The sky is falling, the sky is falling–and other such nonsense

Within minutes of the Houston City Council approving an international terminal plan for Houston Hobby Airport (HOU) requested by Southwest Airlines, United Airlines announced laying off 1,300 employees at cross-town Houston Bush Intercontinental Airport (IAH) and cancellation of the planned IAH-Auckland, New Zealand, Boeing 787 service.

Here’s the news report.

We think UAL’s using Southwest and the City Council’s action to cover up a decision it likely already made, due to the continued weak economy and questionable viability of the New Zealand service. The Southwest/HOU plan is three years in the future–and UAL is cutting employees today and canceling service that Southwest isn’t remotely going to threaten.

It doesn’t pass the sniff test.

We’ve heard the “sky is falling” refrain before. Southwest, American Airlines, the cities of Dallas and Ft. Worth and the D/FW Airport board went to war over Southwest’s desire to do away with the so-called Wright Amendment, which limited service from Dallas Love Field to Texas and the adjacent states. American, the cities and D/FW shrilly contended the commercial viability of D/FW was at stake.

The Wright Amendment was modified to permit one-stop service beyond the five states immediately and to phase out this restriction several years later (2014, if we recall correctly). Lo and behold, the sky didn’t fall in. D/FW is doing fine. (American finally succumbed to Chapter 11 bankruptcy, but for reasons unrelated to Love Field.)

Chicago Midway International Airport transitioned from a purely domestic airport to one including limited international service (hence the adoption of “International” in the name). This wasn’t even a blip on Chicago O’Hare’s service, where United is the largest airline by airport market share.

UAL’s sky-is-falling hand-wringing over the HOU issue is pure poppycock.

15 Comments on “The sky is falling, the sky is falling–and other such nonsense

  1. Flying to New Zealand on the 787 from Houston would have been awful anyway. Especially if the United 787’s are 9 abreast in economy. Crappy narrow seats for such a long haul flight would have been a tremendous ball ache.

    United have been sly here though and used Southwest etc as a cover to slash their own costs.

  2. I agree, UA had already planned the employee cuts at IAH, and they were not going with the New Zealand service anyway.

    However, WN at DFW is a different issue. Yes the Wright Amendment should have never been inplace, restricting DAL. But WN had DFW service twice now, and pulled the plug each time. The first time is when they began co-owning and code sharing on American Trans Air (the old ATA, also known as TZ), and with Air Tran, which they now own. WN does have a right to decide which airports they operate from, but for years they have been saying they like to “stay away from big expensive airports”, and of course that is not true. WN operates at many close and expensive airports, like BOS (and MHT and PVD, both within a one hour drive of BOS), LAX, DEN, and even SEA.

    • WRT AirTran, under the revised Wright Amendment agreement, WN had to pull out of DFW if it were to stay at LUV.

  3. If more airlines wanted to fly into MDW, HOU, or DAL, I’m sure the airports could figure out a fair way to divide the limited gates and slots, just like they do at Reagan.

  4. OFF TOPIC:

    Perhaps Texas should once again look at high speed rail. I’d guess that for the fiscal conservatives, the fundamentalist minimum tax, minimum spending “Tea Party” types make no sense whatsoever. Surely, most people would acknowledge that there’s “good” spending and “bad” spending. Intelligent spending which increases productivity of the economy would apply to most transportation spending (except “roads and bridges to nowhere” etc.), and can pay dividends for many years (including higher government revenues as a result of a better more productive economy). On the other hand, unintelligent spending on foreign wars (i.e. Iraq) and on economy-distorting subsidy programs (big oil tax-breaks etc.) is not good. 😉

    http://www.youtube.com/watch?v=jJfDWtbioEM

    • Your correct on two points OV. First it’s off topic. Second “high speed rail” makes no sense. 95% of passenger rail in Europe is highly subsidized. 100% of passenger rail in the USA is highly subsidized. China is having to subsidize their high speed rail because the tickets cost too much for the average citizen. The Obama high speed rail in Calif has doubled in cost to build and it has just started and goes nowhere. Oh yes, they cut the speed in half too. High speed rail is a joke not to mention a misnomer.

      • just high speed rail form houston to dallas forth worth with speed 100 -150 mil perhour it takes about 3 hours its the same time you went by air plane

      • Of course it’s off topic. However, when the names of “Southwest Airlines” and the “State of Texas” are being brought up in a transportation dispute, you can’t stop thinking about the lobbying power of Southwest Airlines.

        http://findarticles.com/p/articles/mi_m1215/is_n5_v193/ai_12267359/?tag=content;col1

        Texas high speed rail in general has been opposed by Southwest Airlines, which holds a monopoly on flights between Love Field in Dallas and Houston. Southwest, in decrying possible government assistance to the high-speed line, denies that it receives any government help.

        Yet, Southwest Airlines operates over an infrastructure heavily subsidized by the public. Southwest operates through airways and on airports into which taxpayer monies gush from a variety of federal, state and local governments. One study stated that in the last decade the federal government alone poured $44 billion into aviation, half coming from the aviation trust fund and the other half as direct subsidies from the general treasury.

        Further, Texas subsidizes aviation infrastructure and pays to operate its Department of Aviation out of tax dollars (not user fees). However, it prohibits any state tax proceeds to be used for the high-speed train project. The state even requires the rail franchisee to fund the operations of the Authority.

        Of any state, Texas is the worst example of lavish help to aviation and stem treatment of rail. If the state’s rules for high-speed rail were applied to aviation, Southwest Airlines would have to pay hefty annual fees to finance the Texas Department of Aviation and to build the airports into which it operates.

        Quote: 95% of passenger rail in Europe is highly subsidized.

        Not for high speed rail in France (and Japan). You must be thinking about their slower passenger trains.

        Now, as for subsidies, all modes of transportation is, in fact, subsidized.

        http://www.trainweb.org/moksrail/advocacy/resources/subsidies/transport.htm

        Much is made of the $30 billion spent on Amtrak over the last 30 years, but in that same period the federal government spent $1.89 TRILLION on air and highway modes, according to the New York Times and Washington Post.

        Since 1946, the federal government has poured billions of dollars into airport development. In 1992, Prof. Stephen Paul Dempsey of the University of Denver estimated that the current replacement value of the U.S. commercial airport system-virtually all of it developed with federal grants and tax-free municipal bonds-at $1 trillion.

        Not until 1971 did the federal government begin collecting user fees from airline passengers and freight shippers to recoup this investment. In 1988 the Congressional Budget Office found that in spite of user fees paid into the Airport and Airways Trust Fund, the taxpayers still had to transfer $3 billion in subsidies per year to the FAA to maintain its network of more than 400 control towers, 22 air traffic control centers, 1,000 radar-navigation aids, 250 long-range and terminal radar systems and its staff of 55,000 traffic controllers, technicians and bureaucrats

        Obviously, no high speed railroad system can earn back its entire capital costs in its first years of operation (i.e., the full price of building the line in the first place). The trunk lines of the Shinkansen-lines and and the LGV (Ligne à Grande Vitesse) have earned back their original investment costs simply because they’re the oldest high speed lines on the planet.

        Now, laying tracks between Texan cities should be a relatively simple undertaking, considering the ridiculously flat terrain, compared with the logistics of moving hundreds of thousands of people trying to get around in a packed urban core. What Texas and other US cities really should be doing, IMO, is not just building a high-speed rail system, but in addition, an urban mass transit system (if such a system does not already exist). The high speed rail system should be fully integrated with not only an urban mass transit system but with airports and the air transportation system as well.

  5. Irrespective of UAL using Southwest as an excuse for this decision, what impact does this have on the business case for the 787? If I recall, this Houston – Aukland route was one of those “point to point” routes that Boeing so proudly pointed out as an example of how they called it right?

    One cancellation for such a route certainly does not destroy the 787 program nor does it destroy the concept of point to point travel. But it is significant that this route was cancelled as it was so highly promoted and it is 3 years away from being introduced.

    How many other of these point to point routes that have been introduced in the last few years are profitable and still existing? How many more will still be around in 2 to 3 years?

  6. mcpcshowcaseHD
    “Flying to New Zealand on the 787 from Houston would have been awful any-
    way. Especially if the United 787′s are 9 abreast in economy. Crappy narrow
    seats for such a long haul flight would have been a tremendous ball ache.”

    Flying up to 18 hrs on any airplane in Y class, is what the 787 was designed
    and advertised for from the beginning, with the slogan: “connecting smaller
    cities on one side of the world with other small cities on the other side of the
    world, avoiding the inconvenient stopover at major hubs!”

    Many people warned Boeing about this “passenger-unfriendly” manner in which
    Boeing was expecting Y passengers to fly, when the 787 was launched.
    Now it is already becoming clear that most passengers will refuse to do so and
    select other routes on larger, more comfortable a/p’s, even if it means making
    one or more stopovers, depending on the fare, NOT the airplane!

    The net result will be, that most 787 flying will be done at ranges up to 12 hrs,
    which means that the 787 will have to carry the structure for 18hr flights, which
    will seldom if ever be used and thus panelizing most flights with unnecessary
    structural weight and higher operating costs, requiring higher fares!

    • That’s a VERY simplistic view of how things are. The B787 and A350 will still be more economical than their competitors-even if the flights aren’t used for their “optimal profile”. The later-build B787’s (IIRC after line 60 or so) will be more economical than the A332’s-even with the improvements Airbus have in store for the A332.

    • IF United did 9 abreast (?) AND the public refused to buy tickets (at 8/9’s the selling price) then United could re-do the seating to 8 abreast in 8 hours or so – A key part of the 787 strategy. And why do you assume that they don’t have large first/business/economy plus arrangements? The airlines will configure their airplanes so they make money and can change their mind at any time – even at different seasons.

      Personally, I would much rather fly 20+ hours through a hub and kill 6 hours in a terminal between flights than take a non-stop 😉

      • Doesn’t that then not adhere to the Airbus philosphy?

      • Sorry, I should have quoted the part of your comment I was referring to.
        “Personally, I would much rather fly 20+ hours through a hub and kill 6 hours in a terminal between flights than take a non-stop.”

  7. jacobin777
    Yes, “The later-build B787′s (IIRC after line 60 or so) will be more economical
    than the A332′s,” but they would be even more economical, if they would have
    been build to fly maximum 12-14 ranges rather than the 18 hrs it will NEVER
    be used for, carrying a lot of redundant dead wait!

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