AA president Scott Kirby says the carrier seeks to make LAX its "primary Asia-Pacific gateway".

[FWAAA]

so lax-asia is a money loser  but by God if DL does it  its a money maker   go figure 

Exactly.   You're catching on.    
 
Old AA did cut and run from a lot of routes and handed over a lot of revenue and market share to lower-cost airlines before it filed for Ch 11 and trimmed some of its costs.   Southwest, jetBlue and Virgin America all grew as AA pulled back in the face of huge losses over the past decade.  
 
CO took away market share from AA and others during the past decade as it grew in the post-September 11 era.   Delta took away market share and revenue from AA once it slashed its costs and debt in Ch 11 and then merged with NW to gain a presence in Asia.    Correct me if I'm wrong, but when DL and NW merged, DL had but one daily flight to Asia, ATL-NRT.    
 
And obviously, DL has not squandered its NW assets but has managed them very well.    So it stands to reason that there's no way that much larger AA (now the world's largest airline) could possibly compete and win against UA, DL and some Asian carriers.    No way at all.  .   
 
Obviously, the best prediction of the future is gained by staring at the past, in the Bizzarro World inhabited by World Traveler.   Because AA failed in the past, it will fail now.   

 

[WorldTraveler]

except there is absolutely nothing that changed WRT Asia as a result of this merger - except the POTENTIAL that a viable gateway could lie at a former US, not AA, hub or gateway.

The reason why DL has made Asia work so well is because NW did an outstanding job of protecting Japan like it was the crown jewels = and it was.

DL not only has done the same thing with Japan but has grown outside of Japan, first from Detroit and now from Seattle.

DL's growth was based on strengths they already had... not trying to think they could convert a loss making operation into something profitable just because they do a merger which added very little competitively to LAX.

BTW, AA had a TWO PERCENT ex-fuel CASM advantage over DL this quarter while DL paid 2% less for fuel, hardly a huge cost advantage.

AA's CASM advantage is with UA, just as it is for DL.

finally, AA is flying a lot of underperforming capacity from a revenue perspective - the RASM numbers showed that.

AA might have made a lot of money but as competition heats up later this year on AA's domestic network (even though everyone here seems to think it is no big deal that AA is giving away its entire DCA slot portfolio to low fare carriers and that not one but two LCCs will start service from DAL to key AA cities), AA's revenue will be pressured just as costs go up.

AA might well navigate it all- but there are way too many things that have yet to be resolved including finding peace with AA's perpetually unhappy employees - to declare that AA is now in full scale growth mode in markets that have never generated profits for them before.

 

[eolesen]

I'm starting to wonder if some of that "underperforming capacity" you keep pounding like a dead horse is the amount of network overlap between AA and UA.

It's pretty clear from their own earnings that UA has been doing a horrible job at managing their own revenue, and I suspect they've also had some of the less rational pricing...

Given that AA has a far higher degree of domestic network overlap with UA plus on the international flows at ORD, DFW/IAH and LAX/SFO, it's possible that UA is dragging down AA to some degree.

The only place where UA and DL have any overlap of significance is at JFK/EWR (and AA gets negatively impacted there as well).

In addition to the revenue problems they have, they also have a cost issue, thus the loss where AA and DL were able to make money...

 

[WorldTraveler]

UA is not pricing irrationally. They are not getting passengers to pay the price they are asking for.

And the underperforming capacity is where AA's average fares and/or onboard revenue are well below what DL and/or UA get on comparable/identical routes. And many of AA's underperforming routes outside of Asia are ones that have been added in the past two years. Yes, there is a ramp up period but when revenue is 50% or more below what DL or UA are getting, you have to wonder how long AA mgmt. is going to sustain that flying. Remember that AA had a spectacularly poor introduction to Moscow that some blamed on costs - AA had to use the 777 - but AA's revenue was well below DL's who was the only carrier in the Moscow market. Eventually, AA gave up.

There are some of the new routes that might work but AA though a lot of capacity into the market like JFK-DUB and ORD-DUS that were already highly competitive and, not surprisingly, AA's performance has been lackluster, esp. in light of incumbent carriers' actions to protect their own position in those markets.

Again, no one asked why AA doubled capacity on JFK-EZE when DL entered the market but DL decided it wasn't worth fighting to get into a market where it would cost a lot of money to outlast AA's ire.

Yet, the AA fans can't seem to grasp that other carriers are doing the same thing in other markets where AA is trying to establish itself, including in LAX-Asia.

Why some can't accept that other carriers play by the same practices that AA has used with other carriers in key AA markets is beyond me.

UA does have a cost problem by more than 5% compared to AA and DL but the bigger issue is that they leave hundreds of millions of dollars of revenue on the table.

 

[diamondcutter]

uh, no.DL and UA both realized a long time ago that LAX is not the ideal place to operate a hub to Asia. Ironically some of the very same people who have argued about why it wouldn't work for other airlines (including DL) now somehow think those reasons don't apply to AA.They still do.Let's just have a little refresher.First, no one at AA HDQs has said that AA is adding anything to Asia. It is merely a fantasy of some to think that AA will grow at LAX.Second, DL gets TWICE the local revenue and the total revenue on its two flights from LAX to Tokyo than AA gets for its two flights to Asia. UA is behind DL but still way ahead of AA.Third, it is mere delusion that AA is going to add flights from LAX to Asia until it deals with its hundred million dollar per year loss it currently generates to Asia. Of course some call those numbers dubious except that they have been published in industry publications such as Aviation Daily.Fourth, LAX is THE MOST COMPETITIVE gateway to Asia in the US and the one with the highest percentage of foreign competition, exactly the low cost producers that DL and UA both said they don't intend to duke it out with.Fifth, DL never tried to build LAX into an Asia Pacific hub. DL instead is building SEA - the most NW major city in the continental US which gives it the ability to logically compete for every traffic flow possible and do so economically. DL's SEA hub as of this summer is the 2nd largest US carrier gateway to Asia behind UA at SFO. Note also that DL said that by this summer, DL will be the #1 revenue carrier at SEA.Sixth, neither DL or UA has said they won't add flights from LAX to Asia; in fact, it is a given that both will aggressively compete with AA either with nonstop service such as UA added on top of AA's LAX-PVG service or via connections north of LAX where both have enormous ability to pull traffic.I get the emotional attachment some here have to LAX. The fundamental rules of the airline industry won't change just because AA now decides it MUST have a west coast - Asia gateway.  well, let's see. Off the top of my head, the most recent has been BRU. There are undoubtedly more and I will look them and let you know.

Did you find anymore?

 

[WorldTraveler]

how many do you need on top of that plus NRT and HND and a bunch of Caribbean stuff?

 

[eolesen]

Well you did say that "there are undoubtedly more, and I will look for them"...


Since Summer 2011, which is pre-bankruptcy, the list is indeed small if you look at JFK-Europe -- only BRU & BUD, plus HND (NRT is a JV route with JL).

If you expand JFK to include domestic/Canada, it only adds FLL STL TPA YHZ .

Throw in Carib/LatAm, the list does grow, but every destination dropped is also well served with a single connection over MIA:

AUA BGI PLS PUJ SDQ SJO SKB STI SXM



Even with the hand wringing, it appears AA is still serving BCN/CDG/DUB/FCO/LHR/MAN/MAD/MXP/ZRH from JFK. Nine destinations from a non-connecting hub isn't shabby at all in my opinion.

The notion that AA "thinned out" its JFK-Europe service seems to be much ado about nothing. Again.

 

[WorldTraveler]

whatever the cities on the list look like, AA is flying 15% fewer int'l seats from JFK while the airport as a whole has almost 25% more seats over the past four years.

AA may have rationalized its network away from JFK and via MIA but other carriers apparently still are able to fly those markets nonstop.

 

[johnny kat]

WT,

You crack me up. Seriously, do you sit in your mobile home at night and dream of only "The Delta". The truth is gonna slap you right in the a##. AA currently has it to lose...it is gonna be a long costly fight. And judging from the old sour cow Delta employees that I've seen in Europe vs a re-energized group at AA and US, you are kidding yourself if you think that the new AA (even with merger issues) is not going to totally trash the Delta tea party. I have never seen a bunch of more motivated employees (even with lower wages), ready to totally KILL Delta. Keep US my American and screw Delta. RAH RAH... IT IS ON, and you Will lose.

 

[WorldTraveler]

your killing instinct is commendable and I truly am glad that you and many of your peers are fired up about competing again. It has been a long time, AA is a company with a great history, and the US employees have got to be some of the most long-suffering airline employees in remaining loyal to their management in hopes of a payout someday.

But with all due respect, you need to be focusing your competitive energies on UA, not DL. You will got a whole lot more return on your investment by winning against UA. IN case you missed it, the topic is about Asia and UA, not DL overlaps all of AA's flying from ORD AND LAX to Asia. If AA increased its ORD-Asia revenue by 10% at UA's expense and did 15% at LAX, the game changes dramatically.

I get the attachment that many of you have to NYC but it might be time to realize that part of the purpose of the merger was based on the reality that AA just simply isn't going to be of a size to effectively compete with either DL or UA in NYC again. Both are twice AA's size in the int'l market which is where the opportunities are the greatest. Further, as much as original AA employees want to believe otherwise, PHL is a viable hub and outperforms AA at JFK to some of the same destinations in Europe.

AA has a future at JFK and can be a strong #2 at LGA.

But AA's best chances are working within what is doable and attainable and for right now there is enormous opportunity for AA to win against UA.

AA and DL have very similar cost structures right now and are both profitable. UA is neither. UA's employees have been beaten down by management and customers see it. AA and DL by most metrics are well-run right now. We're talking about merger integration and fine-tuning of AA"s network that needs to take place, not a wholesale retreat that some think is the issue.

AA also has a future in Asia; it just may not be from the gateways that a lot of people here think unless they can take it from UA unless DL doesn't also decide to step into/step it up in some of the same markets.

 

[lax]

WT,

You crack me up. Seriously, do you sit in your mobile home at night and dream of only "The Delta". The truth is gonna slap you right in the a##. AA currently has it to lose...it is gonna be a long costly fight. And judging from the old sour cow Delta employees that I've seen in Europe vs a re-energized group at AA and US, you are kidding yourself if you think that the new AA (even with merger issues) is not going to totally trash the Delta tea party. I have never seen a bunch of more motivated employees (even with lower wages), ready to totally KILL Delta. Keep US my American and screw Delta. RAH RAH... IT IS ON, and you Will lose.

 
wow, not sure where you work, but I haven't seen the ultra motivated employees you speak of in dfw or mia.  maybe you mean new hires

 

[MAH4546]

AA has a future at JFK and can be a strong #2 at LGA.

 

 
Well at least now you admit AA has a future at JFK and won't be shutting it down like you attempted to argue earlier.
 
And, here's a fun fact for you: AA is a very strong #2 at LaGuardia. 

 

[WorldTraveler]

UA has a future at JFK as well.....

It isn't fun or not fun. It is simply a reality that AA has the 2nd largest number of seats at LGA. But AA serves far fewer of the top business markets nonstop from NYC than either DL or UA and they opted to pull out of several other airline hub markets such as ATL in order to add flights to much smaller cities in the SE.

a fun fact for you now. Do you realize that US' competitor on the BOS-LGA-DCA Shuttle has a revenue premium on not just the BOS-LGA leg of the Shuttle for the local market but also NOW the LGA-DCA leg. that ATL-based airline gets a revenue premium from LGA to US' hub which results in DL getting a higher share of total local revenue even though US gets a slightly higher percentage of traffic.

But then DL gets higher average fares from LGA to CLE, ORD, and MIA compared to carriers that have hubs on the other ends of those routes.

Just like on LAX-NRT, the only directly competitive Asia-US route which AA and DL fly, customers are willing to pay DL a premium for its services compared to other US carriers.