Topic of the Week: Alaska Wants to Give American Its Mexico City Authority

Alaska Airlines, American

Here’s an interesting little tidbit that I came across on this week. Alaska currently flies LAX-Mexico City once a day. It wants to give that authority to American, which will fly it twice daily and put Alaska’s code on the flights. Why doesn’t Alaska just walk away? Only 2 US carriers can fly this market now, and United is the other one. If Alaska abandons it… then Delta might be able to pick it up. All kinds of interesting undercurrents here. What do you think?

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19 comments on “Topic of the Week: Alaska Wants to Give American Its Mexico City Authority

  1. Is Alaska making money on this route? If profitable why would Alaska let AA fly it? If it isn’t hugely profitable for Alaska, as I can only presume, how will AA make money with higher frequency? Seems like airline infighting which is all too common and in my opinion does not benefit the airlines bottom line. Seems absurd to keep The competition locked out of what doesn’t sound like a cash cow route. Then again I’m no airline expert.

  2. Well, it could be that they’re making money but they want their planes used in other spots to help compete with Delta. Why not have your partner AA do it and AS outs their code on it and doubles the frequency. Win win for AA and AS and a lose for Delta. It seems like AA and AS are cozying up. They are sharing T6 at LAX now and the AS Clubs are now open to AA Admirals Clib members.

    1. completely agree. Its a win-win

      AA gets a second frequency and can route hub traffic. Also gets title of only US carrier with 2 flights which is a good marketing and corporate line to have. It also helps fend off Delta’s codeshare.

      AS continues to serve the route via codeshare and gets a plane freed up to use on more important missions (likely fighting DL in SEA, but who knows). The route is now pure profit as it is codeshare, but unknown if AS metal made money or not. This is at least no risk.

      The interesting part is that I believe in 2016 the restrictions on LAX-MEX go away.

  3. Another factor is international feed. American may be able to take advantage of their own Asia flights plus Cathay & JAL to connect to MEX. AS does not have as much feed into that routing. Plus as mentioned in other comments, if there is a restriction and AA can profit on 2 flights and AS can make money just by selling seats, why not?

  4. Imo, it ain’t going to happen. This is a govt regulated route, so what gives as the authority to hand the route just like that. In a sense I see it as carriers who are granted this route rights are getting a lease, not ownership. I see dl fighting this one out unless ua pulls out and govt then approves next carrier or govt reg of us-mx is modified or goes away as CF wrote in another write up.

    It just does not look right.

  5. Delta has chosen Foreign Made Airbus’ for their long haul fleet while American’s currently taking delivery of new 787’s. Give the routes to American so they can fly them with American made

    1. Why should that matter? Boeing is subsidized through the Ex-Im Bank and Airbus is going to start building planes in US, probably based on Alabama state subsidies. At least Delta is pushing against Ex-Im.

    2. And why does the long haul fleet matter here? What is AA/US flying domestically on many routes, including the flagship JFK-SFO/LAX routes? And where is Boeing sourcing a significant portion of its 787 parts? And where do you think Boeing is selling a large portion of its production?

  6. You mean DL doesn’t fly LAX-MEx, a route they picked up from Western who at it’s peak was flying four times a day with DC10’s?

    Maybe that can be a new way to hand out international routes, you give it up once and you go to the bottom of the list of those who may want the route.

  7. Can they sell the authority? Pan AM sold LHR slots not their authority. Ditto for NRT. Does the Mexican bilateral allow you to select who can fly a route when you abandon it.

    That said doesn’t the whole argument go mute in 2016 with the new bilateral.

    Why waste money on something you can get for free later. Alaska must be desperate to dump and AA must be chomping at the bit to start.

    1. Unlikely. Southwest doesn’t offer any international destinations from LAX, IIRC… Terminal 1 does not have FIS.

  8. MEX is slot restricted and the new airport, promised in 2018 will most likely not be ready on time with the mañana rule in effect. A slot in the hand is worth…..

  9. This is more to do with the new relaxed restrictions (open skies) agreement between the US and MX which is expected to take effect next year. In the short term, AS frees up aircraft to fight off DL in SEA, while making a little money in the process. Long term if they want back in to the market they should be able to once the restrictions are lifted next year. I wouldn’t read much into the AS-AA tie up theory.

  10. Unless AS’s current scheduling is nearly perfect, this just has to be about aircraft utilization. If the once per day RT is perfectly scheduled, (I don’t care enough to look it up.) perhaps AS can use the airplane for an additional city pair each day. If not, it gets parked for far too many hours. Even if they are making a small profit on the route, airplanes on the ground are very expensive and non-productive. Perhaps an easy choice for AS: One moderately long pair each day, with a lot of ground time, or two, perhaps more modestly profitable pair each day? Including the turn and return, LAX-MEX may burn 12 hours of airplane time per day. If used elsewhere, that could become 18 or even 20 hours of utilization. They care about those little details, especially with their newer, larger and very expensive -800 airplanes. They care – a lot, so I’d vote for aircraft usage.
    We may not always understand their routing and schedule choices, but if one follows a single airframe through an entire week, it makes a lot more sense. And, even a low density flight with limited revenue is a better deal than an empty positioning flight necessary to run a profitable, high density flight each day. Any airline’s utilization specialists may seem like (and are) a strange species, but they tend to be some of the sharpest pencils in the box. Look at the airplane’s schedule, not the pax’s schedules and remember that if they skimp on cleaning and catering at some outstations (they do and we all know it), that 737-800 CAN be turned and fueled in well under an hour. (In the Watergate era, Deep Throat advocated ‘follow the money…’ In this case, follow the airplane, not the pax.

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