AA applies for more Brazil service

[FA Mikey]

American Airlines asked for 10 additional weekly flights between the United States and Brazil. Three additional weekly flights for Brasilia and Belo. They are also requesting 4 weekly departures for Manaus.

full story here

 

[FWAAA]

When does the Open Skies treaty between Brazil and the USA take effect?

Probably a good idea to hoard as many frequencies as possible prior to that time - as WT likes to say, the carrier with the largest schedule tends to set the price and tends to win.

 

[FA Mikey]

Is that what he says? I thought it was Delta rules and AA loses. Boy, you learn something new everyday.

The open skies treaty will become fully operational in 2015. In the short term they have significantly increased the number of new frequency's available.

 

[WorldTraveler]

AA should get what it wants as well as "that other airline" who combined have not asked for even close to the limit of what is available under the expanded treaty.
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Note that there are still restrictions on expansion of service to GRU and according to the Brazilian gov't expanding access by US carriers there is dependent on a new terminal which is supposed to open by the time Brazil hosts the World Cup in 2014.

Yes, the airline with the largest revenue share usually is able to control the pricing environment and win business.
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AA is the largest airline to/from Latin America, is the only US carrier serving MIA- Latin America, which is the only region in which AA has been able to meet or outperform its US peers in RASM growth.
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It only makes sense for AA to defend its remaining advantage markets.

 

[s80dude]

AA should get what it wants as well as "that other airline" who combined have not asked for even close to the limit of what is available under the expanded treaty.
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Note that there are still restrictions on expansion of service to GRU and according to the Brazilian gov't expanding access by US carriers there is dependent on a new terminal which is supposed to open by the time Brazil hosts the World Cup in 2014.

Yes, the airline with the largest revenue share usually is able to control the pricing environment and win business.
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AA is the largest airline to/from Latin America, is the only US carrier serving MIA- Latin America, which is the only region in which AA has been able to meet or outperform its US peers in RASM growth.
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It only makes sense for AA to defend its remaining advantage markets.

Didn't Delta just cancel their ATL - MAO service at the beginning of the year? Now they are applying for it again.... Does that give AA a better shot since Delta already flew the route and then pulled out of the market?

 

[WorldTraveler]

There are enough frequencies available for AA and DL to get all they requested w/ this route case and there are still almost half of the available frequencies left over. The fact that DL previously served MAO should be of no consequence.

 

[boston]

There are enough frequencies available for AA and DL to get all they requested w/ this route case and there are still almost half of the available frequencies left over. The fact that DL previously served MAO should be of no consequence.

How long did DL fly to MAO, why did they CXL the trip and what is the reason they want to start it up again? I had heard it was an all nighter Turn ATL-MAO-ATL, in a conversation regarding the LAX-HA flights AA has.

 

[IORFA]

Why doesn't AA request more MIA-GIG to turn the current unrestricted GIG into GRU? ORD-GRU or a daylight MIA-GRU would be good. Also it would give us the maximum GRU we could get.

 

[commavia]

How long did DL fly to MAO, why did they CXL the trip and what is the reason they want to start it up again? I had heard it was an all nighter Turn ATL-MAO-ATL, in a conversation regarding the LAX-HA flights AA has.

Delta's previous Atlanta-Manaus failed for the same reason all of their Atlanta-Brazil service has failed outside of Sao Paulo/Rio de Janeiro. The local market is tiny, and despite the size of the hub and the breadth of the connections, Delta couldn't overcome the fact that the vast majority of the market is going to Miami, Orlando, and New York - all three of which can be far better served with nonstops from Miami.

This time around, Delta wants the Manaus frequencies so they can warehouse them and potentially use them in the future for Rio de Janeiro.

Why doesn't AA request more MIA-GIG to turn the current unrestricted GIG into GRU? ORD-GRU or a daylight MIA-GRU would be good. Also it would give us the maximum GRU we could get.

I suspect that AA doesn't want to erode the existing flights - particularly DFW - with an ORD nonstop, although I agree that a nonstop to ORD would not only bolster AA's network at both ends of that route, but it would also open up new connecting opportunities over ORD - particularly to Asia.

 

[FA Mikey]

The day flight was always a bit of a dog in terms of load. It was a great flight to work because it was day light and the time change was minimal.

AA also tried doing a nonstop to MCO, was very low yield. Chicago would be nice, but AA has always said the local market is too small. Plus now you would have to steal market share from United in ORD.

 

[commavia]

The day flight was always a bit of a dog in terms of load. It was a great flight to work because it was day light and the time change was minimal.

My understanding was always that it was primarily for cargo - for which its daylight schedule was apparently fairly popular.

AA also tried doing a nonstop to MCO, was very low yield. Chicago would be nice, but AA has always said the local market is too small. Plus now you would have to steal market share from United in ORD.

MCO is a massive market from Brazil, but it is extremely low-yielding, and thus it requires an airline with low costs - lower than AA. Thus, TAM now flies it daily (increasing to 13x weekly this summer).

 

[IORFA]

The day flight was always a bit of a dog in terms of load. It was a great flight to work because it was day light and the time change was minimal.

AA also tried doing a nonstop to MCO, was very low yield. Chicago would be nice, but AA has always said the local market is too small. Plus now you would have to steal market share from United in ORD.

I wouldn't be worried about stealing market share from UA on that flight. I can't imagine that it would be a problem. To me, it has always seemed like a whole in the ORD operation and something AA should be dong with our presence in GRU. Especially with all the Asian flights AA offers now and codeshare on now and in the future. I.E. HKG

 

[WorldTraveler]

Considering that AA continues to operate SSA and REC as a circle flight which boards about 70 passengers per day from each city, I would not call AA's expansion outside of Rio or Sao Paulo smashingly successful financial. CNF is probably close to profitable with fares now close to comparable to Rio. You do realize that the top O&D on AA's CNF is not MIA but BOS, don't you?
The notion that AA's MIA hub is necessary for Latin service has obviously not been heard at CO, DL, or UA who all manage to get average fares and loads higher than AA to some of the same destinations in Latin America.
Now that UA and CO have MERGED (get that Mikey?) and are now hafl the size of AA in Latin America, they have the potential to rearrange some share in the region - although anyone who lacks a MIA gateway to latin America will be at a disadvantage.
Also, according to DOT data, DL's MAO flight delivered yields as high as AA's flights to CNF - but with loads around 60% which DL decided it wasn't
Make no mistake, MIA is still the largest single Latin market.. .but to argue that airlines can't make routes work including secondary cities without MIA is just not supported by current evidence.
Further, DL's BSB flight is delivering very healthy average fares... it's no surprise that AA saw the same DOT data I have seen and decided they need to get in on the action.
The whole reason why BSB and MAO will work for both AA and DL is because of the Gol codeshare which both have now.... I have seen itineraries from both AA and DL that are being sold w/ connections over BSB to help make that flight work.... and to the extent that MAO can create connections - and G3 has connections there as well - that flight will work - which is why DL is venturing back in.

We just saw on AA's financials that they underperformed the industry in every global region including their own "backyard" region of Latin America where AA added capacity which couldn't produce sufficient yields... and thus AA's RASM was half of what DL and UA both reported.
AA is in a market share battle to protect its core markets in Latin America.

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I'm not sure why any is even up in arms about this route case... neither AA or DL have come close to requesting all of the available frequencies... either DL or AA can add more Rio flights or to any other city except GRU/VCP (Campinas) in the next year - and then a whole nother set will be available in a year.

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If AA thought they could make an ORD-GRU flight work, they would have asked for it - or shuffled their frequencies around to get it - but they didn't which should speak volumes that they don't see opportunity for yet another ORD-GRU flight or to try to compete with DL's DTW-GRU which is doing very well financially.

 

[commavia]

Considering that AA continues to operate SSA and REC as a circle flight which boards about 70 passengers per day from each city, I would not call AA's expansion outside of Rio or Sao Paulo smashingly successful financial. CNF is probably close to profitable with fares now close to comparable to Rio. You do realize that the top O&D on AA's CNF is not MIA but BOS, don't you?
The notion that AA's MIA hub is necessary for Latin service has obviously not been heard at CO, DL, or UA who all manage to get average fares and loads higher than AA to some of the same destinations in Latin America.
Now that UA and CO have MERGED (get that Mikey?) and are now hafl the size of AA in Latin America, they have the potential to rearrange some share in the region - although anyone who lacks a MIA gateway to latin America will be at a disadvantage.
Also, according to DOT data, DL's MAO flight delivered yields as high as AA's flights to CNF - but with loads around 60% which DL decided it wasn't
Make no mistake, MIA is still the largest single Latin market.. .but to argue that airlines can't make routes work including secondary cities without MIA is just not supported by current evidence.
Further, DL's BSB flight is delivering very healthy average fares... it's no surprise that AA saw the same DOT data I have seen and decided they need to get in on the action.
The whole reason why BSB and MAO will work for both AA and DL is because of the Gol codeshare which both have now.... I have seen itineraries from both AA and DL that are being sold w/ connections over BSB to help make that flight work.... and to the extent that MAO can create connections - and G3 has connections there as well - that flight will work - which is why DL is venturing back in.

We just saw on AA's financials that they underperformed the industry in every global region including their own "backyard" region of Latin America where AA added capacity which couldn't produce sufficient yields... and thus AA's RASM was half of what DL and UA both reported.
AA is in a market share battle to protect its core markets in Latin America.

Blah, blah, blah.

Different forum, same old stuff - some things never change.

None of the above changes the reality that despite your spin and characteristic Delta P.R., recent history has shown that, generally speaking, Miami is necessary for just about all the secondary cities in South America - very few of which currently support nonstop flights to the U.S. outside of Miami. Delta has tried four non-Sao Paulo/Rio de Janeiro cities from Atlanta in the last few years. Three have failed, and one the jury is still out. I suspect this attempt at Manaus will be no different - with or without GOL.

The fundamental facts - whether you want to acknowledge and accept them or not - are still the same: Atlanta overflies the majority of the market for the U.S. (which is going to Miami and Orlando), and the vast majority of the remainder are markets that can just as easily be served via Miami as Atlanta. And, needless to say, that's before you get to the dramatically stronger and more established local presence AA has in every South American market - including every one in Brazil - compared with Delta, or any other U.S. airline.

At least this time around (as opposed to the last attempt), Delta is being straightforward and honest about its intentions - warehouse frequencies in Manaus now, and shift it to Rio de Janeiro in the future if they want.

 

[WorldTraveler]

Once again, the AArogance regarding the importance of MiAAmi is not only overblown, it is simply not accurate.
-According to AA’s own data filed with the DOT, MIA makes up about 25% of revenue but % of passengers on AA’s Latin (non-Caribbean network).
- AA’s revenue in non-MIA Latin markets is just 40% of all revenue carried by US carriers in those same markets and other carriers have a meaningful share (at least the majority) of revenue in every other non-MIA Latin O&D.
- 25% of revenue on AA’s MIA-SSA flight (at least the folks who get off the SSA-REC roundrobin flight) come from MIA.
- only 10% of the revenue on AA’s CNF and REC flights come from MIA
- DL’s average fares on ATL-MAO when it substantially operated were higher than AA’s on any of its new non-GIG/GRU routes. The markets that helped push up the average fares came from int’l to int’l connections at ATL in markets which AA will never capture because AA doesn’t even serve them with its own metal or even with single connections within oneworld.
You do realize that AA’s proposed stAArt of MIA-MAO comes 6 months after DL’s restart of ATL-MAO?
- ATL is the 2nd largest gateway to Latin America and effectively competes in every O&D region to/from Latin America except to/from S. Florida.
What we see, class, in this little exercise is that MiAAmi amounts to less than 10% of all the US-Latin America revenue and other carriers compete quite effectively with AA for the 90% that is not originating in MIA.
Further, AA continues to throw capacity at Latin America in its dAArtboAArd strategy of maintaining share which is why despite having the size advantage that should give them market premiums, AA’s Latin revenue growth trAAils the industry as it attempts to defend one of its few remaining strAAtegic assets against further incursions by other carriers (as has happened in the US and to Europe and Asia).
Meanwhile it is only a matter of time until some other US carrier decides to challenge AA in MIA-Latin America which will knock off yet one more of AA’s historic strategic advantages.
Any questions, class?
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I thought so. Class dismissed.

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The truth is not always eAAsy to hear but if you want to know what the problems are and find meaningful solutions, you've got to hear the truth, regardless of how pAAinful it may be.
Shooting the messenger has never changed the eventual outcome of anything and the same will be true with AA.