SurfandSnow
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WallStreet To UA: Close IAD Part 1

Thu Jun 26, 2014 11:26 pm

Close IAD, an established intercontinental hub serving a primary U.S. market?!?!? We aren't talking about the closure of an overwhelmingly regional/domestic/transborder hub serving a secondary U.S. market (i.e. BNA, CVG, MEM, PIT, RDU, SLC, STL) here. We aren't talking about the closure of a relatively small international gateway (i.e. DL at PDX, UA at MIA) or a relatively weak regional/domestic/transborder hub in a primary market (i.e. DL at DFW, US at LAS and LGA). When was the last time a primary U.S. carrier - not on its deathbed - shut down one of its major international hubs?

"United's cuts in Cleveland set the standard for whether to unwind the Washington Dulles hub" If anything, the CLE cuts strengthened IAD. With the option to connect via CLE gone, I would think most savvy travelers will now opt for an IAD connection over ORD or particularly EWR. No matter how you look at it, the Washington DC metropolitan area is about 3x larger than the Cleveland metropolitan area, while the demographics and growth of the DC area are far superior to those of the Cleveland area. The markets aren't even comparable, it's an apples to oranges comparison.

"Local passengers to Washington generally prefer to fly to US Airways' hub at Reagan National" Not everyone lives inside the Beltway and finds DCA to be convenient. DC has some of the worst traffic in the nation, IAD can be a much better option for folks that live and work in the suburbs. Competition from the US (soon to be AA hub) will be nothing new for UA, the real problem is the proliferation of strong LCCs and beyond-perimeter services at that airport. Still, if someone wants to fly from DC to say Geneva, Rome, Sacramento, San Antonio or San Diego then UA will absolutely be the best way to go. If someone insists on using DCA, they can always take UA DCA-DEN/EWR/IAH/ORD/SFO-XXX...

"Both hubs connect traffic from the eastern third of the country to Europe (and) connect north/south domestic traffic" There is a lot more to both hubs than just the Eastern Seaboard and Europe - Asia, Caribbean, India, Latin America, Middle East, and transcons as well. IAD is actually in some cases superior to NYC in terms of O&D, IIRC KWI is one such example. IAD functions relative to EWR much like ATL does to JFK for DL, handling the high volume connecting traffic flows, leaving the NYC flights to cater to a higher proportion of O&D. EWR is a mess as it is, it would be disastrous if UA tried to send almost all of its transatlantic pax through there.

"McAdoo said United executives have told him that they believe Dulles is profitable" When it comes to major markets, profitability of the hub in and of itself doesn't necessarily matter. Is B6 profitable at BOS? Are AA or DL profitable in NYC? Sometimes long term strategy actually does trump present financial results...

"Another issue is that United relies more heavily on inefficient 50-seat regional jets than any other U.S. airline does" This problem is not unique to IAD, and if anything IAD actually makes the most sense for 50 seaters because so many markets are within an hour or so flight and congestion isn't as pressing an issue as many other hubs.

This whole thing is a ridiculous proposal. If UA officially cuts another hub it would be LAX, in the sense that they will cut all the feeder and other marginal but now extremely competitive flights (ABQ, BOI, BWI, FAT, MCO, MSY, RNO, SAN, TUS, YVR, etc.) in favor of a focus city geared to O&D.
Flying in the middle seat of coach is much better than not flying at all!
 
commavia
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 12:20 am

Quoting LHCVG (Reply 41):
But as it stands, they might end up on a slippery slope where rationalizing connectivity between EWR/IAD might make some of the ex-IAD intl flights unprofitable, which might mean they dump them, which might mean the hub has even less value, and then becomes less viable as a large station for UA (the associated costs of running a large operation).

  

If United is committed to IAD, they need to be watching vigorously for this exact thing and doing everything they can to ensure the above does not happen.

Quoting SurfandSnow (Reply 55):
IAD, an established intercontinental hub serving a primary U.S. market?!?!? We aren't talking about the closure of an overwhelmingly regional/domestic/transborder hub serving a secondary U.S. market (i.e. BNA, CVG, MEM, PIT, RDU, SLC, STL) here. We aren't talking about the closure of a relatively small international gateway (i.e. DL at PDX, UA at MIA) or a relatively weak regional/domestic/transborder hub in a primary market (i.e. DL at DFW, US at LAS and LGA). When was the last time a primary U.S. carrier - not on its deathbed - shut down one of its major international hubs?

You and many others keep highlighting the very real reason why IAD is, indeed, so valuable, and why I doubt United will walk away from it without a fight - because it's the only major global gateway to one of the largest international O&D markets in the U.S. The issue, though, is that IAD seems to be struggling as a domestic hub, and the question that raises, at least for me, is whether IAD could continue to sustain the level of service it currently sees if it lost some of its domestic capacity (see: death spiral, reply 41 above).
 
rdu2sfo
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 12:23 am

Quoting ScottB (Reply 52):
The key question here is whether the the additional revenue realized by UA from WAS O&D at IAD is actually worth the cost of operating two hubs with more costly 50-seat aircraft. By dehubbing CLE, UA obviously walked away from some amount of O&D traffic, too, but it was determined that the costs of the hub at CLE were higher than the marginal revenue realized.

Agree with this completely. There is no debate that there is lots of Washington area international O&D traffic that can be captured by UA at IAD. But the relevant question for any business is whether that demand can be serviced profitably, and I think there are serious questions for UA as to whether that is possible given the IAD-DCA dynamic. The other reality is that Washington, while having lots of O&D simply is not playing on the same level as New York and Los Angeles. Both have more O&D and higher paying customers. All of that government travel is great and all but it will never be paid travel at the same premiums as the industries in New York and Los Angeles that drive international business travel. So this puts UA in a difficult spot.

The bottom line is that if UA was making money and performing financially on par with its peers then this would be a moot point. But the reality is that UA is underperfoming, and if part of that underperformance is being driven by the situation at IAD then they need to address it.
 
threeifbyair
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 12:41 am

For the life of me I can't figure out UA's pricing strategy on IAD flights.

I had several PIT-WAS trips over the past two years and US (from DCA, my preferred airport) almost always vastly undercut UA from IAD. The one time it didn't, I bought a UA PIT-EWR-BWI ticket for a fraction of the IAD nonstop flight. However, UA would often offer PIT-IAD-XXX connections at low fares.

On SEA-WAS, UA until recently was never a price leader. However, AS is jacking up SEA-DCA fares to eye-watering levels (routinely nearing $1000 r/t for peak travel days). UA ought to be able to turn a profit at $600-700 r/t and get good loads.

The disappointing reliability of the Q400 operation is certainly not helping UA at IAD either.
 
johnberg
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 12:55 am

From the article "United's cuts in Cleveland set the standard for whether to unwind the Washington Dulles hub," McAdoo noted. In Cleveland, he said, 17 markets with less than 10 local passengers per flight and 16 markets with generally 11 to 30 local passengers per flight were eliminated as of next month. Using the same metrics in Dulles, 65 spoke routes would be cut."

Does anyone have access to the data to support this claim? I'm guessing this is based on PDEW. What are load factors on these flights like?

Would UA not be better served to make IAD more like AA @ JFK? Have enough Int'l departures to handle O&D, and domestic connections to key O&D markets. They could then route connecting passengers through EWR/ORD/IAH by upgauging routes where necessary.
 
FlyPNS1
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 12:55 am

Quoting rdu2sfo (Reply 58):
All of that government travel is great and all but it will never be paid travel at the same premiums as the industries in New York and Los Angeles that drive international business travel.

True, but in the case of NYC while the market is vastly larger and more premium, there's also competition. EWR has to compete with JFK for international travel and JFK seems to get more of the premium travelers.

The funny thing is that despite all the talk of EWR's superiority, UA sure doesn't seem to have much interest in adding new long haul routes from EWR. UA could easily dump a few slots used by RJ's and add new international routes, but they haven't done it. They bailed on EWR-EZE and EWR-IST. Other IAD routes that were cut (like ACC and DME) were not moved up to EWR. There's been no EWR-DXB or EWR-ICN.

Meanwhile, they've added SFO-CDG, SFO-TPE, SFO-CTU, LAX-MEL, DEN-NRT, IAH-MUC, IAH-NRT (2nd flight), IAH-LOS and IAH-GIG.
 
commavia
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:03 am

Quoting johnberg (Reply 61):
Would UA not be better served to make IAD more like AA @ JFK? Have enough Int'l departures to handle O&D, and domestic connections to key O&D markets.

Personally, in an ideal world, I think yes - a large, primarily-O&D operation at IAD focused on longhaul, O&D, and only limited regional/shorthaul connections.

There's one very big problem with this, though: unlike AA in NYC, United in WAS does not have access to a large operation at the region's preferred domestic O&D airport to compliment IAD. In NYC, AA can move lots of volume on its flights in and out of JFK, catering to the large longhaul O&D market and also connections, because AA also has a very sizable pool of slots at LGA for use connecting NYC to most of the major domestic business markets, and other AA hubs, with very frequent and convenient service. On a larger scale, this is largely what Delta also has at JFK/LGA.

Unfortunately, United does not have this luxury at DCA - which is precisely why I say that United needs to be very vigilant at IAD against AA. If AA wanted to, it could theoretically come in and set up just such an operation as that which you contemplate at IAD - not too large, primarily longhaul/transcon O&D - and combine that with their enormous slot portfolio at DCA to create a powerhouse combination for the local WAS market. United would be virtually powerless to stop such a move short of massive discounting and FF promotions, and dumping capacity, at IAD - but I'm not sure if that would actually hurt or help their situation there. Put bluntly: AA could theoretically build upon their strength at DCA to invade IAD, but United cannot do the same in return, and that strikes me as a strategic problem that United needs to figure out how to address.

[Edited 2014-06-26 18:06:55]
 
toxtethogrady
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:05 am

"AZ's attempt to hub at MXP failed precisely because the short-haul O&D traffic to Milan overwhelmingly prefers LIN."

These days, however, MXP has double the passenger enplanements.
 
commavia
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:11 am

Quoting toxtethogrady (Reply 65):
These days, however, MXP has double the passenger enplanements.

... which you'd expect, since it's a larger, far less capacity-constrained, airport.

But that's different than what you said previously, which wasn't whether MXP would ever make a busy airport, but rather whether it would ever "make a good hub."

Again, the last decade has pretty proven the doubters entirely, 100% correct: MXP does not make a good hub as long as LIN is open, because LIN steals virtually all of the domestic and high-yielding shorthaul local traffic upon which a true network hub would normally be built.

So what MXP looks like instead is a busy international O&D airport where lots of flights arrive and depart each day on foreign airlines, and some on Alitalia, to international destinations, and EasyJet carriers low-yielding shorthaul traffic around Europe and the Mediterranean basin. But just because EasyJet drives lots of volume does not make MXP a hub.

Sound familiar? If United doesn't watch out, I don't think it's inconceivable that this could also be IAD's fate: some full-service, network airline (perhaps United) operating a longhaul/transcon O&D operation, and one or multiple low fare airlines carrying lots of low-yielding traffic to/from domestic markets.
 
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RyanairGuru
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:16 am

Quoting johnberg (Reply 61):
Would UA not be better served to make IAD more like AA @ JFK?

That's the perfect model on paper, but I think that UA would struggle to replicate traffic flows at EWR due to capacity constraints there.

Pre-merger UA needed IAD as it was their only East Coast hub, and there filled a vitally important network function. While EWR is a nightmare, it is one of only two full-service hub airports in the North East (the other being PHL). This somewhat negates the importance of IAD as a hub, and it would make theoretical sense to have a 100 per day O&D focus city (like AA at JFK) and then flow connections over EWR (and ORD and IAH if passengers are connecting between Europe and the West Coast).

The problem is EWR. We all know that EWR is slot constrained, but the other issue UA would have is gates. In an ideal world, UA could up-gauge all of those ER4s in EWR to EM7s and 737s, but I don't think that they have enough real estate to park them all. If anyone could provide guidance on gate utilization in C that would be appreciated.

At A2 they would have to remove several gates to park anything bigger than an ER4. They squeeze them in wing-tip-to-wing-tip, and I don't think they can even park a 70 seater on most gates at A2. At a guess, I'd suggest that they would need to remove 25-35% of gates, at a minimum, to convert them to 737 gates. While they might be able to pick up a couple on A3 as AA and US consolidate their gates (they probably don't need the entire concourse, other than that one gate use by VX), they will still struggle to find enough mainline stands. My point is that slots aren't the only issue at EWR, and simply saying that they could up-gauge everything ignores the fact that they might not be able absorb the additional capacity at EWR.
Worked Hard, Flew Right
 
dank
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 3:00 am

Quoting LV (Reply 5):

Um, do these analysts realize how much government and NGO travel their is out of IAD?

That government and NGO travel isn't paying premium fares, I would suspect. I'm not saying that this is a good idea or not to draw down the hub, just I don't think that makes the hub profitable.
 
capejet
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 3:16 am

UA does operate some incredibly short flights out of IAD that probably lose a lot of money. Examples are Harrisburg PA, Richmond, Charlottesville and Roanoke VA and some others. They could probably eliminate about 20 of those types of flights per day, focus on the long haul and medium haul and have a very profitable operation.
 
hoya
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 5:00 am

Quoting dank (Reply 68):
That government and NGO travel isn't paying premium fares, I would suspect. I'm not saying that this is a good idea or not to draw down the hub, just I don't think that makes the hub profitable.

You'd be surprised. Maybe not to Europe, but most gov't agencies have rules allowing business class for flights over a certain duration (8 or 14 hrs). Then you have all the World Bank, IMF, UN, and other large organizations, and then all the diplomatic travel. Not sure if they still do, but Air France has sent A380s to IAD due to the large premium market (mainly to Africa). The revenue must be there for South African to continue operation of its IAD-DKR-JNB service. The premium fares are there, otherwise all these foreign airlines wouldn't serve IAD.

One major sign of IAD's weakness though is the lack of any south Florida flights. No flights (even on Express!) from IAD to PBI, FLL, or MIA, even though UA serves the cities from its other hubs. Even CLE has kept it's FLL flight. If I'm a UA frequent flyer in the DC area and want to go to South Florida, I have to connect in CLE, EWR, or ORD. Fantastic way to drive customers to US / AA, B6, WN, NK.
Hoya Saxa!!
 
ckfred
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 5:59 am

Quoting tugger (Reply 4):
Wall Street is full of stupid people.

Great point. Wall Street is full of people with degrees in finance who are clueless about marketing, customer service, etc. Wall Street keeps telling Southwest to charge for checked bags. Southwest claims that if they charged for checked bags, the revenue gain would be less than the amount of traffic that would shift to Delta, American, United, and other carriers who do charge. Yet, Wall Street insists that the amount of traffic that Southwest flies because of the checked-bag policy is nil.

Quoting Prost (Reply 6):
In hindsight, I wonder if we all would have been better served with DCA being closed after 9/11 and a "Sherman Plan" of sorts to make IAD more attractive as an airport-- high speed rail to the city center, new terminals to handle the increased traffic, etc. Sell the land DCA is on, which would command a high price to pay off the bonds needed for IAD.

I've heard for years that the only reason that DCA still exists is because of the close proximity to Capitol Hill and the government offices. Every member of Congress has a parking slot, as do the members of the Supreme Court. If it wasn't the reserved parking for so many government officials, DCA might have closed back in the 70s.
 
MaverickM11
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 6:05 am

Quoting hoya (Reply 70):
Fantastic way to drive customers to US / AA, B6, WN, NK.

...who can't seem to make IAD Florida work either. I wonder why?
E pur si muove -Galileo
 
ChinaClipper40
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 9:26 am

Quoting bchandl (Reply 11):
Actually, Wall Street is full of the brightest business people in the world.

Not really. Living in the Connecticut "Gold Coast" suburbs of NYC for more than 35 years, I made many acquaintances who worked on Wall Street. Many were of genuinely limited intellect, and would not survive in other areas of the business world (manufacturing, wholesale distribution, retailing, marketing, etc) or the professions (medicine, the law, research and development, engineering, etc). To my personal observation, the overwhelming flaw of most workers on Wall Street is their incredibly limited tolerance for longish time-horizons for profit. They will recommend gutting a company simply because that particular company (or, indeed, entire sector of the economy) has a realistic time-horizon for profitability of more than 5 years. This is especially true in typical Wall Street evaluations of the pharmaceutical industry - where realistic time-horizons for HUGE profits on new medications are often in the range of 15 or 20 years. Wall Street will often recommend selling shares of a pharmaceutical firm that has an absolute blockbuster new drug on the horizon - a drug that will yield billions of dollars in profit - simply because time-to-market for that particular drug is on the order of 10 or 15 years. And pressure from Wall Street often forces companies to make self-defeating and pernicious decisions. Such as the relatively recent decision by GlaxoSmithKline to abandon all research and development for neurological and psychiatric diseases. At a time when GlaxoSmithKline was sitting on a couple of billion-dollar-profit blockbuster medications for exactly those diseases. "...the brightest business people in the world"? Not really.
 
MaverickM11
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 10:02 am

Quoting ChinaClipper40 (Reply 73):

Quoting bchandl (Reply 11):
Actually, Wall Street is full of the brightest business people in the world.

Not really.

   Certainly not as measured by their very own metrics 
E pur si muove -Galileo
 
Bobloblaw
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:02 pm

UA cant just have a focus city in IAD and serve Europe and a few main domestic cities. If they want corporate contracts (NOVA is one of the fastest growing regions in the country), they have to serve with decent frequency the top domestic revenue markets. Especially those linked to the tech industry.

Quoting MIflyer12 (Reply 25):
You manage to be wrong on both MSP and DTW. They are among the U.S. network hubs with the absolute lowest fraction of O&D travel.

For Delta, ATL probably has the lowest O&D at 20-25%.

Quoting bchandl (Reply 56):
I went to a small MAC school for undergrad. My friend who entered school at 16 and went on to get his undergrad and MAC in 5 years was an intern on Wall Street and left school to get a 6 figure job with Bank of America.

I have another friend who I went to school with who worked for Ernst and Young in NYC and has since moved on to an large investment firm.

Those companies might have a presence on Wall Street but BOA is not "Wall Street" It is a California bank. I am talking about Goldman Sachs etc.

Quoting capejet (Reply 69):
UA does operate some incredibly short flights out of IAD that probably lose a lot of money. Examples are Harrisburg PA, Richmond, Charlottesville and Roanoke VA and some others. They could probably eliminate about 20 of those types of flights per day, focus on the long haul and medium haul and have a very profitable operation.

Youre not looking at it correctly. While those segments lose money, no airline looks at segment profit alone. They look at system contribution. Those short flights from small high fare communities probably have very good system contribution to the profitability of the connecting flights.
 
PSU.DTW.SCE
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:19 pm

Quoting ChinaClipper40 (Reply 70):
Quoting bchandl (Reply 11):
Actually, Wall Street is full of the brightest business people in the world.


Not really
Quoting ckfred (Reply 68):
Great point. Wall Street is full of people with degrees in finance who are clueless about marketing, customer service, etc. Wall Street keeps telling Southwest to charge for checked bags. Southwest claims that if they charged for checked bags, the revenue gain would be less than the amount of traffic that would shift to Delta, American, United, and other carriers who do charge. Yet, Wall Street insists that the amount of traffic that Southwest flies because of the checked-bag policy is nil.



That is so true. The reality is that both sides are needed but often do not understand each other. Operational positions do not always understand the financial positions or see the bigger pictures. On the other side, the financial positions are concerned with running a viable business, managing budgets, and driving profitability that may not always understand the operational ramifications of budget/policy/process changes.

Both are needed. While it is nice to pat the backs of the "front-line" employees for a profitable quarter, the folks in revenue management back in the general office are if not more vital to achieving the financial objectives. On the other hand, the revenue management play a much lesser role in safety and customer service. Both are needed. One is managing the business, the other is delivering the product/service to the customer.

Quoting toxtethogrady (Reply 60):
Wall Street does not advance careers on the basis of merit; it abhors those who show any modicum of ethical behavior.

Go look-up what Goldman Sachs does in regards to manipulating the price of metal - aluminum, zinc, etc that is shuffled between warehouses around the country to artificially limit supply and raise prices.

Ethical??
 
jayunited
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:33 pm

Quoting commavia (Reply 34):
Again - it's not really the same comparison, though. JFK, LGA, and DCA cannot ever be for other airlines what EWR is for United and PHL is for AA - a all-day, omnidirectional, domestic and international megahub. The jury is very much still out on IAD in this regard.

The jury is not out on IAD. IAD was never on the bubble ever since this merger the only hub that on the bubble was CLE which is now being dehubbed but there is no way UA will walk away from IAD. For McAdoo to suggest that passengers from the Mid-Atlantic region wouldn't mind connecting in EWR shows just how out of touch he is with the flying public. McAdoo is only focused on the numbers. If UA abandoned IAD another carrier would just jump right in because I don't believe passengers in the Mid-Atlantic region want to go to EWR to catch a flight across the atlantic.

Quoting commavia (Reply 34):
Not sure that's all that big a problem. Plenty of connectivity is already and can in the future be had via EWR whether it's on an A380/748 or not.

While it is easy for you to say this the truth is EWR can not handle any more traffic. If UA were to try and push more connecting traffic into EWR how many more domestic flights would they have to add? Its easy to suggest the A380 and the 748i but you first must get connecting passengers to EWR in order to fill a international flight on A380 or 748i and there in lies the problem. There have been many threads on here about UA and EWR and how certain UAX flights are either constantly delayed and/or canceled. Shifting more domestic traffic into EWR traffic that would normally be going into IAD would just result in more of the same. In fact the situation at EWR would get worse. Both EWR and ORD have a huge impact on UA overall operation across the UA the last UA needs to do is make the situation worse. Congestion and delays at these 2 hubs have a ripple effect across UA's domestic system.

Quoting AADC10 (Reply 47):
The analyst does not mention that EWR is slot restricted. ORD has been slot restricted in the past. Presumably UA could upguage the transatlantic 757s out of EWR to grow but IAD has available capacity and fewer delays than EWR. It is also UA's closest hub to the southeast, the big hole in their network.

UA has already done what McAdoo is suggesting markets like LHR, EWR, AMS, FRA and other have already been upguaged to widebody aircraft. The 757's are now mainly being used to secondary smaller markets and although some probably could benefit from a widebody UA's 3 class 763 have a total of 183 seats, 2 class 763's have a total of 214 seats and the international 752's have a total of 169 seat. So as you can see there isn't a huge increase in capacity when you go from a 752 to a 3 class 763 and there is only a moderate increase in capacity between the 752 and the 2 class 763.

Quoting johnberg (Reply 61):
From the article "United's cuts in Cleveland set the standard for whether to unwind the Washington Dulles hub," McAdoo noted. In Cleveland, he said, 17 markets with less than 10 local passengers per flight and 16 markets with generally 11 to 30 local passengers per flight were eliminated as of next month. Using the same metrics in Dulles, 65 spoke routes would be cut."
Does anyone have access to the data to support this claim? I'm guessing this is based on PDEW. What are load factors on these flights like?
Would UA not be better served to make IAD more like AA @ JFK? Have enough Int'l departures to handle O&D, and domestic connections to key O&D markets. They could then route connecting passengers through EWR/ORD/IAH by upgauging routes where necessary.

The problem I had with this part of the article is the fact that there is no set standard to measure whether a hub is profitable or not. McAdoo said a UA executive stated that IAD was profitable but if you use his method of calculation IAD is loosing money. That is the thing with accounting you can make anything appear a certain way on paper to support your point of view when there is no set standard by which to calculate. If the numbers were made available I'm sure every person on this thread would probably come up with a different answer because we probably would all calculate the numbers differently. There needs to be a standard set so that investor and the general public can get a clear picture and not have an executive saying one thing and a Wall Street analyst saying something completely different although they both probably started out with the same exact numbers but calculated them in a different manner.
 
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OzarkD9S
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:48 pm

Are there any stats on the number of pax who fly Internationally from DCA vs. IAD. Seems to me there probably isn't much time saved hoofing out to IAD from some parts of the DC area and flying nonstop instead of a short hop up to PHL/EWR/JFK from DCA and continuing on there.

When Star was the undisputed Alliance King for the DC airports, the IAD/DCA split would be more or less mitigated by rewards in Star, now with oneworld gaining a large chunk of FF's, AA can funnel int'l pax to their own flights via PHL/JFK and even CLT now without the trek out to IAD.

Will more int'l travelers out of IAD just opt for a connection out of DCA so they can earn points on their new oneworld FF programs? There may be a long term paradigm shift in that direction. Or not, we shall see....
"True, I talk of dreams,
Which are the children of an idle brain." -Mercutio
 
solarflyer22
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 1:51 pm

My post got deleted but I you all made some similar points about UA and the government/NGO/military traffic at IAD. It would make more sense imo to move EWR hub to IAD not the inverse. This plan just makes 0 sense to me and would certain increase delays at EWR, cost billions and force many employees and loyal customers to ditch UA altogether.

I am sure there are other easier, faster ways to increase profitability. This idea just seems like its DOA.

As for Wallstreet, no a high percentage of them do not know what they are doing. They are trained to make money, period. They are not trained to run a business or develop products. These were the same guys who said the AOL/Time Warner merger was the greatest thing since swiss cheese and that Apple's "portable hard drive device" would not be a "game changer" for Apple.

The merger with Time Warner was a total disaster and that portable hard drive device, was the iPod.
 
commavia
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 2:19 pm

Quoting jayunited (Reply 72):
While it is easy for you to say this the truth is EWR can not handle any more traffic. If UA were to try and push more connecting traffic into EWR how many more domestic flights would they have to add? Its easy to suggest the A380 and the 748i but you first must get connecting passengers to EWR in order to fill a international flight on A380 or 748i and there in lies the problem.

The issue raised was with respect to Lufthansa theoretically moving 380/748 flights from IAD to EWR in a hypothetical IAD closure scenario, not about United adding a great deal more capacity or frequency at EWR.

I still have yet to hear a reason why United/Lufthansa could not shift more connections to move through EWR to get onto larger Lufthansa planes there. We're talking about perhaps a few hundred more people a day, if that - you could shift those connections over EWR easily and compensate by shifting some other connections to flow over other cities. For example, if many of the Lufthansa IAD passengers were connecting to cities in the northeast and south, flow those connections over EWR but shift some of the further Lufthansa IAD passengers connecting to the west coast to move over ORD or DEN instead

I'm not suggesting United should do this, would want to do this, that passengers would love this idea, etc. I'm simply saying it could be done if Lufthansa were ever able to, and wanted to, operate larger aircraft into EWR.
 
CiC
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 2:30 pm

OMG again some recommendations from an unprofessional businessman...

He's just thinking "cost for operation of 1 hub is 1bn   a year and revenue for both is 2,5bn   a year. Close 1 hub and have 1bn   more profit you can give into my investor's pockets"...   
  
 
Bobloblaw
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 2:42 pm

Quoting OzarkD9S (Reply 73):
Are there any stats on the number of pax who fly Internationally from DCA vs. IAD

Yes, that data is available but I dont have access to it.

Quoting CiC (Reply 76):
OMG again some recommendations from an unprofessional businessman...

You dont know the half of it. This guy ran People Express and Vanguard Airlines.
 
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kgaiflyer
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 3:50 pm

Quoting ckfred (Reply 66):
I've heard for years that the only reason that DCA still exists is because of the close proximity to Capitol Hill and the government offices. Every member of Congress has a parking slot, as do the members of the Supreme Court. If it wasn't the reserved parking for so many government officials, DCA might have closed back in the 70s.

If you've been through DCA lately, you'd notice that the infrastructure is pretty much maxed out. It can't handle many more passengers without larger terminals, more parking, and an additional runway. And unless they culvert, sink, raise, or displace the Potomac River, where would they find the land?

[Edited 2014-06-27 09:01:22]
 
FlyPNS1
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 3:57 pm

Quoting commavia (Reply 75):
The issue raised was with respect to Lufthansa theoretically moving 380/748 flights from IAD to EWR in a hypothetical IAD closure scenario, not about United adding a great deal more capacity or frequency at EWR.

But if these are connecting passengers, UA would have to add capacity at EWR to accomodate those connecting LH passengers. While UA could upgauge some flights, it would be difficult to add that much capacity. Plus, the operational impact of putting even more passengers through EWR could be a nightmare when IRROPS happen...which is common at UA @ EWR.
 
commavia
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 4:08 pm

Quoting FlyPNS1 (Reply 79):
But if these are connecting passengers, UA would have to add capacity at EWR to accomodate those connecting LH passengers.

No, United wouldn't - that's my point. Shift some of the people currently connecting over EWR to other places (besides Germany) to route over other hubs, thus freeing up seats at EWR to make room for this theoretical influx of people connecting there off of Lufthansa's 380/748.
 
T5towbar
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 4:51 pm

Quoting tugger (Reply 20):
I did not say that some of the most intelligent people in the world do not work in Wall Street. I did not say that there are not many people in Wall Street that are more intelligent than me.

And I did not "lash out"... where the heck did you get that?

I did say that Wall Street is full of stupid people. And it is, like most everywhere.

Wall Street is not "stupid". Hell, they got us the taxpayer (US) to bail them out with their risky schemes (along with the banksters.......)

Quoting ScottB (Reply 48):
It is fairly easy to imagine how the vast majority of traffic connecting at IAD could be flowed over EWR by increasing aircraft gauge at EWR. Consolidating 50-seat-and-under flights into 70-to-76-seat RJ's or mainline aircraft would lead to lower overall trip costs and a more competitive product at the expense of losing a modest amount of O&D traffic to & from IAD. Does it really make sense to fly three daily 50-seat RJ's between GSO and both IAD & EWR instead of one 738 and two E175's to just EWR? In the latter case, they'd lose out on maybe 4 or 5 O&D passengers on each IAD flight, but the product to EWR ends up being better and lower-cost.

You need the aircraft to do that. Sure, there are too many 50 seaters in the fleet, but you don't have enough 76 seaters or mainline aircraft to make those kind of moves.

Quoting RyanairGuru (Reply 62):
The problem is EWR. We all know that EWR is slot constrained, but the other issue UA would have is gates. In an ideal world, UA could up-gauge all of those ER4s in EWR to EM7s and 737s, but I don't think that they have enough real estate to park them all. If anyone could provide guidance on gate utilization in C that would be appreciated.
Quoting RyanairGuru (Reply 62):
At A2 they would have to remove several gates to park anything bigger than an ER4. They squeeze them in wing-tip-to-wing-tip, and I don't think they can even park a 70 seater on most gates at A2. At a guess, I'd suggest that they would need to remove 25-35% of gates, at a minimum, to convert them to 737 gates. While they might be able to pick up a couple on A3 as AA and US consolidate their gates (they probably don't need the entire concourse, other than that one gate use by VX), they will still struggle to find enough mainline stands. My point is that slots aren't the only issue at EWR, and simply saying that they could up-gauge everything ignores the fact that they might not be able absorb the additional capacity at EWR.

Terminal A (A-2) can be reconfigured again. It used to be all mainline there before. There were 10 M/L gates before Express was brought over and set up. If it was all 170/175's, surely it could be 11 or so gates set up since the 175's footprint is smaller than a 737/320. Presently it is 3 gates that can handle a 170, but Gates 21 and 22 are open enough that it can handle them as well if needed.

AA/US will consolidate A-3, with VX and AS using the remaining 3 gates. VX presently uses 2 (sometimes 3 gates) and AS 1 gate (Gate 30). It depends on what kind of operation the new AA will use it for. We know they will send flights to their hubs which will surely cover at least 6 gates.

The only common use gate in Terminal A is Gate 18. B6 uses it on overflows and WS will be using it again seasonally for their YYC flight.

As far as Terminal C goes, the odd number gates 101 to 111 (not including 114 & 115) in C-2 are set up to handle multiple aircraft from an 145; to a Q400/300; to a 170 or 175; to a 319/320; to a 739.

Eventually when enough 175's or a smaller M/L aircraft comes on line, I guess Corp. Real Estate and the planners can and will reconfigure it. But giving up any slots is not the answer.

IAD is still needed in the system at present. It still has to cover the South East (along with IAH). Problem is that DCA has more traffic and support, especially amongst the politicians. IAD needs that Silver Line built, but it will never have the convenience that DCA has. I can't see getting rid of it and bringing more traffic to EWR.

Quoting jayunited (Reply 72):
While it is easy for you to say this the truth is EWR can not handle any more traffic. If UA were to try and push more connecting traffic into EWR how many more domestic flights would they have to add? Its easy to suggest the A380 and the 748i but you first must get connecting passengers to EWR in order to fill a international flight on A380 or 748i and there in lies the problem.

Tear down a portion of Terminal B, and you can get a 380 in. It's not the runways, its the taxiways that are narrow.

Quoting johnberg (Reply 57):
From the article "United's cuts in Cleveland set the standard for whether to unwind the Washington Dulles hub," McAdoo noted. In Cleveland, he said, 17 markets with less than 10 local passengers per flight and 16 markets with generally 11 to 30 local passengers per flight were eliminated as of next month. Using the same metrics in Dulles, 65 spoke routes would be cut."

Problem was that everybody know CLE was going to get cut. It was supposed to be a slow an gradual reduction, but not what happened these last couple of months. That was a shock to everybody, the way it happened. The media got the news before the employees.
A comment from an Ex CON: Work Hard.....Fly Standby!
 
hoya
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 4:54 pm

Quoting commavia (Reply 80):
No, United wouldn't - that's my point. Shift some of the people currently connecting over EWR to other places (besides Germany) to route over other hubs, thus freeing up seats at EWR to make room for this theoretical influx of people connecting there off of Lufthansa's 380/748.

Because Lufthansa has a limited number of aircraft, and as has been proven frequency is very important. There are 4 flights a day IAD-FRA (2x UA 777s, 1x LH 748, 1x LH A333) and 2 per day IAD-MUC. That is a lot of capacity that can't just be shifted to EWR, where currently there are only 2 daily flights each to FRA (UA 777, LH 744) and MUC.

UA/LH have more flights in/out of IAD to FRA/MUC than EWR, showing how important IAD is as a connecting hub. For anyone connecting on the east coast, you don't want to be routed through ORD or IAH as it prolongs the trip, and EWR is just too congested and delay prone.
Hoya Saxa!!
 
ScottB
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 4:58 pm

Quoting IADLHR (Reply 49):
From Tysons Corner to DCA on the Silver Line will require a change to the Blue or Yellow line. On the other hand from downtown DC, MD and anywhere the Orange line runs the Silver Line will be direct to IAD. That change of trains can discourage people from taking Metro as it can be a headache especially in rush hour.Been there and done that more times than I care to count.

Except that the Silver Line won't actually serve IAD until 2018, and the travel time on the Silver Line out to IAD from downtown D.C. will be nearly an hour. Also keep in mind that the Silver Line station at IAD will be about a quarter mile from the actual terminal, as opposed to the station at DCA being immediately adjacent to the terminal. I don't think a change of trains is particularly more inconvenient than a single train plus a quarter-mile slog with luggage.

Quoting hoya (Reply 65):
Then you have all the World Bank, IMF, UN, and other large organizations, and then all the diplomatic travel. Not sure if they still do, but Air France has sent A380s to IAD due to the large premium market (mainly to Africa). The revenue must be there for South African to continue operation of its IAD-DKR-JNB service. The premium fares are there, otherwise all these foreign airlines wouldn't serve IAD.

Right, but non-U.S.-government organizations probably aren't required to fly a U.S.-flag carrier (or book using a U.S. carrier's code) -- so they're already flying on the competition and not UA.

Quoting bobloblaw (Reply 70):
BOA is not "Wall Street" It is a California bank.

Bank of America hasn't been a California bank for 15 years. It is a North Carolina bank that gobbled up a bunch of other banks as well as Merrill-Lynch.

Quoting bobloblaw (Reply 70):
While those segments lose money, no airline looks at segment profit alone. They look at system contribution. Those short flights from small high fare communities probably have very good system contribution to the profitability of the connecting flights.

Correct, but system contribution isn't necessarily tied into IAD if there's another hub in the region which can serve the traffic. RIC, for example, has 5 daily 50-seaters to EWR and 3 daily 50-seaters to IAD. It would probably be more cost- and slot-effective to send three 76-seat RJ's and 1 738/A320 to EWR while keeping essentially the same network contribution from RIC.

Quoting jayunited (Reply 72):
While it is easy for you to say this the truth is EWR can not handle any more traffic. If UA were to try and push more connecting traffic into EWR how many more domestic flights would they have to add?

EWR can't handle more flights -- this is absolutely true -- but that's not to say that it can't handle more passengers on the same number of flights using larger aircraft.

Quoting jayunited (Reply 72):
The problem I had with this part of the article is the fact that there is no set standard to measure whether a hub is profitable or not. McAdoo said a UA executive stated that IAD was profitable but if you use his method of calculation IAD is loosing money.

You are correct in that the numbers probably can be spun to show that any hub is profitable or unprofitable -- but UA lost a bundle of cash in Q1 so clearly at least one hub (and probably more than that) is unprofitable. Moreover, whether an individual hub makes a profit or not isn't the only metric that matters. Does that hub outperform or underperform the other hubs? Would the network as a whole be more profitable or less profitable if the traffic using that hub were shifted to other hubs?

Quoting ckfred (Reply 66):
I've heard for years that the only reason that DCA still exists is because of the close proximity to Capitol Hill and the government offices. Every member of Congress has a parking slot, as do the members of the Supreme Court. If it wasn't the reserved parking for so many government officials, DCA might have closed back in the 70s.

Probably true, but that doesn't change the fact that DCA exists and competes with IAD for within-perimeter as well as a growing share of outside-perimeter traffic. And the ability of WN & B6 to obtain more slots at DCA is absolutely a threat to the viability of IAD as a hub.
 
UA772IAD
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 5:51 pm

Quoting ScottB (Reply 83):
Except that the Silver Line won't actually serve IAD until 2018, and the travel time on the Silver Line out to IAD from downtown D.C. will be nearly an hour. Also keep in mind that the Silver Line station at IAD will be about a quarter mile from the actual terminal, as opposed to the station at DCA being immediately adjacent to the terminal. I don't think a change of trains is particularly more inconvenient than a single train plus a quarter-mile slog with luggage.

It's difficult to gauge how effective the Silver Line will be serving IAD, since it hasn't been built yet. That being said, it seems as though mass transit service to the airport in the US is hit or miss in terms of ridership. The trains used "typically" don't have amenities geared towards traveling passengers- things like luggage racks, seating that accommodates hand luggage/strollers, etc. In the bigger scheme of things, not having a dedicated ROW with limited or express service into the city center makes the Metro/subway/whatever less attractive. When you compare that to what cities like London, Seoul and Hong Kong offer- a dedicated high speed service to the airport- the local service is much less attractive.

++++

The Wall Street "experts" behind this article, and those on this board who haven't should take a trip down to Northern Virginia and see how things really are here.

NOVA is growing tremendously. The region weathered the recession and businesses and developments are booming here. Tysons (Corner) has grown from a sleepy intersection to having more office space per square foot than Manhattan- and new office buildings, high rise condos and retail spaces continue to sprout up everyday. Reston has grown into a small business hub, and office buildings and firms continue to appear along the Dulles corridor.

Not everyone that travels to and from WAS has to "schlep" or "huff it" out to IAD from downtown. There is a large population of well-off businesses and residents in Fairfax and inner Loudoun Counties who are far closer to IAD than DCA.

If UA closed operations at IAD, they would be ceding a big chunk of steady revenue and frequent fliers to the competition. IAD might not be UA's nicest facility, but they have shop set up for cheap- I can't think of any other carrier in such a position in the WAS region.
 
solarflyer22
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 6:16 pm

Quoting CiC (Reply 76):
OMG again some recommendations from an unprofessional businessman...

He's just thinking "cost for operation of 1 hub is 1bn a year and revenue for both is 2,5bn a year. Close 1 hub and have 1bn more profit you can give into my investor's pockets"...

Haha, yeah that's exactly what he's thinking. Its such a unrealistic view from a simpleton. Its actually very common unfortunately.
 
toxtethogrady
Posts: 1861
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 6:17 pm

Quoting jayunited (Reply 72):
The problem I had with this part of the article is the fact that there is no set standard to measure whether a hub is profitable or not. McAdoo said a UA executive stated that IAD was profitable but if you use his method of calculation IAD is loosing money.

Whatever financial reporting methods United uses always make international look massively profitable while the domestic part of the operation just sucks up money. The numbers look funny, because it takes a whole lot of CASM to make the domestic segment look unprofitable (but maybe the RJ's are costing 30 cents a seat mile and it's dragging down domestic profitability).

As for whether the hubs are profitable, one needs to look at what common sense would suggest if the hubs were run properly. If IAH, SFO and IAD can't make money, there's something wrong with the airline, not something wrong with the city being served. DEN is always going to be strong for tourist traffic and connecting passengers, but it's a small market, population-wise. ORD is a big hub, but Chicago's still digging out from under the recession. Newark has capacity constraints and two other airports competing with it for traffic (not to mention Philly), but New York is still New York. The problem is with the airline.
 
Bobloblaw
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 6:36 pm

Quoting ScottB (Reply 83):
Correct, but system contribution isn't necessarily tied into IAD if there's another hub in the region which can serve the traffic. RIC, for example, has 5 daily 50-seaters to EWR and 3 daily 50-seaters to IAD. It would probably be more cost- and slot-effective to send three 76-seat RJ's and 1 738/A320 to EWR while keeping essentially the same network contribution from RIC.

If the top RIC-IAD connect points are going west, canceling IAD and replacing with EWR wont capture the traffic. Youd need to add ORD or lose the traffic to DL via DTW.

BTW has any airline ever listened to MacAdoo?
 
strfyr51
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 6:36 pm

were United to close IAD ? Whom would it Benefit?!? We could Still fly out of EWR and NYC without the Hub at EWR,
We did before the CO merger .
The hub at EWR is an Advantage for Sure. But! All of those flights could be spread around JFK, LGA and EWR to even BETTER service the NYC metroplex than keeping the EWR Hub,
However? There's NO advantage to closing the IAD hub. We have Hubs at SFO and LAX.
There's no advantage to closing either of those so why the big deal about IAD??
We've had Transcon service there for more than My 31 years at United and as far as I can tell?
We've always been profitable there.
There's JUST as much advantage to serving Washington, DC and Northern Virginia as there is to service NYC.
No I grant you Present management would probably want to see EWR advanced at the expense of IAD but they've already
Moved flights out of IAD to EWR and they "flopped" IAD needs little more than a New Terminal to Surpass EWR No matter
WHAT the do to EWR. In my opinion EWR is the greater liability Just because it can be broken up and spread around the
NYC metropolitan area from HPN, to Steward. And? Still get the bang for the BUCK!! We can always add service to BWI,
PHL , BDL , ORF and RIC. were we of a mind to because there are business there that might benefit us in corporate travel.
The Hub at EWR is nice to have, but The Nation's Capitol?? I think is essential. But! That's MY opinion and why I think so.
 
ScottB
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 8:36 pm

Quoting UA772IAD (Reply 84):
There is a large population of well-off businesses and residents in Fairfax and inner Loudoun Counties who are far closer to IAD than DCA.

Yes, and these are the people who largely represent the 20-30% O&D share IAD captures of the combined DCA+IAD market. The question at hand is whether that submarket is large enough and profitable enough to balance the higher cost of operating two hubs within 250 miles of each other.

Quoting UA772IAD (Reply 84):
IAD might not be UA's nicest facility, but they have shop set up for cheap- I can't think of any other carrier in such a position in the WAS region.

While UA's IAD facilities are cheap and nasty, IAD is actually the highest-cost airport in the region by a wide margin. IAD's cost per enplanement is just under double DCA's and over two-and-a-half times BWI's. DCA is likely to get even cheaper on a per-passenger basis, too, as WN, B6, & VX mainline aircraft replace the 50-seat RJ's US had used to squat on DCA slots.

Quoting bobloblaw (Reply 87):
If the top RIC-IAD connect points are going west, canceling IAD and replacing with EWR wont capture the traffic. Youd need to add ORD or lose the traffic to DL via DTW.

Without access to United's proprietary data, I can't know what the exact traffic flows are over IAD. But you're absolutely correct in that the capacity wouldn't necessarily only need to shift to EWR. Perhaps the optimal pattern would be to upgauge the two ERJ's to IAH to E175's and one ERJ to ORD to E175, while offering four E175's to EWR; that would still keep RIC capacity roughly flat.

Quoting strfyr51 (Reply 88):
The hub at EWR is an Advantage for Sure. But! All of those flights could be spread around JFK, LGA and EWR to even BETTER service the NYC metroplex than keeping the EWR Hub

No, they cannot, because all three airports are slot-restricted and UA holds relatively few slots at LGA & JFK -- only enough to operate the current service to the other hubs.
 
washingtonflyer
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 8:52 pm

Quoting ScottB (Reply 83):
Except that the Silver Line won't actually serve IAD until 2018, and the travel time on the Silver Line out to IAD from downtown D.C. will be nearly an hour. Also keep in mind that the Silver Line station at IAD will be about a quarter mile from the actual terminal, as opposed to the station at DCA being immediately adjacent to the terminal. I don't think a change of trains is particularly more inconvenient than a single train plus a quarter-mile slog with luggage.

2018 if they are lucky. With all the delays it took thus far to get to Reston, god only knows how long it would take to get to IAD.
 
washingtonflyer
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 8:55 pm

Quoting airbazar (Reply 21):
CLT serves the Southeast just like IAD is UA's hub to the Southeast. It's exactly the same market with some overlap of course.

UA tries to serve the southeast, but that distance further north and east makes intra south flying not so palatable. CLT and ATL are both smack in the middle of the southeast and are much better for connecting.
 
washingtonflyer
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 8:59 pm

Quoting kgaiflyer (Reply 78):
If you've been through DCA lately, you'd notice that the infrastructure is pretty much maxed out. It can't handle many more passengers without larger terminals, more parking, and an additional runway. And unless they culvert, sink, raise, or displace the Potomac River, where would they find the land?

There is a proposal out there for a new terminal at DCA. Takes up the MWAA office space near Commuter world.

I posted this in a new thread but somehow (like a lot of stuff on this forum), it disappeared.

http://www.flightglobal.com/news/art...r-weighs-expansion-options-400309/

[Edited 2014-06-27 14:01:00]
 
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STT757
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 9:17 pm

Quoting airbazar (Reply 21):
CLT serves the Southeast just like IAD is UA's hub to the Southeast. It's exactly the same market with some overlap of course.

IAD is not a Southeast hub, it's as far South as Cape May New Jersey. IAD is more an Appalachain airport than Southeast. IAD is closer to Pittsburgh than Raleigh, IAD is closer to Buffalo than it is to Charlotte, IAD is closer to Montreal than Atlanta. I can go on.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
jayunited
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 11:10 pm

I like how people suggest that UA can just move the traffic to another hub. When UA announced and started dehubbing CLE other airlines step in and began adding flights to certain cities no doubtably costing UA passengers, passengers UA felt like they could reroute thru other hubs like ORD, or EWR. The same thing would happen at IAD so when people on this thread suggest that UA could just reroute the traffic to another hub my question is how when customers have a choice? No one forces customers to choose any one particular airline customers choose an airline based upon a many different reasons so if UA no longer meets their needs or if UA is trying as some suggest to coax customers to connect at ORD or EWR and they really want to avoid those hubs then they will just choose a different airline. So while UA could shift the traffic (aircraft) to either EWR or ORD how does UA force the customer to do the same to make the shift as well? In this thread no one has address this but a lot of people love to suggest it.

There is no denying that UA has its problems and needs to get its financial house in order but another question that must be asked is will closing IAD really deal with the root cause of UA's financial problems or will it just compound them and cost UA even more passengers and business that UA can't afford to loose?
 
mcg
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WallStreet To UA: Close IAD Part 1

Fri Jun 27, 2014 11:28 pm

Is part of the problem at IAD the fact that it is such an awful facility? Connecting there is terrible, the United concourse is overcrowded and without amenities and the odd vehicles that provide inter-concourse transport are a pretty un-user-friendly system. I'd say easily the worst hub facility in the United States.
 
IADLHR
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WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 12:04 am

Quoting jayunited (Reply 94):
I like how people suggest that UA can just move the traffic to another hub. When UA announced and started dehubbing CLE other airlines step in and began adding flights to certain cities no doubtably costing UA passengers, passengers UA felt like they could reroute thru other hubs like ORD, or EWR. The same thing would happen at IAD so when people on this thread suggest that UA could just reroute the traffic to another hub my question is how when customers have a choice? No one forces customers to choose any one particular airline customers choose an airline based upon a many different reasons so if UA no longer meets their needs or if UA is trying as some suggest to coax customers to connect at ORD or EWR and they really want to avoid those hubs then they will just choose a different airline. So while UA could shift the traffic (aircraft) to either EWR or ORD how does UA force the customer to do the same to make the shift as well? In this thread no one has address this but a lot of people love to suggest it.

There are a number of UA FF from the DC area that also have business in either PHL or NYC and quite often fly overseas for work after an appointment or two in NYC or PHL. Some Amtrak trains stop right at EWR and there is frequent train service from Penn Station to EWR.Still, there are an increasing number of elite UA FFs that will go out to JFK for either a DL or AA flight rather than deal with the hell hole that EWR has become in recent years and it has been made worse by the abysmal customer service at UA at EWR. I have seen it all happen more times than I care to colunt.

I cant possibly imagine what would become of EWR if UA closed IAD and moved it all to EWR. Loyalty is a two way street and if both the pax and UA dont have loyalty to each other than "loyalty" becomes something else.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 12:12 am

Quoting UA772IAD (Reply 84):
Not everyone that travels to and from WAS has to "schlep" or "huff it" out to IAD from downtown. There is a large population of well-off businesses and residents in Fairfax and inner Loudoun Counties who are far closer to IAD than DCA.

... and yet United still struggles to fill more than a few daily RJs on many if not most routes out of IAD, whereas many of the same routes saw 737s a decade ago and DCA in many cases supports more flights, on bigger jets, and in some cases on multiple airlines, to those same markets even today. Therein, I think, lies the problem.

Quoting jayunited (Reply 94):
I like how people suggest that UA can just move the traffic to another hub. When UA announced and started dehubbing CLE other airlines step in and began adding flights to certain cities no doubtably costing UA passengers, passengers UA felt like they could reroute thru other hubs like ORD, or EWR.

One doesn't really have anything to do with the other. On one hand, people suggested that United could selectively absorb much of the profitable connecting traffic previously carried over CLE at other hubs. I think those people were quite right. On the other hand, you have other carriers now coming in and opportunistically adding nonstop service from CLE to other large cities - but those carriers are targeting O&D passengers beginning or ending their trip in CLE, not connecting traffic moving over CLE between two other cities.

Does this inevitable outcome, to some extent, cost United passengers? Sure it does. Just as it did for AA in STL, USAirways in PIT, Delta in MEM and CVG, etc. But in all of the above cases, it was still financially worth it.

Quoting jayunited (Reply 94):
The same thing would happen at IAD so when people on this thread suggest that UA could just reroute the traffic to another hub my question is how when customers have a choice?

Some might argue it's already happening. The WAS market is absorbing a substantial amount of new domestic low-fare capacity this year between Southwest, JetBlue and Virgin adding flights at DCA and Frontier opportunistically growing (again, a la CLE) at IAD. All of this may well have a detrimental affect on IAD.

Quoting jayunited (Reply 94):
There is no denying that UA has its problems and needs to get its financial house in order but another question that must be asked is will closing IAD really deal with the root cause of UA's financial problems or will it just compound them and cost UA even more passengers and business that UA can't afford to loose?

Yes to all of the above. United needs and should covet the lucrative longhaul traffic WAS generates and that it dominates at IAD, and United should do everything it can to try and preserve its IAD hub and support that traffic. The problem, I think, is that this may be somewhat out of United's hands. The more domestic capacity is added at DCA (and, again, IAD for that matter), the harder it no doubt is and will continue to be for United to support so much domestic capacity of its own at IAD - particularly on high-CASM RJs. And the smaller United's domestic capacity at IAD is, the less feed there is to support those longhaul flights - which is really where the money is, anyway.

It's a real quandary - quite unique to the competitive and geographic dynamics of the WAS region - and I honestly don't know how United will address it.

[Edited 2014-06-27 17:14:56]
 
LoudounHound
Posts: 90
Joined: Tue Mar 25, 2014 8:43 pm

WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 2:21 am

Quoting commavia (Reply 97):

There is no denying that UA has its problems and needs to get its financial house in order but another question that must be asked is will closing IAD really deal with the root cause of UA's financial problems or will it just compound them and cost UA even more passengers and business that UA can't afford to loose?

Yes to all of the above. United needs and should covet the lucrative longhaul traffic WAS generates and that it dominates at IAD, and United should do everything it can to try and preserve its IAD hub and support that traffic. The problem, I think, is that this may be somewhat out of United's hands. The more domestic capacity is added at DCA (and, again, IAD for that matter), the harder it no doubt is and will continue to be for United to support so much domestic capacity of its own at IAD - particularly on high-CASM RJs. And the smaller United's domestic capacity at IAD is, the less feed there is to support those longhaul flights - which is really where the money is, anyway.

It's a real quandary - quite unique to the competitive and geographic dynamics of the WAS region - and I honestly don't know how United will address it.

Very nicely summarized, Commavia. There is certainly some circular logic to all this. UA can't fill a few RJs a day out of IAD partly due to the competition from DCA and BWI, partly due to poor facilities, and partly because it charges too much, driving the price sensitive traffic elsewhere. UA can't lower its fares too much because IAD is a high price airport from which to operate. They can't substantially improve their IAD facilities because that would drive costs higher. And they absolutely can't do anything about the new flights out of DCA.

I have opined previously that they may have to just play a waiting game for perhaps 4-5 years until the WAS area absorbs the new DCA capacity. At that point, growth will once again shift back to IAD out of necessity. If MWAA can somehow lower IAD operating costs in the meantime, maybe UA can tread water until Metro opens at the airport. That should coincide with DCA maxing out.

Or by then maybe UA will partner with F9 to provide domestice IAD feed!
 
User avatar
mariner
Posts: 19473
Joined: Fri Nov 23, 2001 7:29 am

WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 2:36 am

Quoting LoudounHound (Reply 98):
Or by then maybe UA will partner with F9 to provide domestice IAD feed!

Stranger things have happened, I guess.  

Still, when it is just the two of them - United and frontier - they seem to coexist pretty well. Frontier sucks up the low end that United doesn't want and somehow, in the process, perhaps overhaul traffic grows.

Delta seems to have come to the same conclusion with regard to the ULCC's. There has been scarcely a peep from Delta about the several (many?) incursions into its turf by Spirit and Frontier.

mariner
aeternum nauta
 
izbtmnhd
Posts: 901
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WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 2:59 am

Geez...all McAdoo said was that looking at a metric used as an excuse to close CLE there are lots of routes at IAD in similar shape. He's pretty sure that CLE isn't the sole problem with UA. I know EWR can't absorb IAD's traffic but ideally UA needs to find a way to make the domestic operation work there. It's a real problem.
 
incitatus
Posts: 3333
Joined: Wed Feb 09, 2005 1:49 am

WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 4:05 am

Quoting solarflyer22 (Reply 74):
you all made some similar points about UA and the government/NGO/military traffic at IAD. It would make more sense imo to move EWR hub to IAD not the inverse.

Not quite sure government is a gold mine for airlines. It is absolutely the other way around!!!
I do not consume Murdoch products including the Wall Street Journal
 
klwright69
Posts: 2702
Joined: Mon Jan 17, 2000 4:22 am

WallStreet To UA: Close IAD Part 1

Sat Jun 28, 2014 9:58 am

This is an excellent conversation. I think we can all agree that UA has a unique problem with the dynamics in Was DC. But dumping IAD as a hub is the wrong idea.

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