United has operated a hub at Washington Dulles for 30 years. It began as a primarily domestic operation. They wouldn’t introduce their first international flight from DC for four years. However the airport grew into United’s primary transatlantic gateway.
It was also United’s primary connecting city up and down the East Coast and for Northeast and Mid-Atlantic traffic which didn’t make sense to route through Chicago.
With the Continental merger came a hub at Newark. The New York market is potentially more lucrative, and it doesn’t make economic sense to operate connecting hubs within 250 miles of each other. In the future Washington Dulles may survive on the basis of predominantly non-stop traffic. And much of that traffic international, because for short haul domestic flights Washington’s National airport is the preferred destination for downtown visitors.
Washington Dulles Has Been on the Chopping Block for 15 Years
United’s DC hub has been ‘at risk’ though for far longer than just the time since the Continental merger.
While many ago there was speculation that United would buy America West (before they announced a deal with US Airways that never consummated, and ironically before America West acquired US Airways out of a second bankruptcy) in order to acquire the aircraft to grow Dulles quickly, more often than not the speculation has been about the airline walking away from Dulles.
I wrote about United’s commitment to Dulles in the face of naysayers over a dozen years ago. During bankruptcy, some analysts and creditors argued they should cut bait on Dulles.
And that was before their United Express partner Atlantic Coast Airlines severed ties and started an independent competitor at the airport. Independence Air began life with nearly 75 daily frequencies in DC — but with no willingness to spend on marketing through traditional computer reservation systems, and little awareness in the cities they served that passengers could find dirt cheap fares at FlyI.com. The short-lived airline ultimately had as many as 200 flights a day to places like Lansing and more than one Charleston.
They were a high cost airline (mostly regional jets) with low fares and United leveraged its frequent flyer program to help trounce their competitor. On top of regular miles for trips, my office mates were all earning plenty of credits for each segment redeemable for trips including round the world itineraries. United ran a “Go Around the World” promotion in 2004 with credits for flights in and out of Dulles. They dusted off a similar promotion in 2006 to fight off competition in Denver (“Denver You Mean the World to Us”).
Independence Air couldn’t fight back although they tried — they’re the only airline I know of to intentionally load a mistake fare into their system (after midnight) and then call the media the next day about it (message: you never know when you’ll find a great deal at FlyI.com!).
After the demise of Independence Air United built Dulles back up and of course there are more international partner flights and new United international destinations from the airport.
United Is Again Looking at Reducing or Eliminating Hubs
The building of Washington Dulles involved condemning African American homes so that white business travelers could read Playboy. But now that the magazine brand has been modernized and United is taking a look at his DC hub.
From the Original Washington Dulles Concept Video
United killed allowing longer flights at Washington National this year in order to protect its Dulles hub. But it may not be that committed to the hub after all.
A month ago on the airline’s revenue initiatives call United mentioned several times developing a theory for each hub.
As I suggested at the time, “if they don’t understand how all of their hubs operate then perhaps they shouldn’t all exist as they do today.”
‘Defining the mission’ of each hub was again a theme of last week’s earnings call.
San Francisco is strong but will face renewed competition from the merger of Virgin America and Alaska Airlines. United needs to build there. They have a strong position in Denver. Newark is their fortress in the New York region, which faces the new potential for competitors (Alaska Airlines has already announced new flights).
United Boeing 757 in San Francisco
Houston has little competition, but the local economy is suffering from low energy prices. Los Angeles faces the most competition, as American and Delta build their presence and United becomes less significant.
United has indicated they cut domestic capacity too much. They’e been increasing the size of aircraft, moving away from 50 seat regional jets. But it’s smaller aircraft that can serve smaller towns and feed long haul flights — at least when Dulles and Newark are duplicating long haul operations.
The airline may have to choose to feed operations at one or another in order to upgauge flights, fend off challenges, but without adding too much capacity into the domestic market that they drive down airfares even further.
Of course building up Newark further as a connecting hub means relying on New York airspace for connections — something I avoid recommending.
Washington Dulles Going Forward
Washington DC, as the seat of US government, remains a very important international gateway. And congested National airport isn’t sufficient to meet the need for local traffic, either.
But as United moves away from smaller aircraft, it makes less sense to push connecting traffic from small cities through Dulles. They’d rather focus on filling planes out of Newark.
While United had to write off a substantial value of slots at Newark with the government’s decision to end slot controls there, and although United wasn’t maxing out all of the slots they had much of the time, there’s a new potential to grow their operation at Newark. New York is a better metropolitan area in which to hub and United has a significant position there.
Washington Dulles will remain an important city for:
- Transatlantic flights
- Cross-country flights, and flights beyond the 1250 mile legal limit for flights out of National
- Connections between the Northern Virginia community and other tech centers
- Flights to United’s other hubs. They can feed DC traffic through Chicago and Newark just like United used to feed Baltimore traffic into Dulles with several daily Jetstream 32 turboprops (a service that ended days before 9/11).
But it may need to survive largely on passengers traveling to and from DC. And that means supporting fewer flights to and from smaller cities that survived as much on connecting passengers as origin/destination passengers.
Of course if Washington Dulles isn’t going to be a hub and spoke operation, then even the original justification for the legal limits on flight distances from National airport (the ‘perimeter rule’) — to protect Dulles — fall by the wayside.
Oddly, deserting IAD would desert LGA even further. The ONLY way to get from LGA to the east coast is via the IAD feeder flights. If those go away, and they aren’t replaced by EWR feeders, every trip from LGA to Florida, Maine or Boston would HAVE to go via IAH or ORD.
@Joelfreak – There are only 2 flights a day LGA-IAD. There’s not much to walk away from.
Curious Gary how you think AA justifies PHL, CLT, and JFK altogether.
Or is JFK just not considered a hub anymore – and is what AA has at JFK an analog to what IAD could become.
@Greg yep, thats my point. They still can sell fares from LGA to the east coast, they just limit it to feeding via IAD. If those go away, they would have to go to places like FLL via ORD, which increases their mileage a TON. It also really does leave all of the NY market OTHER than EWR deserted by UA.
I live 6 miles from Dulles (in Reston), and certainly hope that United maintains its presence there. I don’t want to take positioning flights 250 miles away to travel.
Although there may not be too many flights outside the perimeter, keep in mind that they still exist.
I always wondered why UA didn’t serve IAD with more domestic transcon flights from smaller airports with lots of O/D traffic. SNA-IAD, PHX-IAD, SAN-IAD, PDX-IAD, and even SEA-IAD and possibly SLC-IAD all have potential to give UA higher revenue routes for both business and government travel, not to mention a frequent leisure travel destination. Even IAD-HNL once a day could be a very lucrative use for an older 767. They also pilfer hub transcon and connecting activity from DL, AS, AA, WN, and B6.
IAD is less convenient than DCA for travel to Washington….unless it offers nonstop service from destinations that ordinarily have had to connect!
IAD also is less congested and has less domestic comeptition than Newark, allowing for more Southerly international nonstop service based on connecting feed. I can imagine IAD-JNB to compete with South African (and DL’s very lucrative ATL-JNB) and even IAD-CPT to bring the only nonstop service to Cape Town for the USA. IAD can offer UA a place to expand service to South America and the Caribbean from the East Coast in the future.
Gary you seem to completely miss one of the key drivers for the IAD hub which is to provide O/D travel to international destinations for government contractors, military and foreign nationals who work in the 100+ embassies. These people are not going to fly thru NYC if they can avoid it, and certainly won’t go backwards to ORD. As you know the international business is what drives profits for legacy carriers (particularly the business class seats) and UA will be loathe to cede these customers to non-US carriers.
That being said, I think you raise a good question as to how many feeder flights are needed to fill these planes and whether UA can divert the non-O/D business to EWR and ORD. My guess is that you will see fewer of the 757 flights to Europe (which indicate lower demand on those routes) as the connecting passengers can be routed to bigger planes at EWR.
@Boraxo – I don’t think I miss that at all, I describe DC as seat of government and important international o/d market, and suggest that could be its future.
@Hugh B – I know, I take them all the time [as an 18 year former DC resident]!!
@Greg — in some sense what Dulles could become is what JFK is for American — an international focus city, and an airport that brings passengers to the region [and to a lesser extent to those international flights] especially from beyond the perimeter but that doesn’t try to operate primarily as a connecting hub and doesn’t try to serve every city.
I don’t think duplicative PHL/JFK makes all that much sense, I especially don’t think PHX/LAX makes all that much sense. PHX seems the most likely hub to downsize. CLT is a different matter, filling a gap in the Southeast.
Thanks for this column, Gary. Many of us miss FlyI, with their new jets and low-cost East Coast fares out of IAD. Of course, UA had to strangle their competition, so that they could become the 600 lb gorilla in the skies and charge whatever they wanted to for their seats. I’ve flown UA transcontinental flights out of IAD for many years, and the coach seating experience on UA was all too often the “flight from hell”, with flight attendants who couldn’t be bothered doing much at all. Just perhaps consumers will get lucky and UA will leave IAD altogether, and then LH and other Euro carriers will replace with their transcontinental flights. That would be a huge win for the flying public!
@Frank Ummm, have you flown LH and BA? The “business class” is a small E- seat with a blocked middle. No thanks. UA E+ is much more tolerable and the buy-ups are getting cheaper. Though it would be nice to see LH operational efficiency on those transcons, which are often delayed.
The last thing we need at EWR is more UA metal. UA is my least favorite of the legacy airlines and their operations are a joke. All these scenarios and theories mean nothing when the airport has two main runways and only one east/west runway primarily used on windy days. The fact is, EWR is now legally able to but I don’t think physically able to handle any more traffic. One runway for inbound and one for outbound means they are limited no matter what feeders/international/connection methodologies you can think up are.
@Boraxo. My comments were solely for transcontinental flights out of IAD, US to Europe and return. Yes, I’ve sat in those “faux business” LH business class seats – but only when flying within-European flights. The LH (and OS) transcontinental business class seating has been great. There’s no comparison between flight service and FA friendliness on UA and LH, LH wins hands-down. Heck, I’ve been treated better by the flight crew while seated in AF “steerage class” than while on a UA transcon flight!
When the DC Metro gets to Dulles in 2020, won’t that somewhat lessen DCA’s competitive advantage?
Wouldn’t them killing IAD as a hub be a huge negative for all the Star Alliance partners that bring traffic into IAD that need UA connections? I would think that Lufthansa, Scandinavian, Brussels, Austrian, Turkish, etc. would take issue with this as it might impact their loads and willingness to fly to IAD.
btreacher, not much. Obviously, the housing is less dense out there, and, more importantly, the incoming traffic from non-DC-area residents wants to go to DC, not the deep suburbs.
I’d be surprised but not shocked if UA eliminated IAD as a hub. I just think DC is too rich a market to walk away from a monopoly hub — even if it has obvious weaknesses. US is ALWAYS going to get higher yields from better located DCA. But they can’t serve lucrative int’l markets from there. I haven’t followed developments at IAD too closely, but I would think it would be a candidate for what AA does at MIA. It’s a hub, but it’s focused on feeding the int’l service. They don’t try to fly from everywhere in the USA to MIA.
LAX is probably more of a candidate for downsizing. UA has no competitive advantage there, and it’s kind of a brawl right now. They have a great monopoly hub in nearby SFO. It seems like that should be their focus.
The one thing that’s confused me is the train IAD put in to replace the moon buggies. The stop at the UA terminal requires… a walk. Yes, those terminals have been declared “temporary” since before I moved to DC (in 1998), and are still there. So what was the long term plan to actually align them with the train?
UA (via UA Express) used to have an IAD-JFK flight that used to… wait for it… feed a bunch of international connections up there.
@brteacher taking the metro to IAD once it’s finished will still take at least 40 minutes longer from downtown than going to DCA. And the IAD metro stop isn’t even going to be at the terminal.
I live 10 miles from IAD, fly 100 times a year and have 6 segments on UA this year. For international, I won’t use UA at all and United Express is the worst run pseudo-airline in the USA. $600 one way to Cleveland in coach on a crappy regional jet? Uh, nope. UA has very limited mainline domestic flying out of IAD. Add extremely high costs at IAD because of the corrupt and unaccountable airport authority and it’s not shocking that United is reconsidering IAD. (The train that doesn’t actually go to the C terminal cost $1.5 billion – the most expensive public project per mile in US history). The only reason I would like UA to stay is to keep fares from skyrocketing out of control.
Dulles itself has potential if the airport can get its costs under control 4 big runways, no congestion, great East Coast and international access. If only someone would run it the right way. Jet Blue tried to run a mini hub there but bailed out.
No one has mentioned BWI in this discussion. BWI has become more attractive than Dulles for folks in near-to-Dulles (as the crow flies) Montgomery County, MD thanks to the ICC road and to Maryland’s refusal to construct an outer beltway bridge. Southwest’s expansion to BWI makes it a discretionary-travel mecca for families on a budget. Southwest has also expanded at National, and offers almost no flights from IAD. Increasingly IAD is the most convenient airport only for VA residents.
Say it ain’t so, Gary. I’ll miss the final 23 years of construction at IAD. And only 4 years after that, they might have a train to get there from DC.
I friend of mine at IAD told me that UAL recently extended its lease on its gates at IAD – so unlikely to close that hub for at least a few years. They have also put quite a bit of money into the their terminal recently.
all ’bout the TATL”s, TPAC’s and TransCons. (and the high fares government and it’s contractors pay)
@Frank: You’re confusing transcontinental and intercontinental. Transcontinental flights go ACROSS the continent (e.g. LAX-JFK) while intercontinental flights go BETWEEN continents (e.g. IAD-FRA). There are no transcontinental LH or OS flights in the US.
Despite all these theories about United’s plans for Dulles, United has indicated again and again its commit to its Dulles hub. That’s why it invested in a wide body hangar at Dulles, which opened in 2013. After many years of cutting flights, 2015 actually saw a net increase in United flights, and it continues adding international destinations, such as Barcelona and Lisbon routes.
This must be a joke. I would be surprised if UA stops hubbing at IAD. Yes, it does make sense having hubs so close together. One is located in the largest city in the USA, and the other is in the nation’s seat of government. Is that not a good enough reason? Well, if UA stopped hubbing at IAD in favor of EWR, that would be a disaster. That would leave UA with one east coast hub that is maxed out. Just because slots are lifted does not mean that UA or anyone else can go crazy and add lots of flights. The author of this story assumes slots will never be introduced. When I read that UA can always add flights in EWR, I nearly laughed aloud. Routing all their east coast connections through EWR? That’s nuts. As if New York air space is not busy enough. DCA can’t do all the longhauls. Another good reason to keep IAD as a hub. UA has its flaws, but a poor route system is not one of them.
UAL just recently extended their lease at IAD through 2020. I think that means they are not leaving.
It’s the International airport to the Nation’s Capital.
Get a grip.
I note today, January 2, 2017, that United Flight #100 (from IAD to Manchester, UK) apparently will no longer operate out of IAD. We flew this flight to Manchester (MAN) for two years in a row during the month of September without being forced to use Newark (EWR) as our stopping point from California. I even noted in December of 2016 that United Flight #100 from IAD to MAN was still being scheduled throughout the month of September, 2017. Yet as of today, the only stop on the East Coast available for us as offered by United is via EWR––an airport we refuse to use for a stopover.
Any insights as to why the IAD flights (United Flight #100) have been cancelled? We much prefer IAD over EWR and will most probably make other travel plans as a result of this change.
I’ve seen a few people praising Independence Air, however they seem to be overlooking the main reason as to why they failed, which was two fold (I worked for Air Wisconsin at IAD from just before the transition (June-August of 2004), and remember seeing the G Concourse plan of United’s before it was opened to the public (and I knew even when I first saw it that passengers weren’t going to be able to know what to do as most passengers on domestic flights are self-entitled idiots).
But Independence made two financially fatal mistakes when they first launched, which all but guaranteed that they weren’t going to survive.
The first, was that right before Atlantic Coast Airlines began the transition to Independence Air, the price of Jet A skyrocketed to a national airport average of $1.65 per gallon from $1.04. While that may not seem like a drastic amount, remember that their jets were acquiring over 1500 gallons on average per flight. Their budget for fuel charges had been based on what the rates previously had been, and so those reserves were gone by October of 2004.
The second problem, was that as a Part 121 Scheduled Air Carrier, an airline MUST do each scheduled flight unless it cancels for a valid reason per the FAA. The reason being that Air Traffic Control has booked a spot for that aircraft in the sequence. If any scheduled flight is being repeatedly canceled for the same reason (such as low passenger demand) in a short period of time, the FAA can actually pull the Operators License of the airline because they are not maintaining their schedule. So to avoid that, Independence Air was frequently having to send flights out with either no, or very few passengers on board, thus taking a second massive financial hit.
Add on to that that most of their destinations were not in high demand (they hadn’t done any marketing research to see if people in random small towns were interested in flying to DC), and you end up with an airline which was doomed to fail before it even did its first flight.
Now regarding United, they will from time to time say that they are looking into dropping Dulles as a hub (really it’s just to have something to talk about on a slow news day), however it won’t happen because the number of high end mileage plus members (notably Global Services (and they are the ones whom United will bend over backwards for, including hotels for weather cancellations)), as well as government officials (US and foreign), make it too powerful an income provider, especially concerning international status. Although the only thing making a new C & D Concourse a reality is that United has to fully fund such a new concourse as it had to do with the G Concourse while Independence Air was around. Something they refuse to do. For now, they’re more than happy with the old temporary facility (of which thank goodness C16 is gone, so no one has to be disturbed by lazy passengers who can’t be bothered to look at the screens before asking where their gate is (the pet peeve of EVERYONE who has ever worked that gate)).