Business Update with Mark Lacter

Getting from Los Angeles to San Francisco in 30 minutes

Yesterday, we heard about the hyper-loop, a system that could get you from L.A. to San Francisco in about 30 minutes without losing your eyeballs.

Steve Julian: Business analyst Mark Lacter, that might come in handy given how crowded California's air corridor has become...

Mark Lacter: We'll talk about the hyper-loop in a moment, Steve, but yes, the L.A.-to-San Francisco air route is the busiest in the U.S., and it's already the most competitive.  We're talking about more than 50 flights a day, which - if you spread them out between six in the morning and 10:30 at night - there'd be one flight every 20 minutes.  But, Delta obviously thinks there's room for more because it's announced an hourly shuttle between the two cities.  That's another 14 daily flights beginning September 3.  The airline will be using a somewhat smaller jet, and it sounds as if the focus will be on the business traveler, with free newspapers, wine, and beer.

Julian: How much will it cost, do we know?

Lacter: As usual, it's a lot cheaper if you make an advance purchase, but if you're buying your tickets at the last minute - which is what a lot of business travelers do - roundtrip runs a hefty $430.  Actually, this Bay Area shuttle is just the latest effort by Delta to expand out of LAX, which is different from other major airports in that it doesn't have any one airline that dominates (United has a slight edge in market share over American, with Delta about three percentage points behind).  American also has been adding flights out of LAX.

Julian: Sounds like the airline business is improving...

Lacter: That's what happens when you pack planes to the absolute max, which is bad news for travelers being crammed into coach seats.  But it's good news for LAX, which continues to be the airport of choice among airlines looking to add service - matter of fact, domestic passenger traffic was up almost 8 percent in June compared with a year earlier.  Some of those gains might be at the expense of service elsewhere - most especially Ontario Airport, which has seen a big exodus among airlines and passengers.  Ontario city officials have been trying to regain control of the airport, which has been operated by the city of Los Angeles.

Julian: Back to the hyper-loop - is this kind of transport possible?

Lacter: Well, it's the brainchild of billionaire Elon Musk, and you never say never with this guy.  He started the electric car company Tesla and the private space company Space X.  The hyper-loop is a high-speed system of passenger pods that would travel on a cushion of air (think of air hockey table).  The pods would travel at more than 700 miles per hour, but they wouldn't result in sonic booms that severely restricted the Concorde aircraft.  Of course, anything that promises super-speed travel is bound to get people talking - and, from what the physics professors are saying, the Musk idea seems feasible.

Julian: How would its cost compare to the bullet train?

Lacter: He says a lot cheaper.  The price tag on the train is $70 billion at last check; Musk says he can do his for $6 billion.  But, the issue isn't so much the cost or even the technology, but the politics.  As a rule, governments do not think outside the box, and that's what a project like this is all about.  Already, you have bullet train supporters saying that the hyper-loop is impossible, but what they're really saying is we have a lot riding on the train, and we don't want this guy to mess it up.

Julian: But, how much demand is there for high-speed transport?

Lacter: You'd think there would be a lot, but when Boeing came up with a nifty idea for a souped-up plane that would shave almost an hour from L.A. to New York, the airlines said no because it would require more fuel - and that would mean raising fares.  Musk says his system would be a lot cheaper than traveling by plane, which could be a game changer in the attitudes about going places.  But, those attitudes won't change until the thing is actually built, and that can't realistically happen until attitudes change.  That's the ultimate problem.

Julian: Hence, why we're content to squeeze into coach.

Lacter: Yep.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA Observed.com.


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