AA Down Under and Trans Pac?

[eolesen]

You are again assuming what I know about airlines and alliances. ALL THESE ASSUMPTIONS always with you.

Hey, you're the one who said:
 

major airlines...months after launching a route, found out the hard way, that they shouldn't have. Most of them did it just for the sake of prestige and making the whole thing - well - "the whole package airline, the global airline thing, the airline with the most non-stop flights to Europe, etc....

What should a reasonable person presume after that grand statement, and then you posting a link to the cancellation of the JFK-BUD route?

Sorry if I incorrectly assumed you didn't know Malev was part of oneworld, that AA was trying to drive traffic to Eastern Europe via BUD, or that they discontinued the route after Malev went belly up.

As I said, AA wasn't one for trying to make more pretty curvy lines on a route map, which you seem to be accusing Parker of with all those aborted CLT-XXX routes you mentioned. That's not defending AA as much as it is stating a fact. AA was conservative in their planning, almost to a fault. Perhaps even the exact opposite of what was happening in Tempe or Crystal City...

Based on your comments, and over 25 years of watching and analyzing airline network changes (one of the many services we do in our consulting practice), I don't see how being more conservative was a bad thing.

 

[ContUNITEus]

I'm guessing you missed the part about JFK-BUD being there to feed oneworld partner Malev's hub, and the route being killed off after Malev ceased operations?...
 

 
 
 
Wow, so now, it's ok for AA to only start a route, because a brand new partner the alliance.  And that for.... what?  Wait....   "Out of pity, in order to help them out in getting traffic, and hopefully get something out of it in the process?" That makes certainly for the most LOGICAL reason to ever start a route, in the midst of the economic crisis.  Great PLAN!!
 
That's like United Airlines deciding to start flying 777s from both IAD and ORD to LJU and PRN in order to feed traffic to ADRIA Airways. 
 
You are being ridiculous, exactly like AA.
 
 
 
 

Hey, you're the one who said:
 

What should a reasonable person presume after that grand statement, and then you posting a link to the cancellation of the JFK-BUD route?

Sorry if I incorrectly assumed you didn't know Malev was part of oneworld, that AA was trying to drive traffic to Eastern Europe via BUD, or that they discontinued the route after Malev went belly up.

As I said, AA wasn't one for trying to make more pretty curvy lines on a route map, which you seem to be accusing Parker of with all those aborted CLT-XXX routes you mentioned. That's not defending AA as much as it is stating a fact. AA was conservative in their planning, almost to a fault. Perhaps even the exact opposite of what was happening in Tempe or Crystal City...

Based on your comments, and over 25 years of watching and analyzing airline network changes (one of the many services we do in our consulting practice), I don't see how being more conservative was a bad thing.

 
 
If anyone was conservative, for the most part, DP was.  As a matter of fact, he was ghetto conservative.  The few times that he did venture into - say- launching new routes - he did it so, but boy, so conservatively, that he might as well not have, for the sake of reputation.
 
1)CLT-BRAZIL on a 767 new route on a subpar aircraft
 
2)CLT-HNL on a 767 (same thing)
 
3)PHX-HAWAII on a sub-par 757 with inferior First class to anyone else out there - using west aircraft.  (Why? You ask, because it - (F Class on that route) does not make money, it's all upgrades.  (HENCE WHAT MY ORIGINAL INTERJECTION WAS IN THIS WHOLE CONVERSATION RE: - First CLASS and iFC, a lot of times, is just there for symbolic reasons).  US Airways prides itself in giving a Muffin, sometimes even without fruit and only with Orange juice/coffee for breakfast on the LIH/KOA-PHX red-eye in FIRST.
 
 
MY SECOND STATEMENT CAME ABOUT AS AN OBSERVATION THAT ALL AIRLINES LAUNCH ROUTES FROM TIME TO TIME THAT THEY REGRET LAUNCHING.  DP should take risks, but be committed at wowing and gaining customers in that process, instead of - say attempt LAX-SYD on a raggedy 763 or even worse a 762.  These are the things that DP and cronies are totally capable of doing - launch something so poorly that it is just meant to fail.
 
AA's is no different.

 

[jimntx]

The purpose of the JFK-BUD service was not to "help out" poor little Malev.  The purpose was to give AA customers codeshare access to a number of Eastern Europe destinations that Malev already served and AA didn't.  Unfortunately, Malev was in much worse financial shape than anyone knew at the time. (Keeping the truth from the public and one's partners was evidently a holdover from the Communist regime days. ) Once Malev went under, there wasn't enough traffic just to Budapest to justify keeping the route.

 

[IORFA]

Jim, the truth makes too much sense. You must be lying! He won't get it. He is in an unhappy place and wishes we were all there with him.

 

[Jacobin777]

There are really only two viable gateways, LAX and SFO.   If fuel prices moderate (or at least stay where they are for a few years, getting relatively cheaper), then perhaps DFW via a 787 might work.   If fuel prices don't cooperate, then flying to Australia from interior gateways isn't going to be economically viable.   
 
From LAX, the only plane AA has that would be a fit is the 77W (777-300ER).   
 
The good news is that AA and QF anticipated this when they applied for and got antitrust immunity for a joint business agreement:
 
http://www.aa.com/i18n/amrcorp/newsroom/jba_aa_qantas.jsp
 
http://www.americanairlines.co.uk/i18n/pressReleases/pr_jbUpdate_nov2011.jsp?locale=en_GB
 
http://aviationblog.dallasnews.com/2011/05/american-airlines-qantas-airwa.html/
 
Far from being upset, QF would likely welcome the world's largest airline starting flights to SYD or MEL from LAX.    That way, not only would AA and QF be able to coordinate prices, schedules and capacity, but they'd be able to share revenues/profits just like the JAL and BA/IB joint agreements.   

 
IMHO the A359XWB might make sense as well but with the JV/ATI, I don't see a reason why AA would need to fly to Australia. New Zealand would be interesting but IMHO I don't see the "numbers" for AA to fly to New Zealand, even out of DFW-even including connections via DFW.
 
I would like to see QF also restart SYD-SFO with a B789.

 

[WorldTraveler]

DOT profitability data for the 3rd quarter has now been released and once again it shows AA sustaining significant losses in order to build a Pacific network. AA had a negative 12% operating margin on the Pacific while DL and UA each had about 13% profit margins in the same region. AA's Pacific network was the only region among the big 3 that lost money in the summer 3rd quarter.

AA is already pushing the limits of its ability to sustain losses in light of higher operating costs with the merger. Adding routes in markets that are not absolutely necessary is very unlikely to happen and even some of the current routes may be cut under Parker.

 

[eolesen]

In other words, AA should just give up in the Pacific, so that UA & DL can further grow the monopoly power they already enjoy by sharing 90% of the route authorities into Japan and China...

 

[WorldTraveler]

absolutely not.

but it is apparent their fast growth on top of markets that are already not producing revenue results comparable to other carriers means that AA is subsidizing losses in its Pacific operation to the tune of between 1 in 4 dollars in the winter to 1 in 8 dollars in revenue in the summer. No other airline is sustaining losses of that percentage in any region of their network on an ongoing basis.

The other side of the equation is that AA's Latin America operation is gaining nearly one dollar in profit for every 4 dollars in revenue, about comparable to both DL and US on the Atlantic. AA's Atlantic was also solidly profitable, just a bit less than DL and US but better than UA. The difference is that no other airline is sustaining losses even in the peak months in any region of their network.

 

[FWAAA]

The creditors/shareholders didn't seem to mind the losses in Asia.    The oft-talked-about corporate contracts that require a comprehensive route network or they'll give all their business to someone else obviously love the growth in Asia.   So who is affected by AA's low yields across the Pacific?   My guess is DL and UA, which probably don't like AA's low fares to Asia anymore than AA liked Tower Air's low transcon fares before Tower imploded.   Oh, and maybe a company whose employees tend to fly just between the USA and South America - they might not like it because they're paying huge fares to subsidize the companies whose employees tend to fly more TPAC flights.   Last quarter, AA reported Latin America yields of about 18 cents per mile while Pacific yields were about 12 cents.  

 

[robbedagain]

fwaa  do you know how is qantas dfw run is doing?    also whats the load factor for it

 

[FWAAA]

I don't know - remember, I don't work for AAG or any of its subsidiaries.  
 
My Wild Ass Guess is that it can't be doing tremendously well.   Australian tourists aren't dying to visit the smaller towns that DFW serves (compared to the bigger places served from LAX).    And those smaller spokes from DFW aren't the primary sources of USA-based travelers to SYD/MEL.   They took a very long flight (LAX-SYD) and added a lot of miles to it by moving it to DFW.   The 747ER can't even fly DFW-SYD nonstop.   That has to make it a very high cost flight.   And I doubt they can fill the 747 all the way for the Westbound flight back to BNE.   
 
When AA announced the DFW-HKG and DFW-PVG flights, I went against the grain and predicted that they would not be long-term successes, either.   Simply too long a flight and not enough O&D from the Dallas-Fort Worth metro area to warrant a nonstop to either one.   

 

[robbedagain]

thanks fwaa   sorry forgot you dont work for aag.

 

[eolesen]

It's entirely possible that the DFW-BNE segment does better than you'd expect.

While not an intuitive route, I've purposely flown into BNE just to avoid the Customs mess at SYD. It's a much more sane experience, especially if SYD isn't your actual destination, and they've got a fairly good pattern of service with nonstops to PER, MEL, and most of the other major cities.

Just looking in MIDT, it's certainly doing better than DL's MIA-LHR flights were...

 

[FWAAA]

Good thing I labeled it a WAG and not a "carefully researched conclusion."  
 
Good news for DFW-based travelers to Australia, or those from smaller places in the south or midwest who now have one-stop service to BNE.  
 
I recall those $1,500 round-trip business class specials started by DL in 2011 when it tried to break into MIA-LHR with the AA/BA slots.

 

[MAH4546]

For years Delta sustained significant loses to Europe and Latin America to build a foothold. Heck, it's performance in Latin America continues to suck as it fails to make inroads like it hoped (I do maintain that Delta should, and would long-term be successful after incurring significant initial losses, build a Miami-LatAm hub to solve it's Latin America problems). And it continues to bleed a ton of money in New York (partly because it has failed to steal AA and UA corporate customers and is relying on connecting traffic, even at LGA). It's Los Angeles-Haneda route is doing so bad that it appealed to DOT for route authority flexibility, likely to move to slot to Honolulu without having to compete with other airlines for it (DOT denied the request about two weeks ago).
 
But remember the rule guys: only Delta is allowed to sustain losses to build a network. Nobody else.
 
And as for the topic of AA to Asia/Oceania, I would not be surprised to see MIANRT/PHLNRT with the 787s and LAXAKL under the QF ATI with the new 2-class 772s.