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.