AA is CLT
DL is LGA?
UA is SFO?
WN is MDW or DAL?


AA is the only one I know for sure. What are actualy UA, DL, and WN's most profitable hubs/operating bases?

Scott Kirby said in 2016 that UA's most profitable is DEN.

DL's would definitely be ATL and American's would be CLT, purely because they have the scale and the market share which enables them to keep down costs and control prices in the market.

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

jubguy3 wrote:

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

I rather doubt your comments regarding LGA. If so, DL would not be willing to build up their presence at LGA if they were losing money. While the margins might not be as much as SLC or ATL, I would be willing to bet there is a profit at LGA.

The problem with trying to determine "profitability" of hubs is how do you do it. Clearly you have to look at O/D traffic, but then you have to look at connecting pax also. There are many methodologies to use for an evaluation and if you want to show a profit or loss you can choose a certain method and accomplish what your goals are. A general statement would be for a hub to be "profitable", the local O/D traffic much be such as to make a profit. That's why for DL, MEM is a no win situation. The hub just can't support itself and it was a problem NW wrestled with for it's entire existence.

You have to define “profitable.”

Are you talking about which hub brings in the most gross profit, or which one has the highest profit margin? The two may not necessarily be the same hub. You have to consider the same question when looking at comments from executives.

Here's a statement from United about it's EWR margins and it's estimate for DL's profit margin in NYC (this was from 2017) --

Scott Kirby -- "We have about 15 percent margins here in Newark,” he told employees. “We estimate Delta in New York has a 4 percent profit margin, even when times are good. And American is somewhere in between."

Note that Delta itself had admitted that NYC had been unprofitable for them up until 2014, so I would not dismiss UA's estimates.

mmo wrote:

jubguy3 wrote:

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

I rather doubt your comments regarding LGA. If so, DL would not be willing to build up their presence at LGA if they were losing money. While the margins might not be as much as SLC or ATL, I would be willing to bet there is a profit at LGA.

The problem with trying to determine "profitability" of hubs is how do you do it. Clearly you have to look at O/D traffic, but then you have to look at connecting pax also. There are many methodologies to use for an evaluation and if you want to show a profit or loss you can choose a certain method and accomplish what your goals are. A general statement would be for a hub to be "profitable", the local O/D traffic much be such as to make a profit. That's why for DL, MEM is a no win situation. The hub just can't support itself and it was a problem NW wrestled with for it's entire existence.

Delta has the lowest profit margin of all big carriers in New York. This has been stated by Kirby a while back. And looking at fare numbers, quite easy to believe. It's building up in NYC and lax with the huge bank roll from its fortress hubs of atl msp and dtw Slc.

Their highest yielding one iirc is msp but in term of total is probably atl.

For ua is Denver.
Aa is clt
Not sure about wn, probably bwi if I have to guess
B6 is Boston
As is Seattle

flymco753 wrote:

As some would claim, “DTW is DL’s least profitable hub.” There I did it for you. *although it’s not some people want to deny the fact that it’s actually pretty profitable.

Of course it's super profitable. Anyone who would state otherwise clearly has no clue.

Biggest marketshare + least competition + highest O and D...That is a successful hub. Eliminates NYC and LA for sure.

EWR is an interesting one. Worked well for CO due to dominance and size.

I believe the new add campaign “New Yorkewr,” coupled with talking with an insider at UA, highlights their weakness in the NYC market. Despite the largest hub and margins, they seem to want to make inroads into NYC, and their lack of NYC flights is not helping them.

This didnt seem to bother CO, which had a very small presence in NYC proper, but it seems to irk UA. Of course, the landscape is totally different.

Delta is bigger with aggressive advertising
JetBlue is here
AA has stagnated

Make no mistake, UA new ads in NYC highlight their preceived weakness, which is a much different take than CO 1990s ads.

AA-DFW
B6-JFK
WN-BWI
DL-ATL
UA-DEN

flymco753 wrote:

As some would claim, “DTW is DL’s least profitable hub.” There I did it for you. *although it’s not some people want to deny the fact that it’s actually pretty profitable.

No one would claim that. Why does every thread need to turn into a DTW conversation?

My guesses (by margin/total profit):
AA - CLT/DFW
UA - DEN/IAH
DL - MSP/ATL
B6 - BOS/JFK
AS - SEA/SEA
WN - No idea

Jeremy

mmo wrote:

jubguy3 wrote:

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

I rather doubt your comments regarding LGA. If so, DL would not be willing to build up their presence at LGA if they were losing money. While the margins might not be as much as SLC or ATL, I would be willing to bet there is a profit at LGA.

The problem with trying to determine "profitability" of hubs is how do you do it. Clearly you have to look at O/D traffic, but then you have to look at connecting pax also. There are many methodologies to use for an evaluation and if you want to show a profit or loss you can choose a certain method and accomplish what your goals are. A general statement would be for a hub to be "profitable", the local O/D traffic much be such as to make a profit. That's why for DL, MEM is a no win situation. The hub just can't support itself and it was a problem NW wrestled with for it's entire existence.

Not sure whether or not DL is profitable now in NYC but as other posters have said they definitely were unprofitable in NYC as a whole at least as of a few years ago. Also DL definitely would be willing to build their presence at LGA while losing money since its a big O&D market to be in and it compliments their JFK operation. For example I'd be really surprised if DL were actually profitable in SEA but its just a market they feel they need to be in so they're willing to eat the loss.

tphuang wrote:

mmo wrote:

jubguy3 wrote:

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

I rather doubt your comments regarding LGA. If so, DL would not be willing to build up their presence at LGA if they were losing money. While the margins might not be as much as SLC or ATL, I would be willing to bet there is a profit at LGA.

The problem with trying to determine "profitability" of hubs is how do you do it. Clearly you have to look at O/D traffic, but then you have to look at connecting pax also. There are many methodologies to use for an evaluation and if you want to show a profit or loss you can choose a certain method and accomplish what your goals are. A general statement would be for a hub to be "profitable", the local O/D traffic much be such as to make a profit. That's why for DL, MEM is a no win situation. The hub just can't support itself and it was a problem NW wrestled with for it's entire existence.

Delta has the lowest profit margin of all big carriers in New York. This has been stated by Kirby a while back. And looking at fare numbers, quite easy to believe. It's building up in NYC and lax with the huge bank roll from its fortress hubs of atl msp and dtw Slc.

Their highest yielding one iirc is msp but in term of total is probably atl.

For ua is Denver.
Aa is clt
Not sure about wn, probably bwi if I have to guess
B6 is Boston
As is Seattle

DL routinely is the lowest fare carrier on many domestic routes from JFK/LGA, but I assume the relatively high local traffic and robust international network make NYC profitable "enough".

I would bet MDW is WN's most profitable hub.

jfklganyc wrote:

Biggest marketshare + least competition + highest O and D...That is a successful hub. Eliminates NYC and LA for sure.

EWR is an interesting one. Worked well for CO due to dominance and size.

I believe the new add campaign “New Yorkewr,” coupled with talking with an insider at UA, highlights their weakness in the NYC market. Despite the largest hub and margins, they seem to want to make inroads into NYC, and their lack of NYC flights is not helping them.

This didnt seem to bother CO, which had a very small presence in NYC proper, but it seems to irk UA. Of course, the landscape is totally different.

Delta is bigger with aggressive advertising
JetBlue is here
AA has stagnated

Make no mistake, UA new ads in NYC highlight their preceived weakness, which is a much different take than CO 1990s ads.

I would also add regional wealth and economic health to your formula, but you pretty much summed it up.

Interesting commentary on UA/NYC, and I think you're onto something. I work in finance in Manhattan, and I have a very large network of friends and colleagues who travel very often. Of them, the only people I know that fly UA are those who live in JC/Hoboken/NJ burbs, and those who retain second residences in SF. Most everyone else flies B6 or DL. DL, especially, has really upped its offerings from LGA/JFK, has a beautiful lounge at JFK, and has an all-around great reputation with the business traveler community in NYC.

That said, many travelers decide which airline to fly based on airport. For some, EWR is a nonstarter, and UA's small presence at LGA and no presence at JFK isn't exactly going to help attract HVC's who could easily fly DL from its 2 NYC hubs instead.

For the most part, I think the NY market share split is going to stay status quo for awhile. But it will be interesting to see if the recent tax changes will materially affect the regional economy and, thus, air travel - and if airlines surrender capacity as a result.

WN does not technically have a hub since they are point-to-point.

jeffrey1970 wrote:

WN does not technically have a hub since they are point-to-point.

WN may not call them hubs but WN builds in tons of connection opportunities, especially at places like MDW, DEN, BWI, etc.

Jeremy

jeffrey1970 wrote:

WN does not technically have a hub since they are point-to-point.

If it looks like a hub, quacks like a hub, and is scheduled like a hub, I’m inclined to consider it basically a hub.

As to the original question, I agree with some of the other posters (AA/CLT, DL/ATL, UA/DEN). In the case of all three to some extent, it would seem to corroborate something Scott Kirby mentioned a while back about how profitable connecting traffic is now in a world where nonstop pricing has in many cases been depressed by ULCCs.

so we cant mention the four letter word DETROIT, and after what 10 posts, not one person has shown ANY FACTS, great thread

http://sixelconsulting.com/Data/reports ... Sample.pdf

Really surprised no one has brought up this document, although it is from 2015, so things may have slightly changed
Based on Total O&D revenue (and yes I am aware revenue and profitability are not necessarily interchangeable)... LGA, JFK, and EWR are combined
WN: 1.LAS, 2.MDW, 3.DEN, 4.PHX, 5.BWI
AA: 1.DFW, 2.NYC, 3.ORD, 4.LAX, 5.PHL
DL: 1.NYC, 2.ATL, 3.MSP, 4.DTW, 5.LAX
B6: 1.NYC, 2.BOS, 3.MCO, 4.FLL, 5.SJU
UA: 1.NYC, 2.SFO, 3.ORD, 4.IAH, 5.DEN

Out of those top 5, in terms of fared yield:
DL: 1.ATL
AA: 1.NYC (although CLT has a fared yield about 6 cents higher)
UA: 1.IAH
WN: 1.PHX
B6: 1.MCO

jeffrey1970 wrote:

WN does not technically have a hub since they are point-to-point.

Look at me with a straight face and tell me MDW is not a hub....I mean c'mon, DAL even has boards for connections.... https://www.nbcdfw.com/news/business/So ... 58713.html

Definition of a hub: "Airline hubs or hub airports are used by one or more airlines to concentrate passenger traffic and flight operations at a given airport. They serve as transfer (or stop-over) points to get passengers to their final destination"

Would be awesome to see if anyone has any updated numbers for 2016 and even better 2017

Midwestindy wrote:

http://sixelconsulting.com/Data/reports/Samples/State%20Report%20Sample.pdf

Really surprised no one has brought up this document, although it is from 2015, so things may have slightly changed
Based on Total O&D revenue (and yes I am aware revenue and profitability are not necessarily interchangeable)... LGA, JFK, and EWR are combined
WN: 1.LAS, 2.MDW, 3.DEN, 4.PHX, 5.BWI
AA: 1.DFW, 2.NYC, 3.ORD, 4.LAX, 5.PHL
DL: 1.NYC, 2.ATL, 3.MSP, 4.DTW, 5.LAX
B6: 1.NYC, 2.BOS, 3.MCO, 4.FLL, 5.SJU
UA: 1.NYC, 2.SFO, 3.ORD, 4.IAH, 5.DEN

Out of those top 5, in terms of fared yield:
DL: 1.ATL
AA: 1.NYC (although CLT has a fared yield about 6 cents higher)
UA: 1.IAH
WN: 1.PHX
B6: 1.MCO

jubguy3 wrote:

I worked with the SLCDA and I can tell you that SLC usually has the highest profit margin in SLC (tied with ATL) but the volume is much lower than in ATL, and operational changes related to the terminal redevelopment are hurting connecting capacity in SLC.

Higher market share = more profitable, almost always. LGA has high landing fees and competition, Delta wouldn't be profitable in La Guardia.

NYC is profitable for DL although I suppose your statement could be correct that LGA isn't. I actually would venture the opposite, that JFK was the drain and LGA was producing profits. On the whole, DL is now making money in NYC. Remember that DL no longer owns the JFK terminals. So while they may be paying higher relative rent, they don't have to carry debt, depreciation or other expenses. They own the LGA terminal (D at least) and will have to carry that cost but they negotiated a "balance-sheet friendly" deal on the LGA remodel. Whatever the hell "balance sheet friendly" means!

DL stated at the investor day presentation in December that ATL was by far the most profitable hub for them. Its probably the most profitable airline hub in the world with the only rival being DXB. There was an acknowledgment that MSP is the highest margin. There are probably a few small-market outstations that are actually higher-margin b/c of the high average fares but MSP shouldn't come as a surprise. Strong business market and fortress hub keep fares up; really cold but not really that stormy (compared to East Coast), plus older and not particularly elaborate facilities keeping operating cost downs.

flymco753 wrote:

SESGDL wrote:

flymco753 wrote:

As some would claim, “DTW is DL’s least profitable hub.” There I did it for you. *although it’s not some people want to deny the fact that it’s actually pretty profitable.

No one would claim that. Why does every thread need to turn into a DTW conversation?

My guesses (by margin/total profit):
AA - CLT/DFW
UA - DEN/IAH
DL - MSP/ATL
B6 - BOS/JFK
AS - SEA/SEA
WN - No idea

Jeremy

It doesn’t have to be turned into a DTW concersation, my point is you have posters that are constantly degrading the state of DL’s status at DTW. If it wasn’t profitable why is DL flying 8x to MCO this winter? Or why did they add an 8x LAX this winter? Or why did they upgrade SNA from a 73W to a 757? Whether posters believe it or not, it is very profitable. The most? Probably not but it’s an essential asset to DL.

I actually understand your sarcasm for your initial post

Midwestindy wrote:

http://sixelconsulting.com/Data/reports/Samples/State%20Report%20Sample.pdf

Really surprised no one has brought up this document, although it is from 2015, so things may have slightly changed
Based on Total O&D revenue (and yes I am aware revenue and profitability are not necessarily interchangeable)... LGA, JFK, and EWR are combined
WN: 1.LAS, 2.MDW, 3.DEN, 4.PHX, 5.BWI
AA: 1.DFW, 2.NYC, 3.ORD, 4.LAX, 5.PHL
DL: 1.NYC, 2.ATL, 3.MSP, 4.DTW, 5.LAX
B6: 1.NYC, 2.BOS, 3.MCO, 4.FLL, 5.SJU
UA: 1.NYC, 2.SFO, 3.ORD, 4.IAH, 5.DEN

Out of those top 5, in terms of fared yield:
DL: 1.ATL
AA: 1.NYC (although CLT has a fared yield about 6 cents higher)
UA: 1.IAH
WN: 1.PHX
B6: 1.MCO

Definitely VERY good data. Thanks for posting it.

Well, going by fare yield among the "top" airport, AA at CLT is way above other "huge" market, with DFW/DCA after that.

On the other hand, WN is definitely all over the place in terms of fare yield. Using just top 10 revenue market HOU and DAL would actually be on top. But LAS, MDW, and DEN made the most money for them. Then, you got the middle of country market like BNA, STL, and MCI all having a good fare yield, then there's the secondary SoCal/NorCal airport. SJC is way above the average, so is SNA and BUR.

Then for DL all 3 of their fortress hub (ATL, MSP, and of course, DTW) make them REALLY good money, although CVG has the highest fare yield among their hub/focus cities. In comparison, NYC is 5 cents below ATL while LAX and SFO fare yield are depressing (13 cents and 12 cents compare to 23 cents at ATL).

For B6 it looks like Washington market is highest yield. The fare yield difference between NYC and BOS are not as big as people make it out to be, though.

Lastly, UA, with Houston again having the highest yield, although ORD and DEN are not far behind.

Ultimately, CLT is definitely most profitable (in terms of yield) hub for "Big 3", but DL is able to make good money from 3 of their fortress hubs (The fare yield at ATL, DTW, and MSP is at least 3 cents above the like of AA at DFW or UA at IAH/DEN).

I'm thinking this is a classic a.net thread, because there is no definitive answer. At best you can allocate revenue to specific airports, and then subtract costs, but even that's arbitrary. Is flight revenue allocated 100% to the departure aircraft, or is it split between departure and arrive airport? If it's split, by what percentage? How about ground handling? Do you treat departures different than arrivals?

High yield does not always equal high profitability as RASM and CASM are higher on shorter-haul routes.
A possible, but not perfect, way to determine hub profitability is to graph RASM against stage-length on a graph for each airport hub. A hub much higher than the average trend line will likely be much more profitable then one far below the line. A high volume low-yield airport could still be highly profitable, however, MCO, FLL, etc., if lower CASM A321/B753/B739/etc. types are primarily used as compared to regional jets at a higher fare operation (with their higher accompanying CASM).
To caution though, aircraft types, airport costs, and other variables of an airline's network at an airport will affect and nuance profitability beyond a single RASM graph alone.

zakuivcustom wrote:

Ultimately, CLT is definitely most profitable (in terms of yield) hub for "Big 3", but DL is able to make good money from 3 of their fortress hubs (The fare yield at ATL, DTW, and MSP is at least 3 cents above the like of AA at DFW or UA at IAH/DEN).

Something else that I think works very well in CLT’s favor is how cheap it is to operate there. I believe it might even be cheaper than ATL on a per passenger basis and ATL has much greater scale. Aren’t the PFCs there lower than almost any other major airport in the US?

ShinyAndChrome wrote:

zakuivcustom wrote:

Ultimately, CLT is definitely most profitable (in terms of yield) hub for "Big 3", but DL is able to make good money from 3 of their fortress hubs (The fare yield at ATL, DTW, and MSP is at least 3 cents above the like of AA at DFW or UA at IAH/DEN).

Something else that I think works very well in CLT’s favor is how cheap it is to operate there. I believe it might even be cheaper than ATL on a per passenger basis and ATL has much greater scale. Aren’t the PFCs there lower than almost any other major airport in the US?

CLT does have the lowest cost per enplanement out of all the US hubs/focus cities.

As AA has scaled down their NYC presence, I bet DL’s NYC profitability is going up. Business travelers want a spectrum of nonstop flights plus LGA is just too convenient for most Manhattan residents. That said, I think DL’s JFK international operations probably bring down their overall NYC profitability (late to the LHR and Brazil routes as an example). And AA’s scaled down offering in NYC might have helped boost profit margins even if total profit went down.

New York is a very competitive market. Even if aa reduces presence from what it has now, just the sheer number of its dominant hubs and one world partnership alone will keep it a very viable corporate option.

Delta has invested a lot of money in NYC, but unfortunately it doesn't have jvs with ba and jl, which cover the two most important business markets out of New York. No amount of money could change that.

Its interesting to see dl continued willingness to operate on b6 dominated JFK routes where they get lower fare despite having probably 25 to 30% higher cost running b738 against 200 seat a321s. When aa have pretty much quit on all of them.

No amount of aa retreat would change that. And I have not really seen aa cutting the major business routes yet.

I think it is very hard to micro-compare hubs vs different airline. Even if you DID have good data which we do not.

One thing I took at is capacity transitions. If AA DFW-TPA went from 8x to 10x (say), that tells me the planning team was pleased with the results on DFW-TPA recently. This gives you a rough distribution across all areas of an airline's profitability. You have to suss out what is a strategic (speculative) capacity move versus optimizing an established business.

Given the sometimes vague clues we have, we could use a Gold/Silver/Bronze rating system.

GOLD = it's great, beyond question, a high profit goldmine.
SILVER = a good solid business, and very consistent over time.
BRONZE = there are visible reductions / questions / executives mentioning struggle there. And/or clearly a strategic endeavor with no circumstantial evidence of profits.

* GOLD *
DL ATL/MSP/DTW/SLC
AA DFW/MIA/PHL/CLT/DCA
UA SFO/ORD/EWR/DEN/IAH?
AS SEA

* NOT GOLD *
DL SEA/LAX/NYC
AA PHX/ORD/LAX/NYC
UA IAD/LAX/IAH?
AS PDX/SFO

That's basically the story IMO. Did not include Hawaiian or LCCs.

tphuang wrote:

Delta has invested a lot of money in NYC, but unfortunately it doesn't have jvs with ba and jl, which cover the two most important business markets out of New York. No amount of money could change that.

I'll grant you LHR, but note that DL has the VS JV there too (focused on O/D obviously, but for NYCers travelling to LHR it doesn't need to be anything else). I'm gonna dispute that TYO is the second biggest corporate market out of NYC though. There's a lot of competition for that mantle with PAR, SAO, FRA, even HKG having greater or similar amounts of flights/seats on a daily basis. Do seats equal corporate demand? No but it shows where the overall demand is and in January demand is not tourist-driven. Do the AA/JL and UA/NH JVs have superior coverage to TYO? Of course as they each have JV hubs on both sides and have the only nonstops. It's likely not the second most important business destination though, and if it was DL doesn't drop the route in the first place as they seem to be focused on winning corporate contracts in NYC (along with AA/UA/B6 etc).

adtall wrote:

tphuang wrote:

Delta has invested a lot of money in NYC, but unfortunately it doesn't have jvs with ba and jl, which cover the two most important business markets out of New York. No amount of money could change that.

I'll grant you LHR, but note that DL has the VS JV there too (focused on O/D obviously, but for NYCers travelling to LHR it doesn't need to be anything else). I'm gonna dispute that TYO is the second biggest corporate market out of NYC though. There's a lot of competition for that mantle with PAR, SAO, FRA, even HKG having greater or similar amounts of flights/seats on a daily basis. Do seats equal corporate demand? No but it shows where the overall demand is and in January demand is not tourist-driven. Do the AA/JL and UA/NH JVs have superior coverage to TYO? Of course as they each have JV hubs on both sides and have the only nonstops. It's likely not the second most important business destination though, and if it was DL doesn't drop the route in the first place as they seem to be focused on winning corporate contracts in NYC (along with AA/UA/B6 etc).

DL/VS is at a competitive disadvantage to BA/AA despite offering a much better product. It's an unfortunate situation DL faces, but that's the reality. As for second biggest corporate market, it's certainly debatable. I'm thinking more of where big finance firms have their offices. They typically have it in London and Tokyo. Obviously, Paris and hkg are big markets too.

I'm just putting it out there that despite cutting back a lot of leisure markets in NYC, AA is still very competitive in major corporate markets. For people working in finance like myself, I think AA/OW offers better options than DL. Obviously, not everyone are of same opinion as I have. But the assumptions that if DL just keeps throwing money at NYC, AA will retreat from business markets and DL can become more profitable here is not proven. They simply don't have the inherent advantages like UA does at EWR.

I know it’s no CLT, but I wonder how DCA and PHX do for AA

tphuang wrote:

adtall wrote:

tphuang wrote:

Delta has invested a lot of money in NYC, but unfortunately it doesn't have jvs with ba and jl, which cover the two most important business markets out of New York. No amount of money could change that.

I'll grant you LHR, but note that DL has the VS JV there too (focused on O/D obviously, but for NYCers travelling to LHR it doesn't need to be anything else). I'm gonna dispute that TYO is the second biggest corporate market out of NYC though. There's a lot of competition for that mantle with PAR, SAO, FRA, even HKG having greater or similar amounts of flights/seats on a daily basis. Do seats equal corporate demand? No but it shows where the overall demand is and in January demand is not tourist-driven. Do the AA/JL and UA/NH JVs have superior coverage to TYO? Of course as they each have JV hubs on both sides and have the only nonstops. It's likely not the second most important business destination though, and if it was DL doesn't drop the route in the first place as they seem to be focused on winning corporate contracts in NYC (along with AA/UA/B6 etc).

DL/VS is at a competitive disadvantage to BA/AA despite offering a much better product. It's an unfortunate situation DL faces, but that's the reality. As for second biggest corporate market, it's certainly debatable. I'm thinking more of where big finance firms have their offices. They typically have it in London and Tokyo. Obviously, Paris and hkg are big markets too.

I'm just putting it out there that despite cutting back a lot of leisure markets in NYC, AA is still very competitive in major corporate markets. For people working in finance like myself, I think AA/OW offers better options than DL. Obviously, not everyone are of same opinion as I have. But the assumptions that if DL just keeps throwing money at NYC, AA will retreat from business markets and DL can become more profitable here is not proven. They simply don't have the inherent advantages like UA does at EWR.

I guess I agree with you and I don’t at the same time. What’s most appealing to business passengers and what’s most profitable aren’t necessarily the same thing. I think you could argue moves like increasing the number of nonstop routes, investing in facilities, etc. end up being a drag on profitability in the short term and probably beyond. And in both of those cases, DL has generally been more aggressive in NYC than AA.

That’s not to say that anyone is necessarily “winning” or “losing” NYC. The whole idea of a “battle” for New York is more like a philosophical battle than a historical one with clear cut winners or losers. NYC a big and frangmented market and it always will be. And it’s big enough so that everyone can have a respectable share of the market backed up by their own particular advantages in network, product, or what have you. No matter which side happens to have the momentum, no one’s going to “lose” unless they face some kind of non NY-specific existential crisis like bankruptcy.

jetbluefan1 wrote:

tphuang wrote:

mmo wrote:

Interesting commentary on UA/NYC, and I think you're onto something. I work in finance in Manhattan, and I have a very large network of friends and colleagues who travel very often. Of them, the only people I know that fly UA are those who live in JC/Hoboken/NJ burbs, and those who retain second residences in SF. Most everyone else flies B6 or DL. DL, especially, has really upped its offerings from LGA/JFK, has a beautiful lounge at JFK, and has an all-around great reputation with the business traveler community in NYC.

That said, many travelers decide which airline to fly based on airport. For some, EWR is a nonstarter, and UA's small presence at LGA and no presence at JFK isn't exactly going to help attract HVC's who could easily fly DL from its 2 NYC hubs instead.

This conversation has been beaten to death over and over year after year puhhllease! As a New Yorker who lives in lower Manhattan Newark is the closest airport geographically, and in terms of time can vary from 20 minutes to an hour by cab/uber to at worst 1 hour 30 minutes in a snow storm or some NYC traffic anomaly. Lower Manhattan also has excellent rail links to Newark Penn Station via the PATH from WTC or NJT from Penn Station to EWR. Since the UA/CO merger (which I freely admit has been a long term investment for loyal customers) Newark still remains the easiest airport to get to. I am a multi-year global services customer so as a data point my access to Asia and Europe from Newark on UA is unsurpassed by any other carrier. I just don't understand what you are talking about when you say that EWR only attracts those who live in JC / Hoboken / NJ burbs, and those who retain second residences in SF. I live in Manhattan and UA is the best carrier in terms of nonstop service options of any other carrier.

Midwestindy wrote:

jeffrey1970 wrote:

WN does not technically have a hub since they are point-to-point.

Look at me with a straight face and tell me MDW is not a hub....I mean c'mon, DAL even has boards for connections.... https://www.nbcdfw.com/news/business/So ... 58713.html

Definition of a hub: "Airline hubs or hub airports are used by one or more airlines to concentrate passenger traffic and flight operations at a given airport. They serve as transfer (or stop-over) points to get passengers to their final destination"

I hear what you are saying. I am just going by what WN says.

Flighty wrote:

I think it is very hard to micro-compare hubs vs different airline. Even if you DID have good data which we do not.

One thing I took at is capacity transitions. If AA DFW-TPA went from 8x to 10x (say), that tells me the planning team was pleased with the results on DFW-TPA recently. This gives you a rough distribution across all areas of an airline's profitability. You have to suss out what is a strategic (speculative) capacity move versus optimizing an established business.

Given the sometimes vague clues we have, we could use a Gold/Silver/Bronze rating system.

GOLD = it's great, beyond question, a high profit goldmine.
SILVER = a good solid business, and very consistent over time.
BRONZE = there are visible reductions / questions / executives mentioning struggle there. And/or clearly a strategic endeavor with no circumstantial evidence of profits.

* GOLD *
DL ATL/MSP/DTW/SLC
AA DFW/MIA/PHL/CLT/DCA
UA SFO/ORD/EWR/DEN/IAH?
AS SEA

* NOT GOLD *
DL SEA/LAX/NYC
AA PHX/ORD/LAX/NYC
UA IAD/LAX/IAH?
AS PDX/SFO

That's basically the story IMO. Did not include Hawaiian or LCCs.

I am curious what your reasoning is for PHX not being gold for AA?

How is fare income allocated to the stations? For example, someone flies LAX - DFW - BNA for $500. Which station(s) recognize the income? I ask, because it seems that determining profitability for a hub would be difficult because connecting passengers are "generating" income for the hub (versus originating/local traffic).

tphuang wrote:

DL/VS is at a competitive disadvantage to BA/AA despite offering a much better product. It's an unfortunate situation DL faces, but that's the reality. As for second biggest corporate market, it's certainly debatable. I'm thinking more of where big finance firms have their offices. They typically have it in London and Tokyo. Obviously, Paris and hkg are big markets too.

From a LHR POS perspective I agree DL/VS is at a disadvantage due to BA's large share advantage ex-LHR, but they're not operating from a base of zero as VS has its clientele; from a NYC POS/schedule side I'm not so sure. From JFK to LHR BA/AA have 11 daily departures as far as I can tell, 2 are daylight flights with 9 flights departing at odd intervals between 6:25 and 11:15 PM EST, averaging ~32 minutes between evening departures, with an average of 27.5 minutes if we exclude the 11:15 BA/AA departure (as an aside, BA/AA have 4 flights between 6:25 and 7:20?! Maybe put 2 or 3 BA A380s here?). DL/VS run 1 daylight flight and 7 evening departures, with departures every half-hour between 6:30 and 8:30, and then two more at 9:30 and 10:30, averaging out to ~34.5 minutes between evening departures. I'm not sure that the difference of 7 minutes on average is that big of a deficiency schedule-wise, and as far as NYC POS DL/VS likely get their share of the pie considering their relative LHR weakness.

tphuang wrote:

I'm just putting it out there that despite cutting back a lot of leisure markets in NYC, AA is still very competitive in major corporate markets. For people working in finance like myself, I think AA/OW offers better options than DL. Obviously, not everyone are of same opinion as I have. But the assumptions that if DL just keeps throwing money at NYC, AA will retreat from business markets and DL can become more profitable here is not proven. They simply don't have the inherent advantages like UA does at EWR.

If you need to go to TYO or HKG nonstop, then yes OW is clearly your choice, just as if you need to go to FRA, then OW is not your choice. In general and excluding TYO and HKG, I'm not coming up with any major nonstop international cities ex-NYC where AA would have a clear schedule or destination POS advantage over DL besides LHR, MAD, and BCN (and DL is competitive to all three). Brazil possibly with LATAM, but DL has GOL on that end too for some Brazil POS, has a competitive nonstop schedule, and the AA/LATAM relationship is not JVed as regards Brazil.

AA is repositioning itself in NYC as the businessman's airline (the past becomes the present again) and due to their hub structure they have a destination POS advantage in some major US cities in their own right. That is the strength of the AA network and they won't be disappearing from NYC. The question is more can they maintain their NYC share against DL, UA, B6, etc. I think DL now does have some inherent advantages over AA in NYC such as their slot holdings (nearly 500 daily flights in the summer between JFK and LGA), their terminal holdings (half of future LGA?!) and their holistic network out of NYC that gets you most anywhere you want to go (the main disadvantage vs. UA being the split hub of course, but AA has the same issue and it shouldn't matter for an O/D NYC traveller anyways outside of the unique UA destinations ex-EWR). Those are some large inherent advantages. As far as throwing money at NYC, what are you referring to? By all accounts they do make money there (even according to Mr. Kirby).

A whole lot of garbage in this thread.

While I can't track it down at present, Oliver Wyman published some estimates I believe in late 2016 or early 2017 that was tacked onto a broader Airline Economic Analysis that they publish routinely. It said in no uncertain terms that the below were the big 3's most profitable hubs based on their assumptions (with the metric being profit margin not gross profits) -

AA: CLT (confirmed by American)
DL: SLC
UA: DEN (confirmed by United)

To me profitable doesn’t mean biggest or busiest, but what profit percentage is returned to the airline from the hub.

UA, by their own admission made a big
mistake abandoning JFK



EWR is a goldmine and a powerful hub but
if you want to be a real contender in that
market you need good service in all three
NY markets


Question is, will UA go back to JFK ?

adtall wrote:

tphuang wrote:

DL/VS is at a competitive disadvantage to BA/AA despite offering a much better product. It's an unfortunate situation DL faces, but that's the reality. As for second biggest corporate market, it's certainly debatable. I'm thinking more of where big finance firms have their offices. They typically have it in London and Tokyo. Obviously, Paris and hkg are big markets too.

From a LHR POS perspective I agree DL/VS is at a disadvantage due to BA's large share advantage ex-LHR, but they're not operating from a base of zero as VS has its clientele; from a NYC POS/schedule side I'm not so sure. From JFK to LHR BA/AA have 11 daily departures as far as I can tell, 2 are daylight flights with 9 flights departing at odd intervals between 6:25 and 11:15 PM EST, averaging ~32 minutes between evening departures, with an average of 27.5 minutes if we exclude the 11:15 BA/AA departure (as an aside, BA/AA have 4 flights between 6:25 and 7:20?! Maybe put 2 or 3 BA A380s here?). DL/VS run 1 daylight flight and 7 evening departures, with departures every half-hour between 6:30 and 8:30, and then two more at 9:30 and 10:30, averaging out to ~34.5 minutes between evening departures. I'm not sure that the difference of 7 minutes on average is that big of a deficiency schedule-wise, and as far as NYC POS DL/VS likely get their share of the pie considering their relative LHR weakness.

I just see my colleagues typically pick BA/AA options by default normally.

And my guess is that this is quite a common theme. Otherwise, there is no reason AA/BA continue to dominate LHR market so much.

tphuang wrote:

I'm just putting it out there that despite cutting back a lot of leisure markets in NYC, AA is still very competitive in major corporate markets. For people working in finance like myself, I think AA/OW offers better options than DL. Obviously, not everyone are of same opinion as I have. But the assumptions that if DL just keeps throwing money at NYC, AA will retreat from business markets and DL can become more profitable here is not proven. They simply don't have the inherent advantages like UA does at EWR.

If you need to go to TYO or HKG nonstop, then yes OW is clearly your choice, just as if you need to go to FRA, then OW is not your choice. In general and excluding TYO and HKG, I'm not coming up with any major nonstop international cities ex-NYC where AA would have a clear schedule or destination POS advantage over DL besides LHR, MAD, and BCN (and DL is competitive to all three). Brazil possibly with LATAM, but DL has GOL on that end too for some Brazil POS, has a competitive nonstop schedule, and the AA/LATAM relationship is not JVed as regards Brazil.

continental Europe and Brazil are not as important business market. Clearly, O/W has a lot of advantages in Asia to the largest markets.

Here is a diagram from a while back by OW. It shows how OW really dominates the largest business markets in the world.
https://pbs.twimg.com/media/DNFEeq-UEAAEerl.jpg:large

AA is repositioning itself in NYC as the businessman's airline (the past becomes the present again) and due to their hub structure they have a destination POS advantage in some major US cities in their own right. That is the strength of the AA network and they won't be disappearing from NYC. The question is more can they maintain their NYC share against DL, UA, B6, etc. I think DL now does have some inherent advantages over AA in NYC such as their slot holdings (nearly 500 daily flights in the summer between JFK and LGA), their terminal holdings (half of future LGA?!) and their holistic network out of NYC that gets you most anywhere you want to go (the main disadvantage vs. UA being the split hub of course, but AA has the same issue and it shouldn't matter for an O/D NYC traveller anyways outside of the unique UA destinations ex-EWR). Those are some large inherent advantages. As far as throwing money at NYC, what are you referring to? By all accounts they do make money there (even according to Mr. Kirby).

It's very hard to loose money in America right now. Things aren't always going to stay this profitable and DL would most likely be the first to sink to losses. LGA station last year apparently got much less profitable just by B6 entering BOS-LGA shuttle. That would show their entire station margin is razor thin. AA is not attempting to be the airline for everyone, so it also doesn't need as much slot holdings.