airlinewatcher1
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 3:52 am

Trying to view this from DIA's and the City of Denver's perspective, I can see how their higher priority would be to protect UA's and WN's position before F9's. They are seen as the more stable long-term carriers. UA has hubbed at DEN for many decades and their current market share is 40%, vs. WN's 27%, and F9's 18% (and continuing to decline).

Wouldn't it make sense that DIA's incentives would disproportionally benefit UA, the airport's major tenant, over the other carriers? The economic impact for Colorado for the DEN-NRT flight is very, very significant.

Why should F9 expect further incentives from Denver when they are cutting back so many flights? My other theory is that all of this is tentative and F9 is in actuality using this as a bargaining chip with the City of Denver. It's not as if they've never received any breaks from the city, the most recent being the lease on the former Continental hanger. The city's end of the sales-and-use tax on aviation parts also provides a better incentive for all airlines using DIA to do more maintenance work there.
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 4:22 am

Quoting airlinewatcher1 (Reply 50):
Why should F9 expect further incentives from Denver when they are cutting back so many flights?

I've read the article three times, and I see where Siegel told the staff that Frontier does not get incentives from Denver/DIA:

"This may come as a surprise, but we do not receive economic incentives as the hometown airline, adding to our cost burden," the letter reads."

It is in a letter to the staff.for their information. It is not a public document, nor a public statement.

Perhaps you can show me where Frontier (Siegel) says they "expect", or should have, incentives?

mariner
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airlinewatcher1
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 4:35 am

Siegel released the letter to the public as well as internally within the company, no? That's why there is a newspaper article about it. That is my understanding.

I think it was implied in the letter that F9 should receive more incentives and that Denver is the "bad guy" here. Although I'm not sure what extra he thinks they should be receiving as the "hometown carrier."
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 4:42 am

Quoting airlinewatcher1 (Reply 52):
Siegel released the letter to the public as well as internally within the company, no? That's why there is a newspaper article about it. That is my understanding.

I haven't seen the letter in the public domain - which doesn't mean it isn't there, of course, although since it is addressed to Frontier Team, I'd be surprised.

Quoting airlinewatcher1 (Reply 52):
I think it was implied in the letter that F9 should receive more incentives and that Denver is the "bad guy" here. Although I'm not sure what extra he thinks they should be receiving as the "hometown carrier."

Nowhere in the letter does it even suggest that. The only reference to "incentives" is that one quote which I posted above.

Here's the full paragraph::

"While we will continue to work collaboratively with our state and local business partners to address these cost concerns, we must act now and do what is within our control to manage our business. This includes the need to right size our operation at DIA ahead of signing a new lease with the airport in 2016. This may come as a surprise but we do not receive economic incentives as the hometown airline adding to our cost burden."

mariner
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lpdal
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 5:07 am

I'm always sad to see such a large airline falling on hard times. Haven't they posted a nice little stash of profit since their transition to an ULCC based model?

Quoting jerseyguy (Reply 15):
Connections for a ULCC are like oil and water, they don't mix

Thanks for a good laugh. One of my buddies was trying to book on NK's FLL-MCO-FLL service, and one of the listed options involved a connection in LGA. So FLL-LGA-MCO-LGA-FLL...Such a "connection" makes no sense whatsoever...He ended up taking 3M (that would be Silver Airways and their Saab 340B+s) through UA instead.

Quoting Legend757 (Reply 22):
F9 is cutting the following cities from DEN, all between now and Jan 6, 2015

I'm not sure if "cutting" is the correct term to use when referring to FLL. Yes, the exact service at FLL is being slashed, but MIADEN and PBIDEN are just starting up. MIA and PBI are 63 miles apart, so they're not competing much for customers, while MIA and FLL are 21 miles apart (see severe reduction of AA service at FLL, and other airlines with service down in MIA). PBI itself is 42 miles northwest of FLL, just barely long enough to avoid the onslaught (but, a lot of service has been cut in favor of FLL, this is even noted in the Wiki article). I'm not implying that you said anything is incorrect, but am just saying that MIA and PBI ops pretty much cover all of South Florida, and keeping FLL service to DEN would just be superfluous.


Distance between the three major commercially-serviced airport in SoFla.

I've always wanted to fly F9 to add their old "A whole different animal - FRONTIER" livery to my log--but they don't fly to anywhere I actually want to go. Trenton, NJ is a ghetto and CLE I've already been to.

-LPDAL
All of my views and posted content are mine alone, and should not be viewed as official communication from my employer, its subsidiaries thereof, or any other entities or airlines.
 
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enilria
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 2:11 pm

Quoting mariner (Reply 51):
It is in a letter to the staff.for their information. It is not a public document, nor a public statement.

Perhaps you can show me where Frontier (Siegel) says they "expect", or should have, incentives?
Quoting airlinewatcher1 (Reply 52):
Siegel released the letter to the public as well as internally within the company, no? That's why there is a newspaper article about it. That is my understanding.

I agree with airlinewatcher1 that it is backhandedly intended for public consumption just as Richard Anderson's comment about 30 SEA gates in an employee phone update was. Either it is to excuse the cuts or it is to aid in re-negotiation with DIA as the papers speculate. I agree that you can't give incentives to an airline that is shrinking, so it is more likely the former.
 
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 4:44 pm

Quoting LPDAL (Reply 54):
I'm always sad to see such a large airline falling

Why are we coming to this conclusion?? They're just following their new strategy of becoming a ULCC. My understanding is that they posted a $30M profit last quarter.
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 6:18 pm

Quoting enilria (Reply 55):
I agree with airlinewatcher1 that it is backhandedly intended for public consumption just as Richard Anderson's comment about 30 SEA gates in an employee phone update was.

I'm sure Siegel is aware that there are whistleblowers at Frontier - some of whom seem to have an open line to the Denver Post - but even the article admits it was "a letter to employees."

The point is that, to my knowledge, Siegel did not release the letter publicly, nor does the letter, at any stage, suggest that Frontier is asking Denver/DIA for incentives. The reference to "incentives" is one sentence in a long letter.

It is purely speculation by a reporter in search of a conspiracy and even she hedges her bets - "could" be a negotiating maneuver." Well, sure it "could" be - but even you admit that it is "speculation" and what if it isn't a negotiating tactic?

Quoting enilria (Reply 55):
Either it is to excuse the cuts or it is to aid in re-negotiation with DIA as the papers speculate. I agree that you can't give incentives to an airline that is shrinking, so it is more likely the former.

It is an explanation of what is happening, whatever other interpretation you want want to put on it. But I'm scratching my head as to why you can't give incentives to a shrinking company. It's happened at DIA before, back in about 2007/8, when a shrinking United got a huge debt relief in return for a big boost in capacity.

mariner

[Edited 2014-11-19 10:21:48]
aeternum nauta
 
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enilria
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 6:28 pm

Quoting mariner (Reply 57):
Quoting enilria (Reply 55):
Either it is to excuse the cuts or it is to aid in re-negotiation with DIA as the papers speculate. I agree that you can't give incentives to an airline that is shrinking, so it is more likely the former.

It is an explanation of what is happening, whatever other interpretation you want want to put on it. But I'm scratching my head as to why you can't give incentives to a shrinking company. It's happened at DIA before, back in about 2007/8, when a shrinking United got a huge debt relief in return for a big boost in capacity.

The DOT guidance on incentives is that you can do them if they are fairly distributed. That is why F9 and WN threatened to sue after the UA deal, although oddly they don't seem to have followed through on that. So it's easy to have an incentive for new flights added by any airline and nearly every airport does something along those lines. If they give F9 an incentive for existing services then if they follow the law on revenue diversion they must give the same deal to everybody and that is nearly impossible as they need money for their hotel, rail station, and C expansion and that would just reduce their revenue across the board.

Of course, the fact that the UA deal did not seem to meet that legal test did not stop DIA, so I suppose anything is possible.

Bottom line, however, as I said, I do not think they are seeking incentives. I think they are excusing their shrinking as the fault of DIA and not WN's huge capacity increase. The reality is that it is mostly WN, but giving UA an unfair cost advantage certainly did not help either.
 
UA444
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 6:39 pm

How times have changed. I remember A.net armchair "experts" years ago saying how UA was going dehub DEN because WN and F9 were going to clean their clocks and how they should just cut their losses.
 
Rdh3e
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 6:42 pm

Quoting enilria (Reply 29):
They gave UA a cost advantage over F9 which is even worse...AND that money should have been used in a way that benefited the airlines equally and in that way F9 now pays more than they should have.

This doesn't jive with this:

Quoting enilria (Reply 58):
That is why F9 and WN threatened to sue after the UA deal, although oddly they don't seem to have followed through on that.

Because clearly DIA showed the airlines that the way they did it is equitable.

Does anyone have DIA's budget showing what portion of revenue comes from what airline? I'd be willing to bet UA was providing 40% of the seats and paying 60% of the bill. (Obviously not real numbers)
 
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enilria
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Wed Nov 19, 2014 6:54 pm

Quoting RDH3E (Reply 60):
Quoting enilria (Reply 29):
They gave UA a cost advantage over F9 which is even worse...AND that money should have been used in a way that benefited the airlines equally and in that way F9 now pays more than they should have.

This doesn't jive with this:

Quoting enilria (Reply 58):
That is why F9 and WN threatened to sue after the UA deal, although oddly they don't seem to have followed through on that.

Because clearly DIA showed the airlines that the way they did it is equitable.

Does anyone have DIA's budget showing what portion of revenue comes from what airline? I'd be willing to bet UA was providing 40% of the seats and paying 60% of the bill. (Obviously not real numbers)

It definitely was not equitable. Here is an article on the original deal which shows that they used excess PFC revenue (nearly all generated by the unplanned growth of WN). UA saved $35 million/yr by agreeing to grow (add NRT), WN got $4m, and F9 got $2.5m. That is not relative to enplanements or space leased or seats or flights or anything else. What happened is that DIA paid down the debt essentially only on United held space and it lowered only their rent...84% of the benefit when to UA. The new deal that came after that one since UA broke that deal was still allowed to get the rent break gave UA even more money and allowed them to keep the money they were not entitled to under this deal.

I'm assuming WN didn't sue because they were desperately trying to get space then and didn't want to irritate DIA. I don't know why F9 did nothing, but F9 said at the time they would go to court.

http://www.denverpost.com/business/c...ia-reach-deal-extend-30-year-lease
 
airlinewatcher1
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Thu Nov 20, 2014 1:50 am

The Denver Business Journal also had a fairly in depth article about this:

http://www.bizjournals.com/denver/ne...nes-cutting-workers-routes-in.html
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Sat Nov 22, 2014 2:29 am

Quoting mariner (Reply 36):
But who knows what is actually going on? I heard two rumours about the fleet yesterday that surprised me, one suggesting they've had more luck in finding decent aircraft that I had thought. And as I've suggested before, they may have an open handshake with Airbus for "certain cancellations." The other rumor was even sexier.

It seems they weren't just rumours - or the sexy one wasn't - but I gather it won't hit the wires until Monday.  

Unless the whistle blowers are busy getting on to their chums at the Denver Post, of course.

mariner
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Legend757
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Sat Nov 22, 2014 2:40 am

Quoting mariner (Reply 63):
It seems they weren't just rumours - or the sexy one wasn't - but I gather it won't hit the wires until Monday.  

Not sure I gather you? Are you being sarcastic?
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Sat Nov 22, 2014 2:48 am

Quoting Legend757 (Reply 64):
Not sure I gather you? Are you being sarcastic?

Sarcastic about what?

It's a rumor until Frontier announces it and I'm told it won't hit the wires until Monday.

mariner

[Edited 2014-11-21 18:50:21]
aeternum nauta
 
Legend757
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Sat Nov 22, 2014 2:57 am

I apologize. I had misunderstood you.
 
GentFromAlaska
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Sat Nov 22, 2014 10:55 pm

Quoting jerseyguy (Reply 15):
Connections for a ULCC are like oil and water, they don't mix

I suppose we could add vinegar and shake it up a bit   
Man can be taken from Alaska. Alaska can never be taken from the man.
 
strfyr51
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 1:41 am

United got to return Unused space and to NOT have to pay for it, they got to get out of an Abandoned Hangar and not pay for that either
We also added DEN-NRT service that Denver desperately wanted. So who is doing What for WHOM?!?
This ENTIRE conversation is a red Herring.!!
 
tom11
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 2:39 am

Quoting TWA772LR (Reply 3):
Am I the only one that's tired of seeing F9 barely scrape by and thinks it's time for someone to take them over? (All that out of pity, from me.) Be it UA, NK, AS, or WN?

I don't think F9 should merge...I think the US market has seen enough mergers/takeovers over the past 10 years, with HP/US, NW/DL, WN/FL, UA/CO, and now AA/US.

With that being said, to entertain your idea:
UA and AS would not make any sense. The business model is far too different, a legacy merging/buying a ULCC? They would dismantle F9 and the F9 product.

WN, again, is too different from F9 to make it work. Plus, they both have huge operations in DEN, and a merger/buyout would certainly hurt DEN. In addition, WN is still trying to finish the integration of FL, the last thing they need is another airline to integrate.

NK is the only reasonably suggestion here. Even at that, I don't think this is something NK is interested in.
 
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illinoisman
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 4:57 am

Quoting enilria (Thread starter):
The article says the blame is on taxes

Not paying your fair share of taxes or fees or wanting a tax break is like not wanting to pay your fair share of the rent or mortgage, you want to be a cheap-skating freeloader and live free off of the the money of others who do work hard and pay their share of rent -- talk about being on socialist corporate welfare!

Quoting airlinewatcher1 (Reply 1):
Interesting how they blame the airport and UA, when I also happen to know that they are alienating many loyal DEN customers with the ULCC business model.

It's not the expenses that are killing them, its the lack of revenue due to their awful customer service and charging for a carry on. F9 used to be a decent airline, but I wouldn't even consider flying with them now - my last experience was beyond awful. I was actually a Summit member for 3 years but now I will have to deal with over friendly and singing WN agents, and a cattle call to board. It's been a complete flip-flop with how they treat their frequent fliers, probably because they don't really care about passengers coming back. They figure a $50 seat will sell to *someone* whether it's a new customer or old. I managed to burn through my mileage balance this year and won't be back ever again

Quoting TWA772LR (Reply 3):
Am I the only one that's tired of seeing F9 barely scrape by and thinks it's time for someone to take them over?

WN entering DEN was the death knell for F9 - as they could no longer win on price or route coverage.
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 5:18 am

Quoting IllinoisMan (Reply 70):
It's not the expenses that are killing them, its the lack of revenue due to their awful customer service and charging for a carry on.

I guess you missed the post about the $35 million net profit:

Quoting mariner (Reply 24):
I'm not sure what you think their financial position is, but the latest numbers I have seen say that Frontier made $35 million - net - in Q2 2014.

http://www.denverpost.com/business/c...ut-low-cost-model-boosts-frontiers

"The financial data, filed with the U.S. Department of Transportation and first analyzed by industry publication Airline Weekly, shows Frontier earned a 15 percent operating margin during the second quarter of this year — a stark contrast to the mere 2 percent logged in the second quarter of 2013. Second-quarter 2014 net profit came in at $35 million."

I'm not sure how the airline is "getting killed" when it has numbers like that. You may not want to fly them but a lot of people do.

mariner

[Edited 2014-11-23 21:24:57]
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United1
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 5:44 am

Quoting mariner (Reply 71):
I'm not sure how the airline is "getting killed" when it has numbers like that. You may not want to fly them but a lot of people do.

Something is wrong as clearly they are not making money in DEN...either that or they want out of their leases and hope that the airport will negotiate.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 5:57 am

Quoting United1 (Reply 72):
Something is wrong as clearly they are not making money in DEN.

Who says they're not making money in DEN? One mo' time:

http://www.denverpost.com/business/c...ut-low-cost-model-boosts-frontiers

"Customers struggle, but low-cost model boosts Frontier's fortunes

Second-quarter 2014 net profit came in at $35 million."


Routes that are connection heavy are problematic - high cost/low yield - so they're dropping those.

mariner
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United1
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 8:42 am

Quoting mariner (Reply 73):

Quoting United1 (Reply 72):
Something is wrong as clearly they are not making money in DEN.

Who says they're not making money in DEN? One mo' time:

ummm....Dave Siegel...

From the linked article that started this thread...

"Frontier Airlines will cut flights and jobs at Denver International Airport because increased taxes and landing fees have made the hub unprofitable, airline CEO Dave Siegel told employees Monday."
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 8:53 am

Quoting United1 (Reply 74):
Frontier Airlines will cut flights and jobs at Denver International Airport because increased taxes and landing fees have made the hub unprofitable, airline CEO Dave Siegel told employees Monday."

"...had made "the hub" unprofitable."

That's why they're dropping (unprofitable) connection heavy flights and moving to mostly O&D, which is profitable.

mariner

[Edited 2014-11-24 01:00:55]
aeternum nauta
 
Rdh3e
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 3:49 pm

Quoting mariner (Reply 73):
Who says they're not making money in DEN? One mo' time:
Quoting mariner (Reply 75):
That's why they're dropping (unprofitable) connection heavy flights and moving to mostly O&D, which is profitable.

What's your point? The CEO said the hub was unprofitable. Of course some flights are good and some bad, but as a whole it's bad... There is literally no better source to prove this than a direct quote from a CEO.

Enilria:

As the only carrier to sign a long-term lease, and as the largest source of revenue for DIA, United absolutely deserves the bulk of the benefit. Reading the article that you yourself posted you can plainly see that UA is making a long term commitment to DIA, extending it's original agreement and promising the city they're not going to be the next CLE. There are also significant penalties for ditching out on the deal.

It may not be fair in everyone's eyes, but I bet if we laid out each piece of the deal and put a value on it, it probably wouldn't be too far in UA's favor.
 
TUSDawg23
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 4:14 pm

Quoting mariner (Reply 73):
Who says they're not making money in DEN? One mo' time
Quoting United1 (Reply 74):
"Frontier Airlines will cut flights and jobs at Denver International Airport because increased taxes and landing fees have made the hub unprofitable, airline CEO Dave Siegel told employees Monday."
Quoting mariner (Reply 75):
That's why they're dropping (unprofitable) connection heavy flights and moving to mostly O&D, which is profitable.

Mariner, I respect your civil dialogue on these boards, but at this point, youre losing the respect of other members on this board when you are continually coming to the defense of F9 and in doing so, ignoring or trying to spin simple facts like this one about the airline. I think the CEO knows a little more about how the DEN hub is doing than you do.
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 5:38 pm

Quoting TusDawg23 (Reply 77):
Mariner, I respect your civil dialogue on these boards, but at this point, youre losing the respect of other members on this board when you are continually coming to the defense of F9 and in doing so, ignoring or trying to spin simple facts like this one about the airline.

We know that Frontier was profitable in Q2 - $35 million - and that was basically DEN with some contribution from TTN.

CLE had scarcely started in Q2, nor CVG and that ILG was losing money. The entire letter is an explanation of why they are downsizing - even dehubbing - DEN and it is because "the hub" aspect is unprofitable.

This is what he actually said in the letter which can be accessed from a link in the Denver Post article in the OP:

"The cumulative effect of these increasing costs is that connecting traffic is no longer profitable for our airline."

I don't do this - and never have - for the respect of other members. I do this to try and keep the record straight about Frontier and it has sometimes made me very unpopular.

Such is life.

mariner

[Edited 2014-11-24 10:11:19]
aeternum nauta
 
GentFromAlaska
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 11:19 pm

Quoting mariner (Reply 75):
That's why they're dropping (unprofitable) connection heavy flights and moving to mostly O&D, which is profitable.

For clarity does your use of O&D mean P2P? O&D can be funneled through a hub and still be considered O&D
Man can be taken from Alaska. Alaska can never be taken from the man.
 
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mariner
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Mon Nov 24, 2014 11:36 pm

Quoting GentFromAlaska (Reply 79):
For clarity does your use of O&D mean P2P? O&D can be funneled through a hub and still be considered O&D

People seem to have different definitions of a lot of things here, but in this case It means what the CEO says it means - connecting traffic is no longer profitable for the airline.

Quoting mariner (Reply 78):
"The cumulative effect of these increasing costs is that connecting traffic is no longer profitable for our airline."


This is why the connection heavy routes have been dropped.

mariner

[Edited 2014-11-24 15:59:05]
aeternum nauta
 
GentFromAlaska
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RE: F9 Blames Deal With UA For Job/Flight Cuts In DEN

Tue Nov 25, 2014 1:17 am

Quoting mariner (Reply 80):
connection heavy routes

"Connection Heavy" I actually like the term it's easy on the ears and on an aging mind. Thanks for the word-smithing
Man can be taken from Alaska. Alaska can never be taken from the man.

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