AA's performance on LAX-PVG

[WorldTraveler]

It has been about a year since AA began LAX-PVG (Shanghai) service.... just weeks after AA announced it, UA, the largest carrier between the US and China, announced that they would also begin service on the same route in addition to the PVG service UA has from a number of other US gateways, including nearby SFO.

Since both carriers announced and started the service about the same time, the results are about as clear of a comparison of how two carriers perform in a market as can be found in the US airline industry.

Data shows that UA outperforms AA on the flight by double digit percentages in a number of financial metrics. The results shouldn't be surprising since UA outperforms AA by a similar margin on every other transpacific route on which the two compete.

Further, publicly available cost data indicates that AA isn't coming anywhere close to generating enough revenue to cover its costs on the flight and will likely chalk up losses for the route exceeding millions of dollars per year, also not much different than what it does with the rest of its transpacific network.

While no airline publicly reports its financial performance at a route-specific level to its employees, there is enough data available that it doesn't take too long for a carrier's performance on any route to become fairly public knowledge.

After providing hundreds of millions of dollars in concessions to the company, AA employees need to know that AA continues in the same transpacific strategy that has cost it hundreds of millions of dollars even though AA is a relatively small player in the US-Asia market.

 

[FrugalFlyerv2.0]

Data shows that UA outperforms AA on the flight by double digit percentages in a number of financial metrics. The results shouldn't be surprising since UA outperforms AA by a similar margin on every other transpacific route on which the two compete.

Can you post the numbers on some of the metrics?
Also, do you know how the financial metrics of this flights compare to some of AA's other USA-Asia flights?

 

[WorldTraveler]

Frugal,
the data is sourced from US government information which it maintains for all US airlines and for foreign airlines that are in joint ventures or have antitrust immunity with US carriers.
Because it is competitive information, it is "fenced" depending on the citizenship of the person who is viewing it and cannot be published in any open forum.

There have been published articles which have spoken to US carrier performance on specific routes but those who post exact numbers endanger the well-being of US carriers as a whole since there is data that foreign carriers may not have access to but which they could use in their route planning exercises.

That said, the DOT does publish entity level data (ie US carrier transpacific performance) which is published in Aviation Daily among other publications, but that publication is copyrighted and its data cannot be published on this website.
There are websites which have allowed their members to post this copyrighted data and you should be able to find it via search engines.

The caveat with this data is that although there are industry-standard methodologies for revenue proration (necessary to determine how much revenue is allocated to an int'l flight vs. the domestic flights which feed it), the standards for cost allocation for airlines are much less standardized. on that basis, making judgments about profitability have to be done very carefully but revenue data can be much more meaningful - and the entity which the DOT publishes does have revenue and cost information along with a profitability number.

There are also private data sources such as have been mentioned here by other people which do not contain the same restrictions and in some cases the data overlaps.

The reason why I mention LAX-PVG, a new flight for AA, is because it follows the exact same trend which exists for every other transpacific flight on which AA and UA directly compete and that is that AA underperforms UA by a significant amount and the percentage difference between them is fairly consistent between markets and over time.

AA's best performing transpac flight is DFW-NRT which does not have competition and on that flight it obtains fares comparable to what other carriers obtain for comparable transpacific service.

 

[FA Mikey]

So really you just pulled it from your butt.

 

[WorldTraveler]

nope.. it is from publicly available data sources... they just can't be published.

I understand the loyalty you and others have to AA and it is not my intention to attempt to change that.

It is my intention to make those AA employees and stakeholders know how AA's strategies - including those which have been funded by significant employee concessions - are working.

Considering that AA's network issues will have a significant effect on US employees post merger, they need to understand the issues at stake as well. US has done a very good job of rationalizing its network to eliminate unprofitable flying and in pursuing opportunities which generally have become profitable over time for the company.

Labor unions either can obtain this data or contact consultants who have access to it if they believe it is in the best interest of their leadership groups to have access to it.

IN addition, there are other public and private data sources which confirm the same trends. They aren't flukes.

 

[FrugalFlyerv2.0]

Frugal,
the data is sourced from US government information which it maintains for all US airlines and for foreign airlines that are in joint ventures or have antitrust immunity with US carriers.
Because it is competitive information, it is "fenced" depending on the citizenship of the person who is viewing it and cannot be published in any open forum.

OK, let me paraphrase: instead of posting a data table/chart or graph, can't you state the 'numbers' in your analysis? For example - UA's average X metric is Y, whereas AAs average X metric is Y% less (or more).
You're basically saying that you've had access to the data, crunched the numbers, came up with a result/conclusion and we have to take your word for it. I'm not saying you're right or wrong, but you show no data to back up your statement.

There have been published articles which have spoken to US carrier performance on specific routes but those who post exact numbers endanger the well-being of US carriers as a whole since there is data that foreign carriers may not have access to but which they could use in their route planning exercises.

Is there a link to the articles? Or can you provide the name of author or publication so that I can search for these articles?
English is my second language but this statement almost contradicts what you've written above (data only available to the chosen few yet there are articles about the restricted data).

That said, the DOT does publish entity level data (ie US carrier transpacific performance) which is published in Aviation Daily among other publications, but that publication is copyrighted and its data cannot be published on this website.
There are websites which have allowed their members to post this copyrighted data and you should be able to find it via search engines.

Again, you don't have to past the actual data table, but at least state the numbers in your analysis. Or provide the link. I'm too busy (too lazy?) to search for these data, however I am was intregued by your conclusions about the performance of AA on routes such as LAX-PVG, but it is hard to just take your word. You might be 100% correct in your analysis, but you provide 0 data for me to either accept or reject your premise.

 

[FA Mikey]

This is yet another thread to distract people away from his inability to discuss or backup his remarks on the MIA-MXP thread. Same here as there no data to back it up. "Hey everybody look over here see the shiny keys?"

 

[WorldTraveler]

I was happy to discuss the MIA-MXP topic but it was shut, apparently because it degenerated into a personal spitting match, including yet another attempt by one user to focus on reputation ratings of this site as a measure of how accurate the message is. Truth is never subject to popularity and never will be.

The entity level data for US carriers for the 4th quarter of 2012 has been published in Aviation Daily on May 29, 2013 and June 5, 2013.

 

[737823]

About a year? AA launched the route April 5, 2011, more than TWO years ago.

http://www.dallasnews.com/business/headlines/20101020-American-Airlines-to-expand-Los-Angeles-32.ece

Josh

 

[WorldTraveler]

alright... time flies... but did UA not announce and begin the flight about the same time?

And if it has really been two years, then it is all the more of concern that the revenue performance continues to lag.


Since I am doing a couple things at once right now, I will continue by saying that in the DOT data which is cited in Aviation Daily above, AA's loss per ASM on the Pacific was 2.32, meaning they lost 2 1/3 for every seat mile flown. The only other airline that had a larger loss for any entity was UA over the Atlantic that lost more than twice as much money per ASM.

As public financial documents show, AA's operating performance was better than UA's in the fourth quarter and it was only in the 1st quarter of 2013 when UA got serious about cutting capacity, esp. on the Atlantic.

AA had losses in every region except for Latin America; UA had losses in domestic and Atlantic but was profitable in Latin America and the Pacific; DL was profitable in every entity based on DOT info.

The DOT data very much correlates with public financial information but provides the detail to explain how well each company performs relative to its peers.

 

[FA Mikey]

We all know how accurate the message is. Delta great American bad, blah blah blah. Your rating is simply a reflection of your constant desire to spin the same crap all the time. Is there any surprise that the delta board is such a waste land? No one can have a conversation with out you posting about how delta will wreak havoc on the earth as it take over. After all isnt deltas only strength is taking over airlines who knew how to do it right? delta has been a poor example of growth, except for there take over of NWA, Western, Pan Am ect. there go discuss how delta failed and then had to take over a smarter company to get it on its way.

 

[jimntx]

In other words, AA is once again maintaining a route that cost a lot more to operate than revenue generated. Just like Moscow and New Delhi out of ORD. Eventually, after a multi-million loss has to be admitted to in financial filings, they will cancel this route--just like Moscow and New Delhi.

 

[737823]

IIRC UAL did start LAX-PVG immediately after AA. Back in 2008 they received the route authority but plans got put on hold due to fuel prices and subsequent downturn. I recall hearing AA is looking to add LAX-PEK, and have applied for LAX-GRU (in addition to ORD). Not uncommon to see AA flights to China with 4/16 pax in F (including non-revs and upgrades), also many open seats in C. Hopefully reconfiguring the 772s will help the routes perform. My feeling is AA will continue eating the losses as China is a strategic market to serve from LAX and longer term will lead to profitability.

Josh

 

[AANOTOK]

IIRC UAL did start LAX-PVG immediately after AA. Back in 2008 they received the route authority but plans got put on hold due to fuel prices and subsequent downturn. I recall hearing AA is looking to add LAX-PEK, and have applied for LAX-GRU (in addition to ORD). Not uncommon to see AA flights to China with 4/16 pax in F (including non-revs and upgrades), also many open seats in C. Hopefully reconfiguring the 772s will help the routes perform. My feeling is AA will continue eating the losses as China is a strategic market to serve from LAX and longer term will lead to profitability.

Josh

Of course they will. In another couple of years I will be asked to take a pay and benefit cut and/or forgo my raise so we can continue to fly to the strategic China since eventually it will lead to profitability.
Got it all figured out.

 

[FrugalFlyerv2.0]

Since I am doing a couple things at once right now, I will continue by saying that in the DOT data which is cited in Aviation Daily above, AA's loss per ASM on the Pacific was 2.32, meaning they lost 2 1/3 for every seat mile flown. The only other airline that had a larger loss for any entity was UA over the Atlantic that lost more than twice as much money per ASM.

Thanks for posting a number (getting you to do that is as painful as pulling teeth ). Although this still doesn't exactly explain how you've reached the conclusion(s) you have made in your first post. So I'll have to take your statements with a large chunk of salt (especially since I don't have a subscription fo Aviation Daily).