Make connecting customers connect elsewhere - A solution for LHR capacity?
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Nice ideas...
However, from a purely business perspective the only thing that matters here is the gravitational pull of LHR.
Hub Airports must be monopolistic in order to succeed, and that usually happens because:
- Customers decide so: They all want to fly to LHR
- Airlines decide so: LH hubs at FRA (and not Berlin as the German Government wanted them to do so sometime ago')
- Government decides so: The MXP example
So as long as customers want to fly to LHR - and Airlines want to meet that demand - there is no chance of a P2P vs Connecting split. It wouldn't make a iota of business sense.
However, from a purely business perspective the only thing that matters here is the gravitational pull of LHR.
Hub Airports must be monopolistic in order to succeed, and that usually happens because:
- Customers decide so: They all want to fly to LHR
- Airlines decide so: LH hubs at FRA (and not Berlin as the German Government wanted them to do so sometime ago')
- Government decides so: The MXP example
So as long as customers want to fly to LHR - and Airlines want to meet that demand - there is no chance of a P2P vs Connecting split. It wouldn't make a iota of business sense.
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I actually disagree with the 'LHR is more expensive' argument. I've flown with BA via LHR and via LGW on many an occasion - every time, LGW was more expensive. BAA being the current owner/operator of STN (for how long is anyones guess) - are they really going to support such transition? No. They want LHR expansion. The idea is flawed in every way.
Maybe it's time for Scotland to find itself an airline after Globespans unfortunate collapse (which of course wasn't their own doing). There are potential UK-based opportunities, but not in London.
Maybe it's time for Scotland to find itself an airline after Globespans unfortunate collapse (which of course wasn't their own doing). There are potential UK-based opportunities, but not in London.
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BA could do what you propose, any time that it likes. I would bet my life savings that it has been thoroughly studied and researched within BA, probably more than once. And rejected.
Not many years ago BA came very close indeed to buying KLM, and their strategy was exactly as you suggest - shift the connecting traffic to Schiphol and keep the O&D at LHR.
As mentioned by Skipness One Echo there is an echo of that strategy in the Iberia tie-up, Madrid will act at least possibly as a safety-valve for Heathrow.
Not many years ago BA came very close indeed to buying KLM, and their strategy was exactly as you suggest - shift the connecting traffic to Schiphol and keep the O&D at LHR.
As mentioned by Skipness One Echo there is an echo of that strategy in the Iberia tie-up, Madrid will act at least possibly as a safety-valve for Heathrow.
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Hub move
Very inetresting points being made, I have to say BA would be mad to move LHR-JFK flights, and as someone has pointed out you'd need a large connecting route structure....wouldn't be enough pax connecting onward for them.
Someone mentioned the BA Eurohub at BHX. This was different, it did remove some connecting pax from BA at LHR. But mainly UK to Continental city traffic, although BA did fly to JFK and AA to ORD. At the time I was a frequent weekly user of Eurohub. It had an excellent Terraces Lounge, stupidly easy connection from gate to gate, and not being slot restrained I was on many flights where we were held for a few minutes to allow connecting passengers to board (i.e BHX-NCL held for MXP/BCN-NCL via BHX). It worked well and must have eased some capacity on BA's short haul routes. It also permitted more services from BHX than may have been operated. Today in BHX (and MAN) LH/AF/KL/SK/LX etc take large pax feed to their hubs, which no longer is provided by BA.
But what happened, it's all history now.......BA walked away from a purpose built hub terminal. BTW I'm not suggesting that this would help long haul traffic if it was still operating, so despite the easing of short haul connecting travel from UK regions on LHR, BA still didn't want it.
Someone mentioned the BA Eurohub at BHX. This was different, it did remove some connecting pax from BA at LHR. But mainly UK to Continental city traffic, although BA did fly to JFK and AA to ORD. At the time I was a frequent weekly user of Eurohub. It had an excellent Terraces Lounge, stupidly easy connection from gate to gate, and not being slot restrained I was on many flights where we were held for a few minutes to allow connecting passengers to board (i.e BHX-NCL held for MXP/BCN-NCL via BHX). It worked well and must have eased some capacity on BA's short haul routes. It also permitted more services from BHX than may have been operated. Today in BHX (and MAN) LH/AF/KL/SK/LX etc take large pax feed to their hubs, which no longer is provided by BA.
But what happened, it's all history now.......BA walked away from a purpose built hub terminal. BTW I'm not suggesting that this would help long haul traffic if it was still operating, so despite the easing of short haul connecting travel from UK regions on LHR, BA still didn't want it.
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The extension of the point is that the UK's National Carrier should serve more than 1 UK city..
If BA had scheduled long and short haul flights from the regions Birmingham, Leeds, Edinburgh, Manchester. this would free up slots at Heathrow..
Thus resolving the capacity issue..
Easy..
Adie
If BA had scheduled long and short haul flights from the regions Birmingham, Leeds, Edinburgh, Manchester. this would free up slots at Heathrow..
Thus resolving the capacity issue..
Easy..
Adie
Paxing All Over The World
American Airlines started a 767 service from STN to NYC (can't recall which airport but probably JFK) Is that service still running? No.
The UK govt have signalled failed to create a workable alternative to LHR and now it cannot be changed. The 3rd might happen but no grat move. Afterall, for the last 60 years, every aspect of commercial development in the South East of the UK has had LHR as it's touchstone. Whether it is the houseing of North and West London or the 'M4 Corridor' which ONLY exists because of EGLL. No one is going to attempt to fiddle with that market.
The UK govt have signalled failed to create a workable alternative to LHR and now it cannot be changed. The 3rd might happen but no grat move. Afterall, for the last 60 years, every aspect of commercial development in the South East of the UK has had LHR as it's touchstone. Whether it is the houseing of North and West London or the 'M4 Corridor' which ONLY exists because of EGLL. No one is going to attempt to fiddle with that market.
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The extension of the point is that the UK's National Carrier should serve more than 1 UK city..
If BA had scheduled long and short haul flights from the regions Birmingham, Leeds, Edinburgh, Manchester. this would free up slots at Heathrow..
Thus resolving the capacity issue..
Easy..
Adie
If BA had scheduled long and short haul flights from the regions Birmingham, Leeds, Edinburgh, Manchester. this would free up slots at Heathrow..
Thus resolving the capacity issue..
Easy..
Adie
BA operated hubs from MAN and BHX for decades which due to their cost base lost money for just as long in an era of less competition. In todays much more competitve environment, they have no chance as the public chooses to fly with the locos or a foreign carrier who has a hub at the destination.
The extension of the point is that the UK's National Carrier
Not that easy then.
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We've been round this many times:
(1) BA no longer operate longhaul from the regions because they can't make money. It's too late to go back, unless they want a fight with EK and KL.
(2) The dual hub was tried with LHR/LGW for years when airlines could be told where to be based. All the LGW-based carriers failed except VS who were able to move accross to LHR. So why would STN work where LGW failed? We are now in a deregulated open skies environment and airlines and airports are commercial outfits, not government departments.
(3) Are we seriously suggesting that BA should have 4 bases and 2 hubs: LHR, LGW, LCY and STN?
(4) Dual hubs at JFK/EWR and DME/SVO work because of the availability of domestic connections because both are in huge countries. Are there any others? In both cases no single airline is present at both hubs as would be the case for BA at LHR/STN.
(5) This has all the wishful thinking of the Silver Island estuary airport. No one has come up with a workable alternative to LHR expansion because there isn't one. Political reality will need to set in quickly, and as mentioned in a previous post on another thread, Justine and Teresa are best off being sent to cut the grass.
(1) BA no longer operate longhaul from the regions because they can't make money. It's too late to go back, unless they want a fight with EK and KL.
(2) The dual hub was tried with LHR/LGW for years when airlines could be told where to be based. All the LGW-based carriers failed except VS who were able to move accross to LHR. So why would STN work where LGW failed? We are now in a deregulated open skies environment and airlines and airports are commercial outfits, not government departments.
(3) Are we seriously suggesting that BA should have 4 bases and 2 hubs: LHR, LGW, LCY and STN?
(4) Dual hubs at JFK/EWR and DME/SVO work because of the availability of domestic connections because both are in huge countries. Are there any others? In both cases no single airline is present at both hubs as would be the case for BA at LHR/STN.
(5) This has all the wishful thinking of the Silver Island estuary airport. No one has come up with a workable alternative to LHR expansion because there isn't one. Political reality will need to set in quickly, and as mentioned in a previous post on another thread, Justine and Teresa are best off being sent to cut the grass.
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The flaw in the argument was in the first word of the title: Make
Passengers don't take kindly to being 'made' to use an airport that they would not otherwise choose to use. The world is littered with failed artificial hubs.
Passengers don't take kindly to being 'made' to use an airport that they would not otherwise choose to use. The world is littered with failed artificial hubs.
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I congratulate sidest for having put up a valiant fight in the face of informed opposition, stated facts, past history, and conventional wisdom.
Might I suggest a career in politics?
Might I suggest a career in politics?
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We know there is a lot of O/D traffic in the UK compared to the norm, particularly London. Then we come to the hub concept. Does it matter where a hub is? Dubai certainly isn't the holiday and business destination of the world.
If the connections are convenient, the ground service is good and most importantly the flights are well priced - surely it doesn't matter?
The idea is not to create a secondary hub in order to work independently of LHR, but rather one that would complement it. This hub would only comprise of existing routes and would have a focus on (but not limited to) connecting traffic - essentially diverting a portion of it from LHR and routing it through STN.
Considering the London-cenric view of premium airlines, the airport would have to be near(ish) London. LGW is a little inflexible because many of the 'good' slots are taken. So take I'll take STN for example. (Remember this is only an example).
There are as many as 14 BA/AA LHR-JFK flights a day. There are many other routes with a large number of frequencies. Cut some of them. Based upon customer data, select a small number of frequencies to cut and then move them to STN. These moves could also be bulked up for growth and flexibility. For example, cut 2 JFK frequencies and add 3 to STN, cut 2 FRA frequencies and add 3 to STN and so on. Time the flights to optimise connections.
Operating costs at STN would be notably cheaper than LHR. Creating a lean structure for the new devision, rather like the Mixed Fleet initiative, will help to keep costs down even further. Utilising aircraft such as the 787 on long haul sectors will also improve financial viability. The savings (or part of them) would then be passed on to the customers, offering an incentive to travel through the new hub. Highlight the cheaper prices. Let those who regularly connect know. Market the fact that is is cheaper and drive as much connecting traffic through the new hub rather than LHR.
Utilising aircraft such as the 787 will also imrpove financial viability, but it will further improve profit margins at LHR on existing routes.
What are you acheiving in making the prices cheaper. That is only damaging yeild. Yield is an ever chainging and fluctuating number, so any erosion of such is a negative. It means you are giving away something. It like when you downsize a route from a 744 to an A333. Not only do you improve costs, you also lose the need to sell the deep discounted tickets that you once had to sell in Y to fill the aircraft. Thus you increase the yield on the seats you sell.
- It creates and allows for growth on existing LHR routes.
- It offers many UK residents a more convenient choice.
- It offers customers both in the UK and abroad a cheaper choice.
- It frees up some slots at LHR for further growth in new markets.
- It builds the Stansted name internationally.
By having a comprehensive full service airline offering to key world cities, the Stansted airport name could be taken further and become more recognised in the international market. This potential could then be harnessed to initiate plans to improve links to London, particularly optimising and creating faster links with the Stansted Express. This in turn would make the airport even more marketable to non-connecting traffic. It must be noted that NRT is further away from Tokyo than Stansted is from London.
DXB and other ME hubs have been successful because their creation did not divert traffic from existing airports. This is the problem with another London airport, that it will always weaken the revenue flows from the other airports. The single hub concept works, multiples won't.
It would certainly have to be a robust operation for any chance of success, no doubt at all about that. However, if the second hub doesn't have all of the LHR routes, does it matter from a connections point of view? You just connect through LHR if STN doesn't offer it. It's not designed to rid LHR completely of connecting traffic, just offering flexibility where economically possible.
FRA-STN-JFK
FRA-LHR-JFK
If connecting through LHR generates an extra £50 per Y seat for BA, why would they actively route pax through STN? That damages the bottom line.
It may weaken the revenue flow by taking some traffic away, but surely that can be recouped by the new hub? Furthermore, if a credible hub can be built and becomes more popular with travellers, expansion is far more attainable than at LHR. Surely it doesn't matter where the money is, as long as it's still there in one way or another? The other plus is that in return they may reach out to new markets with the slots that they have 'gained'. I suppose it depends on how much the airlines will value the extra LHR slots.
The 'extra' LHR slots would have a use, but would they generate the same revenue as the lost flights? If BA moved a JFK and used it for a Manila, or a Jakata, would this generate the same RASM? In all likelyhood, no. Nothing pays quite like JFK.
It's not about taking what LHR does and moving it elsewhere. LHR will still do what it does, just slightly less of it. In return it can then open up to more of what it currently does not, but arguably should do - serve more emerging and growing markets. This is not a fix of Heathrow, and maybe the title should have been better, however it is a solution to some of it's problems and the wider issue of capacity in the South East that could be in place more quickly than any runway capacity.
I'm not suggesting anyone be moved from LHR. It is just a strategy that could be utilised. Like I said, this is mainly a BA growth idea more than anything else.
I'm not suggesting anyone be moved from LHR. It is just a strategy that could be utilised. Like I said, this is mainly a BA growth idea more than anything else.
It's not about taking what LHR does and moving it elsewhere. It's about replicating what LHR does elsewhere. Yes, there will be a small reduction of what LHR does - but in return it is designed to allow LHR to do more of what it currently doesn't and has arguably been said it should do, i.e. operate to emerging and developing markets.
If BA and AA cut 2 of the 14 LHR rotations, there would still be 12. It doesn't for a second change what LHR does. Seasonal changes change frequencies all the time, and considering most of these 14 flights run within 30 minutes of each other, there would be little change. In return BA may choose to use the slots for new dailies to KIX and CTU for example
This is what BA found when they built up LGW. For every rotation moves out of LHR, too many premium travellers elected to fly LHR-XYZ with the competition rather than jolly down Sussex way. Harsh but true.
My point is how much profit is being sacrificed due to a lack of exposure in other markets, and how much of existing revenue can still be held on to if a move to STN is made? BA do make a lot of money on LHR-JFK, but healthy chunk of that is down to connecting traffic.
How would Delta and United up the frequency if there are no slots for them to do so? Other than cutting into their own slots on other routes, which I don't think they'd want to do.
Maybe I am living in an idealised world. But I can't help but think what if? I realise things have happened in the past, but situations change and there there is more than one way of going about something. For it to have any chance of success it would take a hefty investment, which I suppose counts against the idea.
A few months ago, most passengers flying to the UK just booked to Heathrow because they didn't know otherwise. Now this publicity about terminal inertia has made people think - Is there an alternative? Once people realise that there may be a better/quicker/cheaper/more convenient way to get to their destination, they are empowered.
Some people will therefore change their behaviour. That affects demand. Airlines respond to passenger demand. Sometimes. It'll take a lot to prise some airlines out of Heathrow, but if enough passengers vote with their feet, it might work.
Some people will therefore change their behaviour. That affects demand. Airlines respond to passenger demand. Sometimes. It'll take a lot to prise some airlines out of Heathrow, but if enough passengers vote with their feet, it might work.
Hub thinking is a remnant from the 70's. It's on its way out. Today, people want to travel direct - and they're willing to pay extra to do so. I'm one of those - I fly intercontinental more than once a month, and I always go direct If I can. If that means less air points, so be it. Whatever it takes.
How many Gold Card holders do you seriously expect to see in with the Ryanair mob? Not much Exclusivity in there, so what the Hell, we need to duplicate all the lounge facilities that are already in place at LHR.
Where does this leave them then? After BMI growth, is that about it for the rest of time? They will have to grow BA outside LHR.
BA are withdrawing year on year from short haul at LGW as easyJet have won the battle for Gatwick. They have a much larger operation built from scratch in a decade that overtook BA as LGW's No 1. BA long haul leisure is at LGW mainly because there's no room at LHR.
Once you start listing them, there's not all that many. You are mixing up network size and equating it to profitability. They are not the same thing at all. Even the current BA wish list on the BMI takeover are pretty much kind of borderline. Seoul is not likely to be a profit maker for a few years I suspect even if it does come on line soon.
Given the market wouldn't use Gatwick, and hasn't done every time someone has tried since BUA / Caledonian / BCAL to Laker and latterly Virgin, what is your mechanism for getting people to use Stansted or Luton? I mean it's been tried and failed so many times, what's new now? I assure you that it DOES matter where the money is as time and time again, it stays at LHR and won't budge. No matter how good your product is, outside of LHR on scheduled business premium long haul, you're screwed.
Curiously, no one can ever put their finger on why this market situation occurs. There is no disputing it though.
Connections at STN are what exactly? When BA flew LGW-JFK, it was the weakest of all the London JFK flights and customers most certainly did not flock to it citing flexibility. Indeed Delta have just dropped LGW-ATL to build up LHR-ATL by one flight per day. Continental, US Airways and NWA all intended to maintain LGW ops when they got into LHR, within a year, all LGW ops were closed. Did customers want flexibility? Not enough to cover the extra costs and on any given asset / aircaft, it was more proftable at LHR. In this market, it's not about choice of London airport. Short haul is different where BA fly LHR/LGW/LCY-EDI, long haul is hub and spoke. Complimentary hubs do not work, I am struggling to think of one. Paris has two hubs but in different markets.
With a bit of expansion, MAN could offer similar infrastructure to LHR. Then at least LHR could face some domestic Hub competition. Then let the market decide which is best.
Thank you for the interesting topic and thoughts.
I thought the UK government was doing its utmost to turn people away from connecting in the UK (read LHR) with the APD and the unique security charade. I for one will go to great lengths to use another Euro hub both on duty travels (crew member) and private travel.
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Flying direct isn't always a possibility and many people are quite happy to. I have noticed that in particular there is a UK cultural aversion to connecting. Hubs and in particular mega hubs are a way of consolidating your airline and its the trending theme amongst carriers these days.
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The tenant of this thread is is so weak.
Many thousands of UK travels already make the choice NOT to connect over LHR every day, flying from regional airports via AMS/FRA/CDG and even further affield from Man/BHX/NCL/GLA via Dubai going East or with the exception of NCL (Insert EDI instead) going west via EWK.
These are at the expense of BA/VS and the UK economy however they are convenient and in the main competitive.
In the case of Manchester there is an extensive network of routes connecting the city globally WITHOUT transiting ANY London airport. Even Oneworld frequent flyers can avoid London to get to Asia (Finnair), South America and Miami (IBERIA) and the whole of the USA (American daily to JFK and Chicago)
Did you know you can buy a BA codeshare for Manchester to Milan/Dusseldorf/Hanover direct to this day (On FLYBE !) .
Add Qatar / Etihad /Turkish/Singapore/US Airways/Delta Virgin Atlantic - You get the picture. Transfer over LHR is an option NOT an obligation.
Many thousands of UK travels already make the choice NOT to connect over LHR every day, flying from regional airports via AMS/FRA/CDG and even further affield from Man/BHX/NCL/GLA via Dubai going East or with the exception of NCL (Insert EDI instead) going west via EWK.
These are at the expense of BA/VS and the UK economy however they are convenient and in the main competitive.
In the case of Manchester there is an extensive network of routes connecting the city globally WITHOUT transiting ANY London airport. Even Oneworld frequent flyers can avoid London to get to Asia (Finnair), South America and Miami (IBERIA) and the whole of the USA (American daily to JFK and Chicago)
Did you know you can buy a BA codeshare for Manchester to Milan/Dusseldorf/Hanover direct to this day (On FLYBE !) .
Add Qatar / Etihad /Turkish/Singapore/US Airways/Delta Virgin Atlantic - You get the picture. Transfer over LHR is an option NOT an obligation.
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Quote: "I have noticed that in particular there is a UK cultural aversion to connecting."
Quote: "The UK mentality seems to be fly direct"
Maybe, maybe not. It's not that cut and dried. The success of EK, EY and QR in particular (even out of LHR) suggest not.....
Quote: "As TSA/Security nonsense and congestion increases every year at most of the hubs, direct flights will only increase in popularity. It's the future."
.....On the other hand, this is clearly making direct flights increasingly attractive, but some pax are price sensitive and connecting is often cheaper.
Quote: "A MAN hub could work with a new entrant. Would they be happy with less yeild and premium passengers than their European incumbents, I doubt it."
BE appear to be making a success of a MAN hub, albeit on a small scale.
Quote: "Many thousands of UK travels already make the choice NOT to connect over LHR every day, flying from regional airports via AMS/FRA/CDG and even further affield from Man/BHX/NCL/GLA via Dubai going East or with the exception of NCL (Insert EDI instead) going west via EWK."
Exactly, longhaul options can exist without the need for a particular carrier to have a hub at Ringway.
Quote: "The UK mentality seems to be fly direct"
Maybe, maybe not. It's not that cut and dried. The success of EK, EY and QR in particular (even out of LHR) suggest not.....
Quote: "As TSA/Security nonsense and congestion increases every year at most of the hubs, direct flights will only increase in popularity. It's the future."
.....On the other hand, this is clearly making direct flights increasingly attractive, but some pax are price sensitive and connecting is often cheaper.
Quote: "A MAN hub could work with a new entrant. Would they be happy with less yeild and premium passengers than their European incumbents, I doubt it."
BE appear to be making a success of a MAN hub, albeit on a small scale.
Quote: "Many thousands of UK travels already make the choice NOT to connect over LHR every day, flying from regional airports via AMS/FRA/CDG and even further affield from Man/BHX/NCL/GLA via Dubai going East or with the exception of NCL (Insert EDI instead) going west via EWK."
Exactly, longhaul options can exist without the need for a particular carrier to have a hub at Ringway.
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Yields
I remember reading that Branson gave evidence many years ago to a House of Commons Committee that the yields on his VS LHR - JFK flights were 20% higher than the ones on his LGW - JFK.
If the same sort of figure is applicable today, you can see why everyone wants to go to LHR.
Suzeman
If the same sort of figure is applicable today, you can see why everyone wants to go to LHR.
Suzeman
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oceancrosser: I thought the UK government was doing its utmost to turn people away from connecting in the UK (read LHR) with the APD ...
The APD policy may be stupid, but it's not that stupid (yet)
Paxing All Over The World
To save starting another thread ... If you think there are problems about siting an airfield, try this idea for size.
BBC News - Report recommends that Britain should build a spaceport
and the size includes a runway twice that of LHR.
BBC News - Report recommends that Britain should build a spaceport
and the size includes a runway twice that of LHR.