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.
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.
|San Jose del Cabo
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.
And here are the routes United has added.
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.
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.
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.
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.
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?