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SumChristianus
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What if? – United keeps the "Guppy" (2008)

Tue May 15, 2018 5:36 pm

At least according to A.net, many of United’s problems stem from its massive fleet and capacity cuts over the past two decades, specifically its mass parking or B737-300s in ~2008 and domestic B757-200s up until around 2014. United cut mainline capacity replacing service, especially domestically, with regional jets, exacerbated by a stretched mainline fleet with the CO merger, and is only starting to return some of that capacity to the market with new B737s and used A319/A320s. I know these were “needed” to reduce overcapacity and ensure United’s survival, but United’s standing, relative to its competitors, has been deeply hurt by its undersized mainline fleet.

What if, however United didn’t perform its massive fleet and network cuts? AA was able to survive with its inefficient MD80s, US Airways flew B737-400s until 2014, Southwest B737-300s until 2017, Delta operates MD88s, MD90s and 717s and so on. As other carriers were able to make older more inefficient fleets work my migrating them to shorter routes where fuel efficiency is less of a factor, could UA have kept some of the aircraft it had dropped?
Where would United be now if it had maintained a better sized mainline fleet since the mid-2000s? Imagine that it had around 100-150 more mainline narrowbodies

Thoughts?

I think United capacity would be 15% higher, on par with AA and DL (?), industry domestic capacity would be around 4% higher, and while loads and yields would be lower than they were in reality, United would have had a better competitive and long term situation with fewer regional jet flights.

The Denver hub would have stood better against WN with more mainline capacity (no switch from 5x mainline to 1x CRJ, 1x CR7 on IND-DEN for example). UA would probably be around 450 flights a day today (55,000 or so daily seats) at DEN with a much smaller WN to deal with.

WN would have expanded more in PHX, LAS, SLC, MCI, etc. in lieu of DEN, putting more competitive pressure on DL and AA/US/HP.

ORD, IAD, SFO, and pmCO hubs IAH and EWR would have held up better against competitive encroachment, making AA (relatively weaker) at ORD, offering better competition to DL/B6/AA in NYC, starting more transcontinental flying (with A319s freed up from runs which the B733 could have operated instead (ORD-DTW/STL, SFO-RNO, etc.). Not sure about CLE, but it would probably be closer to the size CVG is DL for today.
UA would have held stronger at LAX, weakening the opportunities for AA/DL/WN in Los Angeles.

Not sure again how all this would have worked out, if it would have, but I think that dropping two many mainline planes and replacing them with regional jets has the been the cause of many of United’s troubles. CO had a lot of regional jets too, and similar principles apply to them, but I just wanted to imagine where United would be if it had had 100-150 more narrowbodies to play with over the past decade.

Perhaps Tilton/Smisek didn’t see the ability to fight and succeed, but given United’s network, I think it would have had a fighting chance of being as successful as DL is today if it had a fleet as large, and a vison and leadership like that at DL (Anderson/Bastian). I like what Kirby/Munoz are doing, and things are finally improving from the fleet/route standpoint (from my opinion), but where would United be if it didn’t have to “dig itself out of a hole”?
A Traddie wannaby---UA DL LH NW AA (coming soon)
"Born in Wonder, Brought to Wisdom"
 
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XAM2175
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Re: What if? – United keeps the "Guppy" (2008)

Tue May 15, 2018 5:51 pm

I have no understanding of the UA network as a whole but I'd suggest you're approaching it from the wrong perspective by simply considering an aircraft type's economics based on their fuel efficiency. Total cost of ownership (and by association operation) is also informed by crewing expenses, lease fees, etc etc, and this feeds into overall finances for the airline in a balancing game of high fuel costs against capital expenditure for new aircraft.

Accordingly many airlines that have clung on to inefficient types have done so because they own them outright (or are paying very small lease fees), because they're fully-depreciated (or close to it), and because crews are already trained, cabins are already installed, spares inventories are already in place, and so on.
 
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SumChristianus
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Re: What if? – United keeps the "Guppy" (2008)

Tue May 15, 2018 5:53 pm

XAM2175 wrote:
I have no understanding of the UA network as a whole but I'd suggest you're approaching it from the wrong perspective by simply considering an aircraft type's economics based on their fuel efficiency. Total cost of ownership (and by association operation) is also informed by crewing expenses, lease fees, etc etc, and this feeds into overall finances for the airline in a balancing game of high fuel costs against capital expenditure for new aircraft.

Accordingly many airlines that have clung on to inefficient types have done so because they own them outright (or are paying very small lease fees), because they're fully-depreciated (or close to it), and because crews are already trained, cabins are already installed, spares inventories are already in place, and so on.

Yes, maintenance/commonality would have been an issue to, but I was thinking more in terms of the hypothetical impact on its network.

If UA had 150 more planes it could conceivably moved its CLE hub to BNA giving it a southeastern presence....can of worms I know (WN...)
Just like to consider the possibility,

I.V.
A Traddie wannaby---UA DL LH NW AA (coming soon)
"Born in Wonder, Brought to Wisdom"
 
drdisque
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Re: What if? – United keeps the "Guppy" (2008)

Thu May 17, 2018 3:07 am

Facts as UA saw them at the time:

*Ted is dead, those aircraft need to return to mainline configuration and capacity to Ted markets is getting slashed or eliminated altogether. In 2008 stations like RSW, FLL, and PBI were losing gobs of money. The western Ted markets such as LAS and PHX were OK, but the Ted configuration provided few if any benefits. The only destination where Ted outperformed a 2-class configuration was CUN.
*All-in CASM for the 737 classic fleet was worse than the CRJ or ERJ, even with fuel over $100/barrel. This was in the words of COO John Tague himself.
*Capacity needed to decrease and UA didn't have a large block of aircraft it could temporarily park like NW/DL and AA did, it was best off eliminating a fleet. Remember that during the recession NW/DL parked a lot of 757's and AA parked a lot of MD-80's and retired the A300.
*The 737 Classics were still desirable by foreign carriers - in fact the vast majority were sold off relatively quickly to UTair and other Russian and Kazakh airlines.

Here is a news link about the UA Q2 2008 earnings call to remind you what that was like - http://money.cnn.com/2008/07/22/news/co ... /index.htm maybe this isn't reminding you, maybe you never knew in the first place since you might have been a child at the time.

Given all those things, the only logical solution was to retire the 737 classic fleet. Yes, it would have been great to have a few more A319's to replace them or if the E-jets had come on faster, but United, nor anyone else were in a situation to afford that at the time.

To put things into context, United at the time was seriously pondering if there was any future for them as a domestic airline and whether they should instead focus all of their efforts on just flying internationally, primarily from ORD, SFO, and IAD, and offering a token domestic network to feed that flying. They ultimately decided against that, not based on the premise that the domestic network would turn around, but that cutting their domestic network too much would make the international flying they sought to keep nonviable. Also, some of their small stations were their most profitable domestic outstations so they thought it would be a bit odd if they flew LAN-ORD or SDF-ORD but not BWI-ORD.
 
jetero
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Re: What if? – United keeps the "Guppy" (2008)

Thu May 17, 2018 3:42 am

drdisque wrote:
Facts as UA saw them at the time:

*Ted is dead, those aircraft need to return to mainline configuration and capacity to Ted markets is getting slashed or eliminated altogether. In 2008 stations like RSW, FLL, and PBI were losing gobs of money. The western Ted markets such as LAS and PHX were OK, but the Ted configuration provided few if any benefits. The only destination where Ted outperformed a 2-class configuration was CUN.
*All-in CASM for the 737 classic fleet was worse than the CRJ or ERJ, even with fuel over $100/barrel. This was in the words of COO John Tague himself.
*Capacity needed to decrease and UA didn't have a large block of aircraft it could temporarily park like NW/DL and AA did, it was best off eliminating a fleet. Remember that during the recession NW/DL parked a lot of 757's and AA parked a lot of MD-80's and retired the A300.
*The 737 Classics were still desirable by foreign carriers - in fact the vast majority were sold off relatively quickly to UTair and other Russian and Kazakh airlines.

Here is a news link about the UA Q2 2008 earnings call to remind you what that was like - http://money.cnn.com/2008/07/22/news/co ... /index.htm maybe this isn't reminding you, maybe you never knew in the first place since you might have been a child at the time.

Given all those things, the only logical solution was to retire the 737 classic fleet. Yes, it would have been great to have a few more A319's to replace them or if the E-jets had come on faster, but United, nor anyone else were in a situation to afford that at the time.

To put things into context, United at the time was seriously pondering if there was any future for them as a domestic airline and whether they should instead focus all of their efforts on just flying internationally, primarily from ORD, SFO, and IAD, and offering a token domestic network to feed that flying. They ultimately decided against that, not based on the premise that the domestic network would turn around, but that cutting their domestic network too much would make the international flying they sought to keep nonviable. Also, some of their small stations were their most profitable domestic outstations so they thought it would be a bit odd if they flew LAN-ORD or SDF-ORD but not BWI-ORD.


That's just crazy to me that they were considering that, but given the actions they took, I believe you. CO must've been thinking the same. It's hard to believe considering how DL, AA, and US held on domestically, but I guess they benefited majorly by the reductions in capacity by CO and UA. Was it just a matter of UA being affected more directly by WN and its fuel hedging than the others, along with the transcon blood bath? It's a shame the CO-UA merger didn't happen in 2008.
 
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SumChristianus
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Re: What if? – United keeps the "Guppy" (2008)

Thu May 17, 2018 2:07 pm

drdisque wrote:
Facts as UA saw them at the time:

*All-in CASM for the 737 classic fleet was worse than the CRJ or ERJ, even with fuel over $100/barrel. This was in the words of COO John Tague himself.
*Capacity needed to decrease and UA didn't have a large block of aircraft it could temporarily park like NW/DL and AA did, it was best off eliminating a fleet. Remember that during the recession NW/DL parked a lot of 757's and AA parked a lot of MD-80's and retired the A300.
*The 737 Classics were still desirable by foreign carriers - in fact the vast majority were sold off relatively quickly to UTair and other Russian and Kazakh airlines.

I guess their all out CRJ/ERJing makes sense then, wow...

Here is a news link about the UA Q2 2008 earnings call to remind you what that was like - http://money.cnn.com/2008/07/22/news/co ... /index.htm maybe this isn't reminding you, maybe you never knew in the first place since you might have been a child at the time.


And yes, remember little from that time :D
Just wondered where UA would be if it acted differently at the time. Maybe....dead...
Given all those things, the only logical solution was to retire the 737 classic fleet. Yes, it would have been great to have a few more A319's to replace them or if the E-jets had come on faster, but United, nor anyone else were in a situation to afford that at the time.[/quote]
I wish...but then...reminds me of the European legacies thinking on short-haul flying

To put things into context, United at the time was seriously pondering if there was any future for them as a domestic airline and whether they should instead focus all of their efforts on just flying internationally, primarily from ORD, SFO, and IAD, and offering a token domestic network to feed that flying. They ultimately decided against that, not based on the premise that the domestic network would turn around, but that cutting their domestic network too much would make the international flying they sought to keep nonviable. Also, some of their small stations were their most profitable domestic outstations so they thought it would be a bit odd if they flew LAN-ORD or SDF-ORD but not BWI-ORD.


I guess there has been quite a reversal, with domestic supposedly more profitable now.
I agree that their decison was right for the time...but in the long term I bet UA wishes they could have found a way to have made a larger fleet work....if 9/11 hadn't happened and short-haul traffic hadn't collapsed, but that's another rabbit hole.

Thanks for sharing,

I.V.
A Traddie wannaby---UA DL LH NW AA (coming soon)
"Born in Wonder, Brought to Wisdom"
 
drdisque
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Re: What if? – United keeps the "Guppy" (2008)

Thu May 17, 2018 8:32 pm

I think I should also mention that NW/DL retired all the DC-9-30/40 fleet during 2008 as well as the bulk of the SF340's (not mainline capacity - but it was capacity that was backfilled by CRJ's so that's one reason they didn't have a bunch of CRJ's needing to go on routes that had been traditionally mainline - excess CRJ's were needed to backfill the SF340 fleet). That was also a lot of capacity they removed that I didn't mention. It's also worth noting that during 2008 and 2009 a lot of DL routes that had been all mainline historically and are all mainline now were either mostly or completely RJ's. DL was able to reverse this with the 717 acquisition a few years later.

Yes, UA's domestic network was disproportionately exposed to WN's fuel-hedge-protected network as well as the loss-taking then-startup VX.

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