CUN Saturday Service
- Thread starter jcw
- Start date
If true, not surprising - as predicted months ago. Just like the additional premium/O&D-heavy routes out of LGA, this is a natural and logical progression for AA to better utilize assets (crews, aircraft, facilities, slots, etc.) and continue to fully leverage the synergies of the combined network.
The rumored (although apparently soon-to-be-confirmed) Saturday-only CUN markets - MCI, RDU, BNA, PIT - all make sense as places where AA is one of the largest single carriers, has a comprehensive local offering in terms of nonstop routes, and has a strong penetration into the local corporate/premium travel market. Going forward, as the U.S.-Mexico bilateral is opened up, I would not be at all surprised to see additional markets that also fit this description - like AUS, STL and WAS - added to this roster of seasonal/weekend flying to CUN.
The rumored (although apparently soon-to-be-confirmed) Saturday-only CUN markets - MCI, RDU, BNA, PIT - all make sense as places where AA is one of the largest single carriers, has a comprehensive local offering in terms of nonstop routes, and has a strong penetration into the local corporate/premium travel market. Going forward, as the U.S.-Mexico bilateral is opened up, I would not be at all surprised to see additional markets that also fit this description - like AUS, STL and WAS - added to this roster of seasonal/weekend flying to CUN.
commavia said:
Is it a logical progression? Doesn't feel like it. Is this really a better utilization of assets? I don't believe so. Is there really that much local traffic at the airports...it appears very little connecting traffic. Seems it would have been a better utilization of assets to put the additional capacity at current hubs.
commavia said:
Just because an airline is the largest single carrier in the market...doesn't it mean it can be successful doing non-hub to non-hub flying.
I hope they're successful...but I just don't get this logic.
AirwAr said:
Yes - it is. AA is starting to do this more and more for the same reason that Delta, United and USAirways have been doing it - apparently successfully - for years.
AirwAr said:
Yes - it is. This type of flying is perfectly tailored to utilizing assets - not just aircraft, but also crews, facilities, etc. - that would otherwise be underutilized or not utilized at all on Saturday, which is one of the slowest days of the weak for business travel but one of the busiest days of the weak for leisure travel to places like CUN.
AirwAr said:
Yes - there is. Filling an A319 or 737 to CUN on a Saturday is a lot like filling a 767 from JFK to Europe in the summer - not hard to do. The flights are likely lower yield than flights to a hub on a weekday, but on Saturday when business demand drops dramatically versus peak days of the week these flights need to just cover the marginal cost of operating a flight with a plane that may well otherwise just sit around. And with fuel as cheap as it is, AA apparently feels confident it can get yields sufficient to cover those marginal costs.
These markets don't need connecting traffic - demand is high because CUN is one of the largest outbound leisure O&D markets for U.S. vacationers owing to its relatively security and proximity. Thus the reason why, collectively, U.S. carriers operate literally hundreds of flights there each week.
AirwAr said:
Well apparently the revenue management and network planning teams at AA, Delta and United all disagree - because all of them do exactly this.
eolesen
Veteran
- Jul 23, 2003
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These are quasi-captive markets where you have huge numbers of elites. Adding these flights means more seats open out of the hubs, which can go to fill both local O&D as well as the spokes which aren't as captive.
In addition to the incremental revenue potential, keep in mind there aren't a lot of options to burn miles in those quasi-captive markets, and this may allow for some increased mileage burning. In this type of market, there is less risk in allowing more award seats than might be offered from a hub.
In addition to the incremental revenue potential, keep in mind there aren't a lot of options to burn miles in those quasi-captive markets, and this may allow for some increased mileage burning. In this type of market, there is less risk in allowing more award seats than might be offered from a hub.
wings396
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- Aug 20, 2002
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I agree, at one point US ran Saturday only service to MCO from several non hub stations. I recall that there was even service from RDG to MCO with a 734.They filled them up,so there must have been enough demand to justify the service, which is the same in this case.
eolesen said:
wings396 said:
Indeed. As said previously, I would not be surprised to see more of this in the future. As Mexico's bilateral liberalizes, I think there is opportunity for AA to do this same thing - Saturday A319/737 to CUN - from other markets where it has a strong brand penetration like STL, WAS, CMH, AUS etc. Additionally, I think there's additional opportunity to do this with some places in the Caribbean - like, say, Saturday flights from LGA to NAS and AUA.
commavia said:
For some reason, AA didn't really do these things in the past...and they could have. Maybe they knew it would just be full of award travel tickets. And just cause other airlines do doesn't necessarily mean it makes financial sense for AA. Look at how long US ran the TLV flights at a loss.
You mentioned merger synergies as a reason as to why this makes sense now...how is there a "synergy" in these non-hub leisure markets that now gives the combined carrier the ability to do it.. It seems the only thing that has changed is the management. Could it be the same decisions that has lost AA's ability to capture a revenue premium?
Well, one potential upside...these could be great non-revving opportunities for us.
AirwAr said:
Same with day-of-week scheduling, banked hubs, peak extra sections, etc. - all things AA didn't do previously but is doing now, apparently with success.
AirwAr said:
There are two ways in which I think merger synergies support this type of flying.
First, it is just the added heft and market penetration of the combined airline in these markets. AA was a relatively strong player in all four of these cities, but the "new AA" is now a substantially stronger carrier in all of them with more flights to more places unified under a single brand, single frequent flyer program, single corporate contract structure, etc. That means more AA-loyal or AA-leaning customers in all of these places who can help fill these low-risk flights at yields that cover marginal cost. Secondly, the combined network of the merger may also facilitate the fleet utilization that makes these flights possible and feasible by providing greater flexibility on a slower travel day (and Saturday is one of the slowest for business travel) to send an otherwise underutilized asset (aircraft) to a hub.
As one highly simplified example, rather than AA flying a half-empty 738 RDU-DFW each Saturday morning that handles mostly westbound connecting flows and a half-empty A319 RDU-CLT each Saturday morning that also handles mostly westbound connecting flows, AA can now consolidate down to a single 738 RDU-DFW, fill the plane and pack the A319 on a rotation to CUN instead.
AirwAr said:
I'm skeptical that there have really been any major decisions made by AA management - at least recently - that have led to AA "[losing its] ability to capture premium revenue?" The only one that comes to mind were the shortsighted and noncompetitive premium catering cuts, but most of those were promptly rescinded. Otherwise, AA's new management continues apace at upgrading AA's longhaul premium hard product and, despite expectations otherwise, has not only maintained but loudly trumpeted the A321T highly-premium transcon product.
jimntx
Veteran
Burning award miles is a profitable activity for the company's passenger to engage in. Unused miles are considered a liability on the company's balance sheet; so, if we can get them to burn those miles flying to CUN from these locations, so much the better.AirwAr said:
For some reason, AA didn't really do these things in the past...and they could have. Maybe they knew it would just be full of award travel tickets. And just cause other airlines do doesn't necessarily mean it makes financial sense for AA. Look at how long US ran the TLV flights at a loss.
You mentioned merger synergies as a reason as to why this makes sense now...how is there a "synergy" in these non-hub leisure markets that now gives the combined carrier the ability to do it.. It seems the only thing that has changed is the management. Could it be the same decisions that has lost AA's ability to capture a revenue premium?
Well, one potential upside...these could be great non-revving opportunities for us.
jimntx said:
I don't quite agree...selling miles is a profitable activity. If AA really wants to get miles off the books...a better way would be to loosen up the controls on the inventory system wide.
Rather than these flights being an eventual evolution of the merger, as some have suggested, I just see this more as a difference in mind set of the LUS executive team vs the LAA executive team. Sure, maybe these flights will break even...or even make money, but does that add to improved RASM? I guess we'll see.
AirwAr said:
Not really much to agree or disagree with - what was previously stated is a fact. The selling of frequent flyer miles is, indeed, a profitable activity - but it's also one that creates a liability on AA's balance sheet that is reduced as outstanding frequent flyer miles are redeemed.
AirwAr said:
Why does it have to be one or the other? I think this represents both a synergy arising from the combined network of the merged airline and a difference in mindset from the new executive leadership.
AirwAr said:
Again - AA isn't spending lots of money to run these flights. They will utilize assets - planes, people, facilities - that already exist and would, in many cases, otherwise be sitting idle on one of the slowest business travel days of the week. As such, the incremental, marginal revenue these flights generate largely just need to cover the incremental, marginal variable costs - crew pay, fuel and landing fees.
commavia said:
Obviously I don't know how close you are to the decision makers...so you could be right. However, if your just along for the ride like I am, then I would say that many of these decisions will not necessarily make a splash in the grand skeem of things.
You know, in football, if you lose the quarterback, it can be quite obvious why the team is doing poorly. Dallas Cowboys come to mind. However, if you're missing your first string player at tackle how obvious is it that blocks aren't done with the same effect. Or you're missing your star line backer, the replacement line backer was just slightly slower.
These are "what ifs" that we'll never know for sure.
commavia said:
Not when they expire after 18 months of inactivity. Again...burning miles does not bring in revenue...simple as that.
By the way...I do have faith in our executives that they're making the right long term decision for the company...it's more that I'm challenging your reasons for why these types of flights are good for the company.
AirwAr said:
Incorrect.
When AA sells an AAdvantage mile (to a credit card company to give to a cardholder, to AVIS to give to a renter, to Hilton to give to a guest, etc.) or deposits one directly in a flyer's account based on flight activity, a liability is instantly created and remains on the company's balance sheet until it expires or is redeemed. In general in accounting, this liability is called "unearned revenue," but in the specific context of the airline industry it is typically referred to as "air traffic liability."
As such, burning miles actually does generate revenue because the frequent flyer's redemption of the miles - for a free flight, a bouquet of flowers, whatever - constitutes AA's having "earned" the revenue. When and only when the revenue is "earned" can it be booked on the income statement as revenue, and until then (or, again, until it expires) it remains a liability on the balance sheet.
All that being said - I highly doubt the decision to introduce these flights was made solely on the basis of providing mileage burning opportunities, anyway. As others have said, it was likely just another contributor to what these flights may make sense as a low-risk way to utilize otherwise-underutilized assets.
