Aa Screwup Helps Southwest

[twaokc]

Southwest Airlines is expanding its service in St. Louis after the downsizing of American Airlines' hub in that city's airport.

Executives with Dallas-based Southwest said Thursday that they will add nonstop flights to Los Angeles and Fort Lauderdale, Fla., from St. Louis beginning March 7. Fares will be introduced at $99 each way.

"We're simply responding to customer demand and changes in the marketplace," said Joyce Rogge, the airline's senior vice president of marketing.

American announced in July that it was cutting its St. Louis hub roughly in half, reducing it to 207 daily flights from 417. The move eliminated about 2,000 jobs and took effect Nov. 1.

Southwest has been expanding slowly but steadily as its major competitors cut back. The carrier, the largest U.S. airline that has been consistently profitable since 2001, recently announced new service to Philadelphia and has been adding new transcontinental flights.

 

[chisprings]

I agree. The screwup being the purchase of TWA's assets to begin with. They should have just let TWA die on its own.

Southwest adds a handful of flights. Wow!

AA moves its assets out of a loss leading hub and focuses on more profitable routes - admirable.

 

[FibberMcGee]

I agree. The screwup being the purchase of TWA's assets to begin with. They should have just let TWA die on its own.

Southwest adds a handful of flights. Wow!

AA moves its assets out of a loss leading hub and focuses on more profitable routes - admirable.

Don't start down that road again. Its well trodden and old now. Stop the hatred...jeesh.

 

[AAmech]

Whats up with STL? The yeilds are so low in that city that even SW was cutting service there until AA decided to pull back. Go figure!

 

[AAviator]

Fibber- there is no hatred. TWA had lower costs than AA. TWA was unable to make money in a decade and a half, STL being their primary hub. AA tried it, couldn't make money, and left. Hatred or sound business?

twaokc, time to move on......

 

[Hopeful]

Did anyone stop to think that MAYBE STL just doesn't fit into AA's system and plan? The fact that it was TWA's hub, albeit a main hub for them, AA has ORD and DFW. AA learned it's lessen with too many hubs when it opened and subsequently closed RDU and BNA. I understand the impact on STL and its people when AA cut service, but to say that AA is making a huge mistake allowing Southwest to take over is somewhat over exaggerated. It's possible that AA never needed STL to compliment its current network. I think that what AA did with its purchase of TWA was just to eliminate another carrier. If STL becomes a hub for Southwest, then you might see an awful lot fo one-stops coast to coast, where AA and most others fly nonstops. There's no way AA is in a position to operate unlimited major hubs at the expense of their profitable ones. If Southwest expands, remember that they do not over hire like traditional carriers do. They will contract maintenance out, hire gate agents who will also clean and push and deice aircraft. Althought they may be the Knight in White armor for STL, it will not be a windfall for for the former TWA/AA folks!

 

[MCI transplant]

I agree. The screwup being the purchase of TWA's assets to begin with. They should have just let TWA die on its own.

Southwest adds a handful of flights. Wow!

AA moves its assets out of a loss leading hub and focuses on more profitable routes - admirable.

This is a tipical a.a. responce! Blame all your screw ups on the TWA purchase, and stick your head in the sand!!!!!!!! :down: Signed, another redheaded stepchild!

 

[Andre1980]

So what if WN puts a few more flights in! AA is doing what is right by focusing on its strengths, AA can't mind STL anymore since the yields are not good and the O/D traffic there is thin and plus with the added threat of their fortress hubs being targeted by the expanding LCCs. They need to focus on the importance of providing more flights out of their most important hubs and protect that market share in those markets.

 

[FibberMcGee]

I just wonder ,now that STL is closed for all intents and purposes, what the excuse will be for losing money? The handfull of former TWA people won't be enough to be the cause. Truth be told, STL was not that far behind the other hubs as far as profitability and I think it would have been profitable soon. The yield was so low simply because AA charge too little in many cases. Also, AA knew there was not the O/D market typical for a hub city, it was meant to be an overflow hub so to speak, relieving DFW and ORD. It was a good purchase at the time-saved a lot of AA jobs in the long run but 9/11 changed everything. Are you aware that Mr. Arpey never visited STL during his tenure even though STL was its best performing hub operationally on the system? If you want to blame the economy post 9/11 for the demise of STL, that's fair. The people of STL (95% former TWA people) did what was asked of them. That is a fact you cannot deny. I truly hope that there are no more layoffs at AA and that it will soon return to strong financial growth even if it is without me.

 

[LGA Fleet Service]

Arpey, for better or worse is a numbers guy.He simply ran the numbers and they didn't add up,so the hub was eliminated.Much like Crandall did with RDU and BNA when their numbers didn't add up.

I had read somewhere that under Carty, STL was viewed as"protected" not in the sense that he wouldn't reduce service levels, but in the sense that he wouldn't eliminate it.When Carty went and Arpey took over,that "protection" if you will was lifted and we see what resulted.


In my opinion the reduction in service in STL is a bad idea,especially in terms of the timing.A gradual scale back after the seasonal peak would have been a better course of action.But what do I know, I am just a clerk.


There is much talk of "Competing and not retreating", I see a full blown retreat where STL is concerned.

I think we erred greivously by not keeping the 717 in the months immediately following the completion of the purchase.As I've said before, with the retirement of the F100's we will have a gap in capacity between the Eagle 135/145's and the 80.

Yes, yes, I know..adding another fleet type and the related expense,but we already had the infrastructure built in.Training,maintenance,we had it all but couldn't get rid of it fast enough. :down:

By returning the 717's to Boeing we have aided Air Tran in their fleet renewal program.Look who is going to be operating those same aircraft into DFW soon...
Remember that when you see a 900 series Air Tran tail number.


Look at an RGG sometime,any market served by the F100 can handle a 717.
The 717 was tailor made for the STL route structure.I mean come on, who is going to subject themselves to a regional jet on STL-EWR or STL-LGA? Or any of the other segments that are far too lengthy for an RJ.

 

[AAviator]

Here's the future for AA's seat gap, AND MD-80 replacement.

http://www.embraer.com/english/content/aer...mercial/erj175/

Check out the range from DFW.

717 was/is neat, but a dying fleet type. The EMB product will kick the #### out of the 717.

 

[FWAAA]

Southwest Airlines is expanding its service in St. Louis after the downsizing of American Airlines' hub in that city's airport.

Executives with Dallas-based Southwest said Thursday that they will add nonstop flights to Los Angeles and Fort Lauderdale, Fla., from St. Louis beginning March 7. Fares will be introduced at $99 each way.

"We're simply responding to customer demand and changes in the marketplace," said Joyce Rogge, the airline's senior vice president of marketing.

American announced in July that it was cutting its St. Louis hub roughly in half, reducing it to 207 daily flights from 417. The move eliminated about 2,000 jobs and took effect Nov. 1.

Southwest has been expanding slowly but steadily as its major competitors cut back. The carrier, the largest U.S. airline that has been consistently profitable since 2001, recently announced new service to Philadelphia and has been adding new transcontinental flights.

If STL is such a vibrant market, then how come WN is waiting until next March to add a single daily flight to each of FLL and LAX?? B)

Wow. Two whole flights a day. That is impressive.

AA cuts a couple hundred flights and WN adds TWO??

I love AA. I love the poor souls who worked for TWA. I don't even hate STL. But if STL were such a G-D great place for a hub, then WN would be announcing hundreds of new flights, not TWO flights next March. B)

 

[MAH4546]

Despite the new LAX and FLL service, Southwest will actually be running two fewer daily flights out of STL in March 2004 than they did in September 2003.

 

[chisprings]

I agree. The screwup being the purchase of TWA's assets to begin with. They should have just let TWA die on its own.

Southwest adds a handful of flights. Wow!

AA moves its assets out of a loss leading hub and focuses on more profitable routes - admirable.

This is a tipical a.a. responce! Blame all your screw ups on the TWA purchase, and stick your head in the sand!!!!!!!! :down: Signed, another redheaded stepchild!

I find your responSe to my responSe tYpical of many hurt ex-TWA employees.

I didn't suggest in any way that the purchase of TWA's assets was the reason AA is losing money. It certainly didn't help AA's cost structure in the weakened operating environment. I think pre-TWA, many AA employees (esp. those who remember the 91-95 downturn) thought the company was expanding too quick and incurring a lot of debt for a major fleet renewal, fleet refurbishment and capital projects (MIA, JFK, LAX, DFW). TWA was just a nail in the coffin once the revenue bottom dropped out. It is clear that TWA with its lower operating costs could not even make any money in STL. AA has a higher cost structure and is generating less yield that TWA did due to the weak economy. STL was bleeding money and AA had to stop. Carty was too proud and egotistical to make the right - but hard - choices. He promised labor harmony in 1998 and failed. He erred in buying Reno Air and TWA. (Not knocking either carriers or their fine employees - they were simply strategic mistakes for AA) When I said AA should have let TWA die on its own - I meant it. TWA was a dying airline - the entire industry for many years knew that TWA was dying. TWA was not an acquisiton target because no one wanted to touch TWA debt or labor problems. Unfortunately, Carty thought he was getting something for nothing in TW's most desperate hours. Despite the advice of many - Carty went ahead with the deal. I only wish the synergy of a good economy and continued growth would have meant greater opporunity for all AMR employees (including ex-TW). Fate did not allow this. And as harsh as it may sound - I don't think AA employees from pre-TW should have to bear the brunt of hurt. It is only fair that TW employees who had weak prospects due to the failure of their legacy employer would have to bear the brunt of these hard times. Please do not forget that many AA employees have lost their jobs and suffered through pay cuts along with the 'red headed step children'. As much as I hate to see TWA gone, it may have been easier for all if TW employees had come to work in January of 2001 to find operations shut down (which is what was going to happen - trust me, TW officers were prepared to do this many weeks before Jan. 2001 but held out until the AA deal was finished) and move on with their life. They could have moved on months - if not years - earlier and would not be able to blame AA for their downfall. They also would not have been fed a false sense of hope or security by Carty.

Finally Arpey exits the bleeding STL market and allows AA to move assets to more profitable markets, end expensive operating leases and reduce fixed costs. Why didn't AA have a slow pull down and exit after the holiday season? Well, the benefit of additional holiday revenue (traditionally low-yield VFR traffic) was worth less than moving the aircraft to higher-yielding markets, laying off employees, reducing fixed costs at STL and terminating operating leases. The benefits of staying in STL a few months more through the busy holidays were less than shutting down Nov. 1st.

Southwest adding a few flights a day to the STL market is not evidence of a mistake by AA. In fact, Southwest complains about the low yield in STL as well and will operate fewer flights per day next year at Lambert than they currently do. They may be adding FLL and LAX, but they already have exited many other markets from STL. Also, AA moving capacity away from STL to markets that are more profitable for AA, does not mean that STL does not have the demand for other carriers. The market may be there for other carriers who can benefit more from STL than AA can.

Despite a large corportate base, STL just does not produce the yield airlines need to invest in a large hub operation. In addition STL offers poor terminal facilities and a poor runway configuration. Major upgrades are needed for that airport. In addition, the advent of regional jet point to point flying means that hubs are no longer dominant and weaker hubs like STL will disappear or turn into RJ centers.

AA will maintain an operation in STL that benefits its entire network. I can only hope that the improvements AA is making to the airline's balance sheet and network now (even if at the expense of STL) will secure the airline's future and ability to compete and expand moving forward. This is the best opportunity for all AMR employees active and furloughed, nAAtive and TWA.

 

[chisprings]

I just wanted to mention two other things.

First, when Arpey says we are done retreating - he means post STL. Yes we are retreating in STL - Arpey is talking about retreating moving forward. By pulling down STL - we are free to expand in other markets where we are stronger. This capacity is moving to ORD/DFW/MIA/BOS etc... In addition, we can end expensive operating leases on some TW aircraft and use others to replace the F100 capacity. We also have other aircraft parked that make more sense for us to operate in the long run. Exiting STL allows us to be stronger in other markets and use our assets more efficiently. In order to stop retreating across the network - AA had to make the tough choice to retreat in STL.

The TW 717 were great but were not good for AA. At the time the 717 decision was made - the choice was, keep 74 AA F100 or 30-something leased (expensively) B717. At that time it was clear the F100 won. In the future the 717 will not be a good fit for AA. The EMB170/190 program will kill any chance of 717 future for airlines looking at 100 seat aircraft. It is true AA needs a 100 seater - that will operate outside of the Eagle envrionment. This will depend on AA getting its house in order. I think we are off on the right path.