American has been talking about its cornerstone strategy for a long time now, but while there have been big changes in most of its hubs, LAX has seemingly been ignored. That finally changed yesterday when American announced a broad expansion of service at LAX, but a lot of it looks like things that have been done before. There are a couple reasons that’s the case, and this may very well be the best American can do right now. Still, my hopes are not high for success here.
There are 10 new routes (including the already announced Shanghai flight), and there are additional flights from LAX to 5 more cities (the other hubs, Vegas, and Orlando). Here’s a map to sum things up.
I put the other airlines that fly these routes nonstop on this map just to give you an idea of how underserved these markets are. (Hint: they aren’t.) Now that United has announced it will also fly LAX to Shanghai, every single one of these new American routes is already flown by United. Oh, and Southwest? The airline flies to six of these nonstop, seven if you count Houston/Hobby the same as Houston/Intercontinental, and the other two are easy single stops on the airline. Throw in Delta on a couple routes and US Airways to Phoenix and you’ve got a crowded house.
Some of this may seem familiar. That’s because Delta tried to build up some of these cities in the last couple of years but those routes failed and Delta retrenched. Now Delta seems content serving the bigger cities from LAX and letting Alaska fill in the rest in order to feed Delta’s international network. But American thinks it’s worth a run here so it’ll give it a shot.
I went to the sparsely-attended press conference held at the swanky Wolfgang Puck restaurant at the top of the Ritz-Carlton in downtown LA yesterday and asked what the idea was here. American had Virasb Vahidi, Chief Commercial Officer at the event, and I specifically asked why they chose these routes. His answer? “It’s what our best customers have been asking us for.”
El Paso? Really? Maybe there’s a big corporate client on that route.
But I have a different theory. I think that American wants to make it clear that it cares about LA and it wants to expand but it’s somewhat hamstrung. With the exception of the Shanghai flight, all these new routes will be flown by American Eagle. As part of this, American will be putting $20 million into expanding the American Eagle terminal from six to ten gates. (The Eagle terminal is now where United Express used to be, on the east side of the airport and you have to take a bus over there.) That’s great, but why not expand its Terminal 4 home? It can’t anytime soon.
Terminal 4 is landlocked and the terminal is running just about at capacity. Clearly American can squeeze a few more flights out here (additional frequencies to the hubs) but there isn’t an opportunity for much expansion. When the expensive Bradley Terminal project is done, American’s Terminal 4 will be connected behind security (it hopes) to additional gates in that terminal. But that’s not expected until 2014. So until then, there’s not much American can do unless it wants to start using gates in different terminals, but that would be a big undertaking and a massive inconvenience for passengers.
For now, American has to do much of its expansion with Eagle in LA. That’s not all bad. Now that American has ordered more CRJ-700s and outfitted them with First Class, American can at least offer something closer to a mainline product. At the very least, the airline can offer something competitive with what United has on its army of 70 seat jets. American will put its CRJ-700s on the long hauls like Houston and Oklahoma City (along with some Phoenix and an Albuquerque). Maybe those cities make sense on the newly-acquired 70 seaters whereas they wouldn’t have made sense on MD-80s or 50 seat regionals. Maybe?
Even though the talk today was all about the commitment to LA, I have to think international feed is a big part of this as well. Right now, American only flies to Tokyo from LA with Shanghai coming soon. American is also awaiting final approval for its joint venture with Japan Air Lines. LAX is bound to be an important gateway for that relationship, especially with United dominating San Francisco, so this could be an effort to build a network to fill those Pacific flights. I suppose we’ll find out when that deal gets going with JAL.
While there’s nothing imaginative here at all – it’s all been done before – it’s about what I’d expect American to try and do. My guess is that a fair number of these routes won’t be around in a year, but it’s encouraging to at least see American paying some more attention to its western cornerstone. Maybe the airline will come up with something more creative for its future moves here.
