CF: AA Isn't as Weak in Asia As You Might Think

[eolesen]

Running 2012 data out of AirTraffic.Amadeus.com (it's a subscription site, sorry), I'm getting somewhat similar data to Mark.

Apologies for the formatting -- for whatever reason, IPB is not behaving with the CODE tags as it used to...

Top origins US-BR:
FY2012, generating at least 10 pax per day

Orig Pax2012     Daily2012
---- ----------- -----------
MIA  628936      1723
NYC  504372      1381
ORL  346115      948
LAX  127298      348
LAS  80573       220
CHI  80154       219
BOS  77117       211
WAS  66789       182
ATL  62810       172
SFO  60947       166
HOU  60118       164
DFW  51621       141
DEN  26381       72
DTT  26004       71
PHX  25935       71
SAN  18087       49
CLT  18037       49
SEA  16097       44
PHL  15600       42
TPA  15354       42
BWI  12175       33
MSP  11937       32
MSY  10856       29
SLC  10250       28
RDU  8790        24
STL  8290        22
AUS  7397        20
IND  6284        17
CLE  5874        16
BNA  5777        15
PDX  5393        14
PIT  5134        14
EGE  5083        13
SAT  5027        13
FLL  4605        12
MKC  4362        11
CMH  4313        11
CVG  4013        10
MEM  3857        10
SNA  3825        10

Top destinations US-BR:
FY2012, generating at least 10 pax per day

Dest Pax2012     Daily2012
---- ----------- -----------
SAO  1126905     3087
RIO  539774      1478
BSB  146698      401
BHZ  139014      380
MAO  82419       225
POA  74611       204
SSA  71525       195
CWB  68654       188
REC  57146       156
FLN  40422       110
VIX  40033       109
GYN  33019       90
FOR  24504       67
IGU  19928       54
NVT  12077       33
NAT  10255       28
CGB  8821        24
CGR  8785        24
JPA  6241        17
LDB  6213        17
MCZ  5772        15
MGF  5016        13
AJU  4610        12
BEL  4245        11
BPS  4209        11
RAO  3874        10

Top O&D Markets 2012:
FY2012, generating at least 10 pax per day

Orig Dest Pax2012     Daily2012
---- ---- ----------- -----------
MIA  SAO  249342      683
NYC  SAO  239332      655
ORL  SAO  168676      462
NYC  RIO  115984      317
MIA  RIO  91740       251
ORL  RIO  81188       222
LAX  SAO  62757       171
MIA  MAO  62445       171
MIA  BHZ  43629       119
MIA  BSB  42838       117
LAS  SAO  42643       116
CHI  SAO  41503       113
SFO  SAO  29771       81
HOU  RIO  28750       78
NYC  BHZ  26937       73
DFW  SAO  25302       69
WAS  SAO  25160       68
BOS  SAO  24405       66
LAX  RIO  23160       63
ATL  SAO  21568       59
MIA  SSA  20149       55
MIA  REC  19709       53
ORL  BSB  19670       53
NYC  BSB  18681       51
WAS  RIO  18260       50
DTT  SAO  17789       48
ATL  RIO  17229       47
HOU  SAO  16930       46
MIA  POA  16248       44
ORL  BHZ  15581       42
LAS  RIO  14707       40
BOS  RIO  14137       38
NYC  POA  13270       36
MIA  CWB  12934       35
SFO  RIO  12759       34
CHI  RIO  12191       33
NYC  CWB  11797       32
DEN  SAO  11302       30
DFW  RIO  11246       30
BOS  BHZ  10947       29
NYC  SSA  10895       29
ATL  BSB  10738       29
CLT  RIO  9731        26
MIA  GYN  9463        25
SAN  SAO  9412        25
MIA  FLN  9329        25
NYC  REC  9238        25
PHX  SAO  8947        24
ORL  REC  8862        24
ORL  CWB  8456        23
MIA  VIX  7980        21
NYC  FLN  7547        20
SEA  SAO  7519        20
NYC  VIX  7359        20
MSP  SAO  7179        19
WAS  BSB  7035        19
NYC  GYN  6962        19
ORL  POA  6733        18
DEN  RIO  6566        17
ORL  SSA  6505        17
MIA  FOR  6416        17
LAX  POA  6298        17
PHX  RIO  6079        16
PHL  SAO  5963        16
NYC  FOR  5308        14
BOS  VIX  5231        14
SLC  SAO  5228        14
LAS  BSB  5036        13
LAX  BSB  5014        13
LAX  BHZ  4819        13
LAX  CWB  4666        12
MIA  IGU  4497        12
TPA  SAO  4424        12
ORL  FLN  4319        11
SAN  RIO  4253        11
CLT  SAO  4161        11
NYC  IGU  3988        10
SEA  RIO  3987        10
ORL  MAO  3950        10
RDU  SAO  3854        10
STL  SAO  3844        10
ORL  GYN  3770        10
BWI  RIO  3730        10
MIA  NAT  3716        10
AUS  SAO  3691        10
TPA  RIO  3686        10
MSY  RIO  3658        10

 

[FWAAA]

The O&D between CLT and Brazil is underwhelming. As are the numbers from PHL.

 

[eolesen]

Both could easily be sacrificed if/when TAM joins oneworld.

Interestingly, look at the market share split out of PHL:

Month org dst MSA1 airlines1 MSA2 airlines2 msa3 airlines3
----------- ---- ---- ------------ ------------ ------------ ------------ ------------ ------------
1 PHL SAO 25% AA-AA 25% UA-UA 15% DL-DL
2 PHL SAO 25% DL-DL 20% AA-AA 20% UA-UA
3 PHL SAO 25% AA-AA 25% UA-UA 15% DL-DL
4 PHL SAO 35% US-JJ 20% DL-DL 20% UA-UA
5 PHL SAO 30% UA-UA 20% AA-AA 15% US-JJ
6 PHL SAO 40% US-JJ 20% UA-UA 20% DL-DL
7 PHL SAO 35% US-JJ 20% UA-UA 15% AA-AA
8 PHL SAO 30% US-JJ 20% AA-AA 20% UA-UA
9 PHL SAO 25% AA-AA 20% UA-UA 20% DL-DL
10 PHL SAO 25% AA-AA 20% UA-UA 15% DL-DL
11 PHL SAO 25% AA-AA 20% DL-DL 20% US-JJ
12 PHL SAO 30% AA-AA 20% DL-DL 15% UA-UA
​

You'd think that US would have a more commanding share than AA or UA at PHL. Apparently not.

 

[NewHampshire Black Bears]

robbed,
I'm not honestly sure how to answer your question... it is simply too early to know what will work and what won't... but all the signs are there to say that AA/US are going to face the very same issues after the merger as they have faced before AA's BK and merger, without success.

Sooooo...WT, Del-Dah.....'TRIED' to get INTO JAL's 'Nickers' in 09' Only to get SHOT DOWN ? Hmmm, I did not know that ! Veeedddy Interesting !

And as for defending Yourself, I, being one who backs down from NO ONE,...Defend you to the HILT.
BUT,
(Jesus,Mary and Joseph)..WHY do most of your responses have to be the Equivilant of the 'FEDERALIST PAPERS' ?

 

[WorldTraveler]

My lengthy posts on many occasions have served the purpose of showing that the airline business is not one of emotions or simply connecting dots. US airlines – all of them – are for-profit enterprises that must obtain market-acceptable returns for their investors which is rooted in being at least marginally profitable, something the US airline industry has not done on a consistent basis since Orville and Wilbur.
All data is there only to tell a story. I appreciate that FWA, E, and MAH want to use data to show what is happening in the US-Brazil market but they miss the point of all that data. It really doesn’t matter whether NYC or MIA is the larger market. What the data clearly shows is that:

1. NYC-Brazil is a highly competitive market which AA, DL, and UA plus JJ all serve on at least a nonstop basis plus they connect traffic thru other hubs in addition to those nonstops.
   
2. MIA is a monopoly market for AA with respect to US carriers.
   
3. There is no other global region from the US where one carrier has a monopoly from the largest or second largest gateway.
   
4. There have been no opportunities for any other US carrier to meaningfully serve MIA-Brazil since UA shut down its MIA hub obtained from Pan Am.
   
5. There are a number of Open Skies initiatives coming in the next couple years as well as a new batch of frequencies in the US-Brazil market that will be available this fall with applications due within a couple days.

But larger than US-Latin America or Brazil, there is a mountain of data that shows that AA has not successfully competed with its network peers in competitive markets for well over a decade.
It means nothing to tout how well AA does in Latin America when huge chunks of it are not open for competition.
It is far more meaningful to talk about the US to LHR market which has been liberalized and in which other carriers, even though they are much smaller, are obtaining average fares and market share comparable to AA in key markets.

It is far more meaningful to talk about US-Asia which was almost entirely opened to competition with the most significant event being the first round of HND slots and granting of ATI for AA/JL and UA/NH. The evidence shows that even w/ a JV, AA still has a larger gap between its average fares in the US-Japan market than what any other US airline has between the US and Latin America.
Anyone can tout how important DFW-ICN will be in building AA’s presence in Asia but they must also recognize that KE and its partner DL both serve a number of gateways that will provide far more capacity than AA will have in the US-S. Korea market. The US-China market shows how much lower AA’s average fares are compared to other carriers. Nearly all of AA's TPAC network is directly competitive w/ UA which obtains significantly higher average fares than AA.

As for DL-JL, Bears, I’m not sure if DL ever really expected that JL would choose it but it doesn’t change that AA-JL is still far smaller than DL in the US-Japan market.

AA has yet to show that it can successfully compete in highly competitive markets. When you look at NYC, it is very apparent that AA has lost huge chunks of the market to competitors over the past few years –and several of them continue to add capacity in key AA markets. Add in that US’ network strategy including in int’l markets has been to find niche market and fortress hubs to serve to avoid head-on competition, and it is all the more puzzling how anyone can believe that AA is going to significantly grow in the next few years as it gives up many of the cost cuts it won in BK and has to face even more competition in the top global markets.
I and everyone gets that AA has been in BK and a 10 year long restructuring but I have said for years that AA would have to face the reality of how much its competitors have grown at AA's expense and how much more prepared they are to limit AA's growth and the benefits of the merger just as AA tries to get back on its feet.

AA not only faces the very certain entrance of another carrier in the MIA-Latin America market but also will have to deal with WN’s ability to fly throughout the US from Love Field, removing a key structural advantage which AA has had in N. Texas for years. Again, it’s not hard to see how well AA has done in N. Texas when it has had a protected market.

When you factor in that AA/US will be spending millions of dollars on a merger and will be trying to avoid operational disasters and strategic missteps that AA and US have both made that have given their competitors huge chunks of markets they have acquired in the past, AA has a very, very tall order in the next couple of years as barriers to entry fall in its top markets and as it tries to make its merger work.

 

[eolesen]

All data is there only to tell a story. I appreciate that FWA, E, and MAH want to use data to show what is happening in the US-Brazil market but they miss the point of all that data.

The data seems to speak pretty loudly on its own.

I know that in your world, word counts and insight tend to trump empirical data. As it should.

In the world of analysis, he with the most data usually wins arguments.

AA not only faces the very certain entrance of another carrier in the MIA-Latin America market but also will have to deal with WN’s ability to fly throughout the US from Love Field, removing a key structural advantage which AA has had in N. Texas for years. Again, it’s not hard to see how well AA has done in N. Texas when it has had a protected market.

DFW has always been open to competition, which is why DL kept a hub there for almost 20 years.

Wright's impact is being far overstated lately. The restriction on where WN can fly is being dropped, but the total number of gates is still capped, and WN already holds 80% of the gates. They won't be able to grow substantially unless they manage to invent a 15 minute turn, or somehow get hold of more gates, both of which are doubtful.

My guess is DAL will wind up like ATL. They haven't taken on DL head to head at ATL as much as I'd expected they would, and unlike ATL, they have some core markets they can't easily abandon (i.e the hourly and half-hourly services in AUS-HOU-SAT) without losing some business. Frequency is king there.

You'll see WN add DAL-MDW/LAX/BWI, probably something to Florida, and perhaps PHX and LAS. They'll pull service from smaller cities like ELP/LBB/AMA/TUL/LIT/CRP in the process.

Beyond that, they have to start pulling frequencies from the triangle routes, and reducing in SAT/AUS/HOU would be as damaging as DL deciding to put the LGA-BOS and LGA-DCA shuttles on 90 minute headways and use those slots elsewhere.

Feel free to refute the math if you wish.

 

[MAH4546]

AA has put in its application with DOT to connect Sao Paulo to all five PMAA hubs. LAX-GRU daily starting "late 2013" and ORD-GRU daily starting "late 2014."

 

[MAH4546]

AA has put in its application with DOT to connect Sao Paulo to all five PMAA hubs. LAX-GRU daily starting "late 2013" and ORD-GRU daily starting "late 2014."

 

[Mach85ER]

AA has put in its application with DOT to connect Sao Paulo to all five PMAA hubs. LAX-GRU daily starting "late 2013" and ORD-GRU daily starting "late 2014."

Good news. Hopefully it will help the Pacific presence with service options from Asia to Brazil/Chile/Argentina along with DFW.

I rough figures show GRU-LAX probably has to be a 777.

 

[IORFA]

I think Delta did it with a 767, though not positive. I do know it lasted roughly 9 months, of which it was suspended and not daily. I bet this service will suffer the same fate if we are awarded the rights. I think there is sufficient demand, just not enough willing customers to pay what it will cost. There are numerous options for cheaper flights with one connection over multiple hubs.

 

[Mach85ER]

I guess they did. I think it can be done in the 767-300, just don't see it making it westbound without passenger or cargo hits.

 

[AirwAr]

I think Delta did it with a 767, though not positive. I do know it lasted roughly 9 months, of which it was suspended and not daily. I bet this service will suffer the same fate if we are awarded the rights. I think there is sufficient demand, just not enough willing customers to pay what it will cost. There are numerous options for cheaper flights with one connection over multiple hubs.

With the LATAM GRU hub on one end and AA's LAX Focus City on the other, it might just work. Would LAX be a natural connection point to Japan for the largest population of Japanese outside of Japan?

 

[Mach85ER]

I think the straight line shortest distance lies somewhere between DFW and MIA. LAX is a detour

 

[eolesen]

Absolutely, especially with the JAL partnership.

BTW, TAM doesn't really have a hub per se at GRU. They offer service to a few domestic destinations from GRU, but the bulk of their domestic operation is at CGH, which can be anywhere from an hour to three hours away from GRU by car or bus. Traffic is so bad it is almost easier to connect via BSB to/from CGH if you're in the business districts on the side of the city like Faria Lima than it is to take a cab out to GRU...

 

[WorldTraveler]

Absolutely, especially with the JAL partnership.

BTW, TAM doesn't really have a hub per se at GRU. They offer service to a few domestic destinations from GRU, but the bulk of their domestic operation is at CGH, which can be anywhere from an hour to three hours away from GRU by car or bus. Traffic is so bad it is almost easier to connect via BSB to/from CGH if you're in the business districts on the side of the city like Faria Lima than it is to take a cab out to GRU...

Please tell me you are kidding.

With an average of 120 mainline jet flights and over 20,000 seats per day, JJ’s operation at GRU is the largest that any carrier has anywhere in S. America and on par with the mainline operation at many hubs in the US.

If you want to look at CGH, G3, not JJ, is the largest carrier. At GRU, it is just the opposite.

There are many hours of the day (with the sun shining) when transfers between GRU and CGH take 45 minutes or less.

The data seems to speak pretty loudly on its own.

I know that in your world, word counts and insight tend to trump empirical data. As it should.

In the world of analysis, he with the most data usually wins arguments.

DFW has always been open to competition, which is why DL kept a hub there for almost 20 years.

Wright's impact is being far overstated lately. The restriction on where WN can fly is being dropped, but the total number of gates is still capped, and WN already holds 80% of the gates. They won't be able to grow substantially unless they manage to invent a 15 minute turn, or somehow get hold of more gates, both of which are doubtful.

My guess is DAL will wind up like ATL. They haven't taken on DL head to head at ATL as much as I'd expected they would, and unlike ATL, they have some core markets they can't easily abandon (i.e the hourly and half-hourly services in AUS-HOU-SAT) without losing some business. Frequency is king there.

You'll see WN add DAL-MDW/LAX/BWI, probably something to Florida, and perhaps PHX and LAS. They'll pull service from smaller cities like ELP/LBB/AMA/TUL/LIT/CRP in the process.

Beyond that, they have to start pulling frequencies from the triangle routes, and reducing in SAT/AUS/HOU would be as damaging as DL deciding to put the LGA-BOS and LGA-DCA shuttles on 90 minute headways and use those slots elsewhere.

Feel free to refute the math if you wish.

There is no doubt that DAL is restricted by gates but it hardly means that WN is going to operate at DAL post-Wright the way it does before. Not only will WN very likely pull a lot of its shorthaul regional flying from DAL and replace it with longhaul flying but they also can use 737-800s which will seat as many passengers as network carrier 757s.
Of course you and the AA fanclub wants to believe that the fall of the Wright Amendment will have a minimal impact on AA but WN can easily add 100 flights to cities that do not have service to DAL today including the top 20 markets in the US including all of the major east and west coast markets, They can still maintain a presence in the current short-haul markets (although at greatly reduced frequencies) and can pull enormous amounts of traffic away from DFW.

The gate limitations also mean that WN will likely connect very little traffic at DAL and will instead use the flights it does operate to focus on the local market.

Unlike any other multi-airport city, DAL is closer to the largest concentration of business than DFW.

I’ll be happy to watch the numbers and let them speak for themselves – but it would be an absolutely fatal mistake for AA to believe that WN isn’t capable and intent on taking a huge part of the N. Texas market that has been completely out of its reach.
BTW, if you were willing to let the numbers speak for themselves, the discussion would have ended as soon as I posted AA’s average fare data percentages relative to other carriers in Asia. No other US carrier has an average fare deficit to its peers in a region as great as AA has between the US and Asia.

AA has put in its application with DOT to connect Sao Paulo to all five PMAA hubs. LAX-GRU daily starting "late 2013" and ORD-GRU daily starting "late 2014."

Given that AA already holds 50% of all US carrier frequencies between the US and GRU and will gain yet one more with the merger with US, it will take a COMPLETE absence of interest by every other carrier for AA to gain another frequency, which is highly unlikely to happen.