DL CEO hints at PVG hub

[WorldTraveler]

nope. I am looking at what DL can do.

why don't you look at the route maps for airlines post WWII in Japan.

NW built Tokyo as a global transit point. China is not in that game even with all of their flights. China participates in very little global transit but rather focus on distributing traffic within China.

Don't think that some of the same people who want to do the same at PVG aren't aware of that history and the potential for China to play in that role.

You and the naysayers simply want to stay in a world where the current system exists. DL doesn't think that way.

 

[commavia]

Still definitively trotting out the same baseless tropes without any semblance of a cogent argument or reasoning.  A joint business covering a destination AA doesn’t fly “can’t possibly” be positive for AA’s employees.  On what basis, pray tell, have you arrived at that gem?
 
Again – I could see that argument having some truth to it if, for example, AA were to establish a joint business partnership with a foreign carrier and then eliminate its own flying to that foreign market, thus theoretically sacrificing AA flights, and the accompanying AA staffing, at the altar of the joint business and the partner.  But that is not now, nor has that even been, in any way applicable to the AA/QANTAS joint business, which covers a region the world where AA has not operated its own metal for two decades and had very little realistic prospect of starting its own service anytime soon, anyway.  (And never mind that a joint business predicated on one carrier eliminating 100% of its capacity in the covered markets likely wouldn’t be deemed financial advantageous to the airlines themselves, let alone employees, but let’s set this reality aside for this little Magical Mystery Tour through Delta fantasyland.)
 
So in that context, what the joint business allows AA and QANTAS to do is coordinate their schedules and pricing to create the optimal revenue generation for both airlines, and in so doing, at least theoretically, funnel more passengers between AA planes in and out of HNL, LAX and DFW and QANTAS planes in and out of those same places.  More passengers and more revenue for AA, without AA having to cut a single flight or job.  So again I come back to: how was a single AA job harmed in any way by this arrangement?  I'd love to hear an example of just one AA employee whose employment was in the slightest bit harmed by the QANTAS joint business (as opposed to, for example, the now-DOA Delta-Aeromexico alliance where many Delta employees' jobs actually are tied up in capacity flown to markets covered by the scope of the agreement).
 
In any event, all of this entirely-typical ridiculousness is academic.  The reality is that Richard Anderson is a smart guy, and he knows full well that the requisite regulatory regime, let alone appropriate economic and geopolitical conditions, to facilitate a joint “hub” at PVG resembling that which Delta has at AMS with KLM today is highly unlikely to be in place anytime soon.  Just as he knew that Delta has precisely zero chance of actually moving its Tokyo hub to HND back when he floated that equally-implausible "idea," and just how he knew that CVG and MEM had little realistic prospect of a future as hubs for a merged airline when he strategically used that line in front of hostile congressman.  He’s a business man, and he knows how to play to his audience – this was nothing more, and nothing less.

 

[WorldTraveler]

and you seem to be unable to admit that AA has little reason to put its own metal in the market as long as QF serves it and QF has little reason in pulling down its own capacity in order to make room for AA.

It absolutely does matter whether a JV includes ones own metal or not.

and what AA does or doesn't do with its JVs doesn't mean squat to what DL does or will do with its own.

DL made it clear to KE that it would not agree to a JV that did not include extensive use of DL metal; DL is not going to be solely a feeder airline for KE in the US.


and it is precisely because Anderson is a smart man that he is willing to start the process of considering a JV with Chinese airlines and do it publicly. and again part of that process might well be to push KE to change its approach.
Anderson has a track record of succeeding at his initiatives. that is the part that scares you the most.

 

[commavia]

Ah ... okay ... so now we arrive at the source of this characteristically anti-AA fiction.  So the contention is that, absent the joint business, AA would be flying to Australia with its own metal?  I suppose we should just ignore the twenty years of history leading up to the joint business, when AA had the opportunity to operate its own flights to Australia, while partnering with QANTAS in a less-strategic way, and yet always chose not to.  Fascinating.  So we're once again back to the AA/QANTAS joint business "can't possibly" be pro-AA employees despite the fact that ... it is.  Excellent.  Glad we cleared that up.
 
As for Anderson - good for him that he's "willing to start the process," "publicly" or otherwise, of considering something that isn't likely to happen anytime soon (again, just like the public musings about how Delta wanted to move its Tokyo hub to HND, or about how CVG/MEM were safe as hubs post-merger).  Congratulations to him on his "track record."  In the meantime, the reality on the ground is highly unlikely to change anytime soon.  (And by the way - on the subject of "track records," was there any other news out this week, unrelated to China, about Anderson's ability to get an ATI/JV deal, tied up with a bilateral between the U.S. and another country, done?  Any news at all on that front?)

 

[WorldTraveler]

AA has flown to Australia.

perhaps it was before your time.

DL doesn't negotiate trade agreements. When they are negotiated by their respective governments, DL takes advantage of the opportunity.

Meanwhile, AA in the first quarter shrunk its int'l network more than DL or UA and still posted a lower RASM growth number (it was actually RASM shrinkage) while DL was flat. We haven't heard from UA.

 

[commavia]

Uh ... yeah ... I'm aware that AA has flown to Australia (and New Zealand, and other countries in Oceania) in the past.  Not only was it not "before [my] time," but I myself flew on some of these very flights.  The point I was making was that AA concluded, both before and after it had a marketing relationship with QANTAS, that flights to Australia were not viable.  And yet somehow now, we're supposed to believe, presumably, AA could have concluded differently because ... because there is no reason.  There is absolutely no reason to believe that AA, which seemed extremely happy to leverage its less-strategic QANTAS partnership for two decades and effectively piggy back off the dominant player in the market would all of a sudden changed its mind and decided that it wanted to fly down under itself.  So, in the face of reality, we're now back to evading the question asked - what AA employee, at any level, and in any work group, was in any way disadvantaged or had their economic interests harmed one iota by AA's joint business with QANTAS?  The answer?  There is no example of such an employee.  Indeed, AA's employees benefit from the QANTAS joint business because it funnels more people and more revenue onto AA planes.
 
But, once again, all of this is a typical sideshow distraction from the point at hand - which is that Delta isn't likely to be building any joint "hub" at PVG anytime soon because the regulatory, economic and geopolitical framework simply does not exist to facilitate such a thing.  Richard Anderson can go right on musing about it out loud all he wants, but it has even less of a chance of happening than the JV that Delta thought they were getting with Aeromexico in Mexico - a country which actually does have many of the conditions that would be required for such an alliance construct.  Reality.

 

[WorldTraveler]

and strangely, DL and UA can both profitably operate their own flights to Australia including from LAX.


and you don't want DL to build anything or even grow at PVG because AA is truly SOL in China with no partner of any size and it has to compete with DL and UA from LAX and UA from ORD.

the only route where AA has a chance of doing relatively well is from DFW.

JV or not, DL and UA are in far better shape to not just China but in every country in Asia-Pacific than AA.

 

[commavia]

Good for Delta and United that they want to put capacity into Australia.  Congratulations - genuinely.  But once again, AA concluded otherwise, long before the QANTAS joint business and long before Delta ever even showed up in Australia - again, likely because of the distances involved, the fleet required, and the fact that AA already (again, long-pre-joint-business) had a successful partnership with the dominant carrier (then and now) in the market.  Seems smart to me.  If you've already decided you're not going to fly to Australia, anyway, why not deepen ties with your existing partner who happens to dominate the U.S.-Australia market?
 
As for China - Delta fantasies aside, back here in reality, AA and Delta by this summer will operate precisely the exact same number of routes nonstop between the U.S. and China (6 each) to the same three markets (PEK, PVG and HKG).  It's true that Delta will offer more seats, owing to larger planes and the lone-surviving (for now) NRT-China route to PVG, but alas that matters far less than the network access provided.  As such, characterizing AA's presence in China as "SOL" is laughable but, of course, entirely expected considering the source.  In reality, it's fairly impressive that given all the myriad of historical legacy advantages that we're constantly reminded that Delta has in Asia drawing upon literally 5-6 decades, AA has managed to build a  nonstop U.S.-China network broadly comparable to Delta in a matter of basically ten years.  "SOL."  Right.
 
I will completely agree, though, that United is, indeed, in a "far better shape" in Asia than either AA or Delta - and will remain so - given that it controls the absolute best hub in the U.S. to serve that region, which is SFO.  SFO is to United's Asia franchise as MIA is to AA's Latin America presence - the hub that serves as the definitive "keys to the kingdom," an impenetrable fortress that no competitor can ever fully replicate.

 

[WorldTraveler]

you can continue to try to hold onto QF's coattail as the salvation that AA has in Australia but AA carries nowhere near the amount of traffic that DL carries on its own aircraft to Australia - not even counting the Virgin JV.

and, no, DL did not have or buy a historic advantage in China. NW's strength was in Japan. Most of DL's presence to China has been grown since the merger. and despite your repeated statements that Japan is a dying market which DL will lose, DL's share of the local US-Japan market is still the largest of any carrier and not eroding. and DL has significant average fare advntages to both AA and UA to/from japan.

And DL will have more flights to China this summer than AA, unless you are trying to forget about LAX-PVG - which I'm sure you are.

and DL's average fare advantage to AA to/from China is significant - so not only is AA outsized but DL is delivering higher average fares.

and unlike UA which has sat on AA on every route the two have flown to Asia outside of DFW, DL is now taking the role of sitting on top of whatever AA tries to do to Asia from the west coast.

so, yes, AA's position in China is at a disadvantage to DL as well as UA. and as DL continues to develop and strengthen partnerships with Chinese carriers, it will make AA's job of expanding to Asia even harder.

 

[commavia]

Once again - feel free to go reread what I wrote - but for comprehension, instead of formulation of meaningless retort, this time.  What I said was that AA and Delta will have precisely the same number of nonstop U.S.-China flights this summer - and yes, that includes LAX-PVG.  That's a fact.  Interestingly, what's equally factual is that Delta won't be building a "hub" at PVG anytime soon.
 
Reality.

 

[WorldTraveler]

and since DL connects cities to China via Japan, it is just as valid of a connecting hub whether you can admit it or not.

IN fact, we've already been thru this with E but based on schedules for this summer, DL's NRT hub will be the largest US carrier hub serving Asia.

AA clearly can't call JL's NRT hub as its own but you are sure mighty fast to cling to your JV partner's coat strings....can you admit that absent JL, AA has a fraction of the presence to Japan and NO PRESENCE to Australia.

define your terms one way or the other. You can't cling to JL and QF's network thru JVs when it is convenient but then refuse to acknowledge the service that US carriers have there.

DL has a hub at NRT just as JL does.

DL flies its own aircraft to Australia while AA does not.

pick one argument and stick with it.

 

[FWAAA]

Meanwhile, AA in the first quarter shrunk its int'l network more than DL or UA and still posted a lower RASM growth number (it was actually RASM shrinkage) while DL was flat. We haven't heard from UA.

No, Delta's Consolidated PRASM was down 1.5% in the first quarter, not flat. Flat was the goal, remember? from the Delta investor update:

For the March quarter, unit revenues declined 1.5% as a function of 1.5 points of currency impact.

http://ir.delta.com/files/doc_downloads/investor%20updates/1Q15/Investor-Update-April-2-2015_v001_y59ioj.pdf

I don't think you are a pathological liar, but your consistent aversion to posting actual facts makes me wonder.

DL's PRASM for the month of March was flat, and was down in both Jan and Feb, resulting in a decline for the quarter.

 

[WorldTraveler]

DL's RASM will outperform AA's and DL's revenue will grow because its RASM decline was offset by capacity gains.

DL undoubtedly DID plan that.

UA would have to have positive RASM to grow revenue; that seems like a stretch based on what AA and DL have reported.

this thread is about PVG and Asia, btw. but I guess you are trying to post in another topic to avoid keep a thread alive that highlights what AA did for the quarter.

 

[FWAAA]

That's the typical response for WT when called out for making stuff up. You've apparently just given up on posting actual data and actual facts, right?

https://www.psychologytoday.com/articles/201305/how-spot-sociopath

 

[WorldTraveler]

the facts are that AA underperformed DL's RASM for the quarter, AA's revenues shrunk because they also shrunk capacity while DL's grew, and AA still has the $650 million in impaired currency in Venezuela to deal with while DL is getting close to finishing off its fuel hedges.

Given that a 3% difference in revenue for AA could amount to several hundred million dollars, the total difference in revenue plus the impaired currency is more than enough to put AA and DL on similar footing on the bottom line - and DL doesn't have any merger expenses that it has to continue to incur.

What you can't accept is that I have nailed the big picture for years and all you can do is grovel around looking for a few minor errors that don't change the outcome one iota.

at least commavia is big enough to admit that AA will have fewer seats even on the flights the two do operate nonstop to the US and he can't argue with the fact that DL outperforms AA on average fares to China as well.