We’ve been talking about American’s strategy in New York for a very, very long time. The airline is undersized, and there is no clear solution. It briefly hoped it solved its problem in New York with the innovative Northeast Alliance (NEA) with JetBlue, but the court’s ruling shutting down that plan forced American to figure out yet another new path forward. Now, with no hope of a partnership to improve its fortunes in the near future, it appears the airline is shifting again.
Recently, American announced it would not be able to come to an agreement with JetBlue for a new partnership that would pass federal antitrust scrutiny. This means that in the foreseeable future, American has decided that it will just accept its position as a distant fourth place airline in the region behind Delta, United, and JetBlue. Maybe that changes with a merger or acquisition in the mid- to long-term future, but barring that, it is always going to be a laggard in the market.
So what do you do if you’re American? There have been a variety of strategies used over the years. The plan before the NEA seemed to be focused on serving smaller cities where American could provide more value to people in those places who were flying to New York. It was not about New York origin, for the most part. But that hasn’t worked very well.
In recent months, it looked like American was focusing its New York growth in leisure markets that would appeal to the local traveler. This year saw the start (or restart) of Fort Myers, Myrtle Beach, New Orleans, Orlando, Tampa, and West Palm Beach, all big sun markets. We also saw additional northeast leisure flying primarily in summer, including Burlington, Hyannis, Martha’s Vineyard, Nantucket, and Portland (ME).
The idea here was to effectively focus on the leisure traveler instead of the business traveler, with some notable exceptions like LA, San Francisco, and of course, London. It could use small airplanes to serve those high-dollar markets in the northeast while it used bigger airplanes to go on the sun runs where fares were lower but demand was plentiful.
Either I didn’t quite understand the plan at the time, or it has now shifted once again. Now, American seems most interested in big markets that actually do appeal to the business traveler but also leisure. Anyone else getting whiplash?
Here’s a look at top domestic markets for all airlines based on 2024 passenger numbers with whether American served the market or not in 2023, 2025, and in the new future plan. One note here: I assumed that all summer markets served in 2025 will still be in the future plan.
Purple is newly-entered, red is exited, data via Cirium
To be fair, New Orleans, Orlando, Tampa, and West Palm Beach are all top 20 markets, so those could have been part of this new strategy to go big. But American will now also go back into Atlanta — a market it ditched during the NEA — and Fort Lauderdale. That means in the top 10 markets that can be served nonstop from LaGuardia, it will only not serve the United hubs in Denver and Houston.
American isn’t only focused on huge markets, also filling in a little below that level with Charleston (SC) on the list. But it is also going deeper into smaller markets that might have business demand. For example, Madison will now have service, and Burlington will go year-round.
With all of these adds, it means something has to go away thanks to the slot controls in place. And American will be walking away from several smaller markets:
- Cincinnati
- Dayton
- Knoxville
- Louisville
- Minneapolis/St Paul
- Omaha
- Sarasota
Of these, Minneapolis/St Paul is most surprising since it is a big market, but it is also a Delta market, and that says a great deal. In every single one of these markets, Delta is the only competitor to American. It also has a frequency advantage in all but Dayton where they each have been flying 6x weekly. Most of these are not huge markets, and American is giving up, completely ceding them to Delta. Congrats on that victory, Widget.
Instead, American will mostly push its slots into service in those bigger markets, hoping it can appeal to enough of the local corporates to possibly snag some more business travel. It think it’s better to be a small fish in a big pond than a big fish in a small pond these days.
This still feels like a spill carrier strategy to me. American doesn’t have an advantage in any of these markets over other airlines, but if it has enough breadth, it figures it can probably come in and negotiate aggressive deals to steal some traffic. These spill carrier strategies don’t tend to work out well, but then again, in a highly-constrained market like New York, it does make it a little more palatable. But still…
I can’t say I love this plan, but then again, I also can’t say I have another one short of getting a JetBlue deal done at any cost. Ultimately, none of these strategies will make American a top competitor in the region. It is just hoping to create a plan that will get it to stop losing enormous sums of money.
13 comments on “American’s LaGuardia Strategy Takes Another Turn”
Time’ll tell if this is a good pivot or not, but it’s better than DL’s obsession with AUS. For MSN specifically, AA has gone from almost an afterthought to the market leader.
American’s solution to its NY problem is to merge with or acquire JetBlue. The UA/B6 news of late is all smoke and mirrors. UA has a big problem at EWR for sure, but it can’t acquire B6, even with a tainted DOJ, which would not respond favorably to UA having so much control at two NY airports (#1 at EWR, #2 at JFK). Further, the costs of overlap in NYC would be very expensive for UA to run efficiently.
American will acquire B6 in the foreseeable future, trim the routes B6 has that don’t make sense, and ditch the A220s and sell them to DL or UA.
That will fix AA’s NY problem as without it, AA has no solution in NY. It is too large to leave and too small to compete.
American will eventually ditch AS, which will tie up with UA. AS is not going to last in OW.
American’s future in NYC will be determined by its acquisition of JetBlue, which will happen, eventually. UA will not be able to get its hands on JetBlue no matter the recent news cycle. Too much NY control and a lot of cost to run two hubs in the same region. AA will eventually ditch AS which itself will move to *A and AA will have the only solution viable for its perpetually failing NYC strategies.
I really like this analysis of the top domestic markets, including the visual (though, as an aside, I think CVG should be labeled as red for 2025, based on the the logic & comments). I’d be curious to see something similar for AA/DL/B6 out of BOS, or AA and a few other airlines out of LAX.
Not sure who AA has corporate contracts with, but from the perspective of big company business travel, I’m a little surprised that AA isn’t doing even nominal service (e.g., 1 flight/day) to MSP, given the CPG industry connection there with Target. I’d make the same argument for CVG (for P&G and Kroger), especially as DAY (which is often more convenient with traffic to P&G/Kroger offices in the northern Cincy suburbs) is also being exited. To your point, maybe AA is continuing to try to cater more to companies outside the Fortune 500 that are traveling to NYC instead of from it.
It’s also interesting to note the absence of service to Rochester & Syracuse… Even if that isn’t high-yielding traffic, I wouldn’t have been surprised to see AA serve those markets from LGA as a way to curry favor with politicians upstate.
American is now channeling Spirit at LGA, hoping for spillover from the airlines that people would actually prefer to use. Can’t wait to read about their next NY strategy which should be announced in another 9-12 months.
Question – how much overlap does AA have between LGA and JFK? I know that JFK service exists primarily for international feed but it would be interesting to see how much of their service is duplicative and how that compares with Delta, the airline that has actually figured out how to run a successful operation at each airport.
Anecdata (meant to include above) – CLE to NY area. United and *A loyalists fly the mostly mainline 4x service to EWR. That leaves 10 flights per weekday to LGA (5x DL, 4x AA, 1x F9) and 5 to JFK (3x DL and 2x AA).
The LGA and JFK flights are a bloodbath. Fares are always low, even at the last minute. People joke it’s cheaper to fly to NY than drive there considering tolls and gas and that was BEFORE Frontier jumped in with a daily. So what is American trying to do here and in other markets like this?
AA’s problem in NYC just as it is in Chicago and LA is that they can’t hold onto high value passengers because of the level of service they deliver. Another site detailed a horrific travel day on AA.
All of the schedule parity – even if existed – doesn’t matter if an airline cannot deliver a competitively reliable level of service and reliability.
1000%
American has a serious IRROP problem. Additionally, they seem obsessed with closing the door 10 min before time even when it is easy for agents to see close connects. United’s ConnectionSaver is wonderful.
American needs to fix the service issues first.
If they are a distant 4th now in NYC, then they will stay a distant 4th and keep on losing money unless something significant changes. They need to eithe go big (donate lots of money to the Republican party, change corporate policies to match exactly what Trump says, do a lots of ass-kissing to Sean Duffy and then buy JetBlue a year later) or go home (exit JFK except for the most intensely profitable routes like London). I just cannot see how (for example) JFK – Nashville has a future
This won’t massively change market dynamics, but maybe a low cost way to help on the margins? Since AA is running “Bus Flights” out of PHL now, I’d be curious to see them try LGA-JFK behind security “Bus Flights.” Could open up a lot of connectivity between these domestic feeder markets they’re adding to LGA and the international network they (or at least their partners) have at JFK. They already ticket itineraries with an airport change but that’s a non starter for most folks because they’d be on their own for the cross-NYC trek.
I know they’d rather just send everyone to PHL for that, but the PHL network still just isn’t very strong for both frequencies and OneWorld partner options.
I see AA’s JFK-SNA flight fitting the strategy you defined. It has a small lounge at SNA , it is a wealthy catchment area, and Delta and JetBlue don’t fly the route so it can offer a service other airlines can not provide. Surprised their aren’t other CA markets similar to SNA that AA can exploit.
NYC based here and I find it frustrating how AA doesn’t serve the major business markets of DEN or IAH or regional markets like SYR or ROC. I want to take AA but it doesn’t get me where I need to go! Guess I’ll just fly Delta which has a great schedule to basically anywhere in America plus will provide me great service especially in Economy Plus (with wifi AND more than just Biscoff cookies as a snack).
The America West mentality running AA into the ground doesn’t know what they’re doing.
At every turn they are Sideshow Bob stepping on a rake and getting the handle to the face. Vasu almost cost them their BA partnership, why do you think he was basically ‘disappeared’?
Americans current management still seems to think they’re a plucky upstart duking it out with Southwest in PHX. They don’t compete. They retreat.
They don’t know what to do in New York and it shows. Cram 900 flights into CLT? A thousand into DFW? Who in the EU wants to fly to PHL and find themselves with zero connectivity to NYC?
American management is focused on price sensitive leisure travelers, and it’s killing the place.