New York area is 'critical' to Continental

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"Continental serves 155 destinations from Newark, including 74 a=

Typo?=0A=0A"Continental serves 155 destinations from Newark, including 74 a=
broad. In 1977, it served 26 international destinations from Newark."=0A=0A=
New York area is 'critical' to Continental=0ARevenue from Big Apple flights=
 about to eclipse that of Houston=0A=0ABy BILL HENSEL JR.=0ACopyright 2007 =
Houston Chronicle =0ATOOLS=0AEmail Get section feed =0APrint Subscribe NOW =
=0AComments (6) Recommend (3) =0A=0ARESOURCES=0ANEW YORK FLIGHTS =0A=0ANumb=
er of daily flights out of the New York area*: =0A=95 Continental: 469 =0A=
=95 Delta: 333 =0A=95 American: 249 =0A=95 US Airways: 226 =0A=95 JetBlue: =
200 =0A=95 United: 65 =0A=95 Northwest: 44 =0A*Includes JFK, LaGuardia and =
Newark airports =0ASource: Continental Airlines =0ANEW YORK =97 Continental=
 Airlines may live in Houston, but its rich uncle is in New York City.=0ATh=
e carrier's international revenue, mostly from flights to or from the New Y=
ork area, has grown some 20 percent in the past year and now provides about=
 half its passenger revenue, which totaled $13.1 billion last year.=0AOther=
 airlines have taken notice, a big reason why a Big Apple battle has broken=
 out and promises to get more intense, even as federal regulators move towa=
rd limiting flights in the region.=0AAfter a decade in which Continental an=
d the Port Authority of New York/New Jersey spent some $2 billion to build =
up a hub at Newark Liberty International Airport, Continental is the domina=
nt carrier in the financial capital of the United States with 469 daily dep=
artures.=0AThe next closest competitor is Delta Air Lines with 333 daily fl=
ights, and the list drops off sharply after that.=0AAtlanta-based Delta in =
particular has pushed for a larger market share, spending more than $50 mil=
lion to upgrade facilities at John F. Kennedy Airport. Delta executives say=
 the airline will have spent more than $100 million by next summer.=0AJetBl=
ue also has expanded of late in its hometown of New York City, where it too=
 flies out of JFK, and has said it wants to expand more.=0AJust how competi=
tive is the New York market? Consider this sign seen on cabs around New Yor=
k: "This taxi can't take you to Beijing. Neither can Delta."=0AThat's part =
of Continental's new ad campaign, which began in September and was designed=
 to emphasize the carrier's international scope compared to other airlines,=
 spokeswoman Julie King said.=0AContinental isn't really threatened by the =
growth of the other airlines in the New York area because it has the "very =
enviable position" of having almost all the flights out of Newark, CreditSi=
ghts analyst Roger King said.=0A"That allows them to have almost all domest=
ic flights into Newark, and allows all their international flights to hook =
up with the domestic feed, which JFK flights don't have," King said. "That =
hub at Newark is the strongest Atlantic gateway of any airline."=0AScheduli=
ng reduction=0AAll the recent growth at JFK =97 some 40 percent more flight=
s over the past 18 months, according to government data =97 led to consider=
ably more congestion. And that helped prompt the Federal Aviation Administr=
ation to call a scheduling reduction meeting.=0AScheduling restrictions alr=
eady were in place until last January, when Congress lifted them. One tool =
being discussed now to help ease crowding is congestion pricing, which woul=
d raise fare prices at the busiest travel times.=0AFederal officials seekin=
g to avoid a repeat of massive congestion this summer have proposed cutting=
 back flights at JFK next summer, and a decision is expected to be announce=
d within weeks. The agency also is looking at other New York-area airports,=
 meaning next up could be Continental-dominated Newark, which, like JFK, ha=
s seen crowding and delays.=0ANew York's close-in airport, LaGuardia, handl=
es primarily domestic flights.=0AU.S. Transportation Secretary Mary Peters =
said the government's strong preference is to develop market-based solution=
s.=0A"But we will consider scheduling reductions as a last resort in order =
to prevent a repeat of this summer's nightmare delays," she said in prepare=
d remarks recently.=0AHer department has suggested an hourly limit of 80 fl=
ights at JFK, which amounts to a 30 percent reduction, said Calyon Securiti=
es analyst Ray Neidl.=0A'In a strong position'=0AIt was a decade ago that H=
ouston-based Continental began its push for a major international hub in th=
e New York region and dubbed Newark, 16 miles from midtown Manhattan, its "=
global gateway." The carrier runs 11 nonstops from Bush Intercontinental Ai=
rport to Newark each weekday.=0AContinental's 10-year buildup in the New Yo=
rk area has been key to its international expansion and overall growth, sai=
d Larry Kellner, the carrier's chairman and chief executive.=0A"Continental=
 is well-positioned for the next several years," Kellner said. "We continue=
 to be in a strong position financially."=0AOne reason for that is the cash=
 engine Continental has built in the New York area, which explains why airl=
ines continue to spend money to gain an edge here, despite the threat of go=
vernment-imposed flight limits.=0AContinental President Jeff Smisek said th=
e carrier currently has a quarter of the New York-area market share and off=
ers 43 percent more seats than its nearest competitor.=0A"We are proud to b=
e the largest carrier in New York/New Jersey," he said.=0AThe carrier's chi=
ef financial officer, Jeff Misner, said 138 of its 282 destinations =97 nea=
rly half =97 are outside the United States.=0ABut Delta's Glen Hauenstein, =
executive vice president, argues there's plenty of room for others because =
JFK =97 about 12 miles from Manhattan in Queens =97 is by far the largest i=
nternational airport in the country.=0AHauenstein, a former Continental exe=
cutive who actually worked on its expansion in Newark, said all the airline=
s will have to give up something.=0A"At the end of the day, the government =
has the authority to do whatever it wants," he said. "The airlines have bee=
n very responsive. I was very disappointed the government started out by po=
inting fingers at the airlines because we could point the finger back at th=
em even more."=0AThe Air Transport Authority and the Port Authority of New =
York and New Jersey have done just that. The ATA represents most airlines, =
while the Port Authority runs the airports and depends on their revenue.=0A=
"Cutting the number of flights at one airport to levels not seen in almost =
40 years and declaring victory isn't a solution," said Anthony Shorris, exe=
cutive director of the Port Authority, referring to possible changes at JFK=
.=0AContinental agrees. Smisek also is sharply critical of the federal gove=
rnment, which he says has failed to keep up with the growth of air travel.=
=0AThe airlines all have strongly urged the government to fix and modernize=
 the nation's air traffic control system.=0AThat system could come under mo=
re pressure. An agreement liberalizing routes between the United States and=
 the European Union promises to increase trans-Atlantic traffic.=0AA weaker=
 dollar also makes this country cheaper for visitors from across the pond, =
and New York City's mayor, Michael Bloomberg, has launched a campaign to dr=
aw more international tourists.=0AContinental has modernized its fleet in r=
ecent years and continues to do so. It will take delivery of 25 Boeing 787 =
Dreamliner aircraft in 2009, and many of them will fly out of the New York =
area.=0AFleet issues=0A"Over the next three years, we will spend more than =
a couple of billion dollars on fleet issues," Kellner said.=0AJust how big =
a deal is the New York-area hub for Continental?=0AThe amount of revenue Co=
ntinental gets from New York-area flights is about to surpass revenue from =
its Houston flights, executives say. That's despite the fact that Continent=
al has more than 700 daily flights out of Houston, far more than New York.=
=0ANew York "is critical, absolutely critical," to Continental, said aviati=
on consultant Mike Boyd.=0AContinental serves 155 destinations from Newark,=
 including 74 abroad. In 1977, it served 26 international destinations from=
 Newark.=0ASuch expansion around New York has come at the expense of effici=
ency, with the three New York-area airports rating consistently among the w=
orst in on-time performance.=0AThe airlines need to work harder to reduce c=
ongestion, said the Transportation Department's general counsel, D.J. Gribb=
in.=0A"The operational improvements that have been proposed (by the airline=
s) don't appear to be dramatic enough to meet demand," Gribbin said. "So we=
 have to come up with something as how to best meet demand."=0ABut Kevin Mi=
tchell, chairman of the Business Travel Coalition and a member of the commi=
ttee meeting with the government on congestion matters, suggested regulator=
s are falling short.=0A"The FAA has not made a compelling case whatsoever a=
bout caps or congestion pricing," Mitchell said. "They have brought in a lo=
t of people designed to bolster the FAA's case for congestion pricing, but =
it is just not compelling."=0Abill.hensel@xxxxxxxxx

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