Why United’s CEO Is Right (And Wrong) About Dulles Airport

Washington-Dulles Airport has been my “home” airport for almost 20 years now.  For better or for worse, we’re in a long-term marriage.  Sure, I’ve flirted with National and BWI.  We’ve even gone out on a few dates (don’t tell IAD, I’d get in trouble).  But, in the end, the airport closest to your home is almost always the best one.

I was really interested to read Matthew Klint’s piece on United’s CEO Oscar Munoz and his feelings on Dulles.

Munoz bluntly calls out an issue for United on the NYC-DC market:

“A business customer will stay with you for a little bit of time,” Munoz said during a Jan. 23 question-and-answer session at United’s Dulles hub. [“And then] it’s just ‘I can’t do this anymore.’ And so now you’ve lost that market. And seats between important locations like [Dulles] and let’s say New York have decreased, versus everybody else increasing. They built a market. We gave away a market. But yet we still try to play in it with little aircraft like little kids. That doesn’t work.”

I really like the blunt nature here.  United bailed on JFK, and not just to IAD.  They’ve cut down their LGA-IAD flying, to 2 nonstops a day served by a CRJ-700.  That’s less than 150 seats a day.  Those planes are a dream compared to most of what they fly between Newark and Dulles.  While you’ll sometimes see a once-a-day 737, there’s a steady diet of really small planes, like Q200s and ERJ-145s.  That 737 departure is usually at a non-business traveler friendly mid-afternoon slot, likely a positioning flight.

In fairness, it’s not like their competition is killing them with better aircraft.  American Airlines is allergic to IAD.  They don’t even bother flying there from New York or Chicago.  Delta doesn’t offer prop planes, but does serve the route with a smaller regional jet.  JetBlue is sending their E190s to IAD, which offer a better seat than pretty much everyone else into IAD.

Dulles Night

But, United isn’t just competing with American, Delta and JetBlue.  They’re competing with Amtrak and “screw it, I’ll drive).  I’ve employed both of these methods frequently.  When faced with a ride on a crappy plane for an astronomical price and a commute into Manhattan once I land, I’ll choose what’s behind those other doors more often than you might think.

Oh, But The “Train To Nowhere”

Here’s where Oscar and I disagree, though I still love his candor:

Munoz chided the airport’s administration for building what airport employees call, “the train to nowhere.” Since 1986, United has operated out of what Dulles considers a “temporary” terminal. As a result, in 2010, when the airport built a train to shuttle passengers among terminals, it did not put a stop at United’s current terminal. Munoz noted the airline is paying for a train many of its passengers cannot use.

“Someone told me today that, every single day, we are paying $5 per passenger to fund the train that goes nowhere,” Munoz said. “It pisses me off to no end, because it’s just money that could be used in so many different ways if we wanted to do the right thing here.”

There are plenty of things to blame MWAA (Metropolitan Washington Airport Authority) for.  The “train to nowhere” is not one of them.  There were numerous attempts to get United to commit long-term to Dulles before Oscar was CEO.  His predecessor, Jeff Smisek, kept delaying making a firm decision one way or another while he was busy bribing officials in New York.

Dulles built a train to where the new concourse will be when they have a tenant (that’s you, United) willing to commit some money to the project.  Virginia kicked in $50MM to help lower costs at Dulles, but it’s still unclear how much of that United actually sees.

Dulles (IAD) AeroTrain Pics-Now Open!

It’s Not All United’s Fault

Of course United is paying a portion of the costs to build and maintain the train to C/D.  They’re the only long-term tenant of that concourse, other than the rats that used to hang out in the United Clubs (might still be there).  His claim that he’s pissed they spent that money rings hollow to me.  Should they have used that money to build part of a concourse with no train?  With no commitment from United to extend their lease and spend some money?  That would be crazy.

Dulles has even demonstrated it can build a great concourse (see Concourse A and B) and that airlines can operate profitably out of it.  American, Delta, JetBlue, Southwest and a host of international carriers call that B concourse home.  One of those occupants, American, used to reside in the D concourse but chose the new digs over being a bunk-mate with United in the old C/D concourse.

The tough part about this equation is that it will cost a lot of money to build a new concourse.  United needs to foot some of that if it wants to make it happen, but it’s probably not realistic to expect them to cover all of it.  That’s a bit of a sticky wicket.  That being said, I bet progress could be made with more of a commitment from United.  If you’re MWAA, a poorly run organization to begin with, would you go out of your way to make commitments for a partner that doesn’t want to sign a long-term lease?  Maybe now the two parties can figure things out.

One More Thing On The Nowhere Train

It’s a 5-minute walk from the train station to the existing C/D concourse.  There’s a moving walkway covering about half that walk and a couple of elevators if you’re truly lazy.  As I said to Matthew via Twitter the other day,  the complaints from folks about that walk might help illustrate why Americans weigh about 20 lbs heavier than our European counterparts.

It’s a train that operates between concourses, like dozens of airports across the country.  It’s a much better, more reliable ride than the moon buggies.  People love to bust up Dulles on the moon buggies, then pile on when they build a train without a commitment from their largest tenant on a new terminal.

The Final Two Pennies

Dulles isn’t the best airport in the world.  But, it’s far from the worst.  The C/D concourse is sub-standard.  Bathroom and food service improvements have put some lipstick on the pig, but it still needs to get fixed at some point.  In this rare instance, it’s not all MWAA’s fault.  I guess they could have refused to build the train at all.  But, I see no sense in making a train station for a terminal nobody really wants.  That just pours good money after bad.

Now that temporary improvements have been made to C/D and United has been, ahem, financially encouraged to hang out a while longer, it’s high time to get that new terminal under way.

The post Why United’s CEO Is Right (And Wrong) About Dulles Airport was published first on Pizza in Motion

6 Comments

  1. Hard to focus the blame on Smisek for not committing to Dulles, United complained about the cost of the train before the Continental merger and Dulles was on the chopping block way back during United’s bankruptcy more than a dozen years ago. Take a marginal hub and make it a more costly place to operate and you don’t make it a more attractive place at which to operate.

    1. My understanding is that at one point United was very much leaning in, hence the reason that Dulles built the train. Circumstances changed, I get it. I would have understood if they decided to de-hub IAD, though I’m not sure where else they would have chosen to ramp up.

      Besides, it’s always fun to blame Smisek.

      1. No, it’s not ‘fun’ to blame Smisek when the post insinuates the ‘train to nowhere’ is a result of his decisions.

        The fact is the AeroTrain opened in January 2010, before the merger was even announced. No Smisek involvement.

        The current Dulles terminal situation falls squarely on pmUA decisions.

        You can thank Smisek for putting the pressure to get fees to a reasonable place. Without that it would be a de-hub situation.

        But I personally find Dulles my favorite United hub, C/D facilities aside.

        1. Greg, all I can recall about Smisek is him vacillating on Dulles during his tenure. A new lease wasn’t signed until a few months ago, well after his departure. I don’t see any evidence that supports United was the one pushing the State of VA to give $50MM to lower fees at IAD. And, given how MWAA has overlaid some of the DCA improvement fees on IAD, I don’t actually think the fees at IAD went down during his tenure. I’m open to being wrong, but have read no evidence to support your theory that Smisek got lower fees at IAD.

  2. Agreed there is lots of blame to go around at IAD. It’s been my home airport as well for the past two decades so I should have a vested interested in seeing it fixed…but I don’t. Here’s why. I gave up on United when they gave up on their loyal 1K passengers four or five years ago. I’m Star Gold for life and I never need to fly UA ever again. I find myself in C/D only in those rare instances when there is NO OTHER way to get home. The loss of high revenue business passengers is squarely on UA. I get where I need to go in the B concourse via AA, DL and Jet Blue plus international carriers. The train goes to B.

    Why is IAD a disaster? (or rather, how could it have been a gem?) The MWAA also shoulders much of the blame. They spent $3 billon on the “security concourse” (Basically a big hole in the ground) and the train to nowhere. The train was necessary….but spending multiple billions for it was an egregious waste of resources. Question: How do you spend billions on a one mile long train? Answer: have it built by the MWAA. The passenger facility fees that Congress tacked on to tickets gave the MWAA carte blanch to spend, spend, spend so they did without regard to cost because the MWAA is accountable to no one. Now IAD is the most expensive airport in the USA (save NYC) for passenger enplanement fees – almost $25 per head. JetBlue used to run a mini hub here but they gave up. $25 a head is just too much when you are trying to compete on price. Rent at Dulles is outrageous. This explains the lack of shopping and restaurants – you can’t pay $600 a square foot in rent and make it work.

    Having a train that doesn’t go directly to terminal A, C or D (at all) was a colossal blunder. Terminal B is nothing to write home about – basically, a steel and glass box where they forgot to included customs and immigration. Why spend billions on a train when all your international passengers can’t use it? IAD is short for International Airport Dulles. The MWAA forgot the “International” part. No wonder IAD has four long runways, decent weather, plenty of unused gates, few delays but can’t grow. At least I’ve never seen the rats in the British Airway Galleries or Air France Lounges in B. Add in parking garages that cost at least $25 a day and are so far away they need to run busses to them. It’s obvious that the airport isn’t well run. MWAA is simply not a good steward of funds. Now, debt service is so high that they need more traffic but fees are so high they can’t attract more traffic. Consequently, there is no money and no additional debt capacity for the concourse C/D replacement.

    1. rjb, we agree that MWAA is corrupt. But, some of your facts are wrong. The daily garages are $17 a day. Even the surface lot adjacent to the terminal is only $22. Not sure what garage you’re thinking of that’s at least $25 a day. The train does serve A and B. Yes, there are a few more escalators to get to the regional jet portion of A. I just can’t get that upset about a 5-minute walk.

      A handful of sit-down restaurants have opened up, along with retailers like Tumi. It’s possible those folks don’t make it for the long haul, but they’re there now.

      And, I’m fine with the train not going to D. The moon buggies still do, and they really do just need to build the new terminal as opposed to spending more money on temporary measures. We’re in complete agreement on MWAA. Part of the reason IAD’s costs are so high is because MWAA allocated some of the DCA improvements to IAD. Dulles’ costs should be lower than they are.

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