I am not sure of the reason for the hostility. People have repeatedly noted that AA didn’t want the cargo revenue or the coach passengers that AA is walking away from. I merely reopened the thread to note that, as I predicted, cargo moved almost entirely from AA to DL even though DL is using 5 763s per day on JFK-LAX compared to 10 or so 762s on AA.
Actually, AA isn’t trying something different – UA did the same thing several years ago. The only difference is that AA is using the 321.
I am not assuming the 321 is a disaster at all – but I am noting that there are basic strategic and economic principles that a number of people here have yet to answer.
And the reason is simply that revenue falls off much faster than costs when you use a smaller aircraft. Sure the 321 will cost less to operate than the 762s but the equation should always have included other options.
The biggest strategic unknown – beyond the costs - is that there really is no successful example of a carrier operating as a niche carrier in someone else’s hubs. AA is not only attempting to be a niche carrier in NYC by not flying many of the routes that DL and UA will fly nonstop – but also many that B6 will fly as well – but on the transcons, AA is becoming a niche within a niche by not serving many of the coach passengers who have long been loyal to AA – they cut away a big portion of their customer base.
There was never any doubt – at least in mind – that AA could build a very high quality product. Lie flat products have been put on the 757 and the 321 has the advantage of being a wider cabin aircraft and have lower fuel burn.
But many costs – such as pilots - are not proportionately reduced by carrying fewer passengers.
And, whether AA can turn a 321 faster than DL can turn a 757 or 767, they do not. They use the same ground times if not longer than DL uses. Given that DL boards and deplanes twice as many people as AA’s 321s but thru two aisles, the 767 has very little real disadvantage in terms of turn times.
Plz let me know of a market where a carrier has higher frequency but less capacity and has the dominant share of the market over a competitor.
You and others are throwing your weight behind AA’s strategy even though it is not proven and is actually contrary to fundamental airline network principles which say that the carrier that has the most capacity has a revenue advantage.
I know that UA is not in the same position at JFK as AA but the only thing that AA is doing is a higher frequency version of what UA has done with transcons for years.
And AA cannot increase capacity significantly above what they have without diluting the premium revenue which they say they are after. And it is precisely for that reason that the predictions of AA adding multiple more flights has not happened.
And while coach capacity in the market is actually flat, B6’s addition of a premium cabin will put pressure on the premium cabin.
AA’s loss to VX and B6 has been in the coach cabin. B6 hasn’t ever operated a premium cabin and AA is not trying to regain coach customers; they are in fact cutting coach capacity.
VX’ premium cabins are a fraction of the size of AA’s. Further, VX, along with UA, now has an uncompetitive business class product compared to AA, B6, and DL.
The passengers that VX has attracted are passengers that are largely willing to pay premium coach or discounted business fares.
The real risk in the market is, once again, to UA. It wasn’t known at the time AA made the decision regarding the transcons how badly UA would be stumbling today but, once again, DL gets a higher average fare on JFK-LAX than UA even though DL has only about 10% premium cabin seats while HALF of UA’s aircraft is in premium seats that are not competitive with either AA or DL’s premium cabin product.
If AA succeeds, it will likely be largely because UA is losing so many premium passengers esp. in LAX to AA.
The bias is yours because you once again, like so many other people on here, don’t understand the refinery; nearly all of the analysts got it wrong before it was wrong and those like you who have persisted in saying it was a mistake look only at the single line item for the refinery as a standalone operation.
DL didn’t buy the refinery as a standalone business and has repeatedly said, as have I, that the purpose of the refinery is to lower the price of jet fuel for DL.
IN an industry investor conference that just happened, DL execs noted, as I have, that the price of jet fuel is down by hundreds of millions of dollars because DL has pushed lots of jet fuel onto the market.
Jet fuel now no longer is priced at a huge premium to diesel fuel as it long has been.
DL successfully ended the refining industry’s practice of limiting the availability of jet fuel (which is a byproduct and not intended goal of the refining process for every other refiner) in order to keep prices high.
The failure of DL’s strategy SO FAR is that DL has been unable to keep the savings from the reduced price of jet fuel solely for DL.
But it is always possible that refiners could change their supply of jet fuel which would leave DL in a position of controlling a fairly large portion of jet fuel and having it available for itself.
DL is also changing the input source of fuel for the refinery from African crude which was known to be one of the reasons Trainer was not profitable.
You and others have consistently wanted to judge the success of the refinery on a few quarters’ results when it was clear from the beginning that the refinery purchase was a long term process to change the way DL vs. the rest of the industry deals with the petroleum industry.
The only bias is from those, who like yourself, fail to understand the principles involved in the transaction even though I have repeatedly stated them.
are you serious?