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- Dec 21, 2002
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Pressure by Southwest hurt AA
By CYNTHIA WILSON Post-Dispatch
updated: 07/17/2003 10:09 PM
Competition from low-cost leader Southwest Airlines was likely a major factor in American Airlines'' decision to cancel service to 27 cities from Lambert Field and reduce the number of flights it offers to other destinations.
Southwest, which operates 67 daily nonstop flights from the East Terminal at Lambert, offers competing service to 13 of the 27 cities where American canceled service, effective Nov. 1. The two airlines will continue to compete on five other routes, including to three cities in Florida.
American, the world''s largest airline, laid out its latest plans for St. Louis on Wednesday, when it announced it would cut service here by more than half to strengthen its Chicago and Dallas hubs. The plan, American said, is to shift much of the connecting traffic that now comes through St. Louis to those other hubs, leaving Lambert with flights mainly used by passengers leaving and coming here.
A spokeswoman for American said the 27 cities had high operating costs and low profits. The reason we picked those routes is because they were not performing well financially, said Julia Bishop-Cross.
Industry experts say American was getting hammered on those routes because it had to compete on fares with Southwest.
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Tom Parsons, chief executive of BestFares.com, said Southwest''s $34 one-way specials made it especially hard.
When they ran a deal, it was not uncommon for Southwest to run St. Louis to 10 or 11 cities for $68 round-trip - which American had to match, Parsons said.
American is forcing connections through (Dallas and Chicago) where they have more planes, and they don''t want them to go through St. Louis because they''re not making (as much) money, Parsons said.
American hopes the cuts also mean St. Louis-area travelers will fill 50 percent or more of the seats being offered at Lambert under the slimmed-down schedule, Parsons said.
Some flights, such as those to Vancouver, British Columbia; Honolulu; and Shreveport, La., probably warranted cancellation, because they likely didn''t generate enough local business, said Richard Aboulafia, senior aerospace analyst for the Teal Group in Fairfax, Va.
That''s a sign that the hub at Lambert is in decline, Aboulafia said.
But even if the St. Louis routes where American did not compete with Southwest were doing well, it might have canceled them in favor of routing passengers through Chicago, because that''s where the carrier sees growth.
Parsons said American has always played second fiddle to United Airlines in Chicago. But this may be a good time to apply pressure on its chief rival.
Now is the best time to strike, when everyone''s not sure what United''s future is, Parsons said. Business travelers are irritated with United. American is concentrating on stealing United''s passengers.
Bishop-Cross said American will add more American Eagle flights at Chicago''s O''Hare International Airport. But no other flight additions have been announced for that hub or American''s hubs in Dallas and Miami.
American has available seats on many flights at those airports, Bishop-Cross said. And the airline believes those extra seats will accommodate many of the passengers who now connect through St. Louis.
American hasn''t said if it plans to move any large jets based at Lambert to Chicago. Nor has it notified its pilots union of any planes to be reassigned to Dallas or Chicago.
But a spokesman for the pilots union said Thursday it would not be a surprise if pilots are reassigned.
Whatever happens in Chicago and Dallas, some industry experts say American is giving its St. Louis hub a chance to become profitable by cutting routes and relying more on smaller planes to the cities it will continue to serve.
Area travelers will notice the difference. Only 53 of 207 daily flights American will offer this fall will be on its own larger jets. Of the remaining 154 flights, 85 will be on regional jets and 69 on turboprop planes.
American will offer fewer flights to cities on its larger jets than it will on turboprop airplanes, but only three new cities, Cincinnati, Indianapolis and Springfield, Mo., will be moved from jet service to turboprops this fall.
Some travelers may find the ride more cramped and a little bumpier.
But American stands a better chance of improving its bottom line, Aboulafia said.
Turboprops make sense on many short routes, he said. They make a lot of sense on routes of less than 250 miles, and a fair amount of sense or routes up to 600 or 700 (miles). They''re going to have better economics than regional jets, especially since you can get used props for relatively little money.
Bishop-Cross said American hopes the new schedule will help the airline be profitable. If that proves to be true, then we look for even more opportunities to offer more flights from St. Louis.
Pressure by Southwest hurt AA
By CYNTHIA WILSON Post-Dispatch
updated: 07/17/2003 10:09 PM
Competition from low-cost leader Southwest Airlines was likely a major factor in American Airlines'' decision to cancel service to 27 cities from Lambert Field and reduce the number of flights it offers to other destinations.
Southwest, which operates 67 daily nonstop flights from the East Terminal at Lambert, offers competing service to 13 of the 27 cities where American canceled service, effective Nov. 1. The two airlines will continue to compete on five other routes, including to three cities in Florida.
American, the world''s largest airline, laid out its latest plans for St. Louis on Wednesday, when it announced it would cut service here by more than half to strengthen its Chicago and Dallas hubs. The plan, American said, is to shift much of the connecting traffic that now comes through St. Louis to those other hubs, leaving Lambert with flights mainly used by passengers leaving and coming here.
A spokeswoman for American said the 27 cities had high operating costs and low profits. The reason we picked those routes is because they were not performing well financially, said Julia Bishop-Cross.
Industry experts say American was getting hammered on those routes because it had to compete on fares with Southwest.
Real Estate & Rentals (196)
Dining & Entertainment (174)
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Home Improvement & Gardening (167)
Medical (151)
Services (143)
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Furniture (49)
Movies (48)
...more on Ad Zone
Tom Parsons, chief executive of BestFares.com, said Southwest''s $34 one-way specials made it especially hard.
When they ran a deal, it was not uncommon for Southwest to run St. Louis to 10 or 11 cities for $68 round-trip - which American had to match, Parsons said.
American is forcing connections through (Dallas and Chicago) where they have more planes, and they don''t want them to go through St. Louis because they''re not making (as much) money, Parsons said.
American hopes the cuts also mean St. Louis-area travelers will fill 50 percent or more of the seats being offered at Lambert under the slimmed-down schedule, Parsons said.
Some flights, such as those to Vancouver, British Columbia; Honolulu; and Shreveport, La., probably warranted cancellation, because they likely didn''t generate enough local business, said Richard Aboulafia, senior aerospace analyst for the Teal Group in Fairfax, Va.
That''s a sign that the hub at Lambert is in decline, Aboulafia said.
But even if the St. Louis routes where American did not compete with Southwest were doing well, it might have canceled them in favor of routing passengers through Chicago, because that''s where the carrier sees growth.
Parsons said American has always played second fiddle to United Airlines in Chicago. But this may be a good time to apply pressure on its chief rival.
Now is the best time to strike, when everyone''s not sure what United''s future is, Parsons said. Business travelers are irritated with United. American is concentrating on stealing United''s passengers.
Bishop-Cross said American will add more American Eagle flights at Chicago''s O''Hare International Airport. But no other flight additions have been announced for that hub or American''s hubs in Dallas and Miami.
American has available seats on many flights at those airports, Bishop-Cross said. And the airline believes those extra seats will accommodate many of the passengers who now connect through St. Louis.
American hasn''t said if it plans to move any large jets based at Lambert to Chicago. Nor has it notified its pilots union of any planes to be reassigned to Dallas or Chicago.
But a spokesman for the pilots union said Thursday it would not be a surprise if pilots are reassigned.
Whatever happens in Chicago and Dallas, some industry experts say American is giving its St. Louis hub a chance to become profitable by cutting routes and relying more on smaller planes to the cities it will continue to serve.
Area travelers will notice the difference. Only 53 of 207 daily flights American will offer this fall will be on its own larger jets. Of the remaining 154 flights, 85 will be on regional jets and 69 on turboprop planes.
American will offer fewer flights to cities on its larger jets than it will on turboprop airplanes, but only three new cities, Cincinnati, Indianapolis and Springfield, Mo., will be moved from jet service to turboprops this fall.
Some travelers may find the ride more cramped and a little bumpier.
But American stands a better chance of improving its bottom line, Aboulafia said.
Turboprops make sense on many short routes, he said. They make a lot of sense on routes of less than 250 miles, and a fair amount of sense or routes up to 600 or 700 (miles). They''re going to have better economics than regional jets, especially since you can get used props for relatively little money.
Bishop-Cross said American hopes the new schedule will help the airline be profitable. If that proves to be true, then we look for even more opportunities to offer more flights from St. Louis.
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