AA's higher payscale. (Don't people actually read the thread before posting a reply?)

No.   Which is why the Phoenix debate goes around in circles and people rehash he same point over and over again.
 
AAIL86
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 9:06 pm

Quoting BigGSFO (Reply 188):
No. Which is why the Phoenix debate goes around in circles and people rehash he same point over and over again.

What seems a little strange to me is how much time on these threads is being spent discussing PHX.... seems like 80% of the postings on this thread there is about what happens there going forward (Perhaps its because PHX really does have the most uncertain future of any of AA/US's hubs). In the global grand scheme of things, PHX is a relatively minor domestic hub with a small international presence.... surely not the only hub that AA/US have that's worth discussing - no?  

For me - PHX neither shrinks nor grows going forward. My gut feeling is the ongoing growth in the area and local brand loyality to what will surely be a better all-around product (compared to the current offering at US) will offset the higher costs of the combined AA/US....
" Travel is fatal to prejudice, bigotry, and narrow-mindedness ... Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime. ” - Mark Twain, 1869
 
Western727
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 10:03 pm

Quoting AAIL86 (Reply 189):
80% of the postings on this thread there is about what happens there going forward (Perhaps its because PHX really does have the most uncertain future of any of AA/US's hubs).

Concur. I landed at PHX this morning and found myself looking at the airport and arriving/departing US aircraft in a very different lens; it's my first time in Phoenix since the merger announcement, hence.

I, like many of you, look forward to seeing what ends up happening to PHX as a hub.
Jack @ AUS
 
Caryjack
Posts: 416
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RE: AA/US Merger Impact: Hubs (Part 2)

Thu Mar 21, 2013 10:59 pm

Quoting commavia (Reply 174):
The merged airline will have higher costs, which is really going to challenge the economics of a relatively lower-yielding hub like PHX.
Quoting AeroWesty (Reply 184):
But won't be as profitable at AA's higher payscale.


I understand that salaries at US will increase but does that necessarily mean that AA's cost will be higher than the current? I would hope that the economies of scale would mitigate the US cost increases and at least hold AA's costs (ticket prices) at their current level.

Quoting commavia (Reply 180):
AA today carries literally millions of people every year between the west and somewhere else, and even some within the west via LAX. US is in exactly the same competitive position.
Quoting HPRamper (Reply 182):
The reason AA is weak in some areas - not the entire West Coast but arguably the PNW and northern California - is because they fly gas-guzzling planes and they proved unprofitable on long stage lengths to PDX, SEA etc from ORD and DFW. That said, they have codeshares with AS in place to address that very issue.

Not sure about the "gas-guzzling planes." AA uses B-737s form SEA to ORD and DFW but puts me on an AS 737 to MIA...what is the difference?

I am using the 2 preceding quotes to reintroduce a question I posted in the 1st thread:

**************************
"LAXdude1023 #53 AAmerger part 1

By the way, if you guys are interested in having me do analysis on the other hubs in question, I will be happy to. Just ask.
#245 AAmerger part 1

Up thread I believe you offered to analyze any requested airport. If true, what impact will this merger have on SEA? I typically fly to MAD through ORD (IB) or JFK, and to Central and South America through DFW and MIA.
Thanks,
Cary"
****************************
Rereading the 'dude's offer, SEA was not in question and may not even be a hub...however as an AA frequent flyer out of SEA I am interested in the impact this merger may have on my travels. From all the posts and almost no mention of SEA, it looks like no major changes...right?
Thanks,  
Cary
 
HPRamper
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RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 12:11 am

Quoting Caryjack (Reply 191):
Not sure about the "gas-guzzling planes." AA uses B-737s form SEA to ORD and DFW but puts me on an AS 737 to MIA...what is the difference?

I'm not 100% sure about what kind of aircraft AA uses on SEA routes, but at PDX all you ever saw for years on end was MD-80s. It's possible that AA valued SEA enough to substitute 737s in, while giving up on PDX.
 
point2point
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RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 12:11 am

Quoting EaglePower83 (Reply 181):
Just throwing this out there.....would it be prudent for AA/US to eventually invade DEN or SLC?

I'm sure that the DEN airport managers would be THRILLED to have another carrier in the form of the new AA/US hubbing there..... after UA, F9, WN, ZK, and now with NK expanding, as well as all of the other major domestic carriers fighting for a piece of the action there.......

The more the merrier....... and pax to/from DEN would be having airline deals galore......

 
 
flyguy89
Posts: 3314
Joined: Tue Feb 24, 2009 6:43 pm

RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 2:32 am

Quoting Caryjack (Reply 191):
Quoting commavia (Reply 174):
The merged airline will have higher costs, which is really going to challenge the economics of a relatively lower-yielding hub like PHX.
Quoting AeroWesty (Reply 184):
But won't be as profitable at AA's higher payscale.


I understand that salaries at US will increase but does that necessarily mean that AA's cost will be higher than the current?

Going off what Parker was offering the unions to get their support, the merged carrier's costs will be higher than what AA's would have been if it emerged from bankruptcy alone, the new carrier's costs will still however be significantly lower than what AA's were pre-bankruptcy. US on the other hand will see costs increasing across the board which is what's relevant here as PHX is a US hub operating under current US costs.
 
AAIL86
Posts: 466
Joined: Wed Feb 09, 2011 6:00 am

RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 2:32 am

Quoting point2point (Reply 193):
I'm sure that the DEN airport managers would be THRILLED to have another carrier in the form of the new AA/US hubbing there..... after UA, F9, WN, ZK, and now with NK expanding, as well as all of the other major domestic carriers fighting for a piece of the action there.......

The more the merrier....... and pax to/from DEN would be having airline deals galore......

Not a chance. DEN already has among the lowest (if not absolute lowest) average fares in the country and is arguably overserved at the moment ...

[Edited 2013-03-21 19:34:30]
" Travel is fatal to prejudice, bigotry, and narrow-mindedness ... Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one's lifetime. ” - Mark Twain, 1869
 
Caryjack
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RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 3:14 am

Quoting HPRamper (Reply 192):
I'm not 100% sure about what kind of aircraft AA uses on SEA routes

I'm not either but I don't recall ever taking an MD 80 from SEA to ORD or DFW. A random mid week sample shows the following:
SEA - ORD 6 X B-738
SEA - ORD 6 X B-738 + 1 X B-757
SEA - MIA 1 X B-757

Quoting flyguy89 (Reply 194):
the new carrier's costs will still however be significantly lower than what AA's were pre-bankruptcy. US on the other hand will see costs increasing across the board which is what's relevant here as PHX is a US hub operating under current US costs.

So a net drop in AA's costs (possibly lower ticket prices) but some increase in US's cost with some higher ticket prices, at least in PHX...right?
Thanks,   
Cary
 
commavia
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RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 4:24 am

For those sick of talking about PHX, I read a very interesting article today on CAPA about Delta. In passing, it actually included some interesting - and surprising - data about AA-US.

Specifically, the market share statistics for LGA/JFK, LAX and BOS.

At LGA, according at least to CAPA's numbers, AA-US today (pro forma) actually have slightly more seats out of LGA every day than DL. This was highly surprising to me since DL obviously has quite a few more departures, but since most are on RJs where as so many of AA's are mainline, AA-US actually today offers 33.8% of the total seats out of LGA, compared to DL's 33.1%. At JFK, B6 and DL are very close in share of seats, and AA is not all that far behind. To me, this indicates yet again that AA still today remains an extremely strong competitive force in the NYC market, and a merger will only strengthen that.

Similarly, at LAX, it was interesting to see the pro forma AA-US numbers compared with other key competitors. The LAX market certainly remains distinctly fragmented, with four carriers (UA, AA, WN, DL) all having greater than 10% seat share and no single carrier having greater than 20%. Nonetheless, that appears likely to change. AA, which is already very close behind UA today, once merged (again, before accounting for any rationalization, of course) will leapfrog past UA to be the #1 carrier at LAX by seats, at around 21%. I believe this is the first time in at least 3-4 decades, if not longer, that AA has been the #1 carrier at LAX. In addition, WN and DL are also extremely close in seat share, and with DL's recent buildup is almost certain to jump past WN as the #3 carrier at LAX.

Finally, in BOS, what's notable about the seat share statistics is how far all the legacies have fallen relative to B6. B6 is now the undisputed market leader in BOS with 29.5% seat share. The next larger carrier, US, is around half that, at 15.3%. However, AA-US combined, pro forma, would jump into a relatively strong #2 position at around 26%, substantially larger than DL and UA at around 11-12% each.

Quoting Caryjack (Reply 191):
I understand that salaries at US will increase but does that necessarily mean that AA's cost will be higher than the current?

Parker has made absolutely no secret for years about the labor cost differential at US relative to legacy competitors, and what drove it. He has said it over and over again - US has a network that puts them at a revenue disadvantage, and therefore they require lower labor costs to compete. Well, those days are over.

The "new AA" is now going to have labor costs much more on par with DL and UA. What this means for PHX, however, is the real key. My suspicion is that PHX is already US' lowest-yielding hub, and therefore the one most reliant on, and sensitive to changes in, the aforementioned below-market labor costs.

That does not make me optimistic about the economics of a hub in PHX - or at least one of the same scale and scope as today - going forward.

Quoting flyguy89 (Reply 194):
Going off what Parker was offering the unions to get their support, the merged carrier's costs will be higher than what AA's would have been if it emerged from bankruptcy alone, the new carrier's costs will still however be significantly lower than what AA's were pre-bankruptcy. US on the other hand will see costs increasing across the board which is what's relevant here as PHX is a US hub operating under current US costs.

  

Quoting Caryjack (Reply 196):
I'm not either but I don't recall ever taking an MD 80 from SEA to ORD or DFW. A random mid week sample shows the following:
SEA - ORD 6 X B-738
SEA - ORD 6 X B-738 + 1 X B-757
SEA - MIA 1 X B-757

AA is all 737/757 in and out of SEA right now, but for most of the last 30 years SEA has been a primarily-MD80 station, outside of certain peak summer seasons when SEA has in the past also seen lots of 757s. In that context, the 737s are a relatively new development, having arrived in SEA pretty much within the last decade.
 
point2point
Posts: 2093
Joined: Fri Mar 19, 2010 10:54 pm

RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 4:36 am

Quoting AAIL86 (Reply 195):
Not a chance. DEN already has among the lowest (if not absolute lowest) average fares in the country and is arguably overserved at the moment ...

I didn't say whether there was a chance or not, all I stated is that the airport management would be THRILLED at having another airline such as the new AA/US hubbing there, and it would be in the best interest as such. I'm sure anyone here in a position of an airport manager would welcome any airline that would want to hub at your airport.

May I ask about "among the lowest (if not the lowest) average fares" and what the source is? Maybe they are lower than some major airports in the U.S., but they also may be higher then some other major airports in the U.S.

-------------------

At any rate, I think as time passes, all of the current AA/US hubs will see some reductions, and seats will be reduced in favor of higher revenues throughout the network. Maybe some more than others, but rightsizing will occur, and I think this will be a process that will probably be completed sometime around 2016 before all is said and done.

 
 
ldvaviation
Posts: 1259
Joined: Sun Dec 21, 2008 7:21 pm

RE: AA/US Merger Impact: Hubs (Part 2)

Fri Mar 22, 2013 5:05 am

Quoting commavia (Reply 197):
At LGA, according at least to CAPA's numbers, AA-US today (pro forma) actually have slightly more seats out of LGA every day than DL.
Quoting commavia (Reply 197):
Nonetheless, that appears likely to change. AA, which is already very close behind UA today, once merged (again, before accounting for any rationalization, of course) will leapfrog past UA to be the #1 carrier at LAX by seats, at around 21%.
Quoting commavia (Reply 197):
However, AA-US combined, pro forma, would jump into a relatively strong #2 position [in BOS] at around 26%, substantially larger than DL and UA at around 11-12% each.

So much for the idea that US brought nothing to the table because it had no Asia-Pacific network.

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