While most airlines continue to hack away at short-term schedules in this uncertain time, American has given us a glimpse of what things will look like next year. Yesterday, the airline put out its plan for long-haul flying through summer of 2021, and there are some big changes in store. Overall, American has decided to cut capacity by 25 percent versus this summer and lean heavily on its partners to build out its network. This means that there are some significant changes in store.
A New Episode of “As Seattle Turns”
It’s been a long time since I’ve written about the fight for Seattle, because Delta’s earlier onslaught had settled down as had Alaska’s torrid growth. Now, the battle looks to be reignited. On today’s episode of As Seattle Turns…
Last time, we saw the break between the Widget and the Eskimo grow uglier. Since then, the two have settled into a cold war of sorts. They still won’t speak to each other, but they had at least stopped screaming.
With things settled, it seemed like neither would back down, but then El Aguila arrived. El Aguila had turned a cold shoulder on the Eskimo before, but it came hat-in-hand hoping to reconcile. It promised expensive jewelry — 787s, to be exact — and to love it forever and ever. The Eskimo fell for El Aguila’s wily charms, and now, they have come together to exact revenge on the Widget.
Alright, enough of that. The point is that American sees all that feed that Alaska has in Seattle and thinks it can make a go of an international network. This isn’t something that would normally work, but this deal apparently isn’t structured normally. Now we get to see if it will prove successful.
American is going to put that previously-announced Seattle-Bangalore flight in next winter. London will start next summer. But there is now a new flight being added, and that’s Seattle to Shanghai. This is an important corporate route that is going to appeal to accounts of both American and Alaska. It is also bad news for Delta which had cornered the market from a US carrier standpoint.
But wait, where is American getting the rights to fly to Shanghai? Ah, that brings us to our next storyline.
American Abandons LAX as a Long-Haul Hub
I’ve been waiting for the day American walked away from long-haul in Los Angeles for a very long time. (Yes, I know that sounds strange for someone who lives just down the road.) American should never have tried to make LAX into its big Transpacific hub. It just doesn’t work with all the competition, and the airline has bled money on its long-haul routes. Now, American is pulling the plug.
The airline will walk away from Beijing, Hong Kong, and Shanghai flights. The Beijing authority will be put back in the pool for anyone to pick it up. But the Shanghai authority, well, that’s what American wants permission to transfer up to Seattle.
American is also canceling flying from LAX to Sao Paulo and Buenos Aires. That leaves the only long-haul routes going to partner hubs in London (British Airways hub), Tokyo (JAL hub), and Sydney (Qantas hub). It will also fly seasonally to Auckland, which is possible because of the Qantas partnership.
The eastern half of the US will now access Asia via DFW, the only hub in American’s network that works as an Asian hub. For those in the western US, well, it’ll be a mix. Those people can fly via Tokyo and connect on JAL or they can fly Alaska to Seattle and then connect on to American there. I still think there’s room for a 787 from Phoenix to Tokyo and maybe another city or two but ultimately, this is going to have to leverage Alaska as much as possible in the West.
Europe Focuses on Philly and London
There is a whole lot going on in Europe too, and the them is American consolidating service around two hubs, one on each side of the Atlantic.
In Europe, American is building London back up to where it was before the pandemic. Every flight is currently expected to come back including Phoenix and Raleigh/Durham. London will have particular importance as many secondary markets lose service on American. That includes Berlin, Budapest, Casablanca, Krakow, Prague, and Venice. Though American can always change its mind before next summer, those markets will be best served next year by pumping passengers through London and connecting them on to British Airways.
On the US side, Europe is all about Philly. Philly has been the primary gateway to Europe for the airline, but there has also been plenty of service from Charlotte, Chicago/O’Hare, Dallas/Fort Worth, and New York/JFK. JFK flying stays the same, but that’s nearly entirely about the local market whereas Philly is for connections.
Charlotte now gets stripped of non-core markets including Barcelona, Paris, and Rome. You might be surprised to see that Munich will still be served, but that’s all about corporate traffic. The increase in European flying that Charlotte has seen is being reversed. That’s very different from in Philly where all but the previously-mentioned secondary markets remain.
Chicago loses secondary summer-only cities, Miami loses Milan, and DFW loses Munich. But they will all keep some Transatlantic flying. Funneling traffic via Philly and/or London is the name of the game.
Latin America Stays Strong
Latin America has long been American’s strongest region globally, and that is going to continue. I mentioned the two cuts from LAX to Buenos Aires and Sao Paulo, but beyond that, there is remarkably little going away.
The only other route American will cut is Miami to Brasilia. That was a market that was flown by a 757, and those airplanes are now retired. I can see it being a market that comes back when American gets the A321XLR on property, but for now, it’s clearly the weakest of the remaining Brazilian service. Everything else is good enough to make the cut. After all, gotta be strong enough to fight Delta and LATAM, right?
All of these changes point to an airline that is focused on building up its primary hubs by region. It knows demand will be down. After all, long-haul capacity is being cut 25 percent year-over-year, and the priority is in making sure that connectivity is maintained through the airline’s main hubs.
The one exception is, of course, Los Angeles. LAX is being gutted internationally in favor of Alaska’s Seattle hub. It’s too early to know what the domestic schedule in LA will look like, but you can be sure that without international flying, many feed flights will become unnecessary. I would expect American to have fewer flights in LA and to reorient what remains to serving the local market. It’s about time.
Pandemic also means room for AA at LHR T5, so connections will be much easier – all of BA also consolidated there now
AA’s LAX cuts indeed should surprise no one and you rightly called it a few months ago. There is simply too much competition (and capacity) and little room to firm pricing. AA will remain LAX’s biggest carrier by departures even with the cuts (and the addition of AS code sharing will further shore that up). I would expect DL to look closely at the PEK route, and maybe consider a re-entry into HKG, but the latter is very doubtful given the pandemic, the situation in HKG presently, and DL’s past inability to make HKG work from much larger hubs. I’d also expect UA to wind down some of what remains of its TPAC flying at LAX, namely PVG, with NRT surviving on the back of the NH JV. As for Seattle, this is a declaration of war on DL and DL’s costs there are about to go up, WAY up. AA isn’t bringing a better or more compelling product, and what AS offers is essentially on the same level, but AA now has scale and can fill planes to LHR, PVG (if the LAX route transfer is a success), BLR if it ever takes off. The MAD addition actually makes some sense, but again depends on traffic resuming more normal levels, and we’re far from that. In short, DL’s TPAC strategy has been further thrown into chaos and the airline has even fewer options now, as a China Eastern partnership built around PVG seems unlikely (no one will really want to connect through China for the foreseeable future unless they absolutely have to) and DL will move more traffic onto KE. The MIA-MXP cut is a bit surprising, given the volume of traffic between South Florida and Italy, but then again, but spots were hit hard by the pandemic and perhaps the traffic is more leisure oriented. The other cuts, like CLT to BCN, FCO, and CDG make sense. The seasonal cuts at ORD also make sense, for now, though I suspect, if things normalize a bit, ATH and VCE will come back. The only other thought here is the China routes, which pre-pandemic were assumed to be loss leaders for the US3 (maybe not UA, but the margins there were likely thin). Pre-COVID, there was a ton of capacity on US-China and a lot of that perhaps is now being rationalized on the back of the pandemic.
BA does not fly to Casablanca at all so your assertion above that Heathrow will be a gateway to Casablanca (in addition to the Eastern European cities that AA is dropping from nonstop US service) doesn’t really work. Unless you mean you can connect at Heathrow to Royal Air Maroc, but why would you do that when you can get on RAM at BOS, JFK, IAD, MIA, etc?
Also, one ore thing. AA is not depending on QF to make LAX AKL work. The primary point of sale for travel between the US and New Zealand in the northern winter months (which is when AA will fly the route) is the US, where AA is the largest carrier. If AA cannot leverage its north American network strength to make it work during the time of highest demand then AA has no business flying. I think you’re referring to the drivel they used to get their JV approved, but that’s not really accurate. Qantas isnt nearly as strong in NZ as Air New Zealand. And not strong enough to fill the AA flight. AA depends and will depend on the North American point of sale for Auckland if it wants to make that flight work. Very easy to just say it needs QF to make it work, but when you analyze the claim and truly understand the market you realize that’s not necessarily the case.
BA – Ha, whoops, you’re right. They do fly to Marrakech, however. But yes, Casablanca would have to be handled via Madrid on Iberia.
As for Auckland, I think the Qantas partnership matters more than you might think down there. For example, AA can easily price tickets through to Wellington, Christchurch, Queenstown, etc because of the Jetstar partnership. It helps build feed, and while there’s no doubt Qantas has less loyalty in NZ than Air NZ, remember that Qantas and Air NZ are now partners over the Tasman. So it does create some interesting dynamics.
If I was to go back to NZ, I don’t think I would want to fly Jetstar on my short hops with AA on the long flight. If you live in a city with Air NZ non-stop to AKL, it wold be easier to fly Air NZ to AKL and then on to CHC, ZQN, WLG, or whatever smaller city is your final destination. If you buy a W or Z ticket on NZ, you get Space+ on the short hop. If you do AA/Jetstar, you’re stuck with a very uncomfortable short hop no matter how much you paid for the long haul flight.
AA’s announcement yesterday was rather vague in that many routes were not mentioned at all. The general internet consensus (I know, I know) is that those not mentioned are probably coming back like normal. So, while ORD-PRG and ORD-VCE were indeed chopped PHL-PRG and PHL-VCE are expected to come back, unless you know something the rest of us don’t. The only dots going away completely across the Atlantic, as near as I can tell, are BUD, TXL, KRK, and CMN (the latter two of which never actually started). There were a few others not mentioned, like EDI and SNN and the belief is those will both be back from PHL as well. We’ll have to wait until this weekend’s schedule load to be sure though.
There are other routes, such as DFW-PVG and DFW-PEK which are also not mentioned specifically, but those are also likely to come back since AA didn’t mention returning those authorities like they did the LAX-PEK one. Overall the announcement was a bit of a mess.
Someone please correct me if they’ve seen something else out there that clarifies any of this.
I think that’s accurate, bsed on what I’ve heard, prior communications, and from my contacts.
dfw88 – Agreed that the announcement was very clear, but the way I take it is that the routes not mentioned sit on the chopping block and AA will determine at a later date if it happens. AA knows a lot will change between now and then, so it left it vague on purpose. Will AA fly Venice next summer? As of now, I’m sure it’s not planning on it. But if demand comes back, you know it’ll add the flight back. That’s how I’m taking all those.
Meanwhile, in the filing with DOT, AA asked for a dormancy waiver on DFW-Beijing until spring, so it wants to restart but just not yet.
Just to follow-up on this. I checked this morning after the schedule change loaded and PRG, VCE, SNN, EDI, and ATH are all in the schedule for next summer, starting in May (all of them from PHL plus ATH from ORD). Lots can happen between now and then, obviously, but it appears that the intent is to operate them.
dfw88 – Well look at that. You’re right, and that will make a difference if they actually operate. Interesting.
I think AA and OneWorld is hitting it out of the park and look to see UA to follow (although they will have more pacific flying out of SFO and European on service out of Newark). DL is in trouble. AF/KLM is the only strong partnership left. The ‘Virgins” are both a mess, they have gutted much of Japan in favor of Korea (really) and LATAM and AreoMexico are both bankrupt. DL also has too many widebodies on order that don’t do a good job replacing the old and tired 767s and 757s.
I like the idea of PHX to Tokyo and hope that comes to reality as PHX is a rapidly growing tech, manufacturing and financial market and the LHR flight (twice a day with BA) are super popular and profitable as it the PHX hub operation. Funny that PHX was going to be closed in favor or LAX (which I never believed) and now PHX will be growing and LAX will be JFK (point to point business centers; hubs and OneWorld partners feeder). Excited about 2021 and getting to travel (fingers crossed) and feel AA might be in the best positions in years.
Very glad you covered this story before the fireworks of the 4th. We’ll try to reserve them for local observances (where allowed) but there are a number of key points that need to be made.
For context, let’s go back to United’s acquisition of transpacific assets in the 80s which gave them a clear headstart in becoming the dominant US carrier to Asia among what would ultimately become the US global 3. Delta tried its gateway at PDX and American merged with Reno and built a hub in SJC but both were largely dismantled. Delta later merged with NW, inherited the Tokyo hub from which Delta has been pivoting away from as Japan again opened Haneda to longhaul international flights but refused to give Delta enough slots to move the NRT hub. After years of dribbling out new flights, Delta won the right to operate 7 flights/day from HND to the US, all of its remaining gateways from NRT to give it the largest foreign carrier presence at Haneda. AA/JL and UA/NH are committed to operating dual airport hubs at Tokyo even though there isn’t a single example of that being done on the same basis anywhere else in the world. Of course, the pandemic put a lot on ice but the trajectory for American in Asia was set long before January 2020. Since the US merger, AA continued to hold onto a number of routes to Asia because it was “strategically necessary” but Chicago to Asia fell and then LAX started to fall even before the virus crisis. Whenever the virus crisis ends, American will operate from just 2 cities in the US to Tokyo. Despite multiple attempts at routes to China, American is proposing to retain just a single route to each of Beijing and Hong Kong – from DFW, its largest hub but undeniably the strategically least valuable of the big 3’s largest gateways to Asia -Detroit for Delta and SFO for UA.
Looking to Europe, American has started dozens of routes to continental Europe over the past 40 years, acquired TWA which had a larger presence there and then dismantled most of their network. The USAirways merger provided another opportunity to try again in continental Europe but AA’s pre-covid year-round continental Europe network was a fraction of its former self from JFK and ORD with multiple attempts at trying to make secondary markets work from ORD, PHL, CLT and DFW. AA’s largest gateway to Europe by ASMs will be DFW, just as for Asia. They still have no year-round continental Europe flights from ORD and previously called their NYC and LAX among their lowest performing. American has been unable to successfully maintain large-scale international service from the 3 largest markets in the US. They have tried to bulk up PHL with a bunch of secondary and tertiary markets in Europe but that is being pulled back and their attempts at creating a strong European gateway at CLT as a competitor to ATL are also being pulled dramatically back.
When the CARES Act was passed, American execs immediately started touting that they had a “right to X billion in CARES Act funds from both the first part (mostly grants) and the second part (loans); no other carrier used the same terminology or showed expected loan portion proceeds as part of their projected cash. AA execs said they expected to receive an answer from the Treasury by the end of June. By the middle of June, AA and UA both aggressively started raising money in the capital markets even though neither had much luck in doing so earlier in the virus crisis while DL and WN had each raised more than $10 billion. Including by pledging its loyalty program, UA is set to increase its cash by $10 billion and do it with single digit interest rates. AA has managed to raised about as much as it was expecting from the Treasury but at double digit interest rates. While neither the Treasury nor any of the airlines have provided updates on their CARES Act loans, it would appear that the Treasury is not going to be near as willing to open the public coffers as some airlines had planned.
AA aggressively started adding back domestic capacity after WN led the industry in doing so as post virus crisis demand began to recover – even while DL and UA moved much slower. Vasu said in just a week ago that he DL and UA were both in a world of hurt because they were moving so slow to restore capacity and that AA was far better positioned to assume industry dominance. Since that prognostication, DL and UA have both added thousands of flights/day to their schedules for August and beyond and several US states have imposed mandatory quarantines on travelers from travelers in more than a dozen states. AA and UA have no capacity caps on aircraft while DL and WN have retained it, undoubtedly because they can afford to do so. The head of the CDC called AA’s moves to remove capacity limits “deeply disappointing.”
And then the day after AA was expecting an answer to its CARES Act loan, we had this massive international network announcement from AA. Whether as a condition to a CARES Act loan or a denial of its application, AA is clearly having to get serious about cutting costs and in eliminating the “strategic flying” it had been doing for years. The July 1 announcement is nothing short of a refutation of AA’s post-merger strategy of tying to become a viable global competitor to DL and UA. Not only is AA proposing at best to operate half of its peak China/HKG network and reduce its continental Europe network (again) but it is making no attempt to return to the S. Pacific or Israel or expand to Africa until next summer at the earliest.
After being reduced to #3 of the big 3 in NYC, AA is setting up the same pattern at LAX, the only hope AA had of having a west coast gateway. Even before covid-19, they partnered with Alaska which itself had already unwound large parts of its acquired Virgin America network; JBLU’s recently announced expansion, even though followed by the quarantine announcements, means that two or more out of B6, DL and UA will operate on most of AS’ remaining transcon routes. AS tried to build up its west coast position via merger to counter DL’s growth in SEA but is on the verge of unwinding most of that while AA is on the verge of being in the weakest position on the west coast it has ever been relative to DL and UA. AA and AS, each with failed west coast strategies of their own, turn to each other.
As CF has noted, DL acted early on in virus recovery by disproportionately adding back flights to its western US hubs – LAX, SLC and SEA. Any notion that DL would draw back to its core hubs at the expense of its western US network appears to be folly. AA will press on with its plan to add a flight from SEA to India, undoubtedly driven by a large contract with one of the tech companies – although that flight remains highly vulnerable to any other carrier adding a connecting flight someplace between and dramatically undercutting AA’s nonstop. LHR makes sense given the BA JV. AA somehow believes that it can make SEA-PVG work even though DL has had a 5 year headstart in operating the route and winning over clients not just in the Pacific Northwest but throughout the western US and Canada. DL has built the network necessary to support multiple flights from SEA to Asia and has been waiting for the expanded FIS at SEA to open to continue expanding. The additional flights that AS operates have not stopped DL’s growth of its SEA transpacific network; scores of flights that don’t connect to/from Asia or dozens of additional very small markets to Asia are not going to make or break an AA or DL flight to PVG or any other longhaul destination. Other than LHR, AA and AS’ partnership, at best, can be seen as a simple codeshare (no joint venture, no coordinated planning, separate revenues) that is attempting to save both of them in the western US even as DL and UA built and retained their western US networks.
AA’s pulldown in LAX is even more notable as UA was at terminal capacity before covid while DL is committed to a massive rebuilding of its terminals with access to the TBIT for international growth. DL is already the largest carrier by revenue from LAX to non-hub cities with a larger presence to more cities in the western US than any of the big 4; DL is also the largest carrier on JFK-LAX both by passengers and revenue in what was once the backbone of AA’s network. AA’s pullback also includes its Argentina and Brazil flights even as DL pushes forward with its joint venture with Latam. Just as at JFK, we could easily see DL become the largest carrier with the largest domestic and international network from LAX as well as bookend the west coast with its LAX and SEA hubs. UA has a solid position in the Bay Area but will have little financial ability without a loan to grow in CA esp. given that it will be doing all it can to hold onto its position in DEN where WN is committed to aggressively growing.
To say that covid-19 is forcing a strategic restructuring of the industry is an understatement. With the weakest finances coming into the crisis, AA has to either get serious about cutting costs or find its way into bankruptcy again. UA has to cut back its international network in order to defend its domestic hubs but and still retain the structure of its network. AS’ merger with VX is being shown to have been in naught; B6 will become less dependent on competing with DL. DL can take its time rebuilding its network because it has higher market share in its major markets and, like WN, has stronger finances than the rest of the industry – including better credit ratings and more unencumbered assets to tap if necessary. AA and AS are running for each other where they think they can help each other but no one should think that they can do more than they are – which may not even make a difference or even succeed; AA and AS’ costs are so different that a merger, even if it could be approved by the DOJ, could never work.
A funky full moon and fireworks on the same weekend. I’m headed for the lawn chair. Enjoy the show!
One of the biggest flaws in AA’s business strategy has been their pricing model that is very rarely addressed. AA has continuously mentioned having a revenue problem versus competitors. Until this is fixed, along with their onboard experience, AA will never be able to compete head to head with DL on routes where they compete.
AA needs to abandon their pricing philosophy of charging more for its premium seats than competitors. Those unsold seats that they upgrade their FF’s to erodes revenue. They need to adopt the strategy of more competitive premium cabin fares in an attempt to sell more premium cabin seats, thereby improving their overall revenue. FF’s lose out, but AA has to fix that pricing model problem. Their onboard product does not warrant a pricing premium.
By the time AA acquired TWA in 2001, TWA’s TATL route network consisted of just 5 routes (JFK-CDG, JFK-CAI-RUH, STL-CDG, and JFK-TLV). AA’s acquisition of TWA had nothing to do with TWA’s European network, which was destroyed once Icahn sold the LHR slots in 1991. AA acquired TWA to knock out a weak competitor, and gain a reliever midwest hub (STL) to help ease the congestion at ORD. All of this was pre-9/11, before the industry changed.
TWA’s legacy TATL routes operating within AA are JFK-MXP, JFK-FCO, JFK-BCN, and JFK-MAD. That’s it. And once AA made them all 772 routes with higher cargo capacity, an improved business class cabin over the 763s that they replaced, they are actually a competitive option out of JFK, even amid significant competition.
given that DAL gets higher average fares on the same routes and largely uses A330-300s which are the lowest unit cost aircraft across the Atlantic, it is doubtful that AA makes money – or DL makes tons.
Continental Europe is still part of AA’s “strategic flying” but it also exists because AA could not get its massive JV with BA past AA pilots (since BA is so much larger to the US) if it didn’t operate a certain amount of flights on its own to continental Europe. AA keeps the underperforming continental Europe flying not because it is profitable but because it is necessary.
and TW did have a much larger presence in continental Europe and Israel even if they did not operate them by the time 2001 rolled around.
And the bigger “crime” was that AA could not hold onto the network in continental Europe it acquired from US, which was actually in the Star alliance.
As hard as it is to accept, AA has never done well in continental Europe or Asia outside of Japan.
As Seattle turns, loved that one.
As for Europe, you’re forgetting that we as a nation are in effect banned from the EU do to CV & that will be the case until we get the pandemic under control or there’s a vaccine. So I don’t understand how airlines can even have an international plan for service for next year while things are currently upside down within our own borders.
“Those people can fly via Tokyo and connect on JAL or they can fly Alaska to Seattle and then connect on to American there”. With all due respect, AA has no routes from SEA to Asia. If Shanghai is approved that would give it them 1 in the near future.
In response to their announcement, AA said that “shots across the bow” are extremely expensive and not something they are not interested in doing. Therefore, I am curious to know what Seattle to Asia on American will look like. AA has a revenue problem caused by a service/product problem. Until these items are fixed, it will be hard for them to compete with DL internationally out of SEA.
As a resident and captive CLT flyer, I am not happy. My departure airport is now essentially a domestic and Caribbean hub. Nothing wrong with that, but the implication for my European flying is that AA has become “just another option”, and probably not my preferred option. It really does not matter to me where I connect, as I will now have to connect regardless. Given that I am a lifetime Flying Blue Platinum Elite, SkyTeam’s DL/KLM/AF option with status perks are now very attractive. It will take me forever to get back to AA Plat, or get any kind of status with Star Alliance (UA fly from here, and can connect me to Europe via Newark, IAD or ORD; or Air Canada via one of their hubs, and perhaps Lufthansa will return to CLT one day).
My hope was always that another European option would decide to come here, like WOW, Icelandair or Norwegian. I think those hopes are now pipe dreams. SkyTeam, here I come (again).
I dont understand your sentiment. AA will still fly to many European cities from Charlotte nonstop. London, where you can connect anywhere. And eventually Frankfurt, Madrid, Munich, etc. How is double connecting on a skyteam partner better?
Currently – we know that LHR and MUC are back from CLT. Everything else is gone. I don’t even know if we’ll get the twice daily to LHR back.
Everything else Europe is (predominantly) through PHL, with MIA and DFW thrown in for good measure. I don’t see how I would need to connect twice when choosing Skyteam or Star Alliance options. One hop from CLT with either and I have great connectivity direct into Europe just as much as I do through London with One World. And I’d much rather connect this side of the ocean and fly from my connecting city straight to where I need to be in Europe, and not have to make the connection in London. BA’s intra-Europe seating is awful compared to KLM or LH. And you might end up on (even worse) with Vueling…
CLTFlyer – Frankfurt is back as well. And you will get the double daily to London, presumably, since American said it will be back to 100% in London.
looks like American has been approved for a Treasury Dept. loan along w/ Spirit Airlines, Frontier Airlines, Hawaiian Airlines and SkyWest Airlines.
Still, the high cost of money that AA has had to raise privately – we don’t know the cost of its Treasury loans – means that AA cannot attempt to operate “strategic flying” as it once did. AA’s international downsizing is here for the long-term.
UA is notably missing from the list of approved airlines since it said it wanted them but the Treasury says they are still talking to other airlines.
I read excerpts from an interview with Vasu Raja in which he claimed that American gets a 112% revenue premium to the rest of the industry if one factors out L.A. and New York. All I can say (or write) is that Mr. Raja probably has better data than any of us. It also points out the wisdom in the old Mark Twain quote, “There are three kinds of lies – lies, damned lies, and statistics.”
Another old saying comes to mind, “Actions speak louder than words.” To that point, these moves show that LAX wasn’t working as an international gateway to northern Asia for American. Among other factors, it’s out of the way. It’s also possible that American and Delta can develop more feed at Seattle than at LAX, with its gate constraints.
In doing an extremely quick and shallow analysis (which could, of course, be totally flawed) it appears that American/Alaska and Delta will be rational competitors in Seattle. I don’t see either carrier walking away. Of course, this is speculation. But living in the Phoenix area, I’ve seen the way American and Southwest compete here. It’s quite rational. There’s no reason to think that kind of rational competition can’t happen in Seattle.
Seattle is simply the best gateway in the lower 48 to northern Asia geographically. The Great Northern Railway touted its Oriental Limited as the fastest way to travel to Asia because of Seattle’s location.
The American/Qantas joint venture will probably still have a large presence from Los Angeles to South Asia and Oceania when travel picks up. So will Delta and Virgin Australia. There’s still a lot of travel between Los Angeles, Fiji, Tahiti, Australia and New Zealand (although it pales in comparison to north Asia).
The bottom line is that no one knows what will happen, even though we love to speculate about it.
The problem w/ Vasu’s statement is that AAL still has enormous resources devoted to NYC and LAX and this doesn’t fix all of the problems even in LAX.
AA does well on LAX-HND but underperforms to NRT precisely because NRT would get the leftover traffic when HND opened. Even with the JL JV, AA will be clinging to a lower yielding part of its Japan operation.
AAL’s A321T strategy is likely a very low margin operation; they announced it only to have B6 announce its Mint strategy. With the A321T strategy, AA essentially said it would be walking away from a large portion of the economy market – which DL and B6 have largely split – and that market has become even more concentrated when UA left JFK. DL uses 767s which also carry cargo and carry twice the number of passengers per flight than AA’s A321Ts; AA’s unit costs are much higher than the average fare premium it gets in the market. B6 uses the same A321s as AA but with 60 more passengers. AA’s performance on JFK-SFO is even weaker than LAX.
And the real issue is that AA is walking back from the more competitive LAX market to Asia (plus S. America) but hoping to try yet another gateway to China – despite the fact that there isn’t a single longhaul international route where AA has average fare parity where it directly competes against DL or UA.
AA invested in an equity position in China Southern and yet has continued to cut routes to China. DL’s partner is China Eastern which is based in Shanghai and that has given DL the abililty to generate revenue premiums to AA to/from PVG.
AA is making positive steps to slow the bleeding but is still hoping to hold onto two markets in which it has not done well in for years – LAX to Asia outside of Japan and west coast to Asia overall as well as its underperforming transcon strategy.
And American is still having to walk back significant portions of its continental Europe strategy which have implications for its ability to attract global passengers on the same basis as DL and UA.
And bgriff (below), there is a slim to no chance that DL is going to give up on SEA just because AA can’t make LAX work and DL now sees an opportunity to grow there. DL has built and retained SEA because it works; it has had higher average fares to Asia than American from both Chicago and LAX. All of the reasons why SEA makes sense for AA to develop now were true when DL chose to develop it years ago.
And remember that DL and AS parted ways because, apparently, DL couldn’t get enough seats to fill its international flights. Not only does AS have lots of partners but connecting passengers to international flights are worth far less than local passengers or passengers connecting on AS’ own network. Absent a joint venture – which AA and AS cannot have – or by operating Asia flights on its own network as DL does, AS has no financial incentive to feed AA unless AA is paying a premium for those seats, which simply puts DL in an even better position relative to AA/AS. AA is not going to succeed with a single flight to E. Asia against multiple flights to the region on DL.
What multiple flights by DL to the region? They will fly TYO, ICN, PVG and try to struggle at PKX, that is it. DL’s Asia strategy is as much in trouble as AA’s. AA will have access to TYO, PVG and HKG which is a larger business center.
you do realize that AA has a simple codeshare with CX, not a joint venture. It can buy seats on CX but it has no more strategic access to HKG than it did from LAX which AA cancelled. And HKG right now is tanking as a market.
And DL flew from SEA to HND, ICN, PVG and PEK immediately before the virus crisis and had planned to return to KIX. You can provide your assessment of where you think DL struggles but they are the ONLY ONE of the big 3 that has been consistently profitable flying the Pacific. That is not an opinion but confirmable by DOT data.
DL was also a proponent of expanding the FIS at SEA. You do realize that the money has been spent on that FIS and if DL pulls out of SEA or quits growing, it will be AS that will be hardest hit financially by being stuck w/ a terminal that is no longer needed w/o a large international carrier? DL also operates transatlantic flights from SEA and is the largest international carrier there.
So far as we know, DL is still committed to SEA; DL has its own transpacific and domestic hub operation there and will always have an advantage, esp. over two carriers that can only operate on a codeshare, not joint venture or not merged basis.
The Haneda routes have all been handed out. Even though JL will be flying SEA-HND, AA’s share of the total joint venture is set by what AA can offer on its own flights – which is limited to LAX and DFW. At every other gateway, JL has much higher average fares than AA on the same flights.
and if you would like to start including joint venture partners, Korean is the third largest airline across the Pacific – behind UA and DL – which also means that DL and KE are both larger than either AA or JL.
As long as DL remains at SEA, AA has to figure out how to make its new routes work around what DL has already established. Outside of Tokyo, London, and Sao Paulo, there isn’t a single longhaul international route where AA directly competes against DL or UA that AA has an average fare advantage. None. and it consistently had a 20% average fare disadvantage to DL in LAX.
And none of this changes that DL very likely will continue to grow at LAX, a much larger market than SEA even if AA had it all to itself.
DL displaced AA as the #2 carrier in terms of local revenue on the west coast and DL and UA’s share will further grow as a result of AA’s need to abandon its underperforming LAX flights.
you are free to believe what you want but the route data that you think Vasu has to ultimately becomes public, just like AAL’s financials.
DL and UA aren’t whacking dozens of routes from their international route systems but AA is.
DL and UA aren’t paying double digit interest rates for credit; AA is.
SEA will be AA’s 5th gateway to try to use for Asia flights and no Asia market will have more than 2 US gateways even if SEA-PVG succeeds.
As you noted above, actions do speak louder than words. AA is cutting and having to agree to well-above average interest rates just to stay afloat. DL and UA are not.
With all due respect, I must give Vasu’s comments a lot more weight than yours. Not only are his data probably better than yours, both qualitatively and quantitatively, he’s actually doing the job, not merely offering opinions. It’s no different than observations about sports. I give a lot more weight to comments made by someone who’s actually playing or has played a sport than I do to someone who’s an observer. No matter how know knowledgeable a pundit is (and some are extremely knowledgeable), it’s not the same as someone who’s actually in the arena or has been an active participant.
Tim Dunn – One point of correction. American does not fly LAX to Narita.
It now has 2x daily to Haneda.
CF et al,
I’ll respond to several comments here.
Yes, you are right that AA gave up LAX-NRT as part of gaining a second HND flight – but that highlights exactly what I have said for years. NRT would not be viable when the same markets have service to HND. AA saw the same data which I started to see when DL first gained service LAX-HND compared to other carriers’ service to NRT; the HND flight had a premium and NRT service became no longer viable. AA and UA and their Japanese JV partners are committed to maintaining NRT because HND cannot carry all of the international traffic so they will very likely be forced to carry underperforming NRT flights even as part of the JV while DL shifted connecting traffic to ICN via KE and has just local Tokyo traffic at HND.
As for prognostications about what DL will do with LAX, obviously covid changes a lot but let’s remember that AA jumped all over DL’s LAX-PEK route application and won the route arguing that they would be at a disadvantage in the market without it. Less than five years later, AA is at half of its size to China even if it keeps SEA-PVG and will have just one route to PEK and nothing from LAX to China/HKG. DL moved to Daxing because China Eastern gets home airport status there and will build a hub. The chances are high that DL will, in time make LAX-PEK work just as it has been able to make LAX-PVG work better than AA and UA because of the partner hub on the other end of the route. DL has supposedly also expressed interest in other routes from LAX so will likely move considerably ahead of both AA and UA not just to Asia but also to Europe. For years, some people were convinced that DL had failed in the Western merger that happened at the same time as American/Reno and USAirways/PSA. There isn’t much left of the latter two mergers but it is possible that DL could be set to become the largest carrier at LAX for the first time – decades after the Western merger.
As for the AA-AS prorate in Seattle, think about what you wrote. If AS is giving AA a better deal than it otherwise would give, it is costing somebody something. AS could either sell its own seats at higher margin – local traffic is always worth more than connections – or AA is paying a premium to get AS to prioritize connections to AA which puts them at a cost disadvantage to DL. As hard as it is for anyone to accept, AA is down to its last hope on the west coast other than LAX to Tokyo and is trying yet another strategy that is very unlikely to succeed for multiple reasons – just as all of the other strategies to Asia from other gateways other than DFW haven’t worked. DL and UA acquired Asia route systems from carriers while AA has tried to build from scratch; billions of dollars later, they still have little to show for their efforts. The same is true of AA in continental Europe; there they acquired TW and US networks but dismantled most of them.
As for NYC being a niche, AA’s own statements show that strategy is not working; years ago, AA said it was shifting JFK to be a niche market but they still have called NYC one of their lower performing hubs in terms of margins. AA underperforms DL in average fares from JFK to BCN, CDG, MXP and FCO. AA has a slight average fare advantage to MAD but its only real advantage is to LHR. Given that they have tried to maintain a regional carrier operation to support their international flights, it is very likely that their losses will either continue or they will pull the RJ flights and the transatlantic flights will weaken.
AA and DL used to have very similar 50/50 point of sale balances in NYC but DL has now gained about a 10% local NYC advantage over AA and that is precisely where DL’s revenue growth has come.
The notion that AA can turn LAX into a niche hub based on what they have done in NYC is not likely because NYC is at the low end of profitable for AA, if it is profitable at all.
One other factor that needs to be considered about DL and the west coast is the A220. DL has already extensively deployed it in the western US and very certainly will use the A220-300 even more for long, thin routes when it begins service in a few months. AA and UA as well as AS passed on the A220 and E2 but the A220 is the most economical aircraft available and it has transcon range. It is far from a stretch to believe that DL will start adding routes from LAX to other carrier strength markets, perhaps including ORD, when the virus’ effect on travel starts to wane. DL and WN have the cash and financial strength to execute on their strategic plans and it is certain that a stronger west coast position is one of those strategies for DL. AA’s few domestic advantages from LAX start facing if DL adds LAX-PHL or CLT or even MIA which is very certain to come back – but on more than the A220.
And, finally, the other strategy that DL is clearly set to continue is its growth in Miami and its joint venture with Latam. Some of the new Miami flights/markets are already back in the schedule. AA’s real motivation with trying to grow in Seattle with AS is because DL has proven over and over that it can move into other carrier hubs and become a significant revenue force, even while still having a much smaller flight schedule. DL has maintained 80% of AS’ SEA local market revenue and reached local market revenue parity with B6 in BOS last year. DL brought DFW-LGA and DFW-LAX back pretty quickly. AA knows that DL is gunning for a presence in the MIA to Latin America market. With what it is likely going to do in Miami, DL could overlay most of AA’s remaining top system markets with a fairly small number of additional, new routes where DL doesn’t already fly them. AA can’t turn the west coast into a niche market as they did in NYC; they are counting on AS to help prevent further erosion of AA’s position on the west coast but that is a tall order and one that hasn’t really changed the trajectory of the industry for any other two carriers that have previously used domestic codeshares.
I’m glad you launched this discussion but I’m not sure very many people are willing to admit the very significant strategic path that AA has set itself on with this announcement – but which has roots decades ago in other AA strategic decisions.
The obvious question here is, with AA strongly signalling that it’s giving up on LAX, and UA already more or less having done so, can Delta take the hint and give up on Seattle in favor of growing its Asia presence (and general presence) out of LAX? I suspect they can.
Bgriff – I wouldn’t say United has given up on LAX, or American for that matter. American is just planning on changing the way it operates at LAX, but that doesn’t mean it won’t still have a significant presence. And United, well, who knows where that goes in the longer run. They haven’t really said other than cutting long haul for now. Still, if I’m Delta, I’d see a real opportunity to move toward LAX and assume American would pull back if it pulled back at SEA. A lot of gaming going on here which will be incredibly fun to watch.
Why would DL want to move forward with LAX? It’s a highly competitive market both domestically and internationally. International doesn’t work from there because of the long stage lengths and lower cost Asian carriers that erode profits. DL is better suited to keep SEA at levels they were running before covid and surgically increase LAX where it makes sense.
DL will be fine with AA in SEA just like they were with AA at JFK. AA has way too many internal problems (service metrics, onboard experience, cheap cabins, poor labor relations and customer service, heavy debt load) to be much of an issue for DL. I feel bad for what AS has to endure with AA as a partner.
Eric – LAX is all about terminal space. If American wants to part with some and Delta is able to take that over, then it gives Delta the ability to pull ahead of others. It’s not simple, because the airport generally doesn’t like when a single airline surges ahead, but it’s a possibility that solves a lot of the problems if Delta can keep growing there.
I wonder if Casablanca at least would have stayed if AA still had the 757 they were planning to fly it on, or if some the widebody markets might have survived if they could be downgauged. Once AA retired the 757 for reasons not directly related to these markets (more that AA needed to retire some of their fleet, and based on age, fleet size, and the fact that 737s and A32xs can do 90% of the 757’s missions more efficiently, the 757 was an obvious candidate), there was no way the market was going to make sense.
wonder if Casablanca at least would have stayed if AA still had the 757 they were planning to fly it on, or if some the widebody markets might have survived if they could be downgauged.
Frankly, I don’t give a dam. LOL Sorry, couldn’t resist the attempt at humor.
Actually it’s a good question as demand for international travel may remain shaky for some time thanks to the pandemic. Honestly, I’m surprised there’s even as much demand as there is considering the restrictions placed by the EU & such states as NY, NJ & CT requiring two weeks of self isolation once arriving there.
Didn’t Delta try this same strategy of partnering with Alaska in Seattle recently? Interesting to see if American can succeed where Delta could not (while more than likely using a very similar playbook…)
Delta’s partnership with Alaska was so successful that Delta decided to feed themselves in Seattle instead of rely on Alaska’s feed when Alaska wasn’t willing to go exclusive with Delta. But it has turned out that, at least pre-COVID, Seattle is a big enough market to support both carriers healthily.
I think a core problem is that without immunity, Alaska and Delta couldn’t coordinate schedules, and without revenue sharing, Alaska didn’t have the incentive to look at Delta’s schedule and match their flights to what they saw because Alaska doesn’t get the premium revenue of the connecting long haul segment, only a miniscule pro-rated portion of the fare. This was frustrating for me as a SYD-based Delta flyer often traveling to SEA and EAT at the time; even though AS had a ton of LAX-SEA flights, they managed to be timed to not connect well at all to SYD in either direction. American and Alaska will have the same issues, of course. From Alaska’s point of view, they want the partnership to be successful enough to keep AA building SEA as a long-haul base on routes where it makes obvious geographic sense (Asia) but not so successful that AA wants the feed revenue to themselves. But a big difference is that by joining oneworld, Alaska is now exclusive with AA in a way they never were with DL.
It does seem unlikely that SEA can support a three-way hub; if AA wants to fight it out in a three-way hub, they might as well move back to the bigger market of LAX. If AS sticks to their lane (North America and Hawaii, as they almost certainly will) and AA sticks to theirs (AA hubs and intercontinental flights), it seems *possibly* feasible to have a oneworld hub and a Delta+friends hub there. But if the long haul is truly successful for AA, I find it hard to believe that they won’t want to control the feed, suggesting a merger or hardscabble fight in the long term.
Alex – As I understand it, the mechanism for revenue sharing on the codeshare is different than traditional attempts. If this works, it should allow Alaska to better prioritize traffic that is connecting to long-haul on American. They obviously don’t have the ability to coordinate jointly, but if the compensation works better, then it may change the equation.
OK, I hadn’t realized that. If AS actually gets an added incentive to help AA fly a J passenger (say) Bay Area-SEA-BLR/PVG rather than viewing it almost entirely as an opportunity to fill an empty seat on a flight that they’re operating for local traffic, that would seem like it would help a lot to make the partnership remain sustainable.
That said, my experience with AS’s schedules through SEA is that they don’t care much about timing flights even for online connections. Getting YLW-east coast and back is often impossible without an overnight or 4+ hour layover in one direction (sometimes both), for a common trip for me.
Interesting, thanks for the insight Alex.
You are overestimating how much feed AA’s domestic network provides to PVG/PEK/HKG. And even at that, China and Hong Kong connectivity is still there with Cathay Pacific and China Southern.
AA is very strong at LAX domestically with local traffic. They’ve already stated they are going to focus on those strengths. Domestic cuts will likely be minimal.
This is essentially changing LAX into a NYC-like hub for AA, focused on the very large local market much more than connections, isn’t it? And JFK at least makes geographic sense as a connecting hub for most of the US to most of Europe except for the huge issue of the within-perimeter NYC O&D traffic preferring a different airport. So AA pares back LAX long haul to the major O&D markets that match their network strengths and the one region for which LAX is the optimal place to pass connections over (South Pacific and Hawaii).
Alex – I think there’s some more subtle nuance here. American in New York is all about bringing people from AA’s network into the city. It has very little that appeals to the locals. In LA, it will be more about serving the locals in LA. But ultimately, yes, it focuses on the local market in both. It’s just a matter of which end.
Can you please please please make a Tshirt with the As Seattle Turns logo? I’ll buy it right away and alternate it with my Godzilla’s Home shirt.
Spencer – I’d love to, but since they have airline logos in there, I’m pretty sure I’d get in trouble for trying to sell that!
I wonder what happens to AA’s investment into Terminal 4 and 5 at LAX. Seeing that all international feed is through its partners, it makes no sense for domestic feed to come into LAX. I wonder if AA will likely pull its investment / renegotiate its lease agreement with LAWA leaving the real estate to other airlines (i.e NK, B6, F9).
Keith – I would doubt it. I’d bet AA gets more creative, unless there is some kind of deal to be made with DL about them leaving SEA. Otherwise, my guess is AA will be creative here. You can always shut down the Eagle’s Nest if need be. Could also bring partners into T4. Remember there’s a customs facility in there, but even if not, it’s easy to run them to Bradley. There’s a lot AA could do to keep those gates utilized if it comes to it.
CF, can you look into your crystal ball and see if TXL will ever come back?
Angry Bob – My crystal ball isn’t that good! But I’ll be money TXL will never come back… because BER may actually open. ;) But seriously, that’s always been a really tough market. Nobody does well in Berlin to the US.
United would be the most natural to serve it because of its Lufthansa partnership, but for American, it just doesn’t seem like something that would be worth serving for some time.
Why is Berlin such a tough market? With its tech industry, you’d think there’d be some business traffic to warrant it.
plafuldog – That’s a great question, and I can’t say I know for sure.
Certainly in the old days, Berlin’s divided position meant that its growth (or shall I say re-growth) into a strong city was stunted. Frankfurt developed into the financial hub while Bonn was the West German capital.
Once Germany reunified, Berlin was still a split city that had a lot of economic reconciliation to do. Now, of course, we’re well beyond that and Berlin is a vibrant city. It’s also again the seat of government, but all those years in between took its toll.
Lufthansa focused its growth on the important financial center in Frankfurt along with the southern German auto/tech hub in Munich. Berlin was never a great option for a hub anyway since it had split airports. At one point, it had three commercial airports, Tempelhof in the American sector, Tegel in the French sector, and Schoenefeld in East Berlin/Soviet sector. (As far as I know, Gatow in the British sector never really supported commercial service.)
Once Brandenburg opens this fall (in theory), that would help to create a more hub-friendly option, but that ship has sailed. Low cost carriers have crawled all over Berlin and it would be difficult if not impossible to develop a fortress the way Lufthansa has done in Frankfurt.
That’s about the extent of my knowledge on the subject. It still seems like Berlin should support more service to longer haul destinations than it does.
AA will shrink and see its position decline at LAX over time. That’s quite obvious. I’m predicting under 125 flights at LAX by end of 2021. DL will use this time to become the largest carrier in LAX. AA will rely on AS for intra-westcoast stuff out of LAX. At this point, AA has no need for all of both T4 and 5. It t work on getting AS to move from T6 to T5 so they can align better together. These 2 terminals have 31 gates together and should be able to handle their combined domestic traffic.
AA’s presence at LA will slowly become like its presence at LGA. With all the interest payment and lease payment, they simply don’t have the money to keep sustaining a money losing operation at LA.
Just remember that Delta paid for all of those moves including of Alaska over to T6 so that Delta could build its LAX castle or whatever they are calling it. Hopefully they will just move quickly and redo T3 quickly.
As for the combined AA/AS operation, as of now T5 is still for all of the cats and dogs and there is little reason for LAWA to push those carriers out as long as AA and AS are not filling their own terminals.
Also, a marketing agreement might help AA and AS create a perception of size but every passenger knows there are and will be differences depending on the operating carrier – and that is true of every type of codeshare and joint venture. For some people, the differences are minimal but AA and AS will start operate on a different basis financially and the biggest difference might be that they cannot jointly negotiate contracts and revenue manage as a single airline or even a joint venture can do. and it still comes down to the fact that DL and UA will both be far larger internationally in the western US and can offer a larger more seamless global network.
Both AA and AS may have no choice but to work together but no one should minimize the differences between a single global carrier and a partnership of two smaller airlines that together still don’t have the coverage that its larger competitors have.
> AA’s presence at LA will slowly become like its presence at LGA. With all the interest payment and lease payment, they simply don’t have the money to keep sustaining a money losing operation at LA.
I think the better comparison would be AA at JFK if JB was in OneWorld (instead of Alaska), because there are still a whole lot of OW long-haul flights they can both feed. AA may lose some market share, but OW is likely to still be the dominant alliance at LAX from a market share perspective. As much as I’m a UA fan, I honestly don’t see how UA/SA or DL/ST can compete cost-effectively against such a complete network, including AS up and down the west coast and PHX and DFW connections to go just about anywhere east or to Latin America.
Remember that AA and AS will be two separate companies and cannot have a joint venture which is far different than two airlines in an alliance.
All AA and AS accomplish is putting their code on each other’s flights; they cannot jointly revenue manage, price, or coordinate schedules – all of the things that airlines can do in a joint venture and certainly happen when an airline operates all of its own flights.
Let’s also remember that AA and AS had an extensive codesharing program only a couple years ago but pulled it; just because they are now reinstating doesn’t mean the outcome will be any different. As noted, the notion that AA or AS will be better off because of “better pricing or availability” just means one of those two is paying a higher price to the other to accomplish that which didn’t make sense before.
Complete agreement it gives them limited revenue synergies, but from a consumer perspective – as a LAX-based frequent flier choosing an alliance who wants access to the most possible nonstop destinations and frequencies + the most convenient connections (PHX and DFW) – it’s a no-brainer (as long as they can tolerate AA’s substandard service quality).
Lost in all this is the AeroMexico bankruptcy. Can someone please tell Delta that 49% of nothing is nothing?
Actually CF did a story on Delta’s equity partnerships
I read the article. A more apt title would have been “Delta Blows Billions, Then Sends Furlough Notices to 2,558 Pilots”. Of course, this is the third time in the past 20 years that Delta has furloughed pilots. I believe the airline had to walk back one of those furloughs when a judge ruled against the airline. Note to Readers: Pissing-off your Pilots is not the best business plan.
…because dissing on others is an effective strategy to divert attention from the focus of THIS article?
Instead of reaching for another egg, do you think you could tell us why AA has had such a hard time making Asia and continental Europe work and how you would suggest they fix the problem?
Do you realize that 31% of AA’s longhaul international ASMs and 25% of its longhaul international flights are from DFW; N. Texas is a large metro area but it is baffling to think that an airline that says it is global has far more longhaul international service from one of the most distant hubs to both Europe and Asia from any other hub. Not a single other airline on any other continent overflies so many large hubs where it has been unsuccessful with international hubs. Nearly all of its profitable flying is to London and Tokyo (and that is less than five flights).
The economics of that kind of network don’t work and that is the real issue. AA had an opportunity to build a global network but couldn’t make it work. Add in the debt that AA has accumulated since the US merger and what it will have as a result of covid 19 and AA will never be a viable competitor.
Banks and debt investors love AA as do Airbus and Boeing.
We can debate ’til the cows come home but covid is a turning point that will forever separate AA from the airline it could have been in December of 2000 and what it will forever be.
Delta has failed its People.
once again, let’s focus on the issues.
The issue here is that AA has failed to be able to compete against DL and UA in competitive longhaul markets. They aren’t pulling out of LAX-PVG because they didn’t have enough connections – just as they didn’t leave ORD-PEK and ORD-PVG because they couldn’t find enough connecting passengers. In fact, DOT data shows that AA underperformed UA markedly in the ORD local market AND got lower value connecting passengers. Clearly UA has the upper hand in the Chicago local market to Asia.
It was the same thing in LAX to PVG; DL and UA have very similar revenue numbers – both ahead of AA.
AA is not going to succeed at SEA-PVG by contracting out connecting traffic, likely at a higher cost than DL can provide its own connections. AA will only succeed on SEA-PVG by surpassing DL in the local market – and that is highly unlikely to happen for multiple reasons.
And, of course, the flip side of this is that DL will undoubtedly add a new round of flights into AA strength markets. There are a host of new routes like BOS and RDU to DFW, DCA to MIA, PHL and CLT to LAX that DL could add – and history shows that DL has a much better track record in setting up shop in AA strength markets than the other way around.
So, AA is trying yet another stab at trying to make a route to China work that hasn’t work in multiple other hubs – and in the process gives DL reason to add a few more domestic routes that add up to far higher profits than any single route either airline flies.
But the braintrust at AA still hasn’t figured out how DL was the 6th largest airline in the US 40 years ago and was the largest in 2019.
I thought AA was crazy to introduce SEA – BLR before the pandemic and now they seem committed to it during a pandemic makes them seem even crazier. I think the whole Alaska and AA partnership is a bit strange when you can have Delta fly everything if you mix domestic and international. Being elite on a partner is like having a stepchild relationship. Sure you get some benefits, but you never get the same amount of love that you do from your own parents.
Thanks for the insight Cranky – most likely shutting down the Eagles Nest would be the obvious option, given it would make connections more efficient, less cost to run the busses back and forth, and LAWAs “potential” construction of T9.
You did mention AA could bring partners into its Terminal, though I don’t see why would they if Bradley and T4 are connected, and they have the MSC to expand with additional gates. As a long term startegy if any OW carrier would want to add frequency, yes, it could expand at T4/T5.
Most likely situation here is AS moving with AA at T4/T5. This brings the OW carriers together with an easy connection to Bradley from T4 and vice-versa. It also gives AS room to play with for the longer term with gates at 2 terminals to use, not to mention international expansion with CBP facilities at T4/T5 and Bradley.
The cats and dogs then have more access to gates at T6 if AS moves forward with a full move to T4/T5. That I think would be the most ideal for all parties. AA maintains valuable real estate at T4/T5, AS gets access to more gates and has optimal connections to partner carriers at Bradley, the cats and dogs get more gates to play with if T6 is vacated, and LAWA doesn’t lose its investment.
Keith – Bringing oneworld partners into T4 makes a ton of sense if the goal is to hold on to your gates. If indeed the plan is for American to pull back, then it can keep its gates by getting oneworld partners in there.
Those partners should like the idea since they can then have faster connections to AA. But the reality is that AA is unlikely to be small enough to shut the Eagles Nest and give T5 to Alaska anyway.