Where United Airlines should establish a new hub...
This week's post has nothing to do with Houston other than United has its second-largest hub here, and what's healthy for United tends to be healthy for Houston (barring a monopoly ;-). I'm a bit of an amateur aviation nerd going back to my McKinsey days, and I had a random crazy thought this week: United has a ton of planes and crews sitting around doing nothing right now during the pandemic - they could literally create an instant hub somewhere if they wanted to (assuming they could get the gates). But where?United actually has well-positioned hubs covering most major domestic and international regions. But they do lack good coverage in the southeastern US like Delta does from Atlanta (world's largest hub) and American does from Charlotte. Additionally, Houston serves as a great United hub to Latin America for the central and western US, but is not geographically well-positioned for serving the eastern US the way American is with its hub in Miami. Is there somewhere United could establish a hub that does some combination of what Charlotte and Miami do for American?
The pandemic has made this even more important, as the rise of remote work is driving a huge migration from the north to Florida and even the Caribbean. United sensed this migration early and quickly established a wide range of non-hub flights to better serve Florida. And no matter what you think about the future of the pandemic, remote work has now been absolutely normalized.
- Atlanta and Charlotte are already taken by Delta and American respectively
- Raleigh-Durham is too close to IAD Washington DC Dulles (already a United hub)
- Miami is already an AA hub facing increasing competition from Delta and Southwest
- Fort Lauderdale and Orlando have incredible amounts of low-fare competition from Southwest, JetBlue, Spirit, Frontier, and others.
- Fort Myers is too small to support a hub (679,000 MSA population) as is Jacksonville (1.5m)
A friend of mine threw together some potential United route maps from a Tampa hub (hat tip to Daniel!).
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| Potential Domestic |
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| Potential International |
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| Potential United Latin America coverage IAH+TPA |
As you can see, it's much better geographically from the eastern US to the Caribbean and Latin America than Houston is. Would it cannibalize traffic from IAH? Based on American's service to the same region from DFW and Miami (the equivalent of United's IAH and Tampa), we don't think so. DFW has Latin service nearly as comprehensive as IAH despite American's Miami hub. The two hubs actually reinforce and support each other and give American a dominant position in Latin America. United could challenge that dominance with a combination of Houston, Tampa, and Newark/NYC.
Florida is the third-largest state in the country at 22 million and growing fast. United needs a strong presence there to match its strength in other top five states like California (38m), Texas (28m), New York (20m), and Illinois (13m). A hub (or at least a strong focus city) in Tampa is the best strategic option for them to tap that market. This pandemic will reshuffle the airline pecking order - why play defense when they can seize the initiative and fill a long-standing and growing gap in their route network while also putting more planes and crews to work?
UPDATE: discussion in the Airliners.net forums
Labels: aviation
posted by Tory Gattis @ 12:48 AM
11 Comments:
IAH for Mexico and Western US, and TPA for the rest of Latin America and Eastern US.
Yep, exactly. The same as American does with DFW and Miami+Charlotte.
Would United be expanding in the face of SWA exosnding southward? Given the relative lack of business fliers to LA (i don't know for sure but my perception is that multinationals are much less prevalent there than Europe or Asia] and the high volumes of family traffic from immigration it seems to favor SWA. I too am an airline buff from being a big firm consulting partner for many years.
Yes, although SWA has been focused much more on nearby leisure destinations rather than business destinations deeper in Latin America.
Tory, respectfully disagree, any new hub will lessen the importance of IAH. UA has a presence in FLA already, After the merger all the other hubs got new flights but not IAH. I think its strategy should be to dominate Brazil like from IAH CO did with Mexico, just start flying everywhere in BR and get saturated market share.
Then IAH could compete with MIA for the top Latin Am. hub.
Blessings,
Mike M.
Tory, respectfully disagree, any new hub will lessen the importance of IAH. UA has a presence in FLA already, After the merger all the other hubs got new flights but not IAH. I think its strategy should be to dominate Brazil like from IAH CO did with Mexico, just start flying everywhere in BR and get saturated market share.
Then IAH could compete with MIA for the top Latin Am. hub.
Blessings,
Mike M.
Mike, you are right that the IAH hub was weakened a bit by the merger as a lot of east-west routings that made sense thru IAH in the CO days now get routed thru Denver or Chicago instead with the addition of the UA hubs. I still think any weakening of IAH by a TPA hub would be very slight, as almost in Latam service it offered would route to/from the eastern US where it doesn't make sense for them to go thru IAH anyway.
When UA gets the Airbus 321xlr narrowbody with extra long-range, I could see them serving more cities in Brazil from IAH.
Good comments from a sharp aviation guy on Instagram: https://www.instagram.com/p/CE5MMrIB7xk/?igshid=YmMyMTA2M2Y%3D
Another interesting possibility if UA thought about a TPA hub: airside bus connecting service to Walt Disney World, similar to some of the bus connections they've done with Landline in Denver. Co-brand it with Disney. People could "fly" directly to WDW. It would pull O&D traffic to them that otherwise would go to MCO. https://thepointsguy.com/reviews/united-landline-bus-service-denver-colorado/
Evidently United is considering a new hub in Florida:
https://viewfromthewing.com/rumor-united-airlines-to-open-hub-in-florida/
My comment:
In addition to TPA I used to think fast-growing Lakeland would be a really interesting option, splitting between the big population centers of Orlando and Tampa (a new DFW).
But Industry Insider is really on to something with his arguments for FLL. Delta (Tim’s perfect company with perfect strategy) has already proven you can build up a hub in a coastal market if your competition is mostly smaller airlines (BOS, SEA), so UA would just be taking a page out of their book to go after Spirit and JetBlue at FLL (both are very weak right now).
The second reason I’m switching my thinking from TPA to FLL is that UA wants to be a premier airline in wealthy, top-tier markets, and the Miami-FL-WPB metro is much more of a wealth center than TPA (or Orlando for that matter), especially as more and more of Wall Street moves down there.
The third reason for FLL over TPA is UA needs an East Coast Latin America hub, and a lot of that local demand is focused on the Miami metro area.
The fourth reason that has not been discussed here so far: how the rise of air taxis might change the equation. With a 100-150 mile range at 100-200mph, they could also feed in traffic from the wealthy lower west coast of Florida from Ft. Meyers to Naples as well as West Palm Beach and the Keys. They could really be a game-changer for the local draw zone of the airport, at least for top-tier fliers.
Tampa is listed as one of five airports with the potential to become new legacy hubs. https://simpleflying.com/us-airports-potential-legacy-hubs/
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