United ending Xian

Freshside3 · Sun Dec 10, 2017 12:32 am

They pretty much got all the people that wanted to see the Terra Cotta Warriors......and the "fad" tourist destination had run its course for XIY......at least it had something going for it, unlike HGH, which was destined to fail, right out of the starting blocks.

Cubsrule · Sun Dec 10, 2017 3:01 am

IPFreely wrote:
Cubsrule wrote:
Why? Is XIY-SFO-LAX so obviously superior to, for instance, XIY-ICN-LAX that UA will get all of the non-SFO US business?

First, XIY-SFO is far superior to XIY-ICN-SFO for a SFO bound passenger.

Second, XIY-SFO-LAX is superior to XIY-ICN-LAX for a LAX bound passenger. If you travelled more you would understand why. In the case of any any disruptions (weather, ATC, mechanical, etc.), it is much better for a passenger to miss a connection in SFO than ICN. In SFO there are dozens of daily flights plus ground transportation to get to LAX, meaning a missed connection might result in arriving in LAX a few hours late. Missing a connection in ICN offers few options and probably means arriving in LAX days late, not hours late. When taking a connecting flight I always opt for the connection that gets me as close as possible to my destination on the first leg, preferably within driving distance.

On the connection question, the choice is more personal than you seemingly assume. I prefer not to clear border formalities at an intermediate stop; if I need to connect in East Asia to NGO (i.e. if I'm going on a day DL doesn't operate), I much prefer connecting in ICN or even PEK to HND. YMMV, of course.

flyfresno · Sun Dec 10, 2017 4:14 am

IPFreely wrote:
Cubsrule wrote:
Why? Is XIY-SFO-LAX so obviously superior to, for instance, XIY-ICN-LAX that UA will get all of the non-SFO US business?

First, XIY-SFO is far superior to XIY-ICN-SFO for a SFO bound passenger.

Second, XIY-SFO-LAX is superior to XIY-ICN-LAX for a LAX bound passenger. If you travelled more you would understand why. In the case of any any disruptions (weather, ATC, mechanical, etc.), it is much better for a passenger to miss a connection in SFO than ICN. In SFO there are dozens of daily flights plus ground transportation to get to LAX, meaning a missed connection might result in arriving in LAX a few hours late. Missing a connection in ICN offers few options and probably means arriving in LAX days late, not hours late. When taking a connecting flight I always opt for the connection that gets me as close as possible to my destination on the first leg, preferably within driving distance.

Of course, this theory only works one way with regard to XIY. If you are late or cancelled into SFO on your way to XIY (and we all know how much flow there can be going to SFO), you would likely have to wait 1-2 days to get another nonstop to XIY (assuming this was last summer). Of course, you could double connect, but if you’ve missed XIY, you have probably also missed PEK, PVG, ICN, NRT, CTU, and HKG, at least until the midnight bank (which doesn’t go all those places). But yes, going TO any US city from XIY, much better to connect in the US.

flyfresno · Sun Dec 10, 2017 4:18 am

Freshside3 wrote:
They pretty much got all the people that wanted to see the Terra Cotta Warriors......and the "fad" tourist destination had run its course for XIY......at least it had something going for it, unlike HGH, which was destined to fail, right out of the starting blocks.

So much more to Xi’an and Central/Western China than the TCW.

flyfresno · Sun Dec 10, 2017 4:23 am

zakuivcustom wrote:
flyfresno wrote:
xjetflyer2001 wrote:

Why if someone has been to Xi'an would they be surprised the flight lasted this long?
I don't quite understand your comment
I've been to Xi'an and absolutely loved it, one of my favorite cities in China and I've been to quite a few.
I didn't think the flight would last just because I periodically checked the loads as I wanted to take the flight, just never had the time, but they were never very good. I would think that's more to do with the fact that Xi'an isn't a well known city in the United States for one, but as others have said, for people who have heard of it, it's more tourist travel than business travel

Agreed: Xi’an has some great features: wonderful food from the West Chinese / Muslim quarter that is very hard to find anywhere east of Xi’an, beautiful city walls that are much less touristy than in other cities, and of course the Terra Cotta Warriors and surrounding toombs and temples. Also, you have to pass through / connect in Xi’an to get to many interesting places in the western half of the country. It’s really a great tourist hub. Just not exactly, it appears, the best business market.

I don't disagree. XIY is definitely a great hub for anyone going up the Silk Road (Dunhuang, Jiayuguan, and even further up to Xinjiang), or just exploring the region which was the cradle of Chinese civilization. The only problem, of course, is tourism alone is usually not the best way to make money on a long-haul flight (Unless it's something like Japan<->Hawaii).

On a side note, though, XIY international flights are not even that great even within the region anyway. ICN is 12/wk (daily on KE and 5/wk on OZ), but KIX is 1/wk on 9C while NRT is 3/wk on HU, then you have 2/day on HKG. Definitely small compare to ~16-17/day from SZX or 20+/day from PEK It does have those random FCO and CDG flights on HU, along with SYD & MEL, but last I check, HU is not really making money.

Of course...I’m not trying to argue that UA should keep XIY based on tourism, just that it’s an easy/convienant place to start a trip to central/western China and will be missed for that reason.

IPFreely · Sun Dec 10, 2017 4:33 am

flyfresno wrote:
Of course, this theory only works one way with regard to XIY. If you are late or cancelled into SFO on your way to XIY (and we all know how much flow there can be going to SFO), you would likely have to wait 1-2 days to get another nonstop to XIY (assuming this was last summer). Of course, you could double connect, but if you’ve missed XIY, you have probably also missed PEK, PVG, ICN, NRT, CTU, and HKG, at least until the midnight bank (which doesn’t go all those places). But yes, going TO any US city from XIY, much better to connect in the US.

The opposite is true the other way. For XIY-LAX outbound, XIY-SFO-LAX is preferred over connecting in PVG/PEK. For the return leg, LAX-PEK/PVG-XIY is preferred over connecting in SFO.

coolfish1103 · Sun Dec 10, 2017 7:51 am

USAirALB wrote:
I feel like UA could make SFO-CAN work.

I believe UA tried SFO-CAN before and it didn't last long.

Plus CAN is a restricted airport just like SHA and PEK so airlines would want to use their rights at SHA and PEK rather than CAN. Typically only CZ opens a route via CAN cause of the one route one airline policy the Chinese government imposes to the US. So top cities that are taken by other airlines at SHA and PEK will have some services at CAN with CZ.

LAX772LR · Sun Dec 10, 2017 9:08 am

IPFreely wrote:
Second, XIY-SFO-LAX is superior to XIY-ICN-LAX for a LAX bound passenger. If you travelled more you would understand why. In the case of any any disruptions (weather, ATC, mechanical, etc.), it is much better for a passenger to miss a connection in SFO than ICN. In SFO there are dozens of daily flights plus ground transportation to get to LAX, meaning a missed connection might result in arriving in LAX a few hours late. Missing a connection in ICN offers few options and probably means arriving in LAX days late, not hours late. When taking a connecting flight I always opt for the connection that gets me as close as possible to my destination on the first leg, preferably within driving distance.

The (obvious) flaw in this assessment is that you're only concentrating on the second segment.

The XIY-xxx segment could just as easily be affected (especially when dealing with a gateway as weather prone as SFO); and for that, pax could reasonably prefer the likes of ICN/PEK/PVG/etc which have multiple daily cnnx to XIY, than an airport like SFO that only has 3x weekly.

Nicoeddf · Sun Dec 10, 2017 11:05 am

B737900ER wrote:
Nicoeddf wrote:
B737900ER wrote:
XIY was bound to fail. It’s a tourist destination first, business second. The real money is in CKG.

There you see: Only stupid people at UA. Should have just asked you.

No need to get snippy about it.

Oh you see, I don't have any relation to UA, nor a need to defend them in particular. I just feel I need to point out arrogance when I see it. And especially when its about the common claim "everybody else is stupid but me".

Well, wasn't meant as personal as you took it. Have a great sunday.

klwright69 · Sun Dec 10, 2017 12:27 pm

This is such a non surprise. It is a thing at a.net to mock the notion that checking loads gives a person information about a particular flight.
But looking at XIY and HGH, one would see flights routinely have over a hundred empty seats in economy, with only a meager number occupied in business class. So again, pay attention to such oddball flights and be not surprised when they're dropped..
CTU always had higher loads, and not surprisingly it hasn't been cut. Of course, it still may get the ax, but it's still around for now.
CCS was only 50 percent full on good days, and was cut.

LJ · Sun Dec 10, 2017 12:47 pm

zakuivcustom wrote:
It does have those random FCO and CDG flights on HU, along with SYD & MEL

Which are probably there for the Chinese tour groups (the same as the flights which used to go to Liege).

BuildingMyBento · Sun Dec 10, 2017 1:59 pm

IPFreely wrote:
Cubsrule wrote:
I wasn’t thinking about traffic rights but rather about the value of maintaining a presence in the market. If I’m a FF on XIY-US, it’s hard for UA to capture my business if they are in and out of XIY. I don’t know if the monetary value of continuity is quantifiable but I don’t think there’s any question that it is positive.

If someone is flying XIY-US and UA is the only non-stop option, UA is going to capture that business. No passenger is going to care that UA exited that route then returned one or two or five years ago.

Unless my employer notes that "I have no choice," I will always connect through Japan to get to China.

Heck, if AY or TK (that is, after the new airport opens) keep building up their western China niche markets, those are still better choices.

716131 · Sun Dec 10, 2017 2:16 pm

Maybe they may need to use them for LAX-PEK or maybe LAX-ICN if I'm not wrong.

incitatus · Sun Dec 10, 2017 4:40 pm

Cubsrule wrote:
On the connection question, the choice is more personal than you seemingly assume. I prefer not to clear border formalities at an intermediate stop; if I need to connect in East Asia to NGO (i.e. if I'm going on a day DL doesn't operate), I much prefer connecting in ICN or even PEK to HND. YMMV, of course.

I agree and you have some good points about preference. There is evidently PRICE, which is a huge deal. Even for many people flying on corporate accounts, they can't simply pick the airline / schedule they want. If an alternative is available at a lower price with similar departure / arrival times, they have to take it. I have been forced to fly to Australia on United when I wanted Qantas. But I have also said "no way" to flying Air China which was cheaper and got what I wanted which is Singapore Airlines, getting an exception to the corporate travel policy.

For long-haul with connections, personally I prefer doing the short-haul first then the long-haul. Coming out of a 10-to-13 hour flight then do a connection sucks. But often schedule dictates I can't do it like that.

neromancer · Sun Dec 10, 2017 5:01 pm

flyfresno wrote:
xjetflyer2001 wrote:
tphuang wrote:
It's been hard to sell premium cabin since Chinese gov't started the anti corruption campaign. Oversea business trips that used to pay business now have to travel economy. Hard to make profit when economy is going for $500 R/T. It's like that for most of asia now.

Surprised Xi'an lasted this long. If you ever been there, you'd know why.

Why if someone has been to Xi'an would they be surprised the flight lasted this long?
I don't quite understand your comment
I've been to Xi'an and absolutely loved it, one of my favorite cities in China and I've been to quite a few.
I didn't think the flight would last just because I periodically checked the loads as I wanted to take the flight, just never had the time, but they were never very good. I would think that's more to do with the fact that Xi'an isn't a well known city in the United States for one, but as others have said, for people who have heard of it, it's more tourist travel than business travel

Agreed: Xi’an has some great features: wonderful food from the West Chinese / Muslim quarter that is very hard to find anywhere east of Xi’an, beautiful city walls that are much less touristy than in other cities, and of course the Terra Cotta Warriors and surrounding toombs and temples. Also, you have to pass through / connect in Xi’an to get to many interesting places in the western half of the country. It’s really a great tourist hub. Just not exactly, it appears, the best business market.

I agree that Xi'an is a great tourist destination. But surprised on the low business market. Xi'an is home to some of the better universities and schools in China and is also an intellectual and technology centre. My company employees a number of people in Xi'an and we routinely travel to and from there. Perhaps the connections, timing and/or frequency were poor? We are near Toronto so we normally fly YYZ - PEK - XIY. Better options on that route than YYZ - SFO - XIY.

tphuang · Sun Dec 10, 2017 5:30 pm

neromancer wrote:
flyfresno wrote:
xjetflyer2001 wrote:

Why if someone has been to Xi'an would they be surprised the flight lasted this long?
I don't quite understand your comment
I've been to Xi'an and absolutely loved it, one of my favorite cities in China and I've been to quite a few.
I didn't think the flight would last just because I periodically checked the loads as I wanted to take the flight, just never had the time, but they were never very good. I would think that's more to do with the fact that Xi'an isn't a well known city in the United States for one, but as others have said, for people who have heard of it, it's more tourist travel than business travel

Agreed: Xi’an has some great features: wonderful food from the West Chinese / Muslim quarter that is very hard to find anywhere east of Xi’an, beautiful city walls that are much less touristy than in other cities, and of course the Terra Cotta Warriors and surrounding toombs and temples. Also, you have to pass through / connect in Xi’an to get to many interesting places in the western half of the country. It’s really a great tourist hub. Just not exactly, it appears, the best business market.

I agree that Xi'an is a great tourist destination. But surprised on the low business market. Xi'an is home to some of the better universities and schools in China and is also an intellectual and technology centre. My company employees a number of people in Xi'an and we routinely travel to and from there. Perhaps the connections, timing and/or frequency were poor? We are near Toronto so we normally fly YYZ - PEK - XIY. Better options on that route than YYZ - SFO - XIY.

ever since Chinese gov't start the anti corruption campaign, the businesses can't travel in paid J anymore. That's had a huge effect on all travel to the region. If Hangzhou with its much stronger economy can't support service from SFO, what makes you since Xi'an can? It's much poorer city. The Northwest part of China is not where the money is.

Flighty · Sun Dec 10, 2017 5:41 pm

IPFreely wrote:
Cubsrule wrote:
Why? Is XIY-SFO-LAX so obviously superior to, for instance, XIY-ICN-LAX that UA will get all of the non-SFO US business?

First, XIY-SFO is far superior to XIY-ICN-SFO for a SFO bound passenger.

Second, XIY-SFO-LAX is superior to XIY-ICN-LAX for a LAX bound passenger. If you travelled more you would understand why. In the case of any any disruptions (weather, ATC, mechanical, etc.), it is much better for a passenger to miss a connection in SFO than ICN. In SFO there are dozens of daily flights plus ground transportation to get to LAX, meaning a missed connection might result in arriving in LAX a few hours late. Missing a connection in ICN offers few options and probably means arriving in LAX days late, not hours late. When taking a connecting flight I always opt for the connection that gets me as close as possible to my destination on the first leg, preferably within driving distance.

Overall it's a good principle you mention, but either way it is a 1-stop itinerary with equal risks in Xian, more serious delay risk in Seoul, but more likely delay risk in SFO. I think overall you are right but in the other direction, your point is again weakened. You could be stuck in SFO for a days, or you could go LAX-PVG-XIY or something by following your principle.

Edit: oh, I see you posted this already.

nmdrdh787 · Sun Dec 10, 2017 7:47 pm

USAirALB wrote:
I feel like UA could make SFO-CAN work.

That would require another Tier 1 city to lose a flight. So which one would you pick?

Armaghman · Sun Dec 10, 2017 8:10 pm

https://en.m.wikipedia.org/wiki/List_of ... ies_by_GDP

Alll you need to do is look at GDP XIan not even on top 20. This flight must have been aimed with a key market of US tourist starting/ending tours with Terracotta Army. Too many start/end options and with were Changdubis and local economy makes much more sense

Hibbing fir foreign carriers will make sense for a long time and I think Chengdu will pick up the slack as secondary city in West for a long time.

I was sad to see BA leave Chengdu, we got one of last flights with BA on our return home. Couldn't get of Shanghai for days so took opportunity to see pandas again on the way

winginit · Sun Dec 10, 2017 8:31 pm

zakuivcustom wrote:
Why do people think UA is squendering a ton of money ending the route anyway? It is clearly a subsidized route that once the subsidy ends, routes end. UA looks at the trend and determined that the growth is just not enough for UA to make money on the route without subsidy, the end.

This is exactly what happened, and I'm shocked that anyone with any sort of international commercial aviation background would suspect otherwise as is implied in some of these comments.

These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date). The subsidies end, they cancel the route, and soon after another subsidy comes around. It's for this reason that it's impossible for any carrier to turn an organic profit on a nonstop route between the US and a secondary CN city, and it's the reason flow ODs over PVG and PEK are far lower yielding than the nonstop.

janders · Mon Dec 11, 2017 4:39 pm

Based on my experience with this flight, it was quite popular with US tourist and also was utilized by multiple US tour groups as part of their China tour packages and hence its summer only status.
Too bad it did not work out. Xi'an is quite an interesting place and valuable jumping off point for other interior markets including via growing HSR links.

zakuivcustom · Mon Dec 11, 2017 9:30 pm

janders wrote:
Based on my experience with this flight, it was quite popular with US tourist and also was utilized by multiple US tour groups as part of their China tour packages and hence its summer only status.
Too bad it did not work out. Xi'an is quite an interesting place and valuable jumping off point for other interior markets including via growing HSR links.

Make it even less surprising that the route ended :rotfl:

. Tourist traffic alone, especially with tour groups, is just hard to sustain a flight profitably.

Ultimately, I think of the XIY flight (and interior China flights in general) as something similar to flights from US (East Coast mainly) to Eastern Europe destinations (The like of PRG/BUD). There are certainly demand (especially tourism, VFR traffic here and there), and is definitely convenient for people traveling to that region (Connecting at PEK/PVG is similar to connecting at the like of FRA or AMS), but ultimately, not very high yield due to relatively low business demand, and all these resulted in an on-and-off seasonal flight pattern similar to the one that was observed in many Eastern (or East Central) Europe flights.

Adipocere · Mon Dec 11, 2017 10:57 pm

I think this ends any immediate hopes of SFO - Urumqi or Kashgar.

jetblastdubai · Tue Dec 12, 2017 12:41 am

Adipocere wrote:
I think this ends any immediate hopes of SFO - Urumqi or Kashgar.

Good point. Additionally, if United can't profitably make secondary China service work, other than CTU, from the powerhouse Pacific hub in SFO, the chances that AA or DL will attempt secondary China from LAX or SEA seem even more remote.

Aither · Tue Dec 12, 2017 1:48 am

Chinese airlines are now offering decent connections to XIY from dirt cheap international flights. Today Chinese airlines focus on chinese passengers but more and more foreign passengers are aware of the amazing deals they can get when connecting in China. It's just the beginning. It's going to be much much worse than the ME3.

zakuivcustom · Tue Dec 12, 2017 4:27 am

Aither wrote:
Chinese airlines are now offering decent connections to XIY from dirt cheap international flights. Today Chinese airlines focus on chinese passengers but more and more foreign passengers are aware of the amazing deals they can get when connecting in China. It's just the beginning. It's going to be much much worse than the ME3.

ME3 got this much market bc of the perception of good service (some would say this is debatable) at a good price. CN3+HU? Not so much.

jetblastdubai wrote:
Adipocere wrote:
I think this ends any immediate hopes of SFO - Urumqi or Kashgar.

Good point. Additionally, if United can't profitably make secondary China service work, other than CTU, from the powerhouse Pacific hub in SFO, the chances that AA or DL will attempt secondary China from LAX or SEA seem even more remote.

I don't see AA going for anything from LAX to begin with. Way too much competition from Chinese carriers.

Right now you got:
CA to PEK, SZX
MU to NKG, PVG
CZ to CAN
HU to CSX, CTU, CKG
3U to HGH, TNA (both continuing to CTU)
MF to TAO (soon), XMN

And then there is CX to HKG, which I didn't list.

Only bigger city left is WUH, which currently only have CZ service to SFO. Maybe CZ will operate WUH-LAX soon also.

SEA has less competition (Only HU to PEK and PVG along with MF to XMN and SZX). But the demand, especially O&D, from SEA is way smaller than LA or SF Bay Area.

LAXintl · Tue Dec 12, 2017 4:57 am

winginit wrote:
These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date).

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

jetero · Tue Dec 12, 2017 6:24 am

LAXintl wrote:
winginit wrote:
These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date).

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

It baffles me that that happens.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

jetero · Tue Dec 12, 2017 6:30 am

jetero wrote:
LAXintl wrote:
winginit wrote:
These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date).

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

It baffles me that that happens.

Why on earth would you send a $250 million asset and your first thought be to ask for a subsidy? I’d say you’re running a failing business if you do.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary. It should be between airlines and their clients.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

Nicoeddf · Tue Dec 12, 2017 7:19 am

jetero wrote:
LAXintl wrote:
winginit wrote:
These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date).

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

It baffles me that that happens.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things. :stirthepot:

jetero · Tue Dec 12, 2017 7:24 am

Nicoeddf wrote:
jetero wrote:
LAXintl wrote:

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

It baffles me that that happens.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Nicoeddf · Tue Dec 12, 2017 7:32 am

jetero wrote:
Nicoeddf wrote:
jetero wrote:

It baffles me that that happens.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Why?

hongkongflyer · Tue Dec 12, 2017 8:38 am

May be the subsidy period provided by the local government is over.
It is not unusual for airlines, either from PRC or foreign, to end the route if the route can't justify to continue to exist.
BA ended the LHR-CTU for the same reason.

I just saw a picture of the financial budget of a non 1-tier PRC city, they pay RMB131.56 million per year for the flight to YVR.

jetero · Tue Dec 12, 2017 8:55 am

Nicoeddf wrote:
jetero wrote:
Nicoeddf wrote:

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Why?

Er, a 200 mile route to subsidy versus a 6500 mi route when (being generous) 30% of the costs are fixed ... c’mon!

Nicoeddf · Tue Dec 12, 2017 9:35 am

jetero wrote:
Nicoeddf wrote:
jetero wrote:

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Why?

Er, a 200 mile route to subsidy versus a 6500 mi route when (being generous) 30% of the costs are fixed ... c’mon!

Don't see the difference really. A government entity decides to foster trade, traffic and connectivity by offering subsidy to an otherwise non-profitable venture. And while some little town in Iowa maybe needs connectivity to ORD (or whereever) on a fifty seater, a 13 million metro area of Xi'an arguably needs a connection to the US.

And it really does not depend on how high the subsidy is. Just on the long term net positive effect on economy and trade.
Apparently didn't work out in this case, too bad for Xi'an and possibly UA.

jetero · Tue Dec 12, 2017 9:40 am

Nicoeddf wrote:
jetero wrote:
Nicoeddf wrote:

Why?

Er, a 200 mile route to subsidy versus a 6500 mi route when (being generous) 30% of the costs are fixed ... c’mon!

Don't see the difference really. A government entity decides to foster trade, traffic and connectivity by offering subsidy to an otherwise non-profitable venture. And while some little town in Iowa maybe needs connectivity to ORD (or whereever) on a fifty seater, a 13 million metro area of Xi'an arguably needs a connection to the US.

And it really does not depend on how high the subsidy is. Just on the long term net positive effect on economy and trade.
Apparently didn't work out in this case, too bad for Xi'an and possibly UA.

Seriously?!?! I really hope you’re not doing this professionally.

PM your model.

Nicoeddf · Tue Dec 12, 2017 10:21 am

jetero wrote:
Nicoeddf wrote:
jetero wrote:

Er, a 200 mile route to subsidy versus a 6500 mi route when (being generous) 30% of the costs are fixed ... c’mon!

Don't see the difference really. A government entity decides to foster trade, traffic and connectivity by offering subsidy to an otherwise non-profitable venture. And while some little town in Iowa maybe needs connectivity to ORD (or whereever) on a fifty seater, a 13 million metro area of Xi'an arguably needs a connection to the US.

And it really does not depend on how high the subsidy is. Just on the long term net positive effect on economy and trade.
Apparently didn't work out in this case, too bad for Xi'an and possibly UA.

Seriously?!?! I really hope you’re not doing this professionally.

PM your model.

Yes, pretty serious about it.
You know, why don't you use the opportunity to make a serious argument about why I am mistaken. I might even be convinced. Maybe my position is plain wrong and I have yet to meet somebody to explain it to me so I understand.
Hence, what about my position is so inherently wrong what you hope I don't do it (what is "it" exactly anyway? working in the industry? Handing out subsidies?) professionally?

And forgive the non native speaker: what does "PM your model" mean?

zakuivcustom · Tue Dec 12, 2017 1:04 pm

jetero wrote:
Nicoeddf wrote:
jetero wrote:

It baffles me that that happens.

Airports shouldn’t have air service development departments and airlines shouldn’t have the corollary.

(Admittedly saying that working from the US, which is not similar to anywhere else in the world in how these things work.)

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Huh?

Have you look at the amount of money for, let say, some of the random Midwest airport throw out trying to get a carrier to operate TATL routes? Or MIA and how they can't even use money to enticed somebody operating a nonstop to APAC region.

It is called investment, you lose money now to recoup them via the increased tourism spending or trades. Doesn't always work out, but it is better than standing there, and watching everyone passed by you.

burnsie28 · Tue Dec 12, 2017 1:33 pm

They other thing is I think China is now over-rated. We are seeing with costs creeping up in China and other areas of Asia companies and US and Canada have both decided to open new plants within their borders. While some items and the spread is still great, there are things that were previously outsourced to China that can be achieved for nearly the same costs in the US and Canada or even sent down to Mexico which is cheaper.

hohd · Tue Dec 12, 2017 2:28 pm

With Air China offering crazy low fares, UA found it hard to compete. I recently saw a sub 600 fare to DEL via PEK on Air China from IAH and another sub 600 fare to Wuhan and Xian.

jetero · Tue Dec 12, 2017 2:36 pm

zakuivcustom wrote:
jetero wrote:
Nicoeddf wrote:

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Huh?

Have you look at the amount of money for, let say, some of the random Midwest airport throw out trying to get a carrier to operate TATL routes? Or MIA and how they can't even use money to enticed somebody operating a nonstop to APAC region.

It is called investment, you lose money now to recoup them via the increased tourism spending or trades. Doesn't always work out, but it is better than standing there, and watching everyone passed by you.

You have no idea what you’re talking about, but that’s par for the course around here.

Cubsrule · Tue Dec 12, 2017 2:58 pm

zakuivcustom wrote:
jetero wrote:
Nicoeddf wrote:

No? Don't you have the Essential Air Service program?

Seems a pretty smart (Long term!) investment to enhance trade and built up connections between people, literal and figurative, ones by investing a small sum of money to reap the benefits later.
But maybe thats my socialist/communist european view of things.

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Huh?

Have you look at the amount of money for, let say, some of the random Midwest airport throw out trying to get a carrier to operate TATL routes? Or MIA and how they can't even use money to enticed somebody operating a nonstop to APAC region.

It is called investment, you lose money now to recoup them via the increased tourism spending or trades. Doesn't always work out, but it is better than standing there, and watching everyone passed by you.

Perhaps a sensible demarcation exists between subsidies like EAS where generally there is no expectation of the route operating without subsidy in the future, and some long-haul subsidies, where routes can and do eventually flourish without subsidy. In the longhaul realm, however, it can be difficult to differentiate between those types of subsidies on the front end.

jetero · Tue Dec 12, 2017 3:33 pm

Cubsrule wrote:
zakuivcustom wrote:
jetero wrote:

Yes we have EAS and SCASD, both of which I’m a begrudging supporter. Subsidizing a 6,500 mi route is a completely different story.

Huh?

Have you look at the amount of money for, let say, some of the random Midwest airport throw out trying to get a carrier to operate TATL routes? Or MIA and how they can't even use money to enticed somebody operating a nonstop to APAC region.

It is called investment, you lose money now to recoup them via the increased tourism spending or trades. Doesn't always work out, but it is better than standing there, and watching everyone passed by you.

Perhaps a sensible demarcation exists between subsidies like EAS where generally there is no expectation of the route operating without subsidy in the future, and some long-haul subsidies, where routes can and do eventually flourish without subsidy. In the longhaul realm, however, it can be difficult to differentiate between those types of subsidies on the front end.

You’re much nicer than I am. Thanks for making my point easier to digest.

jetero · Tue Dec 12, 2017 3:46 pm

Nicoeddf wrote:
jetero wrote:
Nicoeddf wrote:

Don't see the difference really. A government entity decides to foster trade, traffic and connectivity by offering subsidy to an otherwise non-profitable venture. And while some little town in Iowa maybe needs connectivity to ORD (or whereever) on a fifty seater, a 13 million metro area of Xi'an arguably needs a connection to the US.

And it really does not depend on how high the subsidy is. Just on the long term net positive effect on economy and trade.
Apparently didn't work out in this case, too bad for Xi'an and possibly UA.

Seriously?!?! I really hope you’re not doing this professionally.

PM your model.

Yes, pretty serious about it.
You know, why don't you use the opportunity to make a serious argument about why I am mistaken. I might even be convinced. Maybe my position is plain wrong and I have yet to meet somebody to explain it to me so I understand.
Hence, what about my position is so inherently wrong what you hope I don't do it (what is "it" exactly anyway? working in the industry? Handing out subsidies?) professionally?

And forgive the non native speaker: what does "PM your model" mean?

Nico, what do you think is opex from SFO to XIY? What do you think is opex from say, DEN to Miles City? Nevermind opportunity costs for a $100+ million airframe. Small sum?!

The idea that subsidies on a route from SFO to XIY could be offset by “economic growth” in the short-run is absolutely laughable. (Probably the same assumptions that went into the tax bill here in the U.S.)

(I’m an ardent free trader. (Subsidies don’t equal free trade BTW.))

PM your model means send me your financial model for the route. I want to see what you’re assuming to make such a statement.

mercure1 · Tue Dec 12, 2017 3:51 pm

The fact of the industry is that governments be they local or national and be it the airport itself, tourism authorities, municipalities or regionally they do offer various types of grants or subsidies for air service globally.

These monies can come in many forms, from fee and use waivers, to marketing assistance, to revenue guarantees and in between.

Cities in both China and the US and virtually every nation in between utilize such incentives and marketing to develop trade, tourism, and economic activity.

jetero · Tue Dec 12, 2017 4:13 pm

mercure1 wrote:
The fact of the industry is that governments be they local or national and be it the airport itself, tourism authorities, municipalities or regionally they do offer various types of grants or subsidies for air service globally.

These monies can come in many forms, from fee and use waivers, to marketing assistance, to revenue guarantees and in between.

Cities in both China and the US and virtually every nation in between utilize such incentives and marketing to develop trade, tourism, and economic activity.

And by UN convention it should be made illegal if you ask me. Definitely one of the biggest government abuses of money worldwide these days, as are any subsidies of private development in the name of “economic growth,” which even educated people somehow seem to be happy to accept.

But, yeah, the guy down the street does it ... (great rationalization from someone whose screen name was I’m sure a tremendous waste of money for the French public.)

winginit · Tue Dec 12, 2017 10:21 pm

LAXintl wrote:
winginit wrote:
These local governments secure subsidies, do a roadshow around the US visiting the US3 with guaranteed profitability for between 18 and 30 months if they serve the route nonstop, and someone bites (United, in this case and all others to date).

Actually, the process is when marketing subsidy is available, it's the airlines that go and bid to win them. The airlines give the local government a show and dance with promises of how well they will do and help provide traffic for the region in return for earning the subsidy.

United attempted to secure funding on several other routes but lost out to CZ and HU for example.

That's not always the case at least in my experience, but maybe it goes both ways.

When I was consulting for a US3 carrier the Chengdu airport came knocking on the door of headquarters and put on the full dog and pony show pitching the growth of the city and all the bells and whistles before finally getting around to the subsidies that would guarantee profitability for what was in that case I believe 24 months. That was several years ago, so maybe once United got a taste for those subsidies they started going more on the offensive trying to seek them out.

Nicoeddf · Fri Dec 15, 2017 9:48 am

jetero wrote:
Nicoeddf wrote:
jetero wrote:

Seriously?!?! I really hope you’re not doing this professionally.

PM your model.

Yes, pretty serious about it.
You know, why don't you use the opportunity to make a serious argument about why I am mistaken. I might even be convinced. Maybe my position is plain wrong and I have yet to meet somebody to explain it to me so I understand.
Hence, what about my position is so inherently wrong what you hope I don't do it (what is "it" exactly anyway? working in the industry? Handing out subsidies?) professionally?

And forgive the non native speaker: what does "PM your model" mean?

Nico, what do you think is opex from SFO to XIY? What do you think is opex from say, DEN to Miles City? Nevermind opportunity costs for a $100+ million airframe. Small sum?!

The idea that subsidies on a route from SFO to XIY could be offset by “economic growth” in the short-run is absolutely laughable. (Probably the same assumptions that went into the tax bill here in the U.S.)

(I’m an ardent free trader. (Subsidies don’t equal free trade BTW.))

PM your model means send me your financial model for the route. I want to see what you’re assuming to make such a statement.

Hi Jetero,

I acutally kind of enjoy the discussion with you. Not sure why your tone has to be so grim though, it's just business and two random guys talking via internet anyway...

To the topic: I fully agree with you. There is no short term gain! And I pretty much hope I haven't argued in this way. I hope I made my point, that in the LONG TERM, entities perceive that by handing out subsidies, a market will grow, trade will grow, connections will grow. That doesn't always work. Sometimes it does.
And while I am an ardent free trader as well, I don't consider well thought through, time and sum limited "incentives" to connect a geographic region to other parts of the world/country as a bad thing per se. There IS a case for economic stimuli via subsidies/route incentives. If that is the special case for UA and Xi'an...no idea.

That is why I am not arguing for Xi'an specifically. And why I can't and have no motiviation of presenting a OPEX calculation vs revenue, or a business plan/model.

I just feel it isn't as black and white as I perceive your arguments.

Have a great weekend.

c933103 · Fri Dec 15, 2017 1:18 pm

the Northern China represented by XIY is economically worse than the performance of rest of China, even among secondary cities. The region focus on resource extraction and resource-based manufacturing, and with the current low resource price as well as oversupply, the economy in the region are particularily worse off.

c933103 · Fri Dec 15, 2017 1:26 pm

nmdrdh787 wrote:
USAirALB wrote:
I feel like UA could make SFO-CAN work.

That would require another Tier 1 city to lose a flight. So which one would you pick?

coolfish1103 wrote:
USAirALB wrote:
I feel like UA could make SFO-CAN work.

I believe UA tried SFO-CAN before and it didn't last long.

Plus CAN is a restricted airport just like SHA and PEK so airlines would want to use their rights at SHA and PEK rather than CAN. Typically only CZ opens a route via CAN cause of the one route one airline policy the Chinese government imposes to the US. So top cities that are taken by other airlines at SHA and PEK will have some services at CAN with CZ.

iirc when UA last tried SFO-CAN it was about the time of the financial tsunami.

And, while CAN is also tier 1 in the US-China bilateral, there is a special term that allowed for an additional 1x weekly frequency dedicated for CAN. As far as I can recall that additional 1x weekly frequency is still not used?

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