American Airlines makes a move to dominate at LAX

[IORFA]

Kev3188, the Compass crews keep saying February. I'm pretty sure the PR said first quarter '15.

 

[Kev3188]

Sounds good. Thanks!

 

[WorldTraveler]

AA still owns it's gates at Love and gets the gates back. I believe it's not until 2024, though, so not really relevant for the short term.

What AA has at LAX is double what DL has - 34 gates. And it's working on more.

and the world can move enormously in 10 years, esp. in aviation.

if you think WN doesn't already have a plan in place that covers all it needs to do in the next 10 years to ensure WN not only increases its presence in N. Texas but also ensures that AA could make no difference in the market even if it did return.

remember what 10 years did in NYC for AA.

as for LAX, you do realize that DL right now offers more seats than native AA or UA and AA has a seat advantage only because of the US merger which brought lots of 321 flights into AA's count?

you also realize that DL actually carried more LAX local passengers in the 2nd quarter than nAAtive did? and that DL's revenue is nearly identical to nAAtive's?

I am all for growth for anyone... but the notion that 1. AA is going to dominate the market doesn't square with the reality that other carriers do very well up against AA with a lot less airport resources and that 2. AA is going to succeed at gaining access to gates while other carriers will not.

the larger question is why AA cannot win in markets where it faces plenty of competition and why it keeps trying to gain structural biases that don't solve the problem?

it's not just you. the fact that an AA exec used the term dominate and talked about preferential gate access says it is a flawed mindset that goes all the way back to Crandall's days when he thought AA should build its route system around markets that AA could dominate by keeping other carriers out.

it is clear decades later that Crandall set AA up for unattainable goals. Unless AA wants to build its own airports, AA cannot dominate any market because airports are public facilities that require and eventually will provide unfettered access to all competitors - regardless of whether the subject is LAX, LHR, Latin America, or N. Texas

 

[LD3]

 Unless AA wants to build its own airports,

Well I am sure if they could, DL would try and block it, like little ol Allegiant....

 

[kirkpatrick]

WT, I can't believe you still can't see that reducing coach seats by a few hasn't hurt us.  We're going for premium pax and we're getting them.  We have a brand new subfleet that pax and crews love to fly, a phenomenal reliability level, and frequency no one can match.  Admit it's working.

As for US's move to terminal 6, it puts them a short shuttle away via AA gate 44, inside security.
 
MK

 

[IORFA]

Plus the tunnel is open again. So they can walk. Also, AA added a direct shuttle to the "Eagles nest" from T6. So instead of going to T4 to go change to a bus that goes by T6 again just to get to the nest. Better all the way around. And better for profits, Mesa is now an AA codeshare instead of US Air codeshare. That works for pax soooo much better.

 

[WorldTraveler]

WT, I can't believe you still can't see that reducing coach seats by a few hasn't hurt us.  We're going for premium pax and we're getting them.  We have a brand new subfleet that pax and crews love to fly, a phenomenal reliability level, and frequency no one can match.  Admit it's working.

As for US's move to terminal 6, it puts them a short shuttle away via AA gate 44, inside security.
 
MK

I'd be happy to believe it if the stats said it was working.

so far, LAX-JFK fares are up for everyone. AA lost overall revenue in the market while other carriers, mostly DL picked it up.

AA's costs went down very little because they offset the cost reduction from more efficient aircraft with more flights.

The product is great and I am sure people love it but that doesn't change the economics.

and given that JFK-LAX is one of the largest markets in the country and AA's strategy was to reduce capacity in order to try to get higher fares - which so far hasn't happened - it is hard to see where that strategy is leading to dominance.
 
 

Plus the tunnel is open again. So they can walk. Also, AA added a direct shuttle to the "Eagles nest" from T6. So instead of going to T4 to go change to a bus that goes by T6 again just to get to the nest. Better all the way around. And better for profits, Mesa is now an AA codeshare instead of US Air codeshare. That works for pax soooo much better.

and AA's costs have gone up as well.

AA is now operating a small transit system in order to move passengers across their fur-flung operation. maybe it works but it isn't cheap, esp. when DL and UA don't have to do it and still get within a few percent of AA's LAX local revenues with a single terminal operation.

yes, I expect AA will push more passengers thru their terminals as they upgrade aircraft.

I absolutely agree with AA's strategy to fight a whole lot harder for LAX than they did in NYC.

however, the resources that AA needs to truly "dominate" the market just don't exist and won't exist for years to come - and even then AA has absolutely no assurance that they can have them and others cannot.

and, really, AA, DL, and UA are very close to being in each other's top markets from LAX anyway. AA can perhaps add MSP and DTW while DL could throw in ORD, DEN, and EWR and add a couple more MIA and transcon but the differences between each carrier's LAX networks is pretty small and always will be. DL already has the highest average aircraft size at LAX and there are many markets that are operated on large RJs that could sustain a mainline aircraft. AA cannot park mainline aircraft at the Nest.

and more significantly, AA does not need to dominate the market in order for it to be profitable. AA, DL, and UA all have very similar shares and average fares. the key to much higher profitability for AA requires making their flights to Asia as profitable as those by other carriers.

 

[jimntx]

WT, I can't believe you still can't see that reducing coach seats by a few hasn't hurt us.  We're going for premium pax and we're getting them.  We have a brand new subfleet that pax and crews love to fly, a phenomenal reliability level, and frequency no one can match.  Admit it's working.

As for US's move to terminal 6, it puts them a short shuttle away via AA gate 44, inside security.
 
MK

Kirkpatrick, you must resign yourself to the (WT-stated) idea that AA is doomed financially.  The Oracle of College Park, GA has decreed thusly.  Decrees must not be challenged--especially with annoying facts.  If it isn't what DL did or would do, it will not work.

 

[jcw]

in case anyone did not know this - DL has never had to shuttle passengers between terminals it the entire history of it's airline - seen when it did mergers - they just clicked their red slippers and all the gates magicially appeared next to each other at every airport over night
 
No one can realize there is construction at certain airports and when that construction is done it will be a seamless connections between terminals - although I realize no one at AA or LAX is aware there is construction going on and did not realize the terminals are being connected
 
Only at DL terminals could something like this happen

 

[FWAAA]

I may be incorrect, but I believe that a portion of (or maybe all of) AA's LAX bus system expenses are paid by LAWA because of LAWA's failure to provide sufficient main terminal gates to handle AA's combined operation. IIRC, it runs a couple million dollars or more per year.

 

[WorldTraveler]

a portion perhaps but AA operates far more gates than it could have fit into one terminal so I have a hard time believing that LAWA picks up the majority of the tab.

adding the terminal 6 gates was not LAWA's idea nor was it necessary... it was primarily to accommodate US' operation which AA didn't mind losing since they were even more removed from AA's southside operation.

and I am fully aware that bussing is necessary in many airports but other carriers don't have to operate in as many locations to get the same amount of revenue as what AA has to do in LAX.

and even if AA gets all the gates that some people think, their operation will be spread out over a large amount of space compared to other carriers. and it is still a long ways off before AA will have all of the gates some people think they will have and there is also no assurance that other carriers might gain additional gates as well.

for now, AA, DL, and UA are very similarly sized at LAX and there is no firm evidence that anyone is pulling away from a crowd that is closer together than has existed at LAX for many years.

 

[jcw]

yes we all forgot - AA bought those gates from UA not for US flights for future expansion - however knowing that both AA and US are operating separately (don't remind us we know DL did their merger the fastest of all and they are the best at merging airlines when the back office systems were basically the same) - yes we know DL is bigger than every airline in every city and DL was so successful in LA building it's hub it had to get out of dodge to build a hub in SEA
 
All makes sense - fantasy land

 

[silverbird007]

Remember Delta and NW were much smaller airlines, so of course it was much easier. That's why Delta is #3 today, it started out much smaller. Delta should be okay as the #3 airline, they were #3 in the 90s.

 

[jimntx]

Remember Delta and NW were much smaller airlines, so of course it was much easier. That's why Delta is #3 today, it started out much smaller. Delta should be okay as the #3 airline, they were #3 in the 90s.

Oh, you just had to do it, didn't you?  Now, we'll get a 3-page dissertation on the AA expands at LAX thread on why you are wrong even if the government data appears to support your statement.  The government failed to include important measures like (my personal favorite from "that" thread) moonthumbs per available seat gallons.  An area of measure in which DL has always been greater, faster, deeper and smarter than any other airline that has ever existed or ever will exist.

 

[WorldTraveler]

yes we all forgot - AA bought those gates from UA not for US flights for future expansion - however knowing that both AA and US are operating separately (don't remind us we know DL did their merger the fastest of all and they are the best at merging airlines when the back office systems were basically the same) - yes we know DL is bigger than every airline in every city and DL was so successful in LA building it's hub it had to get out of dodge to build a hub in SEA
 
All makes sense - fantasy land

I suppose if it makes you feel better to throw hyperbole into the discussion, go ahead.

I never said that AA couldn't or wouldn't expand at LAX.

I have never doubted that they would be the largest airline.

I have said that the notion that AA would gain a huge gate advantage over other airlines is a fantasy and that despite having fewer gates other airlines have managed to keep up with AA in the LAX local market.

If AA chooses to use LAX as a hub, then it's not anyone else's fault that they view LAX as a local market for which they will allocate their resources in order to gain the greatest impact in the local market.

 

Remember Delta and NW were much smaller airlines, so of course it was much easier. That's why Delta is #3 today, it started out much smaller. Delta should be okay as the #3 airline, they were #3 in the 90s.

except in the 3rd quarter, DL was the largest airline based on revenue, which to Jim's great consternation is a statistic that is used throughout all types of business.

go figure.