14 Responses

  1. Oliver
    Oliver at |

    At least they left some space in that ad/banner to put “UN” between CLE and friendly…

  2. Carl
    Carl at |

    Or maybe the statement that the CLE hub hasn’t been profitable in over a decade takes poetic license or depends on what accounting treatment you give it. It does make little economic sense that they’ve kept it this long, but perhaps it has long had a positive contribution margin, and a negative fully allocated cost margin. Meaning that the Company’s overall absolute profit was higher with the hub, but the hub still wasn’t covering its share of corporate overhead. It’s conceivable that the absolute profit doesn’t get enhanced by the change, but the Company’s profit margin does increase, and Smisek’s compensation seems to be tied to profit margin. It’s also the case that pre-merger there was likely traffic connecting via CLE that CO couldn’t capture, but now enough of it can flow through ORD or IAD instead, that CLE is redundant for the network design.

    Nevertheless it is entirely possible that technically CLE has been loss-making on a fully allocated basis, and that’s what he is saying in his letter, while for most of the decade it had a positive contribution margin, and that is why management kept it.

  3. ffi
    ffi at |

    Simply put, the midwest had too many hubs – DTW, CLE, CVG, between NY and Chicago
    MEM was too close to ATL for DL. PIT was too close to PHL for US.

    It remains to be seen if PHL (not too much OD traffic but more connecting traffic) continues to live after AA/US merge.
    I suspect given the trouble with connections at JFK, PHL will be a connection hub for AA.
    and LGA and JFK will live on as O/D hubs for NY for domestic and intl traffic.

  4. Bob mht_flyer
    Bob mht_flyer at |

    Sad to see CLE go, really a shame a easy to use airport. But the last several times I was there it was a ghost town for the last year or two.

    For Manchester MHT this is bad, unless they increase ORD frequency.

  5. Golfingboy
    Golfingboy at |

    Not good at all, I bet 90% of the markets that are losing their 2-3x daily CLE flights, won’t see said capacity be replicated through other hubs. The only reason I am a little annoyed at yet another capacity cut is that PIT has already seen a lot of cuts.

    I am also sure most of those cities still retaining nonstop flights will see frequency cuts, nonstop option will still be there at an exorbitant price, but far less options. Some cities will be axed completely it seems [ERI, BFD, DUJ, FKL, JHW, and PKB] unless they transfer those flights to IAD – doubt EWR/ORD has much room for flights to those cities.

    We know what will happen to those non-hub mainline flights over the next few years… Feeder traffic dries up, yields tanks and then at that time they will declare those flights unprofitable and cut them one by one.

    The UA cut, cut, cut, cut, cut mantra continues [no interest in identifying why it is unprofitable and how can we make it profitable]… This cut is a little more obvious than the other cuts we have had in the past few years. Customers almost always loses in airline mergers.

    Oh well, if the flight options are not working for me, then I need to do something about it rather than whining.

    *cut, cut, cut does not focus on just capacity cuts, but cuts in product, cuts in service, cuts in benefits, etc.

  6. Reid
    Reid at |

    I find it interesting that they will keep LGA-CLE. It shows that they admit LGA has SOME pull…now if we could just get some flights to other places people may want to go to from LGA, other than hubs. I believe this will be LGA’s only service to a non-hub airport on UA.

  7. Nick
    Nick at |

    One thing in the letter Jeff mentions repeatedly is the pilot shortage due to regulation changes. I’m curious as to whether this change will fundamentally affect regional flying. If salaries rise significantly many regional routes may just not make sense anymore with the size jets they use.

  8. VG
    VG at |

    No offense to Cleveland intended, but it is rather surprising that anyone would have ever thought to put a hub in Cleveland. The location is just plain wrong and the city is not big enough. ffi and Carl make some more detailed points worth reading.

    1. Jan
      Jan at |

      Well, back when Continental was single, they didn’t have a Midwest hub. Chicago? No way. Cleveland was good for their operations then.

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  10. Pizza In Motion
    Pizza In Motion at |

    […] United has announced that it will begin getting rid of its Cleveland hub.  This is really no surprise when you consider that United already has hubs in Chicago, Washington-Dulles and Newark.  It’s mostly a reduction in regional jet flights.  Regional jets are something business fliers generally tolerate but don’t love, so I suspect the only folks likely to be upset about this are folks who originate in Cleveland and now may have to take a connection to get where they’re going. […]

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