Should United De-Hub Los Angeles? It Already Has.

There has been a consistent drumbeat regarding United for years in the analyst community: it has too many hubs and needs to close at least one. This mantra is flaring up again with talk that United should look at closing its hubs at Washington/Dulles and Los Angeles. Regarding Los Angeles, that’s sort of a foolish statement. It’s already happened.

Whether United wants to call Los Angeles a hub or not is irrelevant. The reality is that over the last 10 years, United has dramatically shrunk its operation there and shed a lot of flights which were more attractive to connecting passengers. A friendly party with a mi.diio.net subscription helped me out with the schedule data so you could see just how much has changed. I compared schedules (including mainline and regional operations) from July 2016 to those of July 2006, 10 years earlier. In 2006, I included Continental with United for comparison purposes. I did the same with Northwest and Delta, America West/US Airways and American, and AirTran and Southwest to put this chart together.

Percent Change LAX Flights Seats

If that doesn’t just say it all right there…. Overall, United scheduled 45.7 percent fewer flights this past July than it did in July 2006. It also had 26.2 percent fewer seats. Why the difference? Well many of the cuts have been on the regional side where fewer seats are impacted. But no matter how you look at it, this is a substantial decrease. At the same time, it has eliminated 22 nonstop destinations from LAX while adding 11. Here’s that list.

Dropped Routes Added Routes
Aguascalientes Ontario Austin
Bakersfield Oxnard Bozeman
Carlsbad Portland Hilo
Durango (Mexico) Philadelphia Jackson Hole
Guatemala City San Salvador Melbourne (Australia)
Imperial St George Minneapolis
Inyokern San Jose Oklahoma City
New York/JFK Santa Maria Shanghai/Pudong
Morelia Orange County Puerto Vallarta
Modesto Yuma San Jose del Cabo
Oakland Zihuatanejo Vancouver

To see the trends, I think it’s helpful to put this into a map. Thanks to Great Circle Mapper, here are the routes United has dropped.

United Abandoned LAX Routes Since 2006

And here are the routes United has added.

United Added LAX Routes Since 2006

What you notice is that the routes that have gone away fall into two categories. They’re either short regional routes that were full of connections, or they were Latin America routes. Meanwhile the routes that were added are either leisure routes or international, for the most part. But let’s get more specific here by region and see how capacity has shifted.

Intra-California
When I was growing up, United was a strong west coast airline. Regardless of where the headquarters was, people in the west considered United their own. That continues to be the case in San Francisco but it has been largely dismantled in both the Pacific Northwest and in Southern California.

From LAX to airports within California (excluding to the SFO hub), flights are off an incredible 80.8 percent with seats down 72.7 percent. Of the 22 eliminated markets from LAX, exactly half are cities in California. Some of this is because there just isn’t a good airplane for United to use to serve these markets. For years these were the bastion of the Embraer 120 turboprop. But once those were retired, it was 50-seat-jet or bust.

Excluding San Jose and Oakland, two cities that are no longer served because United just couldn’t compete with Southwest, these markets were nearly entirely connecting markets. These were full (or not full) of people flowing through LAX to fly elsewhere. In the case of the absurd flights from Ontario and Orange County, there couldn’t have been a single local traveler.

Even the markets that have kept LAX service have seen dramatic cuts. Fresno is down from 6 or 7 a day to 2 or 3. Palm Springs is down to only 1 flight a day. In markets like that, it still has to be about the connection, but it’s just such a minor presence now.

Intra-West
This isn’t just a California problem. It’s also an intra-West problem. In those markets, United flights are down 64 percent with seats down 60 percent. St George (Utah) and Yuma (Arizona) behave like California markets. They were Embraer 120 cities that disappeared when the fleet left. The only other market to go away is Portland, which I still find incredible.

But you don’t have to kill a route entirely in order to cut capacity. Tucson had 5 flights a day. It now has 1. Albuquerque had 3 flights a day. It now has 1. It’s the same story in all these markets where frequencies have collapsed. Vegas is down from 7 to 3, Seattle is down from 4 to 2. The only new market here is Vancouver, which is probably related to the strengthened partnership with Air Canada. To me, these look like markets that used to have a schedule designed for local and connecting travelers. Now, the semblance of a schedule that remains doesn’t really serve either group well.

Latin American Business/Ethnic Markets
It’s important to break out the business/ethnic markets in Latin America from the leisure markets because they cater to different travelers. On the business/ethnic side, United has effectively walked away. Flights are down 62 percent with seats down 60.9 percent. And 5 destinations are no longer served. It’s now just León and Mexico City. This is a market that United has simply decided not to bother playing in anymore.

Hub Markets
I pulled other United hub markets out of the geographic categories, because they should behave differently. After all, if LA becomes less of a hub, then it should need more connectivity into the other hubs, right? Apparently not.

Hub flights are down 5.4 percent and seats are down 4.2 percent. (I included Cleveland in here since it used to be one.) But really, this is a tale of shifting hubs. Denver service has been decimated (flights cut in half, seats down a third) while SFO has shrunk as well. The only hub that has gone up is O’Hare… except for Newark. Newark, however, is a special case because when United stopped flying to JFK, it shifted that over. So it better have grown.

Leisure Markets and Hawai’i
When it comes to leisure travel, United has a split personality. Hawai’i flying is down, a lot. That actually surprises me. United has 30.3 percent fewer seats on 27.2 percent fewer flights to the islands.

But in other leisure markets, United has grown flights by 127.7 percent with seats growing similarly. What’s going on there? Well there are new markets like Puerto Vallarta, Cabo, Bozeman, and Jackson Hole. Other markets like Aspen and Cancun have been strong growers as well.

Without looking at the data, my guess is that Hawai’i is down because connecting options are down while competition is up. Meanwhile these other markets survive more on local traffic and have less competition.

Transcon Flying
If we forget about JFK, which went away in favor of Newark, then United serves a mere 2 transcontinental markets. Philly is gone, so that leaves Baltimore (seasonally) and Boston. (Orlando is considered a leisure market, though I know there is Disney business that you could argue should have it elsewhere.) Those existing markets are down.

Cats and Dogs
I wasn’t really sure how to categorize these flights to the middle of the country, but I see this as a list of cats and dogs. Existing markets have shrunk (Dallas, New Orleans, San Antonio) but three new markets have been added (Austin, Minneapolis, Oklahoma City). For these specific new markets, my assumption is that they have a very specific need for the local market.

So, has anything grown? Yes! It’s the international world. United has added Melbourne and Shanghai. Meanwhile it has kept Tokyo, London, and Sydney, albeit with small airplanes. Melbourne isn’t really “new” service in that United used to just serve Melbourne via Sydney on a tag flight. It’s just now decoupled thanks to the 787. As for Shanghai, I can’t believe it’s still flying. United either wants to hold on to the authority or it has some big corporate clients that need it.


Ultimately, United has decided to shrink itself in LA dramatically. I imagine there is room to shrink more. Can one flight in Tucson and another in Albuquerque really do well enough to bother keeping them around?

United can’t de-hub LAX, because it’s already done it. The LAX operation looks like one that’s largely designed for the local market, even though it’s hard to see how United can serve the area as well as Delta or American now. Maybe the question analysts should be asking is… should United shrink Los Angeles further?

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81 Comments on "Should United De-Hub Los Angeles? It Already Has."

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davidp627
Member

The question is why would United abandon one of the largest air travel markets in the world? Especially when it had the natural advantage of being one of the first to lay down stakes. Obviously, the numbers have been crunched and they believe that they can’t be profitable at LAX. Why ihas United decided to build up SFO instead? The Bay Area is also a very competitive market.

A
Guest
Has the drop in UA seats/flights matched the gains from all other airlines? By the look of your graphic one would think DL has built up a fortress hub in LAX when I know that’s not the case. Coastal cities have always perplexed me as “hubs” for domestic travel. If I’m east of the Rockies why would I go to LAX to connect to a destination that I flew over already? This is where DEN makes sense to me as a hub. Totally understand the massive O/D market in LA and the international flights but the traditional hub and spoke… Read more »
mikemike
Member

How big is Delta compared to UA today at LAX? The change in service graph is interesting, but could be misleading if the amount of service is an order of magnitude different between the carriers.

CP
Guest

Interesting analysis. Do you not count IAD-LAX as a transcon market? They are doing 7/day on that route.

johnny
Member

I was thinking the same thing. What about Washington DC?

SEAN
Guest

A little hub history…

When hubs were growing after deregulation, CO was at LAX, UA was in CLE & both were in DEN. Fast forward a decade & a half & CO leaves DEN & UA trades CLE for LAX with CO. Once UA leaves CLE, the hub reopens at IAD. When CO chose to grow along the east coast, they placed their hub at EWR buying a small airline in the process who’s name I cant recall at the moment.

SDFDuck
Guest

PeoplExpress.

SEAN
Guest

Ah yes – thanks I thought that was it. In fact, CO almost left EWR. This was about 15-years ago & look at it now.

OhioExile
Guest

My thought is that IAD counts in the UA hub category rather than the transcon category. Thus EWR doesn’t appear either.

Tim Dunn
Member
another great topic, Cranky. Regarding the question upstream, Delta this month has 12% more flights and 18% more seats than United at LAX. The terminal swap at LAX should provide space for Delta to continue to grow. United is doing at LAX what American is doing at JFK: trying to say they can be a niche market carrier in a city where other carriers have much larger hubs. In most other hubs, the evidence shows you can’t compete in someone else’s hubs outside of to your own strength markets (usually other hubs) if you aren’t overall equal to or larger… Read more »
jeff
Member

I agree the similarities between UA at LAX and AA at JFK are striking. Who knows if it will work, but in reality those are probably the only two cities (maybe Chicago) where you can have a reasonably comprehensive O&D only focus and make money, nowhere else has a chance.

Remember that NH & UA are in a JV, they are allowed to coordinate routes and compare data legally, so any changes to TYO will be informed between them and serve the JV as a hole, for the all important financial side, it doesn’t matter which metal is flying.

Tim Dunn
Member

While from a financial standpoint, JVs share revenue, there are very different impacts on employees. If NRT flights have to be cxld as local, more valuable Tokyo local traffic is pulled to HND, there will be a shift in capacity operated by US carriers and their Japanese partners because the same-sized pot is split between 2 Japanese but 4 US airlines.

David SF eastbay
Member

Does it really matter if UA has cut flights or other airlines have added flights, or does it matter more if those flights are making money?

If UA only had 20 flights out of LAX and all 20 make money and say DL has 50 flights but only 19 made money, who is really better off. I’d rather have one flight between LAX and TUS as an example that made money then have 6 flights to compete, but only one still made money.

Tim Dunn
Member
David, AA DL and UA all have very similar average fares at LAX with UA being a little bit higher – likely because they have dropped a lot of west coast flights. The big 3 have very similar cost structures now so the chances are high that LAX is profitable for all 3 and for WN. Even though WN’s average fares are considerably less, they focus on intra-west flights far more than the big 3. The relative lack of gates at LAX overall is going to make LAX an attractive market; the fact that AA and DL are both committed… Read more »
Oliver
Guest

Is anyone working on an Embraer 120 replacement, or are those markets essentially hosed forever unless they can support 50-seaters (and what happens with those as the fleets get reduced).

Kurt
Member

Hey Cranky – you forgot to mention Pittsburgh in the dropped routes list, as well as no mention to the New Orleans route ending this past week.

As to my theory why United still operates LAX–PVG, I believe that’s due to the fact that J/V partner Air China does not have the authority to operate that route themselves (since China Eastern already does, and under current rule no two Chinese carriers can operate the same route to the US), but allowing United to operate it fills that hole.

southbay flier
Guest

If I lived in a market where I could choose any airline to fly and they are all equally convenient, UA would be my last choice. That’s the reality they are facing in LAX. Their hard and soft product have been behind what AA and DL offers. Why would you fly UA unless you had to?

mikebeau
Member

I live in the LA area and am not tied to a particular carrier, it’s been awesome getting so many new/additional choices due to the AA/DL build-up.

Ben
Guest

You seem to miss the point that they already have another, very significant hub very close to LAX (SFO), It makes no sense to have two hubs in close proximity to each other and have short flights from regional destinations to both hubs to then connect. It defeats the purpose of a hub which is to funnel everyone through the same connection point. SFO obviously makes better sense than LAX as the West Coast hub, for one because there’s less competition than SFO which are hubs for both DL and AA.

southbay flier
Guest

IAD and EWR are actually a bit closer to each other than SFO and LAX.

AW
Guest

How does the AS/VX merger play in? Does United retreat to SFO to play defense?

rud01
Member

No expert here by any means, but why expand international outbound without feeder traffic into LAX?

Side note UA terminal at LAX ongoing renovation incl UA lounges, or is that not on UA’s tab?

Anthony
Member

I’m no expert either, but I’d say the second largest metro area in the country ought to generate enough traffic by itself to support quite a few international flights.

Marissa
Guest
I travel to Tokyo quite often–mostly for connections. I dislike HND if i am going downtown–NRT is more convenient. I don’t know why people keep thinking HND is more convenient; however, HND does have good connections on ANA and a great hotel within the airport. The flight from LAX to NRT is always nearly full and nearly always the cheapest (I am coming from Montana). I can go via DEN to NRT but only do this a quarter of the time because it’s usually much more expensive even though much more convenient. I have noticed that I fly more out… Read more »
DesertGhost
Guest

I’d like to have a dollar for every pundit who’s said X airline is going to, or should, de-hub Y city. I’d make Bill Gates look like a pauper.

Anthony
Member

Haha! And the beauty of the internet is that we all can be pundits.

DesertGhost
Guest

So true!

Eric
Guest
Brett hinted at corporate traffic for LAX-PVG. AA historically has had most of the entertainment contracts, but Disney was one where internet armchair CEOs say it’s an UA account. They are building a Disneyland in Shanghai (and unlike Tokyo’s Disney not a franchise) which most likely required flights on their own metal. 787 is a good fit given the competition and a need to serve a corporate account. Brett – great analysis and a very interesting read. St George Utah I would say is a bit different than the others. It is Skywest’s head quarters and with all the EMB-120… Read more »
Anthony
Member

Being so near the southwestern corner of the continental US, LAX isn’t well-situated to be a domestic hub, but it’s still surprising to me that UAL is cutting service to those transcon and international destinations. LA just seems too big & important for a big-three carrier not to be there with abundant nonstop offerings. But I was equally surprised when UAL dropped JFK service, and my thinking was the same: how can a major carrier not have some presence at all three NY airports?? Obviously, UAL management didn’t think the same way.

Garrett D'Andrade
Member
Why is everyone so obsessed with UNITED in Los Angeles? Investors’ unreasonable obsession with PRASM clearly demonstrates that the ‘bottom line’ is ALL that matters in the U.S. airline industry. The days of flying certain routes or aircraft for ‘prestige’ are over in the states so I find it hard to believe that LA’s sub-hub doesn’t reap financial return. I’ve read a lot of commentary that suggests UNITED could reallocate LA capacity to SF, but what gleaming opportunities are they missing out on in SF? Adding a fourth 2nd tier Chinese city in one year? Doubtful. Latin America is a… Read more »
marvzwerin
Member

Cranky So, has UA decided to abandon the US and focus on international? How do maintain an image and prominence when you walk away from all the major markets?
Marv Zwerin

Jim
Guest

Cranky, do you have data showing numbers of passengers instead of percent change? I imagine that Delta was much smaller than United at LAX in 2006, so the large percentage increase may not mean that much. Even with the shrinking, I think United still has an operation of comparable size to the others on your chart.

AW
Guest

Where do I read more about the goofy Orange County to LAX flight that United used to run? That would be a fascinating trip report…

Steve
Guest
Lots of conjecture based on non correlated data points, and not much real analysis. The overall tone of this thread is overly negative, without any real focus on the positive aspects, 1) All the prop flying from LAX was dropped with the EAS agreements and I believe “at risk” flying by Skywest. This flying was a large segment of the ASM drop. 2) You ignore the fact that UA is spending $500M in terminal improvements to T7/8, which includes new lounges (United Club and Polaris). 3) You didn’t mention that United is adding another LHR departure from LAX, or the… Read more »
Steve McCroskey
Guest

The “story” is to say that there is no need to “de-hub” LAX (as other analysis articles around the internet suggest) since UA has done it already. Regardless of what reasoning is pointed out, what Brett is trying to highlight here is that UA has reduced capacity at LAX and is effectively serving the local market.

vasukiv
Member

There is no negative tone to Bret’s story. He’s just reporting the facts. United is doing the smart thing in focusing on where it can make money rather than having capacity for ‘bragging rights’ in a location where others are going crazy. There have been several articles speculating about the status of the IAD and LAX hubs for United. Bret is simply stating that LAX has already been de-hubbed.

Len
Guest
DL has had a habit of building and tearing down its LAX operation. I can think of at least three times it’s grown and shrunk. If I remember correctly, the last trough of their operation was right around 2006/07. They may have shrunk even more into the recession in 08/09. So the growth of DL between 2006 and 2016 looks really big, but it starts from a place where they purposefully got a lot smaller at LAX. A fun look might be the ebb and flow of DL (and AA) at LAX over the years. DL, along with AA have… Read more »
Tim Dunn
Member
Steve, there actually is real fact to support most of what has been discussed and not conjecture. First, average domestic fares between LAX and SFO are within a few dollars of each other – but UA is higher at SFO, likely a product of UA’s larger network to the eastern US. Second, AA, DL and UA all have domestic average fares within a few dollars of each other from LAX. The notion that they are dumping capacity to gain market share is not supported by facts. Third, UA’s strength at SFO is its transpacific network from which they gain a… Read more »
Uncle Jeff
Guest
You really have to be familiar with the CO mindset to understand what happened at LAX. CO uses a narrowminded approach to assessing things. In the case of flights, each flight itself is measured as a profit center, and if the assets can be deployed elsewhere for more return, then that’s what they do. Little consideration is put into the value of the whole, the network, or what it would do to other customers. An example of this in another industry would be a grocery store not selling milk. Hey, it takes a lot of valuable fridge space, and we… Read more »
jboekhoud
Member

7-Eleven would argue operating convenience stores without a gas station is a perfectly valid (and profitable) business model.

Mike Power
Member
I think this is great analysis and agree that UA have moved LAX into more of a focus city than a hub but (and similar to the IAD story) i really feel people are creating more of story here than exists. I agree that United has reduced hub flows through LAX and favors SFO, just as it has shown more love for EWR than IAD. It makes sense when one is smart and rational about it: SFO is a superior place for UA to hub (cf. LAX) with the one exception of fog and the harm that does to your… Read more »
Tim Dunn
Member

About 30% of the passengers flying United at LAX are connecting which is in line with AA and DL. The percent of connecting passengers can be calculated from local passengers from the DOT O&D survey and the number of passengers boarded by carrier.
LAX is a predominantly O&D airport for AA DL and UA but each connects thousands of passengers per day through LAX

Ken
Guest
There are some real fundamental misunderstandings here. American and Delta grown a lot at LAX. But to increase their Asia presence what were their choices? Also, when you look at the routes UA has added at SFO, UA is quickly becoming the Asia powerhouse airline. They are adding unique routes AA and DL will never be able to duplicate. Xian? Chengdu? Singapore? Routes the competition won’t be adding in our lifetimes. LAX will never be a fortress hub for any airline. If UA is going double daily on LAX-London, that doesn’t exactly follow the narrative of closing the hub does… Read more »
Tim Dunn
Member
Ken, United became the Asian powerhouse very soon after they bought Pan Am’s Pacific network in 1985 or so. Pan Am had long had a Pacific route system that was not focused just on Japan as Northwest did so United was in a very great position to be able to make San Francisco into a transpacific gateway. While it is hard to believe that either AA or DL will ever have a transpacific hub as large as UA at SFO, they both have done a very good job of growing other hubs. DTW is the largest US carrier transpacific gateway… Read more »
Ken
Guest
No, LAX is not a UA focus city. CLE is absolutely a focus city for UA. They have hub flights with a number of other flights to places like DCA, LGA, BOS, CUN, and SJU. They also have seasonal flights from CLE to Fort Meyers and Fort Lauderdale. That is truly a focus city. UA has a broad portfolio of LAX flights, including China, Japan, London, and Australia. UA does connect people through LAX to these destinations, so it’ s pretty straightforward in being a hub. It’s still a hub even though it may not be the #1 in the… Read more »
Rhys
Guest
Looked up UA mainline stats comparing 8/2006 with 8/2016. UA operated lights are down from 3,486 to 2,984. Seats are down from 564,117 to 527,950, a decline of 6.4%. ASM’s are up from 1,008,903,166 to 1,080,303,305. Average passenger stage length has grown from 1,788 miles to 2,046 miles. Source is Diio based off of DOT stats. Having worked in network strategy for a rival, I think the best way to look at the hub vs focus city argument for UA at LAX is what share of passengers departing a city are connecting vs local origin. A hub has a higher… Read more »
Matthew
Guest

Cranky, I have appreciated this discussion and thank you for your input on my blog. A user named Rhys just posted some interesting info that you should check out — comment #6.

ETA: Oh, looks like he has posted the same to your blog.

What do you think?

Rhys
Guest
Have posted to both of your blogs. I filtered out connections in other hubs originating at LAX (such as LAX-IAH-MIA). Was a little quick with the unoriginal stats as Inwas in a rush at lunch. United’s LAX connecting percentage (DEN-LAX-SYD) is 30% in Q1 of 2016 compared to Delta at 33% and AA at only 24%. United in 2006 Q1 connected 41% of paxs at LAX. United at LAX seems to have plenty of hub connectivity left and has not restricted to a locally targeted schedule. Part of this may be due to AA and DL having better shedule for… Read more »
Rhys
Guest

Southwest, just to be thorough, is 73% local O&D pax at LAX during the first quarter of 2016, 13% connecting or 1-stopping through LAX, and 14% originating in LAX connecting elsewhere.

Rhys
Guest
I can dig further. In my rapid lunch time exercise, I may have left out CO in 2006, but will double check. That would show a bigger decline in hub size if I had left CO out, maybe a 25% decline instead of 16% in UA seats, but would lessen the decline in LAX connecting percentage over the last 10 years. I would be able to filter our other hub originating UA traffic between 2006 and 2016. It would be interesting to compare fares through LAX connecting versus DL and AA performance between 2006 and 2016. I’m not sure what… Read more »
Rhys
Guest
Spent a little more time working on UA LAX traffic stats and ironed out the data. There had been an error that excluded CO from UA’s 2006 stats, I added HP to AA’s stats for 2006, they had yet to merge in the DOT stats, and WN would get credit for Air Tran’s 3 flights. UA’s share of LAX traffic connecting through LAX dropped from 36% in 1st Qtr 2006 to 30% in 1 qtr 2016, higher than AA’s 24% in 2016 and just three points behind DL’s 33%. Based on connectivity, UA’s LAX operation resembles DL and AA which… Read more »
Michael Simpson
Member
Rhys I think you’ve done fantastic work, especially since you’ve been assessing the network of a competitor (and, apparently, on your own time!) This is going to sound like I’m attempting to diminish your work (I’m not) – but it appears to me that we’re we getting a bit ‘weedy’. One of responses CF posted earlier was that (to paraphrase) defining a ‘hub’ is somewhat subject to semantics. From my reckoning there are, at least, three definitions of what constitutes a hub from an airline network perspective: (1) A hub that funnels traffic on an on-line basis (UA to UA… Read more »
Ken
Guest
I disagree that a nonhub is a city oriented around local passengers only, and that LAX is not a hub city by that definition. This is what CLE has become for UA. On a side note last summer I did actually connect on CLE on UA. I was traveling from CUN-CLE-DEN. But CLE is not a hub. It should be called a focus city. I am living proof UA still connects people through CLE. Does that make CLE a hub? No. There are probably very few customers connecting on UA in CLE. But for some odd reason UA does not… Read more »
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