How American Rebanked Its Chicago and Dallas Operations and Why It’s a Good Thing

You may remember that late in 2013, the new management team at American decided the time had come to rebank its big connecting hubs in Chicago, Dallas, and Miami. Miami went first and things went pretty well. But the big test was at the end of March when the more complex changes in Chicago and Dallas went into effect.

I spoke with both Ilhan Ince, Managing Director of Operations Planning and Performance, and Kerry Philipovitch, SVP of Customer Experience, about how the change was executed. Then I looked at the data to see that sure enough, the operation is running better than before.

More than a decade ago, American got the idea that unbanking was a good plan. A traditional hub had a bunch of planes landing, then a little ground time, and a bunch of planes leaving soon after. This was great for travelers because it meant shorter connecting times, but it also meant the airline needed to staff and have gates for the peaks that would go unused during the downtime. So American came up with a cost saving plan to smooth out the hub operation and spread arrivals and departures more evenly. It saved money and improved utilization of assets, but it made for a worse schedule for customers.

The US Airways management team had learned long ago that the revenue benefits of a true banked hub outweighed the cost savings of a rolling hub, and they brought that strategy to the new American. Miami went first, and things went well, but Chicago and Dallas were more complex. I was curious if a banked operation would cause big issues.

Dallas/Ft Worth
As the dominant airline at DFW by far, American had fewer constraints here than in Chicago. From back in the day when American had banks here, the team realized it had the facilities it needed. The biggest issue was runway and airspace constraints.

With the existing schedule, DFW had been operating pretty simply. It generally used the two parallel runways on each side of the terminal complex with west operations on the west side and east operations on the east side. The other two runways went largely unused. In a banked schedule, this had to change. So American worked with air traffic control to implement a system that would use every runway.

In this new schedule, American had some east-heavy banks. The airline realized that if it kept operating as it had, there would be queues of 20+ airplanes waiting to go east with no issues going west. So the team put together a plan that would mix the runways to manage capacity better. Combining this with a lot of hard work by the hub team to make sure that the operation would run right, and DFW was ready.

The change happened on March 29. Here’s a look at March numbers until the changeover and then a few weeks after. Note that the completion and D0 numbers are for departures from DFW while the A14 numbers are for arrivals into DFW.

DFW Rebanking American

As you can see, on-time performance has improved across the board. In general, departing aircraft have longer scheduled flight times because they can take a little longer to get out in a true banked hub, but airplanes are still pushing back on time more often, regardless of scheduled duration. What is also significant is that airplanes now tend to sit in the destination a bit longer so they can be timed to come back at the perfect time for the hub. That may cost a little more, but it means there’s more time to recover when airplanes are delayed.

These numbers would actually be even better if not for the nasty thunderstorms that snarled operations in Dallas in April on a few days. So far, so good. But what about Chicago? Now THAT was a challenge.

Chicago/O’Hare
As we all know, O’Hare is not exactly an empty airport. It has long had capacity issues though recent runways additions have alleviated that. Still, going to a straight banked schedule had the potential to really cause problems. So American started by building a schedule to do exactly that. It was underperforming in Chicago anyway, so it ran simulations to create what it thought would be best for improving revenue. Then it worked backwards to figure out what could be accommodated at the facility.

Then something funny happened. While American was hard at work modeling based on previous schedules, United decided to do the same thing. And it not only made the decision but it published the schedule right away, throwing American’s models off.

American knew this was going to be ugly if it went as planned. United alone had some banks where it scheduled 45 departures in 15 minutes. Clearly this was going to result in a mess at certain times during the day.

Of course, American couldn’t go to United to coordinate schedules since that’s highly illegal. Instead, it went straight to the FAA and explained the situation. FAA then decided to work on the issue to make sure that Chicago wouldn’t end up in total gridlock.

The end result is that both American and United independently, but with the help of the FAA, decided to make changes to their schedules to ensure the airport would keep operating. United, for its part, smoothed out when it would have flights departing and arriving a bit. And both American and United shifted times on some of their banks. Because of all this, American actually hasn’t fully implemented its new schedule yet. It ran out of time to get it out there. By June, it should be fully implemented, but it’s already substantially in place.

So how are things going?

ORD Rebanking American

Once again, it’s green across the board. The airline couldn’t put into place its ideal schedule but it should be better for travelers than it was before by far. And American will make more money with this schedule. If American can continue to run flights on time more often, then everyone wins.

We can take a look at this again a year from now, I suppose. But so far, it’s looking good.

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26 Responses to How American Rebanked Its Chicago and Dallas Operations and Why It’s a Good Thing

  1. SEAN says:

    Curious – why would it be illegal for American to coordinate schedules with United if both would benefit? After all they are sharing the same airport & airspace.

    • Jerry says:

      Sherman Anti-Trust Act.

    • Its against anti-trust law. There might be a legal way to do it, but they’d have to have the lawyers on every single communication, and that’d be a bit crazy.

    • Jim says:

      I don’t think it’s necessarily illegal to coordinate schedules. They could say “hey, we’ll use this runway at X time, then you use it at Y time”. What is illegal is coordinating pricing or agreeing to constrain capacity.

      • Nick Barnard says:

        Jim, CF might be able to say more, but AFAIK, that would be considered dividing the market by regulators.

        • CF says:

          Nick – Airlines can’t coordinate schedules at all, including dividing up runway time, unless they have anti-trust immunity. I don’t know if there’s a gray area on the edges, but airlines are very cautious with this and wouldn’t want to get near anything that looks improper.

          • Michael Simpson says:

            Replying under pseudonym ‘aaway’ Hello CF, Thoroughly enjoy the blog.

            In responding to whether carriers can coordinate schedules, there are limited grants of immunity from violation when a specific airport is designated for a process known as schedule coordination.  Under International Air Transport Association (IATA) scheduling practice, known as IATA Worldwide Slot Guidelines, an airport can be designated for Level 2 coordination (essentially voluntary scheduling measures to alleviate congestion), or Level 3 coordination (mandatory scheduling measures – ‘slots’) in order to alleviate congestion.
            Level 2 coordination typically involves input from airline stakeholders, the local airport authority, as well as the responsible federal authority (FAA in this case) in achieving balance for facilities that have inadequate infrastructure for the demand anticipated, without having to resort to more draconian (Level 3) measures.
            More information pertaining to this can be found in an FAA notice from September, 2014, published in the Federal Register, “Notice of Submission Deadline for Schedule Information for O’Hare International Airport, San Francisco International Airport, John F. Kennedy International Airport, and Newark Liberty International Airport for the Summer 2015 Scheduling Season.”
            Another reference is the industry bible on the subject – “IATA WSG, 6th Edition”.

             

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            | | CF left a reply to a comment by Nick Barnard on How American Rebanked Its Chicago and Dallas Operations and Why It’s a Good Thing: CF Nick – Airlines can’t coordinate schedules at all, including dividing up runway time, unless they have anti-trust immunity. I don’t know if there’s a gray area on the edges, but airlines are very cautious with this and wouldn’t want to get near anything that looks improper. Reply to this email to reply to CF. Here’s a recap of this post and conversation: How American Rebanked Its Chicago and Dallas Operations and Why It’s a Good Thing was published on Apr 27, 2015 by CF. You may remember that late in 2013, the new management team at American decided the time had come to rebank its big connecting hubs in Chicago, Dallas, and Miami. Miami went first and things went pretty well. But the big test was at the end of March when the more complex changes in Chicago and[…] There were 18 comments previous to this. Here is this reply in context: SEANCurious – why would it be illegal for American to coordinate schedules with United if both would benefit? After all they are sharing the same airport & airspace.JimI don’t think it’s necessarily illegal to coordinate schedules. They could say “hey, we’ll use this runway at X time, then you use it at Y time”. What is illegal is coordinating pricing or agreeing to constrain capacity.Nick BarnardJim, CF might be able to say more, but AFAIK, that would be considered dividing the market by regulators.CFNick – Airlines can’t coordinate schedules at all, including dividing up runway time, unless they have anti-trust immunity. I don’t know if there’s a gray area on the edges, but airlines are very cautious with this and wouldn’t want to get near anything that looks improper. Reply to this email to reply to CF.

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    • bobloblaw says:

      Fixing capacity = fixing pricing

  2. Alex Hill says:

    The benefits of banking hubs for connecting passengers are obvious, but what about for the local O&D passengers? Does banking hubs eliminate particularly the early and late flights that make business day trips particularly from the banked hub easy? Does that affect revenue significantly? This may not matter too much to AA in DFW because of the lack of competition (even a non-ideally-scheduled nonstop beats a connection), but I would imagine it might be a revenue issue in CHI with competition in most markets from both UA and WN.

    • Runway 5 says:

      Alex, if there is enough demand for a certain market, the airline will schedule an off-peak flight. This is similar to US Airways’ CLT-LGA flight that leaves CLT at 630ish AM during the week. Since the bank actually starts at 730, this off-peak flight allows the O&D traffic to travel to lucrative markets.

    • Matt says:

      My issue with AA at ORD was always about the timing of flights. AA flights didn’t leave early enough and they didn’t have a late night arrival. Day trips were out, as was an early meeting on the east coast waiting for the first bank of departures around 8am CT. Regardless of banking, UA supported the O&D business traveler better with better flight times at the start and end of the day.

  3. John G says:

    Actually, the banked flights make it easier on originating pax at times if you want an early flight or a late one.

    AA has started using a bank of flights that comes into DFW earlier, leaving the inbound cities between 5 am and 6 am, and that allows the first bank of Dfw flights to leave earlier. So a lot of first flights out of dfw leave between 7 and 8 instead of later.

    They also scheduled more flights in later.

    A net positive for local pax.

    Unless of course you are flying Envoy…sitting on an Envoy ERJ at the gate an hour late as I type this, waiting for maintenance.

    ***SIGH***

  4. Maarten says:

    Might this explain why my AA flight from ATL – ORD in the first week of May was cancelled and reissued under a different flight number, changing the departure time from 11:48 to 11:55 and the arrival time from 13:05 to 13:07?

    • Simpleton says:

      Ah, the simple mind. You know, I have never understood that people would get up in arms over minutes, in this case eight and two respectively. Time that could, and will be made up in flight easily. Plus, perhaps the airport itself will tell the airlines that you cannot have another 13:07 slot, since they are all given out. Reminds me of the European countries with the wonderful train systems we can only dream about, when they spend literally billions on new and upgraded lines and boast that the trip now is five minutes faster. Over a span of 250 miles (since you probably have a hard time with kilometers, a unit every other country in the world uses but us). The result? The same simple passengers mouth of in unison and roar that “six minutes faster would have been so much more better” (poor English on purpose to reflect the mind of said simpletons)… Imagine how long it would take you, if you are really adventurous, to simply walk it.

  5. Jerry says:

    This works great until there is a weather event, then all the banked flights are massively delayed and the delays end up effecting the entire system.

  6. bobloblaw says:

    Youll notice Delta isnt doing this in ATL. With 1000 daily flights, everything connects to everything and 30 min MCT isnt long enough at Hartsfield.

  7. anon says:

    Working for the local airport shuttle service in Miami, I have to say that with the hard banks, we have seen an increase in AA sending distressed passengers to hotels who have missed their connecting flights. Whether it be International to Domestic or vice versa, if a plane arrives late due to any issue (except weather) and their passengers miss their connection, the next flight out may not be until the next day. They issue vouchers to use our shuttle company to the hotels and the return to the airport as well as the room, meals, etc…

    I wonder how much they lose when that happens.

  8. C'mmon says:

    Isn’t this bank strategy the same Emirates and Qatar have used all these years of continuous growth?

    • John says:

      It’s not a new strategy. US carriers used it extensively in the 80’s and 90s. It was only post 9/11 they went away from it.

  9. MeanMeosh says:

    While the on-time and completion data at DFW is certainly positive, there are still some unanswered questions in my mind before declaring that the changes are working. Specifically, are diversions more of a problem during severe weather due to fewer spare gates being available? Are more customers misconnecting because of minor delays on inbounds due to less connecting time between flights? I have heard anecdotal evidence that diversions and forced overnights are up since the changes, and am also hearing that AA has become much stingier at handing out any kind of compensation due to weather-related forced overnights than in the past (i.e. no more miles and funny money), and that has a way of irritating FFs regardless of the on-time stats. Granted, it will be several months before we can draw any meaningful conclusions.

    In addition, another test will occur beginning in June when we finally shake loose from severe weather season and switch over to localized summer thunderstorms. What’s going to happen when a pop-up storm causes a 20-minute disruption at DFW as one of the banks is trying to depart or land? Given that customers have less time to connect, and fewer spare gates will be available, will this lead to spikes in misconnects and forced overnights?

    Short way of saying, count me as still skeptical that rebanking will work in the longer term.

  10. cdpf says:

    I all for it if AA would just upgrade aircrafts to bigger planes and get rid of 50 seat RJ clunkers, most notoriously being SYR and ORF! Note: ORF does NOT have nonstop flights to ORD (badly needed)!

    • ChicagoSean312 says:

      United has non-stops into ORF. I’m surpised AA doesn’t. Although when I flew US Airways it of course connected through CLT.

      I love ORF airport. You can still park right in front of the airport. Only downfall, no emerald aisle or other counter-bypass products for rental cars. First world problems.

  11. Chase says:

    I don’t buy this for one minute. Wait until the April numbers come out, it’s going to be brutal. One of the major issues I’ve experienced first hand at DFW since this mess was rolled out is how it affects the AA operation during IROPS. Have you seen the storms raging through DFW the past several weeks? With the banks now in place, it has created huge bottlenecks at the airport. Twice now I’ve arrived to DFW and no gate was available due to the weather issues, despite landing on-time. In both cases we waited 30+ minutes for a gate, and I missed my connections as a result, which happened to leave ‘on-time.’

    So I would not extoll the benefits of this re-banking from a passenger perspective. The padding in connection time saved me many times in the past, and now it’s a nightmare connecting in DFW trying to make 40 minutes in between flights. The ironic thing is that once you misconnect, you end up spending about the same time or longer waiting for your newly re-booked flight as you would have under the rolling hub scheme. And as a parting gift AA provides you with a nice middle seat in the rear of the plane since that’s all that’s left during re-booking…

    • Nick Barnard says:

      Chase are you going to look at April 2015 or April 2016’s numbers?

      Making a change of this magnitude takes a bit of time. I’m sure there are lessons on how to handle a banked hub that AA knew and has forgotten, they’ll have to be relearned and it’ll take a bit of time to do so.

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