08-05-2020Quote:
Pretty much all 50 seater are owned free and clear by now. You can pick up a 200 for about $300K without engines. A set of midtime engines sets you back another $2M or so. The majority of these engines are owned by SKYW. They even lease some of their inventory to DL.
Bottom line - they can offer 50 seat service at rock bottom price as long as oil is cheap, pilots are available and there is gate space. The latter was the most limiting factor up to a few months ago.
UA is a network carrier. The more you feed into a hub the more it perpetuates the network effect. The opposite is true too. The more you draw it the hub becomes exponentially less attractive to the point were it would make more sense to abandon a hub altogether rather than splitting traffic between UAs existing hubs. CLE and LAX would be the most likely casualties.
you want to maintain as many spokes as possible and that is where the 50 seater will continue to have a role - specifically if we do not give up any scope.
Just because something is cheap doesn’t mean that people want to buy it. I know that I don’t. When we go visit family I buy tickets since trying to nonrev with a family for 2 legs each way isn’t worth the trouble. I always buy tickets on AA instead of UA since I’d rather ride on an Airbus and connect to an E175 than 2 legs in a E145 on United. Potential customers do the same. We have the number of 50 seaters that we do because the company has chosen not to exercise contractual options to unlock more big rj’s, not because the 50 seater is a good product.Originally Posted by TFAYD
I believe that the comment was strategically placed to appeal to the audience. Remember that SK even acknowledged that the 50 seat question wasn’t asked but he answered it anyway.Pretty much all 50 seater are owned free and clear by now. You can pick up a 200 for about $300K without engines. A set of midtime engines sets you back another $2M or so. The majority of these engines are owned by SKYW. They even lease some of their inventory to DL.
Bottom line - they can offer 50 seat service at rock bottom price as long as oil is cheap, pilots are available and there is gate space. The latter was the most limiting factor up to a few months ago.
UA is a network carrier. The more you feed into a hub the more it perpetuates the network effect. The opposite is true too. The more you draw it the hub becomes exponentially less attractive to the point were it would make more sense to abandon a hub altogether rather than splitting traffic between UAs existing hubs. CLE and LAX would be the most likely casualties.
you want to maintain as many spokes as possible and that is where the 50 seater will continue to have a role - specifically if we do not give up any scope.
