FrugalFlyerv2.0
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john john said:
That's because Parker is an idiot.
A321T
- Thread starter Piedmont1984
- Start date
That's because Parker is an idiot.
WorldTraveler
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no, I grasp completely that AA said it wanted 40% fewer coach seats in the market as well as a reduction in business class on a per flight basis and then decided to add more capacity back into the market by increasing the number of first class seats.
If AA is the only carrier providing FC service and if it really has value, you don't add seats to the market. You use the end of a carrier's FC product to increase pricing strength. that is Revenue Mgmt 101.
whatever cost savings you supposedly got by going from 762s to 321s is reduced if you turn around and add frequency back.
And you still lost the cargo market.
If AA was the market leader in premium transcon service and already had the most departures on JFK-LAX, why is it necessary to add even more flights to the market? At what point does AA have enough more frequency than its competitors?
The reason why Parker is questioning the 321T strategy is because it defies all established market based airline logic.
yet Parker is now in charge at AA and was chosen by the AMR creditors because he has a track record of making airlines work, even if it uses completely different strategies that what AA used.
We can discuss it all day long but I will still bet that it will be a whole lot shorter time than you and others want to admit before the 321Ts are reconfigured.
FrugalFlyerv2.0
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WorldTraveler said:
1. I'm willing to wager if it were DL doing what AA is doing some might call it winning
2. Time will tell. On one hand, Parker did turn the classy US product of the Wolf/Gangwal era into low class HP. On the other hand, Parker with HP/US never had any markets like the premium 3 class JFK-LAX and may decide to keep the 321T configured as it is.
WorldTraveler
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if it is right for the market, it will be right for any airline.
You fail to have never tried to defend Song or Delta Express other than noting what mout that otivated DL to take those strategies when they were launched.
I understand why AA is trying to do what it is doing.
I am simply pointing the logic-defying market strategies that are behind AA's 321T strategy of cutting capacity per aircraft and then adding it back via increased frequencies in classes where increased capacity makes the least sense.
If the truth regarding anyone's strategies grates someone the wrong way, they should probably wear their emotions a little less close.
You fail to have never tried to defend Song or Delta Express other than noting what mout that otivated DL to take those strategies when they were launched.
I understand why AA is trying to do what it is doing.
I am simply pointing the logic-defying market strategies that are behind AA's 321T strategy of cutting capacity per aircraft and then adding it back via increased frequencies in classes where increased capacity makes the least sense.
If the truth regarding anyone's strategies grates someone the wrong way, they should probably wear their emotions a little less close.
Agreed. In 3Q2013, AA had the largest share of the local market between JFK and LAX at an average one-way fare of over $520. The average fare dropped slightly in 4Q2013 (as expected) to about $474. pmUS has no routes with so many passengers where it gets $500 each way. If Parker is the "numbers guy" that so many devoted pmUS employees say he is, he has to be excited about those kind of fares, which are bound to be larger once the first quarter and second quarter numbers are released.FrugalFlyerv2.0 said:
1. I'm willing to wager if it were DL doing what AA is doing some might call it winning
2. Time will tell. On one hand, Parker did turn the classy US product of the Wolf/Gangwal era into low class HP. On the other hand, Parker with HP/US never had any markets like the premium 3 class JFK-LAX and may decide to keep the 321T configured as it is.
Parker's refrain of "it's an experiment of old management that we may revise or abandon" fits with the tired narrative of "AA went bankrupt for a reason, and that reason was that every decision of prior management was wrong."
I agree with WT that we'll probably see the strategy revised or abandoned in short order - that's the familiar MO of Parker and Kirby. They even told the media last year that their operating style was not one of "carefully deliberate before acting" like old AA management, but instead to act without doing as much planning or over-thinking. They'll probably employ that strategy here.
I'll dig up the quote and link later.
To be fair, drunken Parker did realize the error of his ways and did revive the TATL business somewhat by installing the new Envoy Suites in the A330s, which probably account for some of the recent TATL yield improvements of US Airways.
If Delta were employing the same transcon shuttle-like strategy (smaller planes, more frequencies), then every day the retired narcissistic Delta cheerleader would be here to tell us over and over and over again how only he and Richard Anderson could possibly "grasp" and "comprehend" and "understand" what a mind-blowing, industry-leading, game-changing strategy they had jointly discovered.
WorldTraveler
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No, FWAAA, this isn’t a DL can only do good/AA can do nothing right discussion. It is a legitimate discussion about the validity of a major strategy that AA has launched, that to some of us defies basic market principles, and also is apparently being questioned by AA’s new leadership.
There are two core issues at stake. First is the value of the premium and coach parts of the transcon market and the second is AA’s strategy to serve those markets including the aircraft they are using.
Given that the average fares in the market among carriers that offer a premium cabin are fairly close together, DL’s average fares on JFK-LAX are now only 5% less than AA, VX’ are higher than AA’s, and UA is removing its FC cabin and adding coach seats, there is a lot of reason to doubt whether the premium market at appropriately high enough fares to justify the extra space is really as large as AA and its supporters here think it is. Add in that in the JFK-SFO local market, DL is now larger than AA and its average fares, like VX’ are higher than AA’s even though DL has not used the 767 on that route for years, and the notion that there is a large paid premium market is even more questionable. On a combined JFK-LAX/SFO local market basis, DL is now virtually at parity with AA in total revenue and average fare. VX has lower share but higher average fares. Unless VX and DL are getting a whole lot better coach fares than AA, it makes little sense that they have much smaller premium cabins but as good as or higher total average fares if the premium cabins are really producing the amount of revenue that AA says it gets on the transcons.
Perhaps the size of the premium market is there, but multiple data points don’t seem to show it. When you add in that Parker has apparently taken advantage of the refurbishment of the 772s to reduce the number of seats, despite the assertion of some AA supporters that have said that DL obviously can’t sell premium seats, there is a strong belief that native AA mgmt. has either overstated demand or has not been willing to reduce cabin sizes, perhaps to keep frequent fliers happy with generous upgrades. Whatever the reason, the evidence says that high value premium cabin demand on the transcon is just not there.
Second, there is a major question about how AA serves the market, particularly related to the aircraft type. It was always more than a curiosity that AA still operated the 762 on the transcons years after fuel soared in the early 2000s. When the 321 strategy was announced, it made sense from a fuel standpoint but the whole question of the size of each cabin was raised. Relative to the 762, the 321T is 40% smaller in the coach cabin and 1/3 smaller in business while FC remained unchanged, right?
But part of the question is why AA felt a need to ditch the 767 completely including the cargo market which AA largely had to itself. Add in that AA could have used at least some 763s which were already in its fleet and it could have maintained its position in the cargo and coach markets since it should have been obvious that there was a good chance that another carrier would move into the market to replace the capacity.
Perhaps the 321 will be the right aircraft for a reduced presence in the transcon market. But since AA will keep 757s and 767s in its fleet for a number of more years, it raises the question of why AA didn’t consider a strategy involving either one or both of those fleets which do have a great deal of commonality. When we see AA acquiring brand new 773ERs, putting in a FC cabin while pulling it from the rest of AA’s int’l fleet, it makes you wonder if AA really knows how to match market demand to the right aircraft. That fear is even more confirmed when AA deploys the 773ER with only a few more seats than some of AA’s peer carriers have on their 772s and when AA takes up space with a walk up bar when most US carriers realized years ago that there is little justification for taking up space with any other type of facility that can be used for passenger seats on an aircraft.
So, no, the thread isn’t against anyone but rather an attempt to discuss a significant business issue.
There are two core issues at stake. First is the value of the premium and coach parts of the transcon market and the second is AA’s strategy to serve those markets including the aircraft they are using.
Given that the average fares in the market among carriers that offer a premium cabin are fairly close together, DL’s average fares on JFK-LAX are now only 5% less than AA, VX’ are higher than AA’s, and UA is removing its FC cabin and adding coach seats, there is a lot of reason to doubt whether the premium market at appropriately high enough fares to justify the extra space is really as large as AA and its supporters here think it is. Add in that in the JFK-SFO local market, DL is now larger than AA and its average fares, like VX’ are higher than AA’s even though DL has not used the 767 on that route for years, and the notion that there is a large paid premium market is even more questionable. On a combined JFK-LAX/SFO local market basis, DL is now virtually at parity with AA in total revenue and average fare. VX has lower share but higher average fares. Unless VX and DL are getting a whole lot better coach fares than AA, it makes little sense that they have much smaller premium cabins but as good as or higher total average fares if the premium cabins are really producing the amount of revenue that AA says it gets on the transcons.
Perhaps the size of the premium market is there, but multiple data points don’t seem to show it. When you add in that Parker has apparently taken advantage of the refurbishment of the 772s to reduce the number of seats, despite the assertion of some AA supporters that have said that DL obviously can’t sell premium seats, there is a strong belief that native AA mgmt. has either overstated demand or has not been willing to reduce cabin sizes, perhaps to keep frequent fliers happy with generous upgrades. Whatever the reason, the evidence says that high value premium cabin demand on the transcon is just not there.
Second, there is a major question about how AA serves the market, particularly related to the aircraft type. It was always more than a curiosity that AA still operated the 762 on the transcons years after fuel soared in the early 2000s. When the 321 strategy was announced, it made sense from a fuel standpoint but the whole question of the size of each cabin was raised. Relative to the 762, the 321T is 40% smaller in the coach cabin and 1/3 smaller in business while FC remained unchanged, right?
But part of the question is why AA felt a need to ditch the 767 completely including the cargo market which AA largely had to itself. Add in that AA could have used at least some 763s which were already in its fleet and it could have maintained its position in the cargo and coach markets since it should have been obvious that there was a good chance that another carrier would move into the market to replace the capacity.
Perhaps the 321 will be the right aircraft for a reduced presence in the transcon market. But since AA will keep 757s and 767s in its fleet for a number of more years, it raises the question of why AA didn’t consider a strategy involving either one or both of those fleets which do have a great deal of commonality. When we see AA acquiring brand new 773ERs, putting in a FC cabin while pulling it from the rest of AA’s int’l fleet, it makes you wonder if AA really knows how to match market demand to the right aircraft. That fear is even more confirmed when AA deploys the 773ER with only a few more seats than some of AA’s peer carriers have on their 772s and when AA takes up space with a walk up bar when most US carriers realized years ago that there is little justification for taking up space with any other type of facility that can be used for passenger seats on an aircraft.
So, no, the thread isn’t against anyone but rather an attempt to discuss a significant business issue.
AA changing course and removing First Class from the 32Bs (AA's designation of the A321T) is not a matter of "if" but of "when." That's a given. Despite being "numbers guys," Parker and Kirby will not be able to resist the lure of additional economy seats and making the 2-2 business seats the highest class of service. I get that. Like I posted before, it fits with the tired narrative (that everything former management did was the wrong way and that Team Tempe is here to save the day). Yes, the creditors handed Parker the reigns, as everybody realized that the employees would have burned the place down had Horton been chosen instead. Of course, the creditors handed Parker's shareholders a gigantic windfall (28% of the new company) but many AA employees will say the price was worth it.
My back of the envelope calculations (which may be open to debate and argument) reveal that the 32Bs will burn about 5,000 gal on average each way (obviously less Eastbound, more Westbound, averaging about 5,000). The 762s, on the other hand, averaged about 12,000 gal each way. At $3.10/gal, AA will save about $21,500 in fuel on the first nine 32B flights, and give some of that back on the four new daily frequencies. That fuel savings is far larger than the cargo revenue carried by each 762 transcon last year.
Revenue? AA kept the same First Class seat count per flight, so it won't automatically be giving up any of that. Business Class? 20J instead of 30J per flight, but the seats are far nicer and thus AA should sell more of them on each and every flight, on average. To illustrate that point, let's assume that AA sold 15/30J on the 762s on average. That left 15/30J for upgrades for people like me. If AA sells 15/20, that leaves just five upgrades per flight, on average. That's an undeniable victory for AA at my expense. Oh well, airline's gotta eat.
Overall, the nicer seats should result in more sold seats and fewer upgrades, so let's assume that AA sells 15/20J on all 13 daily frequencies, on average. 15 times 13 is far better than 15 times 9. Another victory for AA.
About that 72-seat economy section where each 762 featured 128Y. If the DOT stats are to be believed, AA was previously selling about 1,600 local seats every day between JFK and LAX, or about 800 each way. That 800 each way included the F and J local traffic, so it's clear that AA was selling no more than maybe 550 or 600 local Y seats each way, each day. The rest of the seats were connecting traffic. And some of the local seats may have been sold for deep discount fares - I should know since I used to get $99 AA econ transcon fares with regularity up until last year. With my top-tier status, my comp (UDU) upgrades cleared better than 95% of the time.
With the 32Bs, AA is flying 936 daily Y seats each way. I assume that AA will manage inventory so the connecting traffic will still be accommodated and I assume that AA knows how to price the seats so that it won't sell as many $99 local traffic fares as it used to. The current fares bear that out, as there aren't any bargain-basement 32B fares since the first of this year.
The nine-daily 762s had a total of 1,152 Y seats and the 13 daily 32Bs feature 936 Y seats. It's impossible to claim with a straight face that AA should sell fewer F or J fares, given that the seats are superior to the 762 seats and given that each day, AA is flying 8% more premium seats (40 more F, 10 fewer J). If there aren't enough J seats on a given flight, AA can do what it has always done - sell someone J and seat them (or someone who paid even more) in F. AA may sell fewer Y fares, but won't they be the cheapest Y seats? Back when MRTC was begun, the argument was that the 7% of the econ seats jettisoned to make more room would have been the cheapest of the econ seats. So I'm thinking that Arpey and Horton decided to forego some of those $99 FWAAA specials that permitted me to sit in J almost every time.
I posted here and elsewhere my partially tongue-in-cheek opinion that AA should have flown some 3-class 772s between JFK and LAX once the 77Ws began arriving in 2012. While the NGBC seats are slanted, they're far nicer than the 762 J seats were and the 16 Flagship Suites would have been the best F seats in the market. And they could carry almost unlimited amounts of cargo. And lots and lots of $99 econ fares. As I pointed out earlier in this thread, AA has flown 3-class 772s between MIA and LAX for years now. My idea would have been to feature tham on the two overnight LAX-JFK redeyes and maybe the two other highest yielding daytime flights to JFK. From JFK, put them on the four highest yielding flights to LAX, and watch the money flow in. But of course, that would have been a lot of airplane and a lot of capacity. Burning a lot of fuel. Arpey and Horton and now Parker have all wisely ignored my fleet planning ideas.
Yes, Delta responded by putting some lie-flat all aisle access 763s on the JFK-LAX transcons. For the first time ever, DL finally has a competitive product on the JFK-LAX flights. And if it works for DL - good for them.
One quibble with your post above: Fuel didn't "soar in the early 2000s." Fuel didn't "soar" until Labor Day, 2005, when Hurricane Katrina slammed New Orleans. It kept soaring until August, 2008, and then crashed to very low levels by the end of 2008. Not long after that, it began its upward climb to about where it is now. In retrospect, prior management probably should have replaced the 762s earlier than January, 2014. But waiting until this past January instead of doing it earlier doesn't mean that doing it now is the wrong thing to do. It's some evidence that they waited too long.
Could AA have used 763s? Sure. But that would mean even more econ seats and 763s burn even more fuel per trip. Should AA have used 777s? Sure, but that would mean lots and lots more econ seats and lots and lots more fuel burned per trip. Should AA have used 787-8s or 787-9s? Sure, but those airplanes are very long-range and lots more airplane than is necessary. You've posted repeatedly that AA's 772s are too heavy and too much airplane for USA-Europe and USA-S America, so how could anyone justify using big, heavy airplanes on 2,500 mile transcons when A321s could do it?
In summary, I don't see AA giving up any "good revenue" (meaning high-yield revenue) by using the 32Bs. The only revenue that AA may have abandoned is some or all of the cargo revenue. Even after paying for the fuel for the 10th thru 13th daily frequencies, AA is ahead on fuel by about $267,000 per day. That's $97 million a year. AA didn't give up 40% of any revenue, and it gave up zero of the first class and business class revenue. With superior seats, AA should sell more of them, although B6's entry might trim that. I'm at a loss as to how there is any significant downside here. If I've overlooked something, point it out and I'll read it.
My back of the envelope calculations (which may be open to debate and argument) reveal that the 32Bs will burn about 5,000 gal on average each way (obviously less Eastbound, more Westbound, averaging about 5,000). The 762s, on the other hand, averaged about 12,000 gal each way. At $3.10/gal, AA will save about $21,500 in fuel on the first nine 32B flights, and give some of that back on the four new daily frequencies. That fuel savings is far larger than the cargo revenue carried by each 762 transcon last year.
Revenue? AA kept the same First Class seat count per flight, so it won't automatically be giving up any of that. Business Class? 20J instead of 30J per flight, but the seats are far nicer and thus AA should sell more of them on each and every flight, on average. To illustrate that point, let's assume that AA sold 15/30J on the 762s on average. That left 15/30J for upgrades for people like me. If AA sells 15/20, that leaves just five upgrades per flight, on average. That's an undeniable victory for AA at my expense. Oh well, airline's gotta eat.
Overall, the nicer seats should result in more sold seats and fewer upgrades, so let's assume that AA sells 15/20J on all 13 daily frequencies, on average. 15 times 13 is far better than 15 times 9. Another victory for AA.
About that 72-seat economy section where each 762 featured 128Y. If the DOT stats are to be believed, AA was previously selling about 1,600 local seats every day between JFK and LAX, or about 800 each way. That 800 each way included the F and J local traffic, so it's clear that AA was selling no more than maybe 550 or 600 local Y seats each way, each day. The rest of the seats were connecting traffic. And some of the local seats may have been sold for deep discount fares - I should know since I used to get $99 AA econ transcon fares with regularity up until last year. With my top-tier status, my comp (UDU) upgrades cleared better than 95% of the time.
With the 32Bs, AA is flying 936 daily Y seats each way. I assume that AA will manage inventory so the connecting traffic will still be accommodated and I assume that AA knows how to price the seats so that it won't sell as many $99 local traffic fares as it used to. The current fares bear that out, as there aren't any bargain-basement 32B fares since the first of this year.
The nine-daily 762s had a total of 1,152 Y seats and the 13 daily 32Bs feature 936 Y seats. It's impossible to claim with a straight face that AA should sell fewer F or J fares, given that the seats are superior to the 762 seats and given that each day, AA is flying 8% more premium seats (40 more F, 10 fewer J). If there aren't enough J seats on a given flight, AA can do what it has always done - sell someone J and seat them (or someone who paid even more) in F. AA may sell fewer Y fares, but won't they be the cheapest Y seats? Back when MRTC was begun, the argument was that the 7% of the econ seats jettisoned to make more room would have been the cheapest of the econ seats. So I'm thinking that Arpey and Horton decided to forego some of those $99 FWAAA specials that permitted me to sit in J almost every time.
I posted here and elsewhere my partially tongue-in-cheek opinion that AA should have flown some 3-class 772s between JFK and LAX once the 77Ws began arriving in 2012. While the NGBC seats are slanted, they're far nicer than the 762 J seats were and the 16 Flagship Suites would have been the best F seats in the market. And they could carry almost unlimited amounts of cargo. And lots and lots of $99 econ fares. As I pointed out earlier in this thread, AA has flown 3-class 772s between MIA and LAX for years now. My idea would have been to feature tham on the two overnight LAX-JFK redeyes and maybe the two other highest yielding daytime flights to JFK. From JFK, put them on the four highest yielding flights to LAX, and watch the money flow in. But of course, that would have been a lot of airplane and a lot of capacity. Burning a lot of fuel. Arpey and Horton and now Parker have all wisely ignored my fleet planning ideas.
Yes, Delta responded by putting some lie-flat all aisle access 763s on the JFK-LAX transcons. For the first time ever, DL finally has a competitive product on the JFK-LAX flights. And if it works for DL - good for them.
One quibble with your post above: Fuel didn't "soar in the early 2000s." Fuel didn't "soar" until Labor Day, 2005, when Hurricane Katrina slammed New Orleans. It kept soaring until August, 2008, and then crashed to very low levels by the end of 2008. Not long after that, it began its upward climb to about where it is now. In retrospect, prior management probably should have replaced the 762s earlier than January, 2014. But waiting until this past January instead of doing it earlier doesn't mean that doing it now is the wrong thing to do. It's some evidence that they waited too long.
Could AA have used 763s? Sure. But that would mean even more econ seats and 763s burn even more fuel per trip. Should AA have used 777s? Sure, but that would mean lots and lots more econ seats and lots and lots more fuel burned per trip. Should AA have used 787-8s or 787-9s? Sure, but those airplanes are very long-range and lots more airplane than is necessary. You've posted repeatedly that AA's 772s are too heavy and too much airplane for USA-Europe and USA-S America, so how could anyone justify using big, heavy airplanes on 2,500 mile transcons when A321s could do it?
In summary, I don't see AA giving up any "good revenue" (meaning high-yield revenue) by using the 32Bs. The only revenue that AA may have abandoned is some or all of the cargo revenue. Even after paying for the fuel for the 10th thru 13th daily frequencies, AA is ahead on fuel by about $267,000 per day. That's $97 million a year. AA didn't give up 40% of any revenue, and it gave up zero of the first class and business class revenue. With superior seats, AA should sell more of them, although B6's entry might trim that. I'm at a loss as to how there is any significant downside here. If I've overlooked something, point it out and I'll read it.
jimntx
Veteran
FWAAA, you have once again missed the whole point...
The way AA is doing it is not the way DL is doing it (or would have done it). Therefore, the AA way is deeply flawed, and will probably result in a Chapter 7 somewhere down the road.
The way AA is doing it is not the way DL is doing it (or would have done it). Therefore, the AA way is deeply flawed, and will probably result in a Chapter 7 somewhere down the road.
WorldTraveler
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good response snd I appreciate you taking the time to post your analysis, FWAAA.
too many people on here can't engage in an objective discussion of the issues at hand and it is a shame - and a loss to the board.
just a couple points.
If AA was selling $99 fares and you were being upgraded on a regular basis, then AA wasn't revenue managing very well and the demand for premium classes isn't there. DL and VX don't offer that many more coach seats and, again, they are getting much higher average fares if AA is really getting premium revenue in business and first class.
Your account raises real questions that AA is really getting the premium demand for which it is committing resources to the market and if they aren't and are also taking so much more discount coach traffic, why are other carriers doing so much better?
if the solution really is to squeeze off the lowest amount of coach capacity so that AA doesn't have to upgrade $99 fares, then AA's position in the transcon market is a lot more fragile than a lot of people here want to admit.
if AA really couldn't attract premium coach traffic in the quantities that other carriers are obviously doing in order to get the average fares they do with far fewer business class seats and no first class, then the 321 strategy is appropriate... but it should also come with far fewer premium seats if they are heavily filled with upgrades. thus, Parker may not be as far off base as you might want to believe. several months into the merger and his team is undoubtedly looking thru a lot more reports than he could ever have known before the merger. And, again, the whole strategy was indeed formulated before the merger and anything that preceded the merger on either side is fair game for review.
DL's move to cut off domestic upgrades on the JFK transcons seems a lot more rational if AA really is not getting any more paid premium passengers than they are.... and given that VX is pretty stingy on upgrades and has low business class fares, the chances are that the paid premium traffic is a whole lot smaller than a lot of people here have tried to present.
as for costs, I will readily acknowledge that the 321 burns close to half the fuel per trip as the 762. But the point of burning any fuel at all is to generate revenue. If it is really necessary to cut costs that dramatically compared to other options including the 757 or 763, then the problem is really a revenue problem. Cargo is not a primary motivation for any passenger carrier but if they can profitably carry 200 passengers, then the cargo revenue can easily be added on and likely does become profitable... 10K pounds of cargo per flight is just not funny money.
as for product, none of the carriers really jumped into the market with lie flat seat significantly before anyone else. I'm not sure there will be any real advantage to any carrier because of having lie flat seats; it is now the standard for serving the market. Given that VX doesn't have them, they might be at a disadvantage but since they have a revenue premium now, they have the ability to give up some premium revenue and not be terribly hurt - and they do have the smallest premium cabins in the market.
this strategy will be one to watch and it is indeed linked to what AA does in JFK and LAX, both of which have int'l implications.
again, thank you for your response.
too many people on here can't engage in an objective discussion of the issues at hand and it is a shame - and a loss to the board.
just a couple points.
If AA was selling $99 fares and you were being upgraded on a regular basis, then AA wasn't revenue managing very well and the demand for premium classes isn't there. DL and VX don't offer that many more coach seats and, again, they are getting much higher average fares if AA is really getting premium revenue in business and first class.
Your account raises real questions that AA is really getting the premium demand for which it is committing resources to the market and if they aren't and are also taking so much more discount coach traffic, why are other carriers doing so much better?
if the solution really is to squeeze off the lowest amount of coach capacity so that AA doesn't have to upgrade $99 fares, then AA's position in the transcon market is a lot more fragile than a lot of people here want to admit.
if AA really couldn't attract premium coach traffic in the quantities that other carriers are obviously doing in order to get the average fares they do with far fewer business class seats and no first class, then the 321 strategy is appropriate... but it should also come with far fewer premium seats if they are heavily filled with upgrades. thus, Parker may not be as far off base as you might want to believe. several months into the merger and his team is undoubtedly looking thru a lot more reports than he could ever have known before the merger. And, again, the whole strategy was indeed formulated before the merger and anything that preceded the merger on either side is fair game for review.
DL's move to cut off domestic upgrades on the JFK transcons seems a lot more rational if AA really is not getting any more paid premium passengers than they are.... and given that VX is pretty stingy on upgrades and has low business class fares, the chances are that the paid premium traffic is a whole lot smaller than a lot of people here have tried to present.
as for costs, I will readily acknowledge that the 321 burns close to half the fuel per trip as the 762. But the point of burning any fuel at all is to generate revenue. If it is really necessary to cut costs that dramatically compared to other options including the 757 or 763, then the problem is really a revenue problem. Cargo is not a primary motivation for any passenger carrier but if they can profitably carry 200 passengers, then the cargo revenue can easily be added on and likely does become profitable... 10K pounds of cargo per flight is just not funny money.
as for product, none of the carriers really jumped into the market with lie flat seat significantly before anyone else. I'm not sure there will be any real advantage to any carrier because of having lie flat seats; it is now the standard for serving the market. Given that VX doesn't have them, they might be at a disadvantage but since they have a revenue premium now, they have the ability to give up some premium revenue and not be terribly hurt - and they do have the smallest premium cabins in the market.
this strategy will be one to watch and it is indeed linked to what AA does in JFK and LAX, both of which have int'l implications.
again, thank you for your response.
It's too bad the 763 still hasn't returned to BOS-LAX and meanwhile we are stuck with all 738s (4x daily) not even a single 757. And looking at the fall schedule the times sucks, 7am, 9am, 4:05pm and 8:45pm, what a joke, having to leave the office at 3pm or arrive in LA after midnight.
Josh
Josh
WorldTraveler
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Josh,
you may know that UA has replaced most of their 757s in BOS-LAX with 739s while AA has replaced the reduced capacity of the 757s with increased frequencies on the 738. for both carriers, their capacity is neutral but they are using lower CASM aircraft which makes sense.
B6 and DL are adding frequency to the market which is driving overall capacity in the market up by 10% while VX is slightly reducing frequency but downgrading several flights from 320s to 319s which gives them the greatest decrease in capacity.
BOS-LAX is just as competitive as JFK-LAX even though there are no widebodies or lie flat cabins.
you may know that UA has replaced most of their 757s in BOS-LAX with 739s while AA has replaced the reduced capacity of the 757s with increased frequencies on the 738. for both carriers, their capacity is neutral but they are using lower CASM aircraft which makes sense.
B6 and DL are adding frequency to the market which is driving overall capacity in the market up by 10% while VX is slightly reducing frequency but downgrading several flights from 320s to 319s which gives them the greatest decrease in capacity.
BOS-LAX is just as competitive as JFK-LAX even though there are no widebodies or lie flat cabins.
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #192
Something tells me the 321s will not be able to make it from LGA to the west coast if the PANYNJ drops the perimeter restrictions as it is considering doing.
even with 110 passengers, how far can the 321T make it from LGA?
even with 110 passengers, how far can the 321T make it from LGA?
nycbusdriver
Veteran
WorldTraveler said:
Something for the 757 to do if the Port Authority changes the rules (which is highly unlikely, although it has been "considering" that for...what, now....about 25 years?)
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #195
AA has committed to getting rid of its 757 fleet other than for int'l use.
and maybe the PANYNJ won't change a thing but it appears that they are far more serious about it than they were years ago.
and maybe the PANYNJ won't change a thing but it appears that they are far more serious about it than they were years ago.
