Wednesday, June 6, 2012

United begins executing IAH long-term plan

The question is, have they had this in the works for a while now?

United won't rule out further Houston job cuts. Olivia Pulsinelli, Houston Business Journal

Industry observers have suggested United had been planning the 1,300 cuts before the Houston City Council approved Southwest Airline Co.’s (NYSE: LUV) proposed international expansion of Hobby Airport, the Chronicle reports. But United denies those claims, saying the cuts and planned operations reductions are a direct result of the Hobby expansion.

That's United's company line, but when you look at the routes, services their cutting it's a stretch to say that any of these are even going to be remotely affected by the LUV/HOU expansion*:

United Airlines walks away the sore loser after Southwest wins International expansion from Hobby, Centre for Aviation.

United has extended its contentious logic to other routes. The carrier has previously warned that cities at risk for lost service include San Jose, California and Charlotte, NC, and reductions would also occur from Houston to Detroit and Louisville and Mazatlan, Mexico. While the Houston-San Jose flights cater to some business travellers given San Jose’s location in the technological corridor of Silicon Valley, California, there is also likely a large portion of connecting traffic on those flights from leisure travellers to Mexico and Latin America. As of 03-Jun-2012 United will offer weekly one-way seats from George Bush Intercontinental to San Jose with Boeing 737-800s/900s. Southwest does not offer flights between San Jose and Houston, which would mean all service from the tech-rich Silicon Valley to Houston would end.
Charlotte is US Airways’ largest hub, and the airline is the dominant carrier on the Charlotte-Intercontinental route. Yet as at San Jose, Southwest has no flights from Charlotte to Houston. Charlotte is likely one of the routes from Houston that United claims is unprofitable but “operates this flying relying on future growth improving the performance of the non-profitable routes”. Since Southwest is not a competitor there, United is observing other market factors but using the Hobby expansion as a scapegoat. United blaming Southwest for causing it to reduce service to cities Southwest does not serve is a significant stretch of the feasible truth.

I would urge you go read the entire CAPA study.  It makes a very strong case that UA had been planning a fleet restructuring that would de-emphasize IAH for a while now.  Many of the routes they're considering laying across the chopping block (IAH-AZN for example) will not be remotely affected by LUV's entrance into the International market from HOU.  The feeling being that this decision is going to be UA's scapegoat to execute a long-term plan that's been on the books for a while.  At least since the merger.

It appears, to my eye, that IAH is not going to factor significantly in UA's future planning. As time moves forward they appear to be poised to move more routing and resources to other hubs.  Whether or not this was in the works before the LUV/HOU decision or not is a matter of contention.  The facts however seem to indicate that, despite UA's protestations to the contrary, they certainly were.

*Thanks to Kevin for finding the CAPA survey.

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