AA president Scott Kirby says the carrier seeks to make LAX its "primary Asia-Pacific gateway".
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What? Not Phoenix or Charlotte? 
While LAX makes sense for AA's primary gateway to Asia, I'm still surprised that AA hasn't applied for some of the available China frequencies to announce JFK-PVG/PEK or LAX-PEK. I've lost count of how many unallocated frequencies are currently available, but I can see AA's competition grabbing them if AA doesn't.
While LAX makes sense for AA's primary gateway to Asia, I'm still surprised that AA hasn't applied for some of the available China frequencies to announce JFK-PVG/PEK or LAX-PEK. I've lost count of how many unallocated frequencies are currently available, but I can see AA's competition grabbing them if AA doesn't.
WorldTraveler
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that is correct. The only reason why the US and China don't have Open Skies is because the Chinese aren't willing to submit to the same level of accountability in reporting that the US demands for countries that have Open Skies and joint ventures.
As for the issue of LAX being AA's primary gateway to Asia, the obvious question is what this means for ORD where I have noted that AA has consistently underperformed UA in every market the two serve side by side and where AA currently has more flights to Asia than it does from LAX.
Sounds to me like Kirby is priming the pump for a pulldown of ORD-Asia service.
While AA's DFW-Asia buildup has been more recent, it seriously raises the question of how much of that will remain. To somehow think that AA will deploy more capacity from LAX than it has from DFW and ORD is a bit of a stretch.
AA has the advantage of a large hub at DFW but there is still little ability to meaningfully serve large parts of the US via DFW and the cost of connecting from most of Asia via DFW is very high given that several of AA's DFW to Asia flights are some of the longest among US carriers.
It also raises the question of why AA thinks they can do better from LAX in a market that is divided between 3 US carriers, not just the 2 at ORD, as well as a host of foreign carriers, many of which deploy huge amounts of capacity to LAX. Add in that oneworld is the smallest carrier from LAX to Asia and it becomes even harder to understand how AA thinks it is going to win at LAX when it hasn't done so at ORD or JFK.
DOT statistics show that AA carries half the volume in the local LAX to Asia market that DL and UA carry - and those two are within a couple percent of each other in terms of volume.
However, the more telling statistic is that AA's average fare from LAX to Asia is 16% lower than the industry average and 30% lower than DL's which has the highest average fare from LAX to Asia among US carriers.
Further, DL and UA both have west coast hubs sitting above LAX which will be able to pull any amount of traffic they want out of LAX and make it virtually impossible for AA to gain a revenue share.
The analogy is expecting to be a competitive carrier to Europe by using MIA instead of IAD or JFK as a gateway.
As for the question of why AA doesn't add more PEK service, the answer probably lies in the fact that AA's ORD-PEK flight still arrives at 2145, better than it has been but still too late to provide many connections.
I have a feeling that Kirby's message really means that what is at ORD will be shifted to LAX and AA's net size to Asia will be shrinking.
Given that AA has been losing double digit percent of revenues for quarter after quarter, it is hard for anyone to believe that AA will actually be growing to Asia before it stops the bleeding it currently has.
As for the issue of LAX being AA's primary gateway to Asia, the obvious question is what this means for ORD where I have noted that AA has consistently underperformed UA in every market the two serve side by side and where AA currently has more flights to Asia than it does from LAX.
Sounds to me like Kirby is priming the pump for a pulldown of ORD-Asia service.
While AA's DFW-Asia buildup has been more recent, it seriously raises the question of how much of that will remain. To somehow think that AA will deploy more capacity from LAX than it has from DFW and ORD is a bit of a stretch.
AA has the advantage of a large hub at DFW but there is still little ability to meaningfully serve large parts of the US via DFW and the cost of connecting from most of Asia via DFW is very high given that several of AA's DFW to Asia flights are some of the longest among US carriers.
It also raises the question of why AA thinks they can do better from LAX in a market that is divided between 3 US carriers, not just the 2 at ORD, as well as a host of foreign carriers, many of which deploy huge amounts of capacity to LAX. Add in that oneworld is the smallest carrier from LAX to Asia and it becomes even harder to understand how AA thinks it is going to win at LAX when it hasn't done so at ORD or JFK.
DOT statistics show that AA carries half the volume in the local LAX to Asia market that DL and UA carry - and those two are within a couple percent of each other in terms of volume.
However, the more telling statistic is that AA's average fare from LAX to Asia is 16% lower than the industry average and 30% lower than DL's which has the highest average fare from LAX to Asia among US carriers.
Further, DL and UA both have west coast hubs sitting above LAX which will be able to pull any amount of traffic they want out of LAX and make it virtually impossible for AA to gain a revenue share.
The analogy is expecting to be a competitive carrier to Europe by using MIA instead of IAD or JFK as a gateway.
As for the question of why AA doesn't add more PEK service, the answer probably lies in the fact that AA's ORD-PEK flight still arrives at 2145, better than it has been but still too late to provide many connections.
I have a feeling that Kirby's message really means that what is at ORD will be shifted to LAX and AA's net size to Asia will be shrinking.
Given that AA has been losing double digit percent of revenues for quarter after quarter, it is hard for anyone to believe that AA will actually be growing to Asia before it stops the bleeding it currently has.
AA's net size to Asia isn't shrinking, and nothing is being transferred from ORD.
Shocking (or not, actually) that you refuse to believe reality: AA is going to embark on a very aggressive Asian expansion over the coming years.
Delta got killed on Europe flying for years upon years as it built up its network; and it still can't really make Latin America work. What AA is doing is no different.
Shocking (or not, actually) that you refuse to believe reality: AA is going to embark on a very aggressive Asian expansion over the coming years.
Delta got killed on Europe flying for years upon years as it built up its network; and it still can't really make Latin America work. What AA is doing is no different.
WorldTraveler
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No, it is not the same thing.
DL lost money when every other carrier lost money due to industry wide events.
DL also makes money to/from Latin America. It isn't the huge profit machine that Asia or Europe are - where DL reported 25% profit margins last summer (fall 2013 data has not been released) but DL does make money on a year round basis to/from Latin America.
If AA chooses to expand LAX to Asia without fixing their revenue shortfall from ORD, then so be it.... but the bleeding will only increase.
Given that Parker and Kirby wasted no time getting rid of the unprofitable parts of US' network, the chances that they will continue to sustain hundreds of millions of dollars in losses flying the Pacific is more than a stretch.
AA has structural and marketing disadvantages to/from Asia which won't be erased no matter where they fly from but those disadvantages get magnified a whole lot more when in a highly competitive market.
Again, the data doesn't lie that AA is #3 out of 3 US carriers from LAX to Asia both in terms of number of passengers as well as average fares.
To think that AA is going to throw a bunch of capacity at the market and everything is going to improve is thinking that has never proven to be successful before - and there is little reason to believe that Parker and Kirby are going to try it out now.
AA might focus on LAX but to think that they are going to continue to support ORD where AA's revenue performance is known to be at a disadvantage is highly unlikely.
The real question is DFW to Asia where many of the new flights are too recent to know how they will perform long term.
DL lost money when every other carrier lost money due to industry wide events.
DL also makes money to/from Latin America. It isn't the huge profit machine that Asia or Europe are - where DL reported 25% profit margins last summer (fall 2013 data has not been released) but DL does make money on a year round basis to/from Latin America.
If AA chooses to expand LAX to Asia without fixing their revenue shortfall from ORD, then so be it.... but the bleeding will only increase.
Given that Parker and Kirby wasted no time getting rid of the unprofitable parts of US' network, the chances that they will continue to sustain hundreds of millions of dollars in losses flying the Pacific is more than a stretch.
AA has structural and marketing disadvantages to/from Asia which won't be erased no matter where they fly from but those disadvantages get magnified a whole lot more when in a highly competitive market.
Again, the data doesn't lie that AA is #3 out of 3 US carriers from LAX to Asia both in terms of number of passengers as well as average fares.
To think that AA is going to throw a bunch of capacity at the market and everything is going to improve is thinking that has never proven to be successful before - and there is little reason to believe that Parker and Kirby are going to try it out now.
AA might focus on LAX but to think that they are going to continue to support ORD where AA's revenue performance is known to be at a disadvantage is highly unlikely.
The real question is DFW to Asia where many of the new flights are too recent to know how they will perform long term.
robbedagain
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and so only dl can win asia yet they scale back nrt go figure unbelievable sk and dp are nbrs guys and i dont think they will allow losses on select flights to continue so i think lax-asia is gonna turn around for the better
WorldTraveler
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no, AA doesn't have to give up. But as much as some people want to try to argue otherwise, DL does have a very solid position on the Pacific and at LAX precisely because it inherited a solid Japan presence - of which LAX is absolutely part of it - and DL has not only defended what NW built but has also grown it.
China and other markets are growing - but Japan is not dead and DL still generates very strong profits from Japan.
It is also hard to understand how anyone can think AA can succeed in other markets when they struggle so badly in Japan. It is no different than DL's conclusion that it had to deal with its shortcomings at LHR if it is going to be seen as a credible player in ALL of Europe. It is no more possible to "win" in Europe without having a solid, profitable presence at LHR and the same is just as true with Tokyo - which for now means NRT.
AA not only has a poor track record of sustaining service in the most competitive markets to Tokyo but its overall Pacific revenues are below other carriers - and since DOT data shows that AA underperforms UA in every one of the direct routes that AA and UA compete in, you can't argue that the problem is just Japan.
Profit-motivated companies don't keep throwing money at something that loses money without fixing it.
People here have tried to pretend for years that AA doesn't have problems on the Pacific despite the fact that it is very clear they do.
Parker and Kirby are committed to and have been charged with turning AA's Pacific network around. I have yet to hear a credible plan by anyone on here with how AA is going to turn around their money losing Asian operations other than to just keep throwing more money at the problem - something well-run companies just don't do.
China and other markets are growing - but Japan is not dead and DL still generates very strong profits from Japan.
It is also hard to understand how anyone can think AA can succeed in other markets when they struggle so badly in Japan. It is no different than DL's conclusion that it had to deal with its shortcomings at LHR if it is going to be seen as a credible player in ALL of Europe. It is no more possible to "win" in Europe without having a solid, profitable presence at LHR and the same is just as true with Tokyo - which for now means NRT.
AA not only has a poor track record of sustaining service in the most competitive markets to Tokyo but its overall Pacific revenues are below other carriers - and since DOT data shows that AA underperforms UA in every one of the direct routes that AA and UA compete in, you can't argue that the problem is just Japan.
Profit-motivated companies don't keep throwing money at something that loses money without fixing it.
People here have tried to pretend for years that AA doesn't have problems on the Pacific despite the fact that it is very clear they do.
Parker and Kirby are committed to and have been charged with turning AA's Pacific network around. I have yet to hear a credible plan by anyone on here with how AA is going to turn around their money losing Asian operations other than to just keep throwing more money at the problem - something well-run companies just don't do.
The Amazing Kreskin (or, judging by the comedic value, perhaps Carnac the Magnificent) tells us Delta is inevitably going to put the hurt on AA's fortress in MIA-South America, and yet AA suggests it might add a few flights between LAX and Asia, a vast market with, it's true, lots of competition, but also no single dominant competitor, and it's hopeless.
"What you don't understand" ... [opens envelope, blows inside] ... "The sound heard round the internet airline forum world whenever the glory and invincibility of Delta is not the focus of all discussion and attention." If only Carson had been an airline nerd ...
"What you don't understand" ... [opens envelope, blows inside] ... "The sound heard round the internet airline forum world whenever the glory and invincibility of Delta is not the focus of all discussion and attention." If only Carson had been an airline nerd ...
FrugalFlyerv2.0
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Considering how much AA and UA historically compete with each other from ORD, I too would be a little surprised if AA just gave up ORD-Asia flying. Speaking of Asia expansion, what about flights from PHL? At least PHL-NRT?MAH4546 said:
WorldTraveler
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I suggested PHL to Asia a long time ago on here.
If AA wants to continue to flush money down the drain, it is welcome to continue to try to compete against UA from ORD to Asia... the results for year after year have been underwhelming to say the least.
We will see but I simply don't believe that AA's new bosses are willing to subsidize a region of the world to the tune of $200 million plus per year as AA's old guard has done.
When you consider that they have to do the same thing at LAX and did at JFK until they pulled the plug, the question is how much AA is willing to pay to play in a market that it can't make money in on its own.
If AA fixed its own strategic weaknesses, what DL did would be irrelevant.
We're not talking about AA's losses to Europe, even continental Europe, now are we? AA figured out what it can do and not do in Europe and makes money flying there, even if the PMAA network was very thin to continental Europe.
AA pulled out of a lot of markets but they made money.
Why some can't realize that the same thing will happen with Asia is beyond me.
If AA wants to continue to flush money down the drain, it is welcome to continue to try to compete against UA from ORD to Asia... the results for year after year have been underwhelming to say the least.
We will see but I simply don't believe that AA's new bosses are willing to subsidize a region of the world to the tune of $200 million plus per year as AA's old guard has done.
When you consider that they have to do the same thing at LAX and did at JFK until they pulled the plug, the question is how much AA is willing to pay to play in a market that it can't make money in on its own.
If AA fixed its own strategic weaknesses, what DL did would be irrelevant.
We're not talking about AA's losses to Europe, even continental Europe, now are we? AA figured out what it can do and not do in Europe and makes money flying there, even if the PMAA network was very thin to continental Europe.
AA pulled out of a lot of markets but they made money.
Why some can't realize that the same thing will happen with Asia is beyond me.
AdAstraPerAspera
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I wish your Sisyphean bloviations were confined to the DL board
WorldTraveler
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plz tell me what decisions DL has made that have put AA in the position it is today.
AdAstraPerAspera
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I almost responded but then I remembered that wasn't the topic of this thread. Nice try, tho
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