A tale of hubs, USAIRWAYS style (Philadelphia, Pittsburgh: buy, depreciation, calculation)

[tread102]

Originally Posted by pman

it seems likely that PHL provides larger profits with a lower margin. I got that information from a link someone posted on this site that let you look at airport revenue by carrier. Philadelphia is a much larger market than Charlotte (the metro is 6 million and it has the ability to draw from parts of the baltimore and ny market) which is why it has such strong OD traffic. there's a reason why USAir has so staunchly defended its turf in Philly against southwest rather than decamping to CLT. the reason charlotte's margin is higher probably means it has less competition rather than market fundamentals.

No the reason that Charlotte has high margins is because of its low cost. Their costs are some of the lowest in the country. Airport bets a billion on future amid USAir concerns | CharlotteObserver.com & The Charlotte Observer Newspaper.

Some nice points in here about clt compared to phl. I can see Usairways reducing some flights in philly if and when a merger comes about, and routing them through charlotte.

[pman]

Originally Posted by tread102

No the reason that Charlotte has high margins is because of its low cost. Their costs are some of the lowest in the country. Airport bets a billion on future amid USAir concerns | CharlotteObserver.com & The Charlotte Observer Newspaper.

Some nice points in here about clt compared to phl. I can see Usairways reducing some flights in philly if and when a merger comes about, and routing them through charlotte.

ummm, you're point doesn't negate mine at all. clt is cheap, phl is higher revenue and moderate, ny is high cost and high revenue. from your article

, Mass.-based Atmosphere Research Group, said it’s risky to invest in more capacity with the future of the airport’s No. 1 carrier up in the air.

Read more here: Airport bets a billion on future amid USAir concerns | CharlotteObserver.com & The Charlotte Observer Newspaper
the exact same debate that is going on with a $5bn plan to modernize phl. I think that if phl moves forward with their plan they will lose some service but if they do not theyll likely retain most service. Clt makes little sense as a european hub vs phillys location and market size. It will compete with dfw to mexico and miami makes a lot of sense as a gateway to south america. Today you can fly to santiago direct from jfk or connecting at miami. The connection is american which flies one a day out of philly and requires an all day layover...meanwhile us air has several a day which would dramatically tighten the schedule. It will then make sense to fly pit passengers to miami as well. Pit to charlotte to spain though?

charlotte is PIT with low costs. personally, I hope they cut service dramatically at PHL because they're defense of PHL has driven southwest from the market and is driving up margins (out of my pocket)

[MathmanMathman]

In that story, Philly is looking to add a runway and terminal expansion that could cost between $6.4 and $10.5 billion. Airlines are opposed because the cost will be passed on to them. Philadelphia is a busy airport but I don't think they have the volume to say "It costs $10 billion? That is to laugh!".

So...any chance Pittsburgh could be made US Airways' secondary (or tertiary if the JFK hub is acquired) hub for the northeast? It's airspace is uncongested, plenty of available gates, and it's designed for hub traffic. And by 2018 its expansion debt will be paid off and that should greatly lower landing fees, etc. It might be more cost effective than expanding Philly.

[BrianTH]

PIT has made the pitch that rather than expanding the East Coast airports, first traffic should be diverted to PIT, and they even tried to get the FAA to help them out. I guess the airlines haven't wanted to do that (at least not yet).

[pman]

Originally Posted by MathmanMathman

In that story, Philly is looking to add a runway and terminal expansion that could cost between $6.4 and $10.5 billion. Airlines are opposed because the cost will be passed on to them. Philadelphia is a busy airport but I don't think they have the volume to say "It costs $10 billion? That is to laugh!".

So...any chance Pittsburgh could be made US Airways' secondary (or tertiary if the JFK hub is acquired) hub for the northeast? It's airspace is uncongested, plenty of available gates, and it's designed for hub traffic. And by 2018 its expansion debt will be paid off and that should greatly lower landing fees, etc. It might be more cost effective than expanding Philly.

yeah, PHL (the airport not the city) doesn't have many options to expand. aside from the usual high cost philly special, the reason for the cost even on the low end is they have to rearrange the airport runways and build out into the river. the airlines think that even with a runway they'll have airspace issues. it also requires ups to relocate (apparently ups is pretty busy down there) and not only aren't they happy, but the airlines think it will cost more and take longer to do that since they have to buy private land (hence the higher estimate). they are expanding the commuter terminal and improving the taxiway and runway (those have been agreed to). all that being said, atlantic city has been trying to become a secondary airport, harrisburg (which will soon have a train stop on the ny-philadelphia keystone, the airport is actually in middletown), and to a lesser extent there's the lehigh valley. I suspect the trend of fewer flights, larger planes will continue at PHL. there's just so much uncertainty in the airline market these days...and the transportation system is completely missing the rail segment. PIT is an example of what not to do but Pittsburgh is also an example that good job growth is possible without a rapidly expanding airport (though better air service in Pittsburgh is needed)

[MathmanMathman]

Philly could use a second airport and for $10 billion, that might be a smarter option. Harrisburg has one runway and can't easily add another. Plus at 100 miles away, it's not exactly Philly's 2nd airport. Amtrak goes right by it but unless trains are leaving for Harrisburg every 30 minutes or less, it's not a commute connection.

Atlantic City has two runways but effectively just one as the other is only 6,000 feet. And it's about 60 miles to Atlantic City from Philly.

I don't understand the economics of the hub system, but Pittsburgh has not only the infrastructure but also the amenities (Airmall).

[Copanut]

My wife and all my friends avoid the Philly airport as much as possible. It's a dump.

[ElijahAstin]

Originally Posted by MathmanMathman

Philly could use a second airport and for $10 billion, that might be a smarter option. Harrisburg has one runway and can't easily add another. Plus at 100 miles away, it's not exactly Philly's 2nd airport. Amtrak goes right by it but unless trains are leaving for Harrisburg every 30 minutes or less, it's not a commute connection.

Atlantic City has two runways but effectively just one as the other is only 6,000 feet. And it's about 60 miles to Atlantic City from Philly.

You're forgetting Lehigh Valley International, which siphons off a lot of potential customers from Allentown-Bethlehem-Easton.

And where would you suggest this airport go?

[MathmanMathman]

Originally Posted by HeavenWood

You're forgetting Lehigh Valley International, which siphons off a lot of potential customers from Allentown-Bethlehem-Easton.

That's a good 60 miles too. And its runways are even shorter. One 7,600 and the other 5,800.

And where would you suggest this airport go?

I don't.

[PITairport]

Originally Posted by MathmanMathman

I don't understand the economics of the hub system, but Pittsburgh has not only the infrastructure but also the amenities (Airmall).

Originally Posted by MathmanMathman

So...any chance Pittsburgh could be made US Airways' secondary (or tertiary if the JFK hub is acquired) hub for the northeast? It's airspace is uncongested, plenty of available gates, and it's designed for hub traffic. And by 2018 its expansion debt will be paid off and that should greatly lower landing fees, etc. It might be more cost effective than expanding Philly.

Yes, PIT has the infrastructure, airspace, gates, etc., but the one amenity that it doesn't have is the most important one: O&D.

As far as a secondary hub for US Airways, consider that they have been a major hub, medium hub, small hub, and focus city for US Airways during their local downsizing. They would have stopped the downsizing at a smaller hub or focus city if it made sense. It didn't then, and I don't think it would now. With AA, they would have hubs at DCA, PHL, JFK, and ORD. PIT being in the middle of that triangle would be the last place they will focus on for a major expansion.

That's a good 60 miles too. And its runways are even shorter. One 7,600 and the other 5,800.

7,600 feet is plenty for the role of ABE, even if they play more of a reliever role for PHL. It also has the benefit of not only drawing from Philadelphia, but also from Northern NJ as well. But even with all that, the airport still hasn't really taken off.