Anyways moving on to David’s comment:

“I said to people a long time ago that the government needs to go back to setting prices. That will be the only way service comes back into the airline business as when fares were set by the government the airline only had service to set them apart.”

I think that regulation is the worst thing that can happen to the industry right now. It’s been said again and again that consumers find price and schedule more important than service. Regulation simply provides an artificial rise in fares with no guarantee for an improvement for the consumer. The best way to bring about lower prices and a better product is competition, which is limited in a regulated environment.

“Oakland is another area Southwest is hurting the other carriers. Not counting Aloha, ATA, and Skybus, AA and CO pulling out of Oakland had to be due WN and their big operation at OAK and Jetblue being #2 at OAK. WN has gotten so big that one can get from the Bay Area to just about anywhere heading east with a one stop using WN, so connections on AA and CO just don’t have as big a draw as it might have been when a “large” carrier served a city.”

What’s the problem? It is clear that WN and B6 have provided a superior product compared to AA and CO in these markets. The consumers have clearly made a choice in this situation.

Fort Lauderdale on the other hand, is somewhat shocking. Southwest smells blood in the water @ FLL and I find it little coincidence that all of the new routes announced by WN either touch FLL where UA has quit entirely or DEN, where obviously UA is downsizing.

Fort Lauderdale is less seasonal than West Palm Beach and does have some business traffic. Also keep in mind American maintains a fairly decent sized station in Fort Lauderdale (largely point to point flights now that San Juan and St Louis are being axed) and Delta has had a long term presence there. Jet Blue, Spirit and Southwest all have 40 plus daily flights so the fact that United would terminate service to an Airport with so many airlines having more than just operations to hub cities is a real indication of where United is headed.

But then again any airline that had to quit a route from JFK to Heathrow a few years back has trouble beyond simply losing money in a few poorly served stations.

Allen – I absolutely think SWA’s move in Denver is a major thing on the minds of investors. Southwest does not compete with the car; it carried more domestic passengers than any other airline last year and it’s a massive powerhouse. You can compare route maps from Frontier and Southwest and see that the overlap is tremendous. There are very few cities that Frontier flies where Southwest doesn’t, and they’re mostly small.

Bobber – The flight doesn’t go away until October 25, so you’re fine. Enjoy your trip.

Any idea when the LHR-DEN gets cut? We’re taking that route at the end of July on the way to OAK (cheaper than SFO). I was never convinced there was a need for more direct flights to DEN from LHR (I think BA has one, unless that is out of LGW). I’m due to make an LHR-GIG trip in November as well, hoping to do so on UA, but is that a likely candidate for the chop as well now?

Bobber

p.s. Hope your head has cleared now!

Europe – ZRH, GVA, ATH, HAM, TXL, GLA, FCO
S.Amer – SCL, BOG, PTY, GIG, ASU, MVD, CNF
Asia – DEL, MNL, GUM, SPN, and HKG – JFK/LAX/DEL/NRT
S.Pac – BNE, AKL

Each one, in my mind, represents major opportunities lost or mishandled at the hands of United management. Each of these cities continues even today to be served by at least one US carrier except BNE and CNF. So how do the other carriers make these markets work where the Friendly Skies failed?

Other US carriers are not without their own high visibility market failures – AA pulled out of Australia twice – it just seems that UA has had far more of them than most. Strangely, all of these failures came from Pan Am cast offs, too. Pan Am made its bones in Latin America, giving birth to several airlines in the region who followed its model. Yet with such a rich history loaded with loyal Pan Am customers, United basically ceded the opportunity to American who inherited a bare bones operation from Eastern who got a fire sale bargain from Braniff!

Delta got the better routes from Pan Am to Europe but rather than figure out a way to serve the markets they inherited nonstop instead of intra-Europe (ZRH and GLA were the two exceptions), United pretty much just said fuhgeddaboudit, packed up and left.

In Asia? Wow. They inherited an operational mess that included all-coach L-1011s but actually spent a penny on equipment and facility improvements which, for a while, paid off handsomely. HKG is a shell of its former self and UA is stuck flying nonstops from the US that are becoming too expensive to operate. Their version of the 777 can’t fly ORD-HKG leaving them stuck with the 747s they’re not retiring. Otherwise they would have made the switch long ago.

Opportunities lost or badly mishandled, from one corner of the world to another. “The numbers don’t work” sounds hollow in the face of US based competition that beat them to the punch and are making the numbers work just fine.

There was a time in the airline world when no one thought Braniff would fold. Certainly not Eastern. DEFINITELY not Pan Am! Well, why not United?

I think the airlines are cutting routes more for the reason of getting rid of employees and no or low profit routes and using fuel prices as the reason. So many routes are flown just because the other “guy” flys it. They all seem to think they must to what everyone else is doing.

Southwest and Denver is a good example of one airline hurting two airlines at once. Maybe Frontier needs to move. Those old enough to remember years ago when Western was a big player at Denver along with UA and CO, but they realized it was best to move to SLC where they would be alone.

Oakland is another area Southwest is hurting the other carriers. Not counting Aloha, ATA, and Skybus, AA and CO pulling out of Oakland had to be due WN and their big operation at OAK and Jetblue being #2 at OAK. WN has gotten so big that one can get from the Bay Area to just about anywhere heading east with a one stop using WN, so connections on AA and CO just don’t have as big a draw as it might have been when a “large” carrier served a city.

I wonder what things will be like a year from now.

I think Frontier investors are extremely worried about Southwest. High fuel costs are one thing, but Southwest is preventing Frontier from being able to raise prices to accommodate for them. It all comes back to competition and supply and demand.

Fuel costs are being blamed for so much in this industry, but it’s not the main reason for the industry’s problems. Commoditization and over-capacity are the real culprits that aren’t allowing the carriers to adjust ticket prices to the rise in fuel prices. One of three things will happen to snap back the industry to rationalization. Either a large legacy will go under, fuel prices will drop back into the $2 range, or both.

If fuel prices drop, the airlines are going to be very hesitant to give back the hard earned price hikes, especially after the huge capacity cuts announced recently. If a legacy goes (United or USAirways?), there’s going to be so much capacity taken out of the market that airlines will once again have pricing control and fares will be able to be raised to meet fuel prices.

Either way, history will prevail, and the airlines will be making historic amounts of money once again in only a few years. Unless, of course the government props up the feeble airlines again. If that happens, disregard everything I just said.

I wouldn’t describe the difference between Frontier and SWA in Denver as “very few”, either. IIRC even with this Frontier still servers twice as many destinations with about twice as many flights.

Isn’t SWA’s competition the car?

But this is just my two-bits worth. No fancy research; just stuff I know from being overly geeky about the airlines. :)

Still, compared to many other airlines around the world, UA has an inferior cabin product (granted, its getting better in J class). Maybe it’s a sign that the problems are much bigger and will not be solved just by parking planes and culling routes.