AA adds 2nd daily CLT-LHR flight

[WorldTraveler]

I didn't realize AB's finances were that shaky.  I thought they may have turned the corner already.
So you don't think Etihad will find a few hundred million $$$ to keep AB and AZ alive?

it's not a question of whether they have enough money but whether they are willing to subsidize the kinds of losses those companies are generating - and there are different reasons for both.

Etihad will get what it can out of their investments - and it isn't really clear what they really want - but there is more and more pushback from the US and Europe to Middle East attempts to dominate aviation at the expense of established, home carriers.

 

[IORFA]

And you know how parker works he will want more money to subsidizes the route

From what we have been told, the subsidy hasn't been touched in tears. But you're right, I'm sure with all your insider knowledge I'm sure it's gone. Not!

 

[WorldTraveler]

there is enough public information to suggest the flight is indeed profitable on a standalone basis.

it is also doubtful that subsidies would continue for as long as the flight has operated even if the route weren't profitable.

 

[MAH4546]

It's a private travel bank that pre-purchases business class seats even if they go out empty. It absolutely still exists.

 

[WorldTraveler]

which doesn't mean the flight is subsidized.

It simply means they are guaranteeing enough revenue to ensure that the flight remains viable for AA.

If they don't use enough seats from the travel bank, they may pay more for the seats than if they bought them retail but they likely have a very accurate forecast of demand at this point to not waste what they buy.

AA also sells seats to the general public on the flight so all AA needs is to know there is a certain amount of demand that they can count on - but they don't need a subsidy to make the flight work.

The flight also carries a higher percentage of traffic beyond LHR than most other US-LHR flights on AA including to India, making the flight vulnerable if another carrier started service to another European hub.

 

[commavia]

I don't think there's all that much probability of another carrier opening a competing RDU-Europe flight, realistically, and even less chance of this flight ending.
 
Delta loaded RDU-CDG a few years back, but I don't believe it ever even started, and if it did, it certainly didn't last long.  The RTP partnership that guarantees revenue on the LHR flight isn't stupid - while they would certainly like more nonstop flights to Europe and more competition, they also know that realistically the market is probably not large enough to support more than one daily flight, and if there is only to be one daily RDU-Europe flight, LHR is of much more utility than CDG given that it's a larger local market and several of the major corporate backers (e.g., GSK, etc.) are headed to LON.

 

[USFlyer]

The flight also carries a higher percentage of traffic beyond LHR than most other US-LHR flights on AA including to India, making the flight vulnerable if another carrier started service to another European hub.

 
I guess DL will chase AA out of the market then.  Amazing how DL has every advantage and no one else has any.

 

[FrugalFlyerv2.0]

which doesn't mean the flight is subsidized.

It simply means they are guaranteeing enough revenue to ensure that the flight remains viable for AA.

 
 
So is it a subsidy or is it not a subsidy? 
Doesn't subsidy mean that there is enough money provided to keep a service functioning?  Without the GSK guarantee of a certain amount of revenue to AA, I'm pretty sure the flight does not operate.
 
 

 
I guess DL will chase AA out of the market then.  Amazing how DL has every advantage and no one else has any.

 
Yep, you've grasped it.  DL uber alles!

 

[700UW]

Maybe they are dumping the money to AA, lol!

 

[WorldTraveler]

frugal,
if you don't the difference between guaranteeing enough revenue and subsidizing then it isn't worth trying to discuss it.

A subsidy involves providing financial support that the flight could not generate on its own; guaranteed revenue simply means a promise to use the service enough to ensure it will continue to be viable for AA.

I never said anything about DL starting new service - goes to show how sensitive everyone is on here.

DL did load but never start RDU-CDG. I too suspect, that like PIT-CDG, the market is only big enough for one carrier.

Given that I believe the RDU-LHR route goes back to when AA had a hub there, they should be able to hold onto the int'l flight given the size and wealth of int'l business in RDU.

 

[FrugalFlyerv2.0]

I never said anything about DL starting new service - goes to show how sensitive everyone is on here.

 
There is your qualifier.  At the same time you also didn't mention LH /UA / * alliance starting a RDU-Europe flight either. 
About being sensitive, I think you're the one that likes to circle the wagons with respect to DL.

 

[WorldTraveler]

yes, it could very well be Star. seems less likely given that the Carolinas are historically where US has been the strongest and their alliance benefits from it.

With US' move from Star, it still is not clear how well LH will hold onto the business it has in the SE; it is possible they could rely on UA's IAD hub but it would be a step down in service to many destinations.

 

[700UW]

LH has contracts with BMW and other companies, and you can still but a ticket on US and connect on LH in CLT to MUC.

 

[WorldTraveler]

exactly. and LH can route passengers on DL via ATL or NYC or UA or AA via ORD as well on the same basis.

Interline ticketing existed long before codeshares and alliances and continues to be a valid way to serve the Market.

 

[700UW]

Why would LH route them to ATL when LH doesnt fly non-stop to MUC?