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LAXintl
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United Plans LAX Facility Modernization

Fri Sep 06, 2013 6:11 pm

In keeping up with the Joneses, United Airlines is out with its proposal to modernize its LAX terminal facilities spread out over 3-terminals.

United plans to invest about $413 million in improvements including revised security screening checkpoints, new baggage sorting system, renovating passenger waiting areas, new boarding bridges and a new consolidated premium customer club (which I had posted on previously).

Here is the story, now that its public.

United Airlines plans more than $400 million in terminal upgrades
http://www.insidesocal.com/aviation/...-400-million-in-terminal-upgrades/

=
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ldvaviation
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 6:58 pm

If anyone is counting that is approximately $1.3 B plus that LAWA has spent or will spend (with financing from the airlines) to more or less upgrade the MEP systems in four terminals. Could a brand new concourse have been built for all four airlines for that amount of money? One wonders.

As it is, most of the money will be spent on upgrading systems that will do little to improve the aesthetic experience of those terminals. Delta's budget for finishes and branding is $12 million; United's is around $34 million. We are not going to get much in the way of aesthetic improvements for that, considering the bulk of that will go to building the United Club.

Moreover, United has only committed so far to spending that $34 million on the finishes and branding in T7. If it does nothing in T6 and T8, LAX will continue to have areas within terminals (such as 6) that look forgotten and neglected.

[Edited 2013-09-06 12:06:14]
 
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STT757
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:09 pm

Hopefully this will finally put to the rest the arguments posters have been making around here lately speculating UA was going to abandon the LAX hub in favor of SFO. UA is in a solid position at LAX, the introduction of the Skywest ERJ-175s will hopefully help reinforce their North-South traffic from LAX.

With regards to the consolidated UA club, they need to make sure it's big enough and centrally located.

[Edited 2013-09-06 12:14:15]
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PHX787
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:23 pm

Doesn't DL share some gates or at least one of the councourses at LAX? I flew outta there last year with DL and I saw a UA 777 parked next to my flight.
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LAXtoATL
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:46 pm

Alaska, Delta, and United all share gates in Terminal 6.
 
usairways85
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:47 pm

Quoting STT757 (Reply 2):
Hopefully this will finally put to the rest the arguments posters have been making around here lately speculating UA was going to abandon the LAX hub in favor of SFO.

UA is not showing signs of abandoning LAX but they aren't showing many signs of expanding either. There have been several key route aircraft down gauges including NRT & SYD

They are closing the terminal 6 club and many of the upgrades appear to be going to T7 even though UA still uses several gates out of T6. Unless they plan on further consolidating their operation.
 
United1
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:47 pm

Quoting LDVAviation (Reply 1):
Moreover, United has only committed so far to spending that $34 million on the finishes and branding in T7. If it does nothing in T6 and T8, LAX will continue to have areas within terminals (such as 6) that look forgotten and neglected.

Where are you getting that from? The article says that the bulk of the $413M will be spent in T7 but no where does it say that the $34M for branding ect will only be spent in T7.

Quoting PHX787 (Reply 3):
Doesn't DL share some gates or at least one of the councourses at LAX? I flew outta there last year with DL and I saw a UA 777 parked next to my flight.

Both DL and UA use the T6 rotunda for some flights...UA also leases the 4 or 5 T6 connector gates.
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SonomaFlyer
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:49 pm

Quoting STT757 (Reply 2):
Hopefully this will finally put to the rest the arguments posters have been making around here lately speculating UA was going to abandon the LAX hub in favor of SFO.

Whoever made that prediction needs to resign from ANet, that is just silly. Yes, UA should abandon one of the largest and potentially the most profitable airports....

Not going to happen.

UA is rightsizing their flights with either refreshed or new a/c out of LAX. By next spring, that conversion will be complete with the 777s going to Australia.

Competition is stiff but the population cachement is so massive that UA can take a chance with long thin TPAC routes out of LAX that the competition simply couldn't do because their 767s wont have the range and the a/c that could make it would not be profitable.

UA took it in the shorts on the 787s short term with the issues. They do have a nice lead on the domestic and most foreign competition in opening new efficient routes with the 787s. LAX is a key part of the strategy.
 
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:51 pm

Quoting LDVAviation (Reply 1):
Could a brand new concourse have been built for all four airlines for that amount of money? One wonders.

Could an entire new terminal be built? Sure. But where are you going to put it? But no, there's no one mega-terminal that could be built for all 4 airlines. That would be a terminal with 50 gates and 500 flts PER DAY.

It's costing so much because the airlines are updating existing structures. T1, for example, needs to be leveled and start again from scratch. But then there would be nowhere to put WN during construction. HOU is building an all new 5 gate terminal for around $150M which will take 10 months. T1 at LAX is $400 for 3 years.
My posts/replies are strictly my opinion and not that of any company, organization, or Southwest Airlines.
 
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 7:57 pm

Quoting STT757 (Reply 2):
Hopefully this will finally put to the rest the arguments posters have been making around here lately speculating UA was going to abandon the LAX hub in favor of SFO.

LAX is simply a huge market where United has been strong going on 60 odd years.

LAX does not need to function as much as a traditional connecting hub as it has a much higher local component in enplanements unlike SFO which is more reliant on connection flow to make it work.

Quoting usairways85 (Reply 5):
UA is not showing signs of abandoning LAX but they aren't showing many signs of expanding either. There have been several key route aircraft down gauges including NRT & SYD

They are still the largest carrier at LAX..

Quoting usairways85 (Reply 5):
They are closing the terminal 6 club and many of the upgrades appear to be going to T7 even though UA still uses several gates out of T6.

Proposal for club is to be located in the walk way between T6 and T7. Will be quite central.
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ikramerica
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:03 pm

OP says premium pax club, not United club. Are we talking new F lounge too?
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aklrno
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:11 pm

Quoting QANTAS747-438 (Reply 8):
It's costing so much because the airlines are updating existing structures. T1, for example, needs to be leveled and start again from scratch. But then there would be nowhere to put WN during construction. HOU is building an all new 5 gate terminal for around $150M which will take 10 months. T1 at LAX is $400 for 3 years.

There are big changes coming to T-1 soon. A new baggage X-ray facility is coming soon so that will help out with the check-in area. If US leaves, there will be a lot of space for a WN expansion, even space for WN to use temporarily while work is done in front. Out at the gates, the latest plan is to chop 100 feet of the end of the building to allow for taxiway and runway changes. To make up for that, T1 will expand to the east where the entry road and some parking is now, the new area to be called T-0 but it will actually be an enlargement of T-1.

The gate changes are dependent on the new runway plans being approved, but the land side changes are likely to start very soon.

Except for being crowded, I think T-1 (which is one of the newest at LAX) works well. It is a very short path from sidewalk to gate and TSA is now doing a much better job at security. I think it feels more open and has better lighting than most airports.
 
ikramerica
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:21 pm

That latest plan wont happen now that Villarigosa and his puppets are out of the picture.
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jetblastdubai
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:26 pm

Not sure if the designs are completed and/or approved yet but if they were able to add a 2nd level to T7 and T8, they could double the terminal space, segregate arrival/departure areas and not lose any acreage in the process. It'd be easier to complete the project in stages as well...complete the new, upper level without disrupting the lower level and then use the upper level exclusively while the lower level is refurbished.

LAX terminals were not originally designed for the number of large aircraft using the airport now. There is very little seating in the widebody gate areas and if/when T8 ever reverts from RJs to B737/A320, it will be packed again.
 
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jfklganyc
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:30 pm

LAX is such a mess. No train old terminals and close runways.

Meanwhile plan after plan to modernize as a whole have been scuttled.

Thankfully TBIT went through. As for UA...lipstick. ..that's all this is.
 
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:33 pm

Quoting ikramerica (Reply 10):
OP says premium pax club, not United club. Are we talking new F lounge too?

One of the intents is to consolidate its 3 LAX clubs into a single mega one.

Quoting ikramerica (Reply 12):
That latest plan wont happen now that Villarigosa and his puppets are out of the picture.

   With 6 of 7 airport commissioners being new, its pretty clear the winds will blow differently. Already 3 publicly have stated their opposition for the runway relocation, as has the new mayor.
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commavia
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:40 pm

Quoting STT757 (Reply 2):
Hopefully this will finally put to the rest the arguments posters have been making around here lately speculating UA was going to abandon the LAX hub in favor of SFO.
Quoting usairways85 (Reply 5):
UA is not showing signs of abandoning LAX but they aren't showing many signs of expanding either.
Quoting SonomaFlyer (Reply 7):
Whoever made that prediction needs to resign from ANet, that is just silly. Yes, UA should abandon one of the largest and potentially the most profitable airports.

UA certainly wouldn't "abandon" LAX as a huge operation, and "hub." But what has happened in the last decade is that UA has basically stood still in the market - cutting multiple mainline routes and transitioning many others from 737s to CRJs - while other carriers, especially AA and more recently DL, have grown, grown, grown.

Quoting LAXintl (Reply 9):
They are still the largest carrier at LAX..

True, albeit the gap has narrowed dramatically. Whereas around 2000 UA was the clear leader at LAX with #2 and #3 - WN and DL, amazingly - being fairly distant. Today, the growth of DL in the last 18 months and the sustained expansion by AA for the last decade, coupled with the stagnation at UA, has caused the gap to shrink to almost nothing. AA and UA are now essentially tied at LAX, with DL and WN close behind, and with the most recent round of growth AA has done, I would not be surprised if this year AA actually tops UA.
 
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:47 pm

Quoting LAXintl (Reply 9):
Proposal for club is to be located in the walk way between T6 and T7. Will be quite central.

That will help, though both clubs now aren't very far out into the pier. My concern is space.

Quoting LAXintl (Reply 9):

They are still the largest carrier at LAX..

By a very small margin.
 
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 8:57 pm

Quoting commavia (Reply 16):
True, albeit the gap has narrowed dramatically.
Quoting usairways85 (Reply 17):
By a very small margin.

You guys call 14% margin small?

Jan-July enplanements.

Incl regional partners
AA: 6,942,838
UA: 7,992,218


United has the most real-estate at the airport, and has the most potential upside opportunity.
It sits in the top spot, and so long as its flying is profitable so be it.
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boilerla
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 9:01 pm

Maybe I'm a bit daft, but how exactly is the money apportioned here? The article says that "United plans $413 million" in improvements, but it then goes on to say that LAWA will be paying for most of the improvements. So does LAWA disburse the money to the airlines when they ask for it?

Also if they plan to consolidate the T6 & T7 united clubs and the international first class club, won't the T7 club need to be expanded significantly? It's pretty crowded at certain times anyway. Will they get rid of the gate next to the club?

I'm all for modernizing T7 (although T8 could use some help too) but I'm not sure what "modernizing passenger waiting areas" might mean other than installing a couple more electrical outlets. There's not a lot of room to do much beyond some new carpeting.
 
airbazar
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 9:07 pm

Quoting QANTAS747-438 (Reply 8):
Could an entire new terminal be built? Sure. But where are you going to put it? But no, there's no one mega-terminal that could be built for all 4 airlines. That would be a terminal with 50 gates and 500 flts PER DAY.

If they are finding space at LHR to level and rebuild terminals from scatch, then they could surely figure out a way to do it at LAX. Heck, LAX just proved that it is possible with the new International terminal   Would it be highly disruptive for a while? Sure. But in the long run it would be much better.
 
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 9:09 pm

Quoting boilerla (Reply 19):
So does LAWA disburse the money to the airlines when they ask for it?

Money is pretty simple process.
United as the tenant pays for for the work (except TSA portion funded by uncle Sam directly).
LAWA then as the landlord then buys the work back minus the UA proprietary upgrades by issuing future rental credits (spread out over a decade or more).

Quoting boilerla (Reply 19):
Also if they plan to consolidate the T6 & T7 united clubs and the international first class club, won't the T7 club need to be expanded significantly? It's pretty crowded at certain times anyway. Will they get rid of the gate next to the club?

Plan is for a consolidated entirely new club as I mentioned prior.
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jetblastdubai
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 9:21 pm

What is the plan for moving runways at LAX? When I worked there they were talking about moving the 24s farther north and either creating more room between them OR adding a center taxiway like the 25's have now. If they move 24L to the south to create more space between the runways, then they'll lose a lot of terminal space in T1, T2 and T3.

Big issue was real estate acquisition from Westchester as well as La Tijera street having to be relocated.
 
ldvaviation
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 9:45 pm

Quoting United1 (Reply 6):
Where are you getting that from? The article says that the bulk of the $413M will be spent in T7 but no where does it say that the $34M for branding ect will only be spent in T7.

It comes from the Board Report:

"Terminal 6 and Terminal 8 Optional Scope:
United has indicated that it may wish to make improvements to the concourse and connector
areas of Terminals 6 and 8 including the Public Areas of the connector areas in Terminals 6 and
8. If United intends to do so, within 120 days of the execution of the Amendment, United at its
sole cost and expense, will prepare and deliver to the Executive Director for review and approval
definitive and comprehensive plans for the development and implementation of the T6 Optional
Scope and T8 Optional Scope."
 
ldvaviation
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 10:01 pm

Quoting LAXintl (Reply 18):
United has the most real-estate at the airport, and has the most potential upside opportunity.
It sits in the top spot, and so long as its flying is profitable so be it.

It seems that with every new amendment to their lease United gives up more and more of that real estate.

In the pending agreement, United gives up the T6 Lounge and the rights to the T6 gates in 2017 or 2022 (if LAWA proceeds with construction of the MSC).

[Edited 2013-09-06 15:04:07]
 
FATFlyer
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 10:03 pm

If I'm reading the full report correctly it looks like the new Club will be 35,000 sq ft in a new build 4th level added over the top of the new centralized screening. (Also looks like a 5th level will be added for building mechanical/offices)
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 11:01 pm

New proposed lounge will be 29,000sf.

There are also three separate existing United Club lounges that will be impacted by the proposed
project, including a 13,025 s.f. lounge area in the Concourse Level of Terminal 7, a 6,000 s.f. lounge
area in the Concourse Level of Terminal 6, and a 4,000 s.f. First Class/International lounge area in the
mezzanine of Terminal 7. The two United Club lounges in Terminal 7 will be displaced as a result of
the consolidated and centralized SSCP, and the United Club lounge in Terminal 6 will be displaced as
a result of the LAWA Terminal Concession Manager retail program. Hence the new 29,000 s.f.
United Club at the new Level 4 of Terminal 7 is an enabling project for the consolidated and
centralized SSCP.
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ikramerica
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 11:28 pm

Quoting LAXintl (Reply 15):
One of the intents is to consolidate its 3 LAX clubs into a single mega one.

So loud and very likely undersized like at EWR.

I always liked the CO club at T6 because it was quiet and small, even if the views weren't the best.

F club in T7 for UA was nice IIRC. I like how they escort all the pax to the gate and board them directly without ever having to wait in line. You feel like a VIP even if you aren't (my wife and I were on miles to ZRH via LHR). And the F club being over the rotunda in T7 meant it was a short walk to all departures.

Quoting LAXintl (Reply 21):
Money is pretty simple process.
United as the tenant pays for for the work (except TSA portion funded by uncle Sam directly).
LAWA then as the landlord then buys the work back minus the UA proprietary upgrades by issuing future rental credits (spread out over a decade or more).

Sort of the reverse of a build-out credit on a new retail lease, where the owner may front a portion up-front in return for a long term lease that pays it back over time.

Here, the tenant fronts a large portion upfront, and then gets the landlord to pay it back over time.
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ikramerica
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 11:31 pm

Quoting LAXintl (Reply 26):
New proposed lounge will be 29,000sf.

Sounds like it will be over T7 near the entrance rather than between T6 and T7 (or closest to T7). That's not a bad location, and if it's on top of the airport, should have panoramic views of the airport. Hopefully the F lounge will get the premium views and their own escalator. Not like the Flagship lounge in T4.
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LAXintl
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RE: United Plans LAX Facility Modernization

Fri Sep 06, 2013 11:57 pm

Quoting ikramerica (Reply 27):
So loud and very likely undersized like at EWR.

Should not be too bad. Combined the 3 lounges today are about 23,000sf. Replacement is 29,000.

Quoting ikramerica (Reply 28):
Sounds like it will be over T7 near the entrance rather than between T6 and T7 (or closest to T7). That's not a bad location, and if it's on top of the airport, should have panoramic views of the airport. Hopefully the F lounge will get the premium views and their own escalator. Not like the Flagship lounge in T4.

The linked design is version 1 (from March) and the most complex involving 2 new floor levels. They have had atleast 2 other design concepts since with the others putting the lounge on either current level 3, or a new level 4 between T-6 and 7.

Regardless of board approval, UA has several months to decide on the final concept of what they wish for.
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ikramerica
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 12:23 am

Quoting LAXintl (Reply 29):
Should not be too bad. Combined the 3 lounges today are about 23,000sf. Replacement is 29,000.

True, but we don't know how much of that space will be wasted in lobbies, and used by support facilities, and how much will actually be lounge space with chairs, compared to the ratio now.

Either way, the wrong choice of finishes will either create a very loud lounge environment or a quiet one. Loud like EWR C2 or quiet like IAH E. EWR C2 is quieter but very poorly laid out so can't be used as a model for anything.
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747megatop
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 3:31 am

Quoting LDVAviation (Reply 1):
Could a brand new concourse have been built for all four airlines for that amount of money? One wonders.

This is just the arm chair CEO/airport designer's thoughts below

Yes, i really wish this cludgy mess of terminals in LAX is totally revamped in stages/phases versus incremental revamps of terminals which is more like putting lipstick on a pig. The main problem with LAX is the cludgy terminals leading to narrow alleyways which do not allow for smooth movement of planes.

What they should do is keep the new TBIT as it is and then demolish the old terminals and the car parks 1 by 1 in stages/phases and build a toast rack style set of liner satellite terminals allowing free movement of airplanes around the terminals. LHR is being revamped precisely in this style by getting rid of their messy configuration of old terminals (T1 & T2) - http://www.balfourbeatty.com/files/e.../Presentation_slides_07Dec2011.pdf (Go to page 5 of this presentation and pay special attention to layout of T5A, T5B, T5C & T2A,T2B,T2C). Basically an ATL style configuration.
I know that this is just wishful thinking and will realistically not happen at LAX, but if there was a chance of LAX starting all over from scratch then this should be the terminal layout. Also, since LAX is a O&D heavy airport and not as connection heavy as ATL maybe the curbisde roadway space should be spread out accross multiple terminals just like the page 5 of the LHR link i mentioned (the roadway there is for T5A and T2A...in the toast rack configuration). Here is a nice article of "toast rack" being the future of airports - http://www.independent.co.uk/travel/...ports-the-toast-rack-8516636.html.

[Edited 2013-09-06 20:54:32]
 
laca773
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 3:51 am

What about the dated gate areas. What are they going to do with the T8 concourse? Are they going to enlarge it, re-mark the gates to allow the 737s to utilize them?
 
platinumfoota
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 4:03 am

United needs more gates at LAX. Planes have to sit and wait for a gate everyday. United is willing to expand but don't have the space to do so. They should have never given up those T6 gates they once had.
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777ord
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 4:12 am

Yup. This has been in the pipeline for a while and the final product will be great!!!

The fun part will be the temporary luggage sorting area out by gate 86 :p
 
platinumfoota
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 4:34 am

Quoting 777ord (Reply 34):
The fun part will be the temporary luggage sorting area out by gate 86 :p

86!?   
Never forget United 93
 
Max Q
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 5:11 am

Quoting SonomaFlyer (Reply 7):

UA is rightsizing their flights

Nonsense, they are retreating.
The best contribution to safety is a competent Pilot.


GGg
 
itrade
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 10:00 am

Quoting aklrno (Reply 11):
There are big changes coming to T-1 soon. A new baggage X-ray facility is coming soon so that will help out with the check-in area. If US leaves, there will be a lot of space for a WN expansion, even space for WN to use temporarily while work is done in front. Out at the gates, the latest plan is to chop 100 feet of the end of the building to allow for taxiway and runway changes. To make up for that, T1 will expand to the east where the entry road and some parking is now, the new area to be called T-0 but it will actually be an enlargement of T-1.

I thought it was already announced that US is moving to T3.
 
AWACSooner
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 11:38 am

Quoting QANTAS747-438 (Reply 8):
Could an entire new terminal be built? Sure. But where are you going to put it?

How about where all the Intl remote stands are? Build a tram system (a la ATL/DEN) to shuttle pax out there (one that's earthquake resistant). Then move a few airlines out there and start rebuilding the terminals at the main area.
 
commavia
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 12:08 pm

Quoting LAXintl (Reply 18):
You guys call 14% margin small?

Jan-July enplanements.

As I said - the gap has narrowed considerably since 2000, when UA was the far and away leader. Nonetheless, the numbers you cite are YTD through July. AA added, or will add, a considerable amount of new flying in August and the rest of the year.

Quoting LAXintl (Reply 18):
United has the most real-estate at the airport

True, although that hasn't stopped AA (and for that matter DL) from using their smaller gate space far more intensively by comparison. And in the near future AA may well have additional gates - in both TBIT and T4 - to play with.

Quoting LAXintl (Reply 18):
and has the most potential upside opportunity.

In terms of gate space - yes. Although UA hasn't seemed to have much of any interest in exploiting such upside opportunity at any point in the last decade.

Quoting LAXintl (Reply 18):
It sits in the top spot, and so long as its flying is profitable so be it.

Again - we'll see. The varying growth trajectories would seem to suggest otherwise. AA and DL have been consistently growing at LAX while UA ... hasn't (at least not by much, comparatively).
 
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jetblastdubai
Posts: 1931
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 1:24 pm

Quoting commavia (Reply 39):
In terms of gate space - yes. Although UA hasn't seemed to have much of any interest in exploiting such upside opportunity at any point in the last decade.

I agree with your observation however I believe that UA has had several factors working against them in recent years that AA and DL have either been immune from or significantly less effect by.

1. UA had a much tougher merger road to plow through that DL did and that set them back on their heels a bit more.
2. UA bit the bullet earlier than others in retiring less-efficient A/C thereby not "net"growing their fleet much in the past few years.
3. UA has a lot more hubs to protect and therefore need to spread their resources out among more airports. They might just had to choose which hubs were more critical to their system and which markets could survive with a little less focus. LA and Chicago are mega markets where UA has huge potential and real estate to build on in the future. If they chose to relinquish space/routes at SFO or EWR, they might never recover from the loss. Fares from SFO are normally a bit higher than equal-length legs out of LAX so it made sense to focus on ROI while not totally retreating from LAX.

On the west coast, LAX is all that AA has so they could afford to put all their "marbles" there.
 
commavia
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 1:42 pm

Quoting jetblastdubai (Reply 40):
UA had a much tougher merger road to plow through that DL did and that set them back on their heels a bit more.

True - UA executed their merger far, far worse than DL did. On the flip side, I think it would be hard to argue that UA's challenges (merger-related or otherwise) in the last five years were any more challenging or intractable than the equally self-inflicted challenges (not at all merger-related, obviously) that AA has had to contend with. And yet AA has still managed to continue growing steadily at LAX in the recent past, adding - since 2010 - nearly 20 net-new destinations and dozens of additional flights.

Quoting jetblastdubai (Reply 40):
UA bit the bullet earlier than others in retiring less-efficient A/C thereby not "net"growing their fleet much in the past few years.
Quoting jetblastdubai (Reply 40):
UA has a lot more hubs to protect and therefore need to spread their resources out among more airports. They might just had to choose which hubs were more critical to their system and which markets could survive with a little less focus.

I agree - this is the key. UA made the strategic choice to further concentrate their rapidly-dwindling mainline fleet in recent years at other hubs besides LAX. The level of former-mainline flying now done by CRJs at LAX, if at all, is rather amazing. And, again, it is made all the more notable by the fact that in roughly the same time AA (and DL) have been steadily adding lots of new flights - both mainline and RJ - at LAX.
 
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jetblastdubai
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 1:55 pm

Quoting commavia (Reply 41):
And yet AA has still managed to continue growing steadily at LAX in the recent past, adding - since 2010 - nearly 20 net-new destinations and dozens of additional flights.

Absolutely true, and yet they're still not quite as big as UA at LAX and they're probalby very close to maxing out on room to do much more. UA on the other hand is just getting warmed up. Should be fun to watch.

The new, multi-level terminal 7 will be a showpiece.
 
commavia
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:13 pm

Quoting jetblastdubai (Reply 42):
and yet they're still not quite as big as UA at LAX and they're probalby very close to maxing out on room to do much more.

I'm not so sure. AA is apparently planning on moving flights to several gates (4, I believe, based on what I've read here on A.net) at Bradley next year, and when that happens, I would not at all be surprised to see AA and LAWA work out a deal to reconfigure T4 and buy AA at least 1-2 more gates there as well.

Quoting jetblastdubai (Reply 42):
UA on the other hand is just getting warmed up.

If true, then I will be interested to see what they're "warming up" for. New routes? More flights? Bigger planes?
 
jetlanta
Posts: 1662
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:25 pm

Quoting LAXintl (Reply 18):

You guys call 14% margin small?

Jan-July enplanements.

Incl regional partners
AA: 6,942,838
UA: 7,992,218


United has the most real-estate at the airport, and has the most potential upside opportunity.
It sits in the top spot, and so long as its flying is profitable so be it.

LAXintl, is traffic really the right metric? I argue that it is not. Neither is flights or seat capacity. Since we can't really know about profitability at LAX per carrier, the best metric to use when gauging market strength is revenue.

For the year ended 1Q13 this is how LAX bi-directional O&D REVENUE shook out per day. This does not include revenues from traffic connecting over LAX.

United: $5.7M
American: $4.8M
Delta: $4.3M
Southwest: $2.4M
Others: $1.3M

To see how these numbers illuminate the argument, take a look at daily O&D TRAFFIC over the same period:

United: 20,358
American: 18,823
Southwest: 18,119
Delta: 15,686
Others: 2,520

A couple of things to note:

UA is still the largest across all metrics and has the benefit of the largest connecting network, so non-O&D traffic/revenue numbers are also higher. However, UA's west coast network is also far more "built-out" with significantly fewer growth opportunities on the domestic side.

AA's local O&D REVENUE is closer to Delta's than United. So people who are concerned about AA catching up with UA ought to be looking at whether DL is catching up with AA. Of course, adding in US would have a small positive impact on AA's totals.

A significant amount of Delta's recent LAX expansion is not fully baked into these numbers yet. So while DL is third, the gap is still closing.

WN's numbers prove why TRAFFIC isn't a good metric. Bodies don't equate to dollars.

At the end of the day, and I make this point every time LAX comes up, we have three network carriers who are relatively evenly matched. The local O&D variances are small. UA carries more connections over LAX today, but both AA and DL have made significant progress in that area over the past few years. With UA's focus on SFO and Delta's SEA gateway growth, it will be interesting to see what other connecting markets are developed at LAX by domestic carriers over the next few years.

People looking for "winners and losers" at LAX are going to have problems. Capacity constraints coupled with market growth mean that all of these carriers can "win" at LAX, and likely are.
 
jetlanta
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:40 pm

Quoting commavia (Reply 43):
If true, then I will be interested to see what they're "warming up" for. New routes? More flights? Bigger planes?

I think it is likely that AA will be focusing more attention on LAX than either UA or DL over the next few years. But it should be understood that they will be doing so from a position of weakness. UA has SFO and DL is building a strong gateway at SEA. AA has nowhere else to turn.

That would be fine if they could dominate LAX, but with the strength of the domestic and international competition at LAX, opportunities are going to be hard to come by. The classic example is when AA added LAX-PVG. UA immediately pounced. Nothing will come easy at LAX.

So the terminal can be nice, and they can carry lots of traffic, but can they reach the profitability at LAX that UA and DL achieve with their multi-gateway operations? I suspect the answer is no.
 
commavia
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:42 pm

Quoting jetlanta (Reply 44):
AA's local O&D REVENUE is closer to Delta's than United. So people who are concerned about AA catching up with UA ought to be looking at whether DL is catching up with AA. Of course, adding in US would have a small positive impact on AA's totals.

A significant amount of Delta's recent LAX expansion is not fully baked into these numbers yet. So while DL is third, the gap is still closing.

Well, again, AA isn't standing still either, and the substantial expansion AA has been - and is still - doing at LAX is, also, not baked into these numbers.

I would also be curious to see what portion of these "bi-directional" O&D revenue numbers are LAX-originating. I think the thesis has been advanced repeatedly here that DL is likely not as relatively strong in the LAX-originating market as the LAX-destined market. DL has lots of hubs in lots of places so it stands to reason they'd carry lots of people to LAX, the continent's second largest urban area. And while DL has no doubt improved in this regard in the last 18 months as they've so dramatically surged capacity into the market, I would still suspect the gap between DL and AA/UA (and, perhaps, WN, too) is wider when you look specifically at the LAX-originating market. Could be wrong - I'd be interested to know. I know many very frequent business and/or leisure travelers in the LA area, and even with all the new flights DL has added at LAX in recent years, not one of them is a DL FF - virtually all of them fly AA or UA.

Either way, I think the takeaway that has already been discussed is that the gap between UA and everyone else at LAX isn't what it used to be.
 
SonomaFlyer
Posts: 2229
Joined: Tue Apr 20, 2010 2:47 pm

RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:48 pm

Quoting Max Q (Reply 36):
Quoting SonomaFlyer (Reply 7):

UA is rightsizing their flights

Nonsense, they are retreating.

Care to extrapolate on that remark? Why should they continue to fly claptrap 744s to Australia driving down Y class yields to fill seats? Why not fly an a/c that is outfitted comparably to the competition? Why not fly an a/c far more efficient to NRT and PVG that matches demand on the route?

How is this a retreat?

Looking at jetlanta's numbers and the investment UA will make in renovations, I see no retreat. Unfortunately, the LAX physical plants are a mess and they can't demo and start over so they have to spruce it up instead. The inability to move runways because of pathetic city/county planning building housing right up to the airport perimeter will mean the airport won't have the ability to maximize its four runways.
 
commavia
Posts: 11489
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RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 2:51 pm

Quoting jetlanta (Reply 45):
But it should be understood that they will be doing so from a position of weakness. UA has SFO and DL is building a strong gateway at SEA. AA has nowhere else to turn.

I disagree. It's not weakness. It's network strategy. I don't believe AA intends to turn LAX into a mega hub as UA has at SFO, or a primary Asian gateway as DL is doing at SEA (speak of a "position of weakness" vis a vis NRT/SFO/Asia relative to UA). I don't think LAX could ever serve as effectively at either role - but then again, I don't think AA needs or wants it to. I don't believe AA has ever intended for LAX to serve as more than a major O&D-focused operation for the continent's second largest urban area, and as a connecting hub for flights within the southwest, to/from Hawaii, and international partners. In that regard, I don't think AA will have any trouble at all making LAX work. After all - they haven't up until now.

Quoting jetlanta (Reply 45):
The classic example is when AA added LAX-PVG. UA immediately pounced. Nothing will come easy at LAX.

Got it - nothing comes easy anywhere. But things will certainly be coming a lot easier to AA in coming years than they have been in the last few. Any example of AA having competitive difficulty in the recent past has to be viewed in the context of larger, systemic issues AA has been facing during that time. So sure, AA has struggled in multiple competitive markets against UA and DL - but that's in large part due to the fact that AA has been fighting with one hand tied behind their back in multiple ways - non-competitive union contracts, lack of bankruptcy cost benefit, misconfigured aircraft, smaller network, etc. Most, if not all, of those issues are or soon will be addressed. And when that happens - we'll see who has the competitive problem. (Reminder: AA's operating margin for just June and July was over 14%.)

Quoting jetlanta (Reply 45):
So the terminal can be nice, and they can carry lots of traffic, but can they reach the profitability at LAX that UA and DL achieve with their multi-gateway operations? I suspect the answer is no.

Please provide substantiation for the implication that that UA and DL have achieved "profitability" at LAX that is in excess of AA, and further substantiation as to what portion of this alleged excess profitability can be attributed specifically to LAX as opposed to those two carriers' generally higher levels of profitability relative to AA. Again - AA has been flying the wrong aircraft over a smaller network with noncompetitive union contracts for the last seven years. No wonder they've been less profitable - overall, not just at LAX - relative to UA and DL. But that dramatic disparity is definitely going away.
 
jetlanta
Posts: 1662
Joined: Thu Jul 12, 2001 2:35 am

RE: United Plans LAX Facility Modernization

Sat Sep 07, 2013 4:16 pm

Quoting commavia (Reply 46):
I would also be curious to see what portion of these "bi-directional" O&D revenue numbers are LAX-originating. I think the thesis has been advanced repeatedly here that DL is likely not as relatively strong in the LAX-originating market as the LAX-destined market. DL has lots of hubs in lots of places so it stands to reason they'd carry lots of people to LAX, the continent's second largest urban area. And while DL has no doubt improved in this regard in the last 18 months as they've so dramatically surged capacity into the market, I would still suspect the gap between DL and AA/UA (and, perhaps, WN, too) is wider when you look specifically at the LAX-originating market. Could be wrong - I'd be interested to know. I know many very frequent business and/or leisure travelers in the LA area, and even with all the new flights DL has added at LAX in recent years, not one of them is a DL FF - virtually all of them fly AA or UA.


This point is used over and over without the support of data. Funny thing is, there IS data available. Here is the latest:

LAX Point of Origin:
American: 56.2%
United: 53.2%
Southwest: 48.5%
Delta: 48.3%

So AA does indeed have a local Point of Origin advantage. But AA "used" to have a lot of things that they don't have anymore. Things can change. But, does it even matter? O&D revenue is generated on both ends. The contrasting argument is that AA is weak in terms of the rest of its network. Not sure how that that benefits AA over the long run.

One other thing, the argument that you don't personally know any Delta FF's in the L.A. is silly. Not only is it anecdotal, but patently ridiculous. I think we can agree that some of the 3,900 or so LAX POO paxs that Delta generates from LAX are SkyMiles members. This is especially true when you consider that Delta has a higher average fare, $313 vs $288 for AA. United comes in at $321.

Quoting commavia (Reply 48):
ot it - nothing comes easy anywhere. But things will certainly be coming a lot easier to AA in coming years than they have been in the last few. Any example of AA having competitive difficulty in the recent past has to be viewed in the context of larger, systemic issues AA has been facing during that time. So sure, AA has struggled in multiple competitive markets against UA and DL - but that's in large part due to the fact that AA has been fighting with one hand tied behind their back in multiple ways - non-competitive union contracts, lack of bankruptcy cost benefit, misconfigured aircraft, smaller network, etc. Most, if not all, of those issues are or soon will be addressed. And when that happens - we'll see who has the competitive problem. (Reminder: AA's operating margin for just June and July was over 14%.)

If this merger doesn't go through, there are still going to be a ton of questions about the strength of the overall network and the impact that has on their long-term competitive position.

Quoting commavia (Reply 48):
Please provide substantiation for the implication that that UA and DL have achieved "profitability" at LAX that is in excess of AA, and further substantiation as to what portion of this alleged excess profitability can be attributed specifically to LAX as opposed to those two carriers' generally higher levels of profitability relative to AA. Again - AA has been flying the wrong aircraft over a smaller network with noncompetitive union contracts for the last seven years. No wonder they've been less profitable - overall, not just at LAX - relative to UA and DL. But that dramatic disparity is definitely going away.

You aren't understanding my point. My point is that SFO and SEA are certainly going to be higher margin gateways over time for UA and DL than LAX will be for anyone. That is the nature of LAX international service. Too much competition, much of it on the low-end. UA and DL have the luxury of cherry-picking the markets they want to fly from LAX and connecting the rest of the network via SFO and SEA. AA has no such luxury. It is LAX or bust. It doesn't matter what airplane they fly or what union contracts they have, they can't change the competitive dynamic at LAX. Those things bring them to parity, nothing more.

Again, as my point always is when it comes to LAX, anyone looking for a clear winner is going to be disappointed. All three network carriers are well-positioned at LAX to meet their overall network needs. And all have the opportunity to achieve decent levels of profitability.

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