United aiming Small?

Discussion in 'United Airlines | MileagePlus' started by edcho, Mar 8, 2013.  |  Print Topic

  1. edcho

    edcho Silver Member

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    http://skift.com/2013/03/07/united-...orlds-largest-airline-but-size-still-matters/


    Not too surprising but not too encouraging either. Looks like they will continue to try to cut capacity rather than to attract new flyers? How the heck will UA survive in the long term?
     
  2. Black Cloud
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    Black Cloud Gold Member

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    By reducing capacity they can fill more seats and charge more. AA/US will do the same thing.

    Makes perfect business sense for long-term survival.
     
  3. Wandering Aramean
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    Wandering Aramean Gold Member

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    And it is consistent with the behavior of every other post-merger airline in recent memory. Cut capacity and rationalize routes and fleet deployment to reduce costs and increase yields. Then grow where appropriate in a strategic manner.
     
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  4. eponymous_coward
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    eponymous_coward Gold Member

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    Trufax: Alaska Airlines is getting better than 10% return on invested capital (pretty good returns in the USA airline industry). They are nowhere near the largest airline in the USA.

    Running a good business in your industry and not being the largest business in your industry are not mutually exclusive concepts.
     
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  5. sobore
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    sobore Gold Member

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    Less flights, fuller aircraft. Not great for the traveler, but it seems to be working for the company.
     
  6. stephenbgarvan

    stephenbgarvan Silver Member

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    ARGH
     
  7. stephenbgarvan

    stephenbgarvan Silver Member

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    and they dont pull some of the same shenanigans
     
  8. stephenbgarvan

    stephenbgarvan Silver Member

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    driving down loyalty and continuing choice of allocation of spend in many cases..hmmmmmmmmmmmm
     
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  9. sobore
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    sobore Gold Member

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    It's helping AA. I just threw a few hundred their way. ;)
     
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  10. Scottrick
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    Scottrick Gold Member

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    I would rather they be smaller and focus on quality than expand just for the sake of being bigger. Hyatt is my favorite hotel chain, and yet people are constantly bringing up its small size. Guess which are the biggest chains? IHG, Hilton, Accor, Marriott, Wyndham, Choice, and Best Western (in no particular order). Would you like more Hilton pesos? More useless Priority Club Platinum status? More secret Wyndham devaluations?
     
  11. Wandering Aramean
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    Wandering Aramean Gold Member

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    Well, I also need hotels where I'm traveling to. For me personally none of the chains can provide anything remotely resembling coverage, much less at a reasonably price point. That means I cannot be loyal to them because they do not meet my actual travel needs. And, yes, such a thing exists outside the context of points, status and such.
     
  12. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    Guess which of the chains hasn't been where I wanted to travel recently.

    Quality is nice, but I don't want to pick my travel destinations based on the availability of Hyatt properties. Even if that means staying at a perhaps less high-quality hotel...
     
  13. HaveMilesWillTravel
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    HaveMilesWillTravel Gold Member

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    By the way, while there is a huge difference in scale between, say, Hyatt and Hilton/Marriott, I don't think this is the type of "aiming smaller" that United is looking for. They are not going to become Virgin America with posh cabins for a handful of routes.
     
  14. eponymous_coward
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    eponymous_coward Gold Member

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    AS's elite program has been "enhanced" in a number of ways over the years (of particular note, AS has DL-style three level award levels). You can find plenty of gripe threads on TOBB.
     
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  15. Captain Oveur
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    Captain Oveur Gold Member

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    In other news, water is wet.

    I don't doubt the points made upthread about leaner not being a bad thing. However, I don't get the feeling that was the intention when the airlines merged.
     
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  16. HeathrowGuy
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    HeathrowGuy Gold Member

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    It was almost certainly the intention from the United side. Historically, pre-merger United was never a particularly efficient organization.
     
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  17. Black Cloud
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    Black Cloud Gold Member

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    Look at the business fundamentals of US airlines over the last 15 years. Too much capacity was added, which drove fares down and made airlines unprofitable for the most part.

    The only way for the market to correct was to reduce capacity. That is accomplished in one of two ways: put your competitor out of business or merge. No one really had the balance sheet to out crazy the others so we're in a mass consolidation cycle.

    We'll be in a depressed capacity era for probably 10 years and then the market will likely flip again.

    This is business 101 and applies to almost every industry.
     
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  18. eponymous_coward
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    eponymous_coward Gold Member

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    For the legacies, yeah. For the LCCs like AS, WN, B6 and VX, as a group, they are considerably more influential in the industry than they were 15 years ago. That's where the growth's been. And IMO that's a good thing.
     
  19. Wandering Aramean
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    Wandering Aramean Gold Member

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    WN is far more a legacy than LCC at this point, including in the way they are dealing with capacity and growth.
     
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  20. eponymous_coward
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    eponymous_coward Gold Member

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    Possibly, but given that trees can't grow all the way to the sky, and there's a practical limit on the kinds of markets you can profitably and realistically serve in the USA with 737s, that was somewhat inevitable. There's a point where AS, VX and B6 will bump their heads too (it looks like VX may have hit that the day they started flying).

    I should also include F9, G4, and NK too.
     
  21. desamo

    desamo Gold Member

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    Smisek made this point when asked about Southwest at today's talk. He said in particular their return on capital investment (if I remembered that correctly) was more typical of a legacy than an LCC.
     
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  22. Wandering Aramean
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    Wandering Aramean Gold Member

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    Roughly everything about them is legacy at this point. The main differences they have are that they don't fly intercontinental and their FF program is revenue-based rather than miles-based. The latter will change with the other programs in the coming years. The former likely won't with WN but if that's the only metric you've got differentiating then, well, you're not all that different. And WN will be a regional player similar to B6 in terms of countries/destinations covered in the not-too-distant future.
     
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