United - Continental merger beginning to take a toll in Cleveland (Columbus: rental car, 2015)

[tom11011]

Cleveland business community is zeroing in on how to keep Cleveland's nonstop flights from vanishing | cleveland.com


I hope the city can aggressively go after Southwest to take up the slack, but with Southwest merging with Airtran who already has a large presence at CAK airport, I don't know.

[Cleveland_Collector]

None of this changes the simple fact that CLE is the only airport in the region that can handle the amount of traffic along with the size of planes (CLE is the only airport in the state that can handle the A380) that it does. It also doesn't change the fact that it is also within the closest proximity to the vast majority of NEO's major businesses. If Continental/United leaves, other airlines will rush in to pick up the business. As the Medical Mart and other area expansions continue to take place, it will only further bolster the air travel to the area. My guess is that executive business travelers coming to the area aren't going to be to thrilled with flying a 3-stopper, regional jet route into CAK regional and then taking an hour car ride to where they need to go. It get's to a point where their time is worth more than saving $200 on a flight while wasting 4 hours in airports and rental cars. That aspect clearly favors CLE.

With this being said, my guess is that Continental is hedging for lower operating costs at CLE and really doesn't plan on leaving unless their enplanements at CLE diminish significantly by 2015. As of the turn of the year, they were actually on an upswing. I know that every flight I have been on has been jam-packed. Basically, United/Continental will do what they feel is best for them...always have, always will.

[tom11011]

Well, Cleveland doesn't get any A380 aircraft or any 747's unless the president is coming.

Continental is not going to leave, they will just reduce their daily departures and arrivals by about 1/2. The only direct flights on Continental will be to Chicago, New York, or Houston, the hub cities-- aka you will have to connect.

CEO Jeff Smisek is on record saying unless the business travel situation in Cleveland drastically turns around, Cleveland will loose it's hub status as there is no sense it trying to keep it alive when Chicago is 1 hour away by air.

I know you say every flight you have been on has been jam packed, but this is not because of increased air travel (in general), it's because of reduced departures and reduced aircraft forcing the remaining aircraft to become full. Although this is not a Cleveland thing, airlines have reduced the number of aircraft everywhere to fill up airplane seats. Air travel in general may be increasing "technically" but it is just returning to levels before the great recession.

Having said all that, I certainly do not want to loose the hub status, but realistically, it's in the cards.

“The key for Cleveland is to have a level of business travel so that we can have either consistent profitability or have that hub's profitability in a clear line of sight (ahead),” he said. “We lost a lot of money here, but we stuck by Cleveland. Cleveland needs to earn its hub status every day,” he said.

http://www.crainscleveland.com/artic...FREE/101119982

[Boffo]

He didn't say it needed to drastically turn around, it just needs to remain profitable. I think this is the article you were referring to United Airlines CEO Smisek says Cleveland must 'earn its hub status every day' - Cleveland Business News - Northeast Ohio and Cleveland - Crain's Cleveland Business.
With that being said, I think we have a few years to show United/Continental that Cleveland is a good investment. There are too many dehubbed cities surrounding us and I hope we don't end up like them.

[Cleveland_Collector]

Originally Posted by tom11011

Well, Cleveland doesn't get any A380 aircraft or any 747's unless the president is coming.

That doesn't change the fact that the infrastructure is sound and, therefore, able and attractive to a carrier that may need to land one here. No other airport in the state can land one.

Continental is not going to leave, they will just reduce their daily departures and arrivals by about 1/2. The only direct flights on Continental will be to Chicago, New York, or Houston, the hub cities-- aka you will have to connect.

CEO Jeff Smisek is on record saying unless the business travel situation in Cleveland drastically turns around, Cleveland will loose it's hub status as there is no sense it trying to keep it alive when Chicago is 1 hour away by air.

Ummm, Chicago was always an hour away by air. Basically, so is Newark. And, the business travel situation has turned around from the 2009-10 levels he was quoting. They've been knee-deep in corporate-speak since the merger. The fact is, they would have to support 8 US hubs. Even though they are the largest combined airport in the world, that is probably too many--but, maybe not. They will go with the places that offer the best per-enplanement rate along with the least competitive routes (read: higher fares). That is where Cleveland may actually win out as that is why Continental established a hub here in the first place--the competition wasn't as fierce as in, say, Chicago.

I know you say every flight you have been on has been jam packed, but this is not because of increased air travel (in general), it's because of reduced departures and reduced aircraft forcing the remaining aircraft to become full. Although this is not a Cleveland thing, airlines have reduced the number of aircraft everywhere to fill up airplane seats. Air travel in general may be increasing "technically" but it is just returning to levels before the great recession.

They have been doing that since 9/11. I'm talking about what is happening recently. For instance, the last time I flew to Newark (in December), there were 6 direct, full-sized 737 flights leaving daily plus multiple (over a dozen) 1-stop flights using regional jets. This is up significantly from just this past summer when there was about 12 fights in total and they were not always packed. I would also contend that every airport is attempting to return to pre-recession levels given that all of the top 50 airports, save 1 or 2, are also down significantly in throughput.

Having said all that, I certainly do not want to loose the hub status, but realistically, it's in the cards.

“The key for Cleveland is to have a level of business travel so that we can have either consistent profitability or have that hub's profitability in a clear line of sight (ahead),” he said. “We lost a lot of money here, but we stuck by Cleveland. Cleveland needs to earn its hub status every day,” he said.

United Airlines CEO Smisek says Cleveland must 'earn its hub status every day' - Cleveland Business News - Northeast Ohio and Cleveland - Crain's Cleveland Business

Everything's on the table, to be sure. But, once again, pure corporate speak: “We lost a lot of money here, but we stuck by Cleveland." -- and pure, unadulterated BS. The insinuation that they somehow stayed here because they "believed in the Cleve" is an insult to anyone's intelligence. They stayed here because we offered them a strategic advantage and a portal to servicing the business travel needs of 11, Fortune 500 HQs among the many, many others that are represented here. That has not changed.

CLE currently has more than 5 million enplanements per year making it easily the busiest airport in OH for flight originations (and about 8x that of CAK). It also handles about 9.5 million pasengers yearly making it the busiest airport for throughput in OH (Cleveland - 9,492,495, Cincinnati - 7,977,588, Columbus - 6,233,485). As the economy improves, it is reasonable to assume that the numbers will also. I doubt that they will seriously consider walking away from what will amount to 3 million enplanements and close to $3 billion in low-competeing revenue (nearly 10% of their annual revenue) unless the grass is greener elsewhere.

[tom11011]

>>>I doubt that they will seriously consider walking away from what will amount to 3 million enplanements and close to $3 billion in low-competeing revenue (nearly 10% of their annual revenue) unless the grass is greener elsewhere.

Well, one only has to look to Pittsburgh to see what US Airways did. Pittsburgh has just as good of airport infrastructure as any other. Not to mention there terminal is awesome, one of the first mall concepts.

[Na zdrowie]

Originally Posted by tom11011

>>>I doubt that they will seriously consider walking away from what will amount to 3 million enplanements and close to $3 billion in low-competeing revenue (nearly 10% of their annual revenue) unless the grass is greener elsewhere.

Well, one only has to look to Pittsburgh to see what US Airways did. Pittsburgh has just as good of airport infrastructure as any other. Not to mention there terminal is awesome, one of the first mall concepts.

Local demand (as a percentage of total passengers) was lower in Pittsburgh during its hub days than in Cleveland, so Cleveland is positioned better regardless of what happens with United/Continental. There was more to the Pittsburgh story also - US Airways was in trouble post 9/11 and was trying to cut costs and negotiate lower fees. Pittsburgh's aiport wouldn't budge enough for US Airways, so the airline finally pulled what remained of the hub.

The fact that the Cleveland business community as an advocate for the airport is taking proactive steps now in light all of the new development going on in the city is a good sign.

[Cleveland_Collector]

I highly doubt that airlines really give a crap about how good the airport mall is as they don't gross dollar one from them. Sure, they're a nice amenity, but the key is putting butts in seats. I've never heard of a person not going on a trip because the airport shops weren't up to shopping mall standards.

The problem Pittsburgh had was considerably different from this merger. Pittsburgh lost their hub for a few reasons. The most significant reason was that, after the reverse acquisition by America West, US Air was hemorrhaging money. The other and much lesser reason was that they had another hub in relatively nearby Philadelphia. The logistics made sense, but the money simply wasn't there. Add to that the fact that the throughput was lower in 2007 than Cleveland's is now, US Air chose the larger market in Philadelphia which handled the majority of the international flights. The main domestic hub was always Charlotte.

[Na zdrowie]

Originally Posted by Cleveland_Collector

CLE currently has more than 5 million enplanements per year making it easily the busiest airport in OH for flight originations (and about 8x that of CAK).

Have you heard about the proposed high speed rail along Lake Erie connecting Chicago with (depending on how it would be built) either Buffalo or Pittsburgh or both, and ultimately the east coast? Cleveland would be in the middle and it seems like Hopkins would be well positioned to benefit assuming the high speed made it more convenient than driving for passengers from outside the metro area. You could also connect directly from the Cleveland rail station (I'm guessing downtown) to Hopkins on the Rapid. The airlines and rail operator could coordinate fares and mileage programs like Continental does with Amtrak for example in Newark.

This is all pretty new (I think the first I heard about it was about a month ago), but what sets it apart from the 3-C proposal is that it's high speed and part of a larger multi-state proposed network. So far it has bipartisan support (!) from congressmen in northern OH (Steve Latourette is actually the rep from NEO pushing the idea right now).

[Cleveland_Collector]

Yes, I have heard about it. I don't know too much about it other than it has the full support of all of Northern Ohio's Congress members along with Sherrod Brown. It appears that the Feds are very interested in having a Chicago-to-NYC high speed line. It also appears that being situated roughly between them puts Cleveland squarely in those plans.
Ohio Congress members seek Lake Erie high-speed rail corridor | cleveland.com

If this happens, it will be fantastic for the area.