Less than two months ago, I asked Brian Znotins, VP of Network for United, what the future of Cleveland looked like. He said it had “long been challenged to turn a profit,” but I wasn’t able to get a read on whether the death of the hub was imminent. Turns out, he must have had the plan to chop Cleveland down already in progress. [Edit on 04FEB @ 8pm: United reached out to me to make it clear that no plans were made in any form until January of this year, so it was a quickly-implemented decision.] It’s now official. Cleveland will become the largest NON-hub for United.
United told its employees in Cleveland over the weekend that it would be dramatically downsizing the hub in waves. By the time they finish in June, Cleveland will still see service to 20 cities. That will include the hubs and key business markets like New York/LaGuardia, Washington/National, and Boston. And fear not, Florida-lovers, those prime leisure markets like Tampa, Orlando, and more will still get flights as well. Mainline flights are mostly unchanged but regional flying is slashed.
To most people, this shouldn’t be a surprise. Just as Memphis was to Northwest in the South, Cleveland was Continental’s beachhead into the Midwest. But once it merged with United, the strategic rationale for maintaining a Cleveland hub in the shadow of Chicago disappeared. I should note that this is very different from Charlotte, which while also a mid-size city, provides real network value for American.
After the merger went through, the only real point of a Cleveland hub was if the city could support it with strong local traffic. Otherwise, connections could easily be served over existing hubs. And just about everyone knew it.
Of course, United tried at the time to calm fears by signing a five-year deal to keep the hub intact. But after 2 years, lack of profitability gave United an out. Even without hitting those targets, it wasn’t all that costly for United to walk away. As I said to the Cleveland Plain-Dealer in 2010, “if it doesn’t work, I don’t see this as a deterrent to walking away.” That has turned out to be true, since they’re walking away before the 5 year mark.
There was really only one thing surprising about all this, and it was the rationale given by CEO Jeff Smisek in his letter to the employees.
You would think the right thing to do is just say it the way it is. “We were flying 50-seat RJs around unprofitably and it just didn’t work despite the support everyone in the city provided.” But Smisek tries to deflect the blame on to others. This reminded me of the whole dust-up in Houston where Smisek blamed the city allowing Southwest to build a customs facility at Hobby Airport for United’s shrinkage at Intercontinental. Please.
This time, Smisek blames two groups. First, he says the “demand for hub-level connecting flying through Cleveland simply isn’t there.” Say what? So it wasn’t local demand but rather connecting demand? Something tells me people weren’t saying “heck no, I’ll never connect through Cleveland. Newark and Chicago are WAY easier.” Last time I checked, people look for easy connections with short total travel durations. Sure, some people don’t like regional jets as much, but I find it hard to believe that connecting passengers were what made this hub fail. If that was the case, then the blame can be turned on to the scheduling team for not timing connections well enough.
If that wasn’t enough, he says the timing of the cuts “has been accelerated by industry-wide effects of new federal regulations” that require the airline to reduce regional flying “as several of our regional partners are beginning to have difficulty flying their schedules due to reduced new pilot availability.”
This is exactly what we talked about yesterday, but unfortunately it’s too hard to verify if this is true or not just yet. After all, every airline has seen big cancellations since the new pilot rules went into effect due to the horrible weather we’ve had. So we can’t get a straight read on this yet. We’ll really know if that’s true when we see if United shifts its regional fleet around after the hub is closed.
Most of Cleveland’s flying is done by ExpressJet and I have not heard about any pilot shortages there. (My requests for comment to ExpressJet went unanswered.) But there are a few turboprop flights operated by CommutAir. That airline may very well be having trouble. If we see the Cleveland ExpressJet capacity redeployed into other CommutAir markets to pick up the slack, then this might be valid. But to me, it smells more like an unnecessary blame game. All this did was shift the timing and not change the end result. Is the parting shot at the government really helping anything?
The hub just didn’t work. I think most people can understand that, even if they aren’t happy about it. Cleveland will still have most of its mainline flights and it will have nonstop flights to its biggest markets. While nobody in Cleveland will be happy to see service decline, they should at least by happy to have nonstop flights to the most important destinations… for now
That’s the name of the game for nearly every mid-size hub these days. The writing has been on the wall for awhile.
—
Edit 04FEB 647a: After publication I received this statement from ExpressJet effectively noting that it is not experiencing a shortage.
While the new pilot qualification rules implemented in August 2013, along with the compounding effect of the new FAR117 flight time and rest requirements, have created an increased need for pilots industry-wide, ExpressJet Airlines continues to attract qualified pilots.
