"UAL doesn't want the competition" of SWA
06-10-2012, 08:19 PM
#34
Banned
Joined APC: Oct 2010
Position: IAH 737 CA
Posts: 690
Top 23 4th Quarter 2010:
1. LAX - 7.91M
2. LAS - 7.03M
3. MCO - 6.97M
4. ATL - 6.57M
5. ORD - 6.56M
6. DEN - 6.11M
7. SFO - 5.91M
8. PHX - 5.49M
9. BOS - 5.46M
10. LGA - 5.36M
11. DFW - 5.29M
12. SEA - 4.92M
13. JFK - 4.41M
14. FLL - 4.36M
15. BWI - 4.12M
16. PHL - 4.07M
17. EWR - 3.97M
18. SAN - 3.85M
19. MSP - 3.64M
20. TPA - 3.54M
21. DCA - 3.54M
22. DTW - 3.47M
23. IAH - 3.15M
1. LAX - 7.91M
2. LAS - 7.03M
3. MCO - 6.97M
4. ATL - 6.57M
5. ORD - 6.56M
6. DEN - 6.11M
7. SFO - 5.91M
8. PHX - 5.49M
9. BOS - 5.46M
10. LGA - 5.36M
11. DFW - 5.29M
12. SEA - 4.92M
13. JFK - 4.41M
14. FLL - 4.36M
15. BWI - 4.12M
16. PHL - 4.07M
17. EWR - 3.97M
18. SAN - 3.85M
19. MSP - 3.64M
20. TPA - 3.54M
21. DCA - 3.54M
22. DTW - 3.47M
23. IAH - 3.15M
06-11-2012, 08:28 AM
#35
Line Holder
Joined APC: Nov 2008
Position: Boeing
Posts: 52
This article may just be written by a Smisek intern.
It goes from first saying that Houston is the 3rd most profitable hub in the US to then saying why it is not.
Houston: You Blew It on United Hub | Industrials News | Print Financial & Investing Articles | TheStreet
Houston: You Blew It on United Hub
Ted Reed
06/11/12 - 06:31 AM EDT
HOUSTON (TheStreet) -- Houston, you blew it. You killed the goose that laid the golden egg.
Aesop's fable, written in the sixth century B.C., tells of a couple that had a goose that laid golden eggs. Thinking they could get more gold more quickly, the couple killed the goose and cut it open. But they found no more eggs. The fable has stood for 2,400 years as a tale of being rich, wanting to be richer, and losing everything in that pursuit.
This ancient lesson, unfortunately, was lost on Houston's city council, which voted 16-1 last month to enable Southwest (LUV) to build an international terminal at Houston Hobby Airport, diminishing United's (UAL) hub at Houston Bush Intercontinental. There United operates the third biggest U.S. hub, with 650 daily departures to 177 destinations including 64 international destinations.
United's Houston hub is also the third most profitable major airline operation in the country in terms of profit margin, according to Scott Kirby, president of US Airways (LCC). The golden egg is the vast benefit it brings to Houston's economy. In a global world, cities have few assets more important than international airports with the reach to drive global commerce.
As John Kasarda, professor at the Kenan-Flagler Business School at the University of North Carolina, has said, in the 18th century the great cities were ports. In the 19th century, the great cities were railroad cities. In the 20th, they were cities with good highway access. In the 21st century, they are cities with non-stop international flights.
What misled the Houston council? First, it is far too easy to argue that competition is wonderful and solves every problem and government should never stand in the way. Also, the 2010 merger between United and Continental bred resentment because the hometown carrier closed its Houston headquarters. And who can resist the promise of lower fares to Mexico City and Cancun and San Jose del Cabo and the engaging charm of Southwest CEO Gary Kelly?
On top of all that, Southwest reversed an earlier position to say it would pay for the needed improvements at Hobby. Free money! If only life were so simple.
Houston, of course, is important - it's the home of the oil industry and the fourth biggest U.S. city. Nevertheless, Houston cannot possibly, by itself, support all the flights United operates there. Rather, 71% of hub passengers connect, coming from elsewhere to change planes. That is the highest percentage for United's hubs. At Denver, the next highest, 68% connect. At Dulles, 65% connect; at Chicago, 62%; at Cleveland 57%, and at Los Angeles and San Francisco, 52%. At Newark, the lowest, just 42% connect.
Statistics compiled by United show that among U.S. hubs, Houston ranks fourth in providing airline seats that exceed the number of local passengers. In other words, Houston has far more capacity than its residents fill. Charlotte, US Airways' biggest hub, has 5.3 seats per local passenger. Atlanta, Delta's(DAL) biggest, has 4.2. Dallas, AMR's(AAMRQ.PK) biggest, has 2.9. Houston has 2.8, Detroit has 2.5 and Chicago also has 2.5. At the other end of the spectrum, Miami and Los Angeles have just 1.6 seats per local passenger. (Capacity includes all airlines, not just hub carriers.) Among the top 10 hub cities, only Chicago has two international airports.
In the hub system, you bring in passengers to connect. The more passengers you have, the more flights and destinations you can offer. Sadly, little margin for error exists in a historically unprofitable business where, too often, the last one or two passengers on an airplane provide the margin between a profit and a loss.
"Charlotte is truly the No. 1 case of how you can build a hub in a smaller city that drives jobs and benefits to the local economy far above what the local economy warrants," said Brian Znotins, United's managing director of international planning. "But Houston too has disproportionately attracted capacity. Since the merger, we've grown Houston more than any other hub. Houston was set up for success, but then something changed, because Houston said 'We will redo our aviation policy.'"
Now, United must respond. It plans to cut about 6% of Houston capacity, starting with its September schedule.
"We have a series of flight that lose money," Znotins said. "We knew they were losing money, but we thought we were going to grow in Houston. Now we know we won't grow, so those flights look like money-losing investments that won't get any better. Rather than fly them for two more years, we are pulling back."
Among the lost flights, the most prominent was showcase Houston-Auckland, New Zealand service, where Continental had planned to use a Boeing 787 seating 219 people. Only four of those 219 had Auckland or Houston as a final destination. The rest were connecting. But in 2013, Houston Bush will offer fewer connecting passengers. So why start?
Other planned cuts include one of three daily 737 flights to San Jose, Costa Rica, one of four daily 737 flights to Baltimore, and one of two daily flights to Morelia, Mexico on a 50-seat regional jet. Some other flights will get smaller aircraft, while a small number of destinations, fewer than a dozen, will disappear, Znotins said.
Maybe it doesn't seem like much. But you take out a few flights here and a few flights there, and suddenly your hub isn't quite so powerful anymore.
The tragedy is that Aesop laid all this out two and a half millennia ago. The golden goose, the United hub, provides Houston with far more air service than it can support. That only made Houston want more, so it chopped up what it has in return for a few cheap flights to Cancun.
-- Written by Ted Reed in Charlotte, N.C.
It goes from first saying that Houston is the 3rd most profitable hub in the US to then saying why it is not.
Houston: You Blew It on United Hub | Industrials News | Print Financial & Investing Articles | TheStreet
Houston: You Blew It on United Hub
Ted Reed
06/11/12 - 06:31 AM EDT
HOUSTON (TheStreet) -- Houston, you blew it. You killed the goose that laid the golden egg.
Aesop's fable, written in the sixth century B.C., tells of a couple that had a goose that laid golden eggs. Thinking they could get more gold more quickly, the couple killed the goose and cut it open. But they found no more eggs. The fable has stood for 2,400 years as a tale of being rich, wanting to be richer, and losing everything in that pursuit.
This ancient lesson, unfortunately, was lost on Houston's city council, which voted 16-1 last month to enable Southwest (LUV) to build an international terminal at Houston Hobby Airport, diminishing United's (UAL) hub at Houston Bush Intercontinental. There United operates the third biggest U.S. hub, with 650 daily departures to 177 destinations including 64 international destinations.
United's Houston hub is also the third most profitable major airline operation in the country in terms of profit margin, according to Scott Kirby, president of US Airways (LCC). The golden egg is the vast benefit it brings to Houston's economy. In a global world, cities have few assets more important than international airports with the reach to drive global commerce.
As John Kasarda, professor at the Kenan-Flagler Business School at the University of North Carolina, has said, in the 18th century the great cities were ports. In the 19th century, the great cities were railroad cities. In the 20th, they were cities with good highway access. In the 21st century, they are cities with non-stop international flights.
What misled the Houston council? First, it is far too easy to argue that competition is wonderful and solves every problem and government should never stand in the way. Also, the 2010 merger between United and Continental bred resentment because the hometown carrier closed its Houston headquarters. And who can resist the promise of lower fares to Mexico City and Cancun and San Jose del Cabo and the engaging charm of Southwest CEO Gary Kelly?
On top of all that, Southwest reversed an earlier position to say it would pay for the needed improvements at Hobby. Free money! If only life were so simple.
Houston, of course, is important - it's the home of the oil industry and the fourth biggest U.S. city. Nevertheless, Houston cannot possibly, by itself, support all the flights United operates there. Rather, 71% of hub passengers connect, coming from elsewhere to change planes. That is the highest percentage for United's hubs. At Denver, the next highest, 68% connect. At Dulles, 65% connect; at Chicago, 62%; at Cleveland 57%, and at Los Angeles and San Francisco, 52%. At Newark, the lowest, just 42% connect.
Statistics compiled by United show that among U.S. hubs, Houston ranks fourth in providing airline seats that exceed the number of local passengers. In other words, Houston has far more capacity than its residents fill. Charlotte, US Airways' biggest hub, has 5.3 seats per local passenger. Atlanta, Delta's(DAL) biggest, has 4.2. Dallas, AMR's(AAMRQ.PK) biggest, has 2.9. Houston has 2.8, Detroit has 2.5 and Chicago also has 2.5. At the other end of the spectrum, Miami and Los Angeles have just 1.6 seats per local passenger. (Capacity includes all airlines, not just hub carriers.) Among the top 10 hub cities, only Chicago has two international airports.
In the hub system, you bring in passengers to connect. The more passengers you have, the more flights and destinations you can offer. Sadly, little margin for error exists in a historically unprofitable business where, too often, the last one or two passengers on an airplane provide the margin between a profit and a loss.
"Charlotte is truly the No. 1 case of how you can build a hub in a smaller city that drives jobs and benefits to the local economy far above what the local economy warrants," said Brian Znotins, United's managing director of international planning. "But Houston too has disproportionately attracted capacity. Since the merger, we've grown Houston more than any other hub. Houston was set up for success, but then something changed, because Houston said 'We will redo our aviation policy.'"
Now, United must respond. It plans to cut about 6% of Houston capacity, starting with its September schedule.
"We have a series of flight that lose money," Znotins said. "We knew they were losing money, but we thought we were going to grow in Houston. Now we know we won't grow, so those flights look like money-losing investments that won't get any better. Rather than fly them for two more years, we are pulling back."
Among the lost flights, the most prominent was showcase Houston-Auckland, New Zealand service, where Continental had planned to use a Boeing 787 seating 219 people. Only four of those 219 had Auckland or Houston as a final destination. The rest were connecting. But in 2013, Houston Bush will offer fewer connecting passengers. So why start?
Other planned cuts include one of three daily 737 flights to San Jose, Costa Rica, one of four daily 737 flights to Baltimore, and one of two daily flights to Morelia, Mexico on a 50-seat regional jet. Some other flights will get smaller aircraft, while a small number of destinations, fewer than a dozen, will disappear, Znotins said.
Maybe it doesn't seem like much. But you take out a few flights here and a few flights there, and suddenly your hub isn't quite so powerful anymore.
The tragedy is that Aesop laid all this out two and a half millennia ago. The golden goose, the United hub, provides Houston with far more air service than it can support. That only made Houston want more, so it chopped up what it has in return for a few cheap flights to Cancun.
-- Written by Ted Reed in Charlotte, N.C.
Last edited by caflyer; 06-11-2012 at 08:55 AM.
06-11-2012, 09:27 AM
#37
On Reserve
Joined APC: Oct 2011
Posts: 16
Perhaps Houston has not done enough to protect United/Continental. And maybe we should look at ways for U/Con to be more profitable. Clearly having a level playing field for competition to United isn't good enough. May I make a few suggestions to appease the high and Exhaulted United Airlines.
1) The hell with merely restricting international competition at Hobby. Clearly if United is dropping a Baltimore flight, Southwest is domestic competion. How about United demand that Houston close Hobby Airport altogether. That way, they could preserve the United Hub at IAH.
2) Since competition from an airline that doesn't interline is unacceptable, Let's just ban Southwest from IAH as well. They were there once and the COULD come back. Let's just get Barney Fife out here and "Nip it in the bud."
3) International traffic is vital to the survival of United at IAH. And everyone in Texas knows it's only 3-4 hours to drive from DFW to IAH. With American in BK, LET'S JUST BAN ALL INTERNATIONAL TRAFFIC AT DFW. After all they already repealed the Wright ammendment. It's all for IAH and United.
4) Finally, Let's ban all international private flights from IAH to anywhere. remember, this is all about protection for United Airlines.
Let's hope these few simple steps can appease the lord god United so they will bless the peons of Houston with their continued presence.
What a bunch of whiny little babies.
1) The hell with merely restricting international competition at Hobby. Clearly if United is dropping a Baltimore flight, Southwest is domestic competion. How about United demand that Houston close Hobby Airport altogether. That way, they could preserve the United Hub at IAH.
2) Since competition from an airline that doesn't interline is unacceptable, Let's just ban Southwest from IAH as well. They were there once and the COULD come back. Let's just get Barney Fife out here and "Nip it in the bud."
3) International traffic is vital to the survival of United at IAH. And everyone in Texas knows it's only 3-4 hours to drive from DFW to IAH. With American in BK, LET'S JUST BAN ALL INTERNATIONAL TRAFFIC AT DFW. After all they already repealed the Wright ammendment. It's all for IAH and United.
4) Finally, Let's ban all international private flights from IAH to anywhere. remember, this is all about protection for United Airlines.
Let's hope these few simple steps can appease the lord god United so they will bless the peons of Houston with their continued presence.
What a bunch of whiny little babies.
06-11-2012, 09:58 AM
#38
APC co-founder
Joined APC: Feb 2005
Position: B777
Posts: 5,853
United only has 275 departures out of IAH, the rest of the claimed 650 departures are outsourced.
http://www.airlinepilotforums.com/av...epartures.html
http://www.airlinepilotforums.com/av...epartures.html
06-11-2012, 10:53 AM
#39
HOSED BY PBS AGAIN
Joined APC: Mar 2005
Posts: 1,713
Originally Posted by clouseau
Perhaps Houston has not done enough to protect United/Continental. And maybe we should look at ways for U/Con to be more profitable. Clearly having a level playing field for competition to United isn't good enough. May I make a few suggestions to appease the high and Exhaulted United Airlines.
1) The hell with merely restricting international competition at Hobby. Clearly if United is dropping a Baltimore flight, Southwest is domestic competion. How about United demand that Houston close Hobby Airport altogether. That way, they could preserve the United Hub at IAH.
2) Since competition from an airline that doesn't interline is unacceptable, Let's just ban Southwest from IAH as well. They were there once and the COULD come back. Let's just get Barney Fife out here and "Nip it in the bud."
3) International traffic is vital to the survival of United at IAH. And everyone in Texas knows it's only 3-4 hours to drive from DFW to IAH. With American in BK, LET'S JUST BAN ALL INTERNATIONAL TRAFFIC AT DFW. After all they already repealed the Wright ammendment. It's all for IAH and United.
4) Finally, Let's ban all international private flights from IAH to anywhere. remember, this is all about protection for United Airlines.
Let's hope these few simple steps can appease the lord god United so they will bless the peons of Houston with their continued presence.
What a bunch of whiny little babies.
1) The hell with merely restricting international competition at Hobby. Clearly if United is dropping a Baltimore flight, Southwest is domestic competion. How about United demand that Houston close Hobby Airport altogether. That way, they could preserve the United Hub at IAH.
2) Since competition from an airline that doesn't interline is unacceptable, Let's just ban Southwest from IAH as well. They were there once and the COULD come back. Let's just get Barney Fife out here and "Nip it in the bud."
3) International traffic is vital to the survival of United at IAH. And everyone in Texas knows it's only 3-4 hours to drive from DFW to IAH. With American in BK, LET'S JUST BAN ALL INTERNATIONAL TRAFFIC AT DFW. After all they already repealed the Wright ammendment. It's all for IAH and United.
4) Finally, Let's ban all international private flights from IAH to anywhere. remember, this is all about protection for United Airlines.
Let's hope these few simple steps can appease the lord god United so they will bless the peons of Houston with their continued presence.
What a bunch of whiny little babies.
06-11-2012, 07:05 PM
#40
Gets Weekends Off
Joined APC: Jun 2011
Posts: 467
There will be 5 international gates at Hobby.
Maybe we need to stack RJ's out of Hobby every 20 minutes going to Latin America..............Ya know, in that 5th gate. SWA only has 4 of those gates. All UAL needs to do is sue to get that other gate or sue to add more gates.
Lets go head to head with SWA internationally. It's here, and it is inevitiable, so lets roll.
Maybe we need to stack RJ's out of Hobby every 20 minutes going to Latin America..............Ya know, in that 5th gate. SWA only has 4 of those gates. All UAL needs to do is sue to get that other gate or sue to add more gates.
Lets go head to head with SWA internationally. It's here, and it is inevitiable, so lets roll.
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