ChockJockey
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What about India? It seems no U.S. carrier serves it directly. What are the barriers to entry there?
CF: AA Isn't as Weak in Asia As You Might Think
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robbedagain
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i think ual may serve it from ewr but not 100% sure if they do i thought they served it at one point if not still do
AA has orders for 42 787s, 20 of them reportedly changed to 787-8s with deliveries set to begin later this year (November?) and the other 22 are 787-9s with deliveries set to begin whenever Boeing gets them built (2015 or later?).
Of course, the bigger question with 787s is "when will 787s fly again?" If it delivers the promised fuel efficiency, it would seem like the best for MIA-Asia and perhaps a good fit for PHL-Asia.
I think that UA still flies to India from EWR. AA did ORD-DEL for several years but it announced the start of the route before the 2005 oil price runup and being such a very long route, it suffered from the "lots of fuel burned to carry lots of fuel for such a long flight" issue. Interwebs rumours were that yields were not high enough, due in part to Air India's discounting. Don't know if it would work better today - fuel certainly hasn't gotten any cheaper.
ChockJockey
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Ah I see now, so they do, to Delhi and Mumbai. I guess we'll just have to see if it's in the cards for the new AA.
The other factor I forgot was that damndable Emirates, favorite of the airliners.net fanbois, with its 90 total A380s and hundreds of 777s when you add the orders plus delivered planes which is the low-fare leader to India. Dubai isn't the most ideal connecting point for a lot of destinations from the USA, but it's pretty good if you're heading to India. As EK adds flights from more and more big US cities, I don't see much hope for nonstop USA-India flights. Oneworld offers LHR connections and Skyteam offers various connections from its hubs in Europe.
WorldTraveler
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BA happens to be quite strong in India - not surprising given the historic relationship.
It is not likely worth keeping a plane in the hour for 15 hours or more to compete against a multitude of carriers that can undercut US legacy carriers.
Further, the India market is far from settled - it is going thru foreign ownership changes. It isn't worth a US carrier to develop the market in light of the unsettled and highly competitive nature of the market.
It isn't really clear that UA is making money to India now... the economics of a lot of the former CO longhaul flying were far different than they are today with much higher labor rates and higher fuel.
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UA is waiting for 787s too which might change the economics of a lot of their longhaul flights... but it comes at the price of taking on a lot of debt. There have been a couple of articles recently that have highlighted how much debt UA is taking on in the next few years - more than $15B in about 7 years and they aren't generating anywhere close to enough cash flow to cover that debt plus they have existing debt that will have to be refinanced or paid down
It is not likely worth keeping a plane in the hour for 15 hours or more to compete against a multitude of carriers that can undercut US legacy carriers.
Further, the India market is far from settled - it is going thru foreign ownership changes. It isn't worth a US carrier to develop the market in light of the unsettled and highly competitive nature of the market.
It isn't really clear that UA is making money to India now... the economics of a lot of the former CO longhaul flying were far different than they are today with much higher labor rates and higher fuel.
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UA is waiting for 787s too which might change the economics of a lot of their longhaul flights... but it comes at the price of taking on a lot of debt. There have been a couple of articles recently that have highlighted how much debt UA is taking on in the next few years - more than $15B in about 7 years and they aren't generating anywhere close to enough cash flow to cover that debt plus they have existing debt that will have to be refinanced or paid down
OP
eolesen
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AA pulling out was a combination of Emirates and BA's existing service. AA started it up before ATI, and pulled it about the time the JV was launched.
I don't have hard data to show here at the moment, but in the markets where EK is present, they've generally got ~20% share and growing, and in a lot of the core markets, they trade places with BA.
From a pricing standpoint, India's been a revenue bloodbath for the past couple years, and the dominance by the wayport triplets (QR, EK, and EY) hasn't helped much; SQ and TK also have some influence. All of them have a far better premium and economy product than any US carrier, and their costs that are a third to half that of the US and legacy EU carriers.
I don't have hard data to show here at the moment, but in the markets where EK is present, they've generally got ~20% share and growing, and in a lot of the core markets, they trade places with BA.
From a pricing standpoint, India's been a revenue bloodbath for the past couple years, and the dominance by the wayport triplets (QR, EK, and EY) hasn't helped much; SQ and TK also have some influence. All of them have a far better premium and economy product than any US carrier, and their costs that are a third to half that of the US and legacy EU carriers.
WorldTraveler
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and as I expected as well.
Given that AA-JJ-US control about 70% of all US-Brazil flights, this ensures that AA will get no new frequencies and it may significantly harm US' chances as well.
Given that AA-JJ-US control about 70% of all US-Brazil flights, this ensures that AA will get no new frequencies and it may significantly harm US' chances as well.
If LATAM and AA had an immunized joint venture, then I'd agree completely with the above. But AA and LATAM are merely in the same alliance, without any ATI. AA and LATAM will still have to compete against one another, the way AA and BA had to compete across the Atlantic until Open Skies brought approval to their long-standing requests for ATI.
If being in the same alliance as another strong carrier means no chance of additional frequencies (because the strength of both are added together), that would be similar to saying that AA could never be approved to fly to HKG on its own metal because its alliance partner, CX, currently flies most of the daily nonstops between N America and Hong Kong (and between USA and Hong Kong). CX is clearly dominant in the nonstop market.
Are there other examples where the DoT has denied an airline frequencies not merely due to its own strength/domination between the two countries, but because it belongs to the same alliance as another strong/dominant airline between the two countries? I understand aggregating the strength of the alliance partners in a determination of ATI, but I don't understand why competing alliance members' strength should influence the decision.
That said, AA is pretty dominant on its own and the DoT could certainly reject AA's requests on that basis. My somewhat esoteric question concerns your assertion that TAM's entry into Oneworld changes the equation between AA and the DoT. If I were AA, I'd argue to the DoT that LATAM could, for all we know, leave Oneworld and join Skyteam within a couple of years, strengthening Skyteam and weakening AA's position. In the Haneda allocations, of course, the immunized joint ventures should be considered, as they represent aggregations where no competition will occur. Here, AA and LATAM must still compete.
OP
eolesen
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DOT has shown in the past they don't like ATI without a commitment to OpenSkies, so the discussion of route authorities may be a moot point.
DOT also looks to see where there are underserved markets as much as anything else. Even if its a carrier who already has a large allocation of authorities. That's why DL and UA continued to get route authorities into China and Japan all these years -- they were able to prove the market they proposed to serve would serve the public good better than to allocate in a smaller market served by another carrier. There's clearly a shortage of service from the west coast to deep South America, and Brasil in particular.
DOT also looks to see where there are underserved markets as much as anything else. Even if its a carrier who already has a large allocation of authorities. That's why DL and UA continued to get route authorities into China and Japan all these years -- they were able to prove the market they proposed to serve would serve the public good better than to allocate in a smaller market served by another carrier. There's clearly a shortage of service from the west coast to deep South America, and Brasil in particular.
WorldTraveler
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Again, China and Japan have either open skies, either actual or for all practical purposes. There are enough frequencies available to allow any carrier proposals to succeed.
That is not the case with Brazil... and I have said all along that AA's position as the dominant carrier would be a hindrance to it.
Being simple alliance partners wouldn't exempt AA from gaining frequencies but the mere size of AA and JJ combined even as simple airlines makes it even harder to argue that they should gain any more frequencies. Even non-immunized codesharing involves market concentration and there is every reason to believe that AA would at least pursue that level of cooperation.
Of course AA is gunning to have the market so locked up when Open Skies does come that no one else can compete, whether AA has ATI/JV or not.
The DOT and DOJ aren't dumb enough to buy the argument that AA and JJ will just send annual Valentine cards.
That is not the case with Brazil... and I have said all along that AA's position as the dominant carrier would be a hindrance to it.
Being simple alliance partners wouldn't exempt AA from gaining frequencies but the mere size of AA and JJ combined even as simple airlines makes it even harder to argue that they should gain any more frequencies. Even non-immunized codesharing involves market concentration and there is every reason to believe that AA would at least pursue that level of cooperation.
Of course AA is gunning to have the market so locked up when Open Skies does come that no one else can compete, whether AA has ATI/JV or not.
The DOT and DOJ aren't dumb enough to buy the argument that AA and JJ will just send annual Valentine cards.
So seven slots will go to nobody? I don't think so.
AA/US will get at least seven for LAXGRU.
WorldTraveler
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again, if no one else asks for enough to cover all the slots, then AA/US will get some.... but the chances that LAX-GRU can support two daily or near daily 777s is slim....if AA adds the flights now, they will end up pulling them later and perhaps they are hoarding slots now in preparation for having to get them up in order to gain ATI/JV.
The issue is not just frequencies but parking spots and slot times at GRU.
The issue is not just frequencies but parking spots and slot times at GRU.
Application window is closed. Even in the extremely unlikely DL gets 21 slots, then AA/US gets 7. And if DL gets 21 slots, it is because DOT determined that DL has to give AA/US seven slots itself.
At the worst, AA is gaining 14 GRU slots, FYI.
