DOT Approves AS/AA LAX-MEX Route Swap

[WorldTraveler]

no, I am a bit enough boy to admit where DL is in each market.

I have never tried to argue that DL is #1 in Latin America - in any shape or form.

DL is #3, I know it, and DL's salvation is ATL which is the 2nd largest hub to Latin America in revenue and ASMs and seats.

I have also never tried to argue that DL on its own is anything but is #3 in LHR.

so, yes, I can indeed talk about

 

[LDVAviation]

And again, Delta's super-incredibly-amazingly-awesome-critically-important lead among international seats out of LAX is not nearly as important as certain dead-horse-beaters continually repeat because AA is no slouch in terms of international network breadth and depth out of LAX.  Congratulations to Delta for being larger out of LAX to international markets - for now - but the context is important, given that it's largely driven by VFR- and/or leisure-heavy markets in Mexico and Central America, and given the fact that AA offers nonstop access to notable premium/business international markets where Delta is absent (GRU, YYZ, etc.).
 
As already said - I don't think AA is too worried, what with their extensive domestic and international network out of LAX, 3-class transcons, enviable gate position (including, soon, heavy TBIT access), etc.
 
Reality.

 
 
Until Delta offers a competitive schedule from LAX to ORD, MIA, DC, PHL, and even LHR, AA has nothing to worry about.
 
On that note, isn't it telling that Delta would fly from LAX to many leisure-heavy markets in Mexico and Central America rather than from LAX to DC, ORD, and PHL?  
 
(I thought Delta could win anywhere.)

 

[WorldTraveler]

and yet DL for its leisure heavy routes from LAX gets higher average fares than AA. How does THAT happen?

maybe DL customers really do pay a premium for DL service and the premiums you think AA has really don't exist like you think.

and maybe the market is looking for AA to offer competitive schedules to BOTH Tokyo airports plus Australia - on AA metal.

 

[MAH4546]

The fares aren't high enough.
 
Delta is moving many Mexico routes to RJs, cutting service on some to seasonal, and discontinuing Manzanillo. 
 
All while AA continues to add capacity between LAX and Mexico, where it will become the largest U.S. carrier. 

 

[WorldTraveler]

while you are worrying about what DL is doing in Manzanillo, perhaps you can tell us what (besides being cxld), AA is doing with DFWBJX, DFWZIH,ORDCZM, DFWGDL,DFWQRO.

and there are another half dozen or so US-Mexico markets including MIA-CZM and JFK-CUN where AA has reduced capacity.

I guess the fares are too low... or does AA just not want to serve those markets?

In fact, the facts that you don't bother to look at or cite, DL has added more capacity from the US to Mexico than either AA or UA an din many cases more than both of them combined.

again, AA managed to pick up LAX-MEX a few months before DL starts it but DL's rate of growth is far higher from the US to ALL of Mexico.

 

[MAH4546]

AA is doing what DL is doing - adjusting capacity to appropriately fit market demands.
 
The difference is that I'm not boasting about those markets. I don't come around here with made up facts and lies about how wonderful AA is doing in certain markets. 
 
And do you just throw out a bunch of city pairs and hope your guess is right? DFWQRO went from a pair of ERJ-145s to a pair of CRJ-900s. In fact, AA replaced a ton of it's ERJ flying between DFW and Mexico with CR9s.
 
Want to guess what airline is the largest airline between the United States and Mexico? That's right, it's your favorite! 

 

[WorldTraveler]

and I have never said that capacity discipline is a bad thing... in fact, I have praised AA for matching capacity with demand.

Yes, AA reduced capacity in all of the markets I mentioned. I am more than capable of seeing the difference in gauge changes that keep seats constant; AA didn't do that.

I also haven't argued about who is largest between the US and Mexico. I know who that is.

what I have challenged repeatedly is your notion of how great AA is in LAX when in fact in one int'l market after another, including Mexico, and in the entire int'l market as a whole, AA is NOT the largest int'l carrier - and still won't be in the LAX-Mexico market when DL also gets its chance to add LAX-MEX. AA is just getting a head start.

and since AA is now the last of the big 4 to report and will do so tomorrow, do you want to guess how big of a RASM loss AA will post in Latin America? suppose that the reason why AA is adding capacity to Mexico and northern Latin America is because a lot of the markets in S. America are not doing well at all.

given that UA noted how much RASM pressure it is seeing because of the strong dollar, and AA gets a higher percentage of both its Latin and Asia revenues from foreign points of sale, the chances are very high that AA will see RASM pressure for AA like what UA showed - now and going forward.

and UA also shrank its revenues, something that AA will do as well. DL and WN are the two carriers among the big 4 that managed to grow overall revenues despite anemic RASM.

 

[commavia]

[SIZE=10pt]Some interesting commentary on this subject from Alaska's earnings call last week (emphasis mine):[/SIZE]
 

[SIZE=10pt]Mike Linenberg (Deutsche Bank):[/SIZE][SIZE=10pt] "When I look at your relationship with American, we’re a year and a half since the merger, and you’ve done a pretty good job, percentage wise, growing the revenue. But it seems like that – that it could be a much bigger deal. This recent move to transfer the Mexico City-LA authority, it’s one of many – all sorts of types of things that you could envision, at the beginning, that you could accomplish with them. And I’m just – is it what’s maybe preventing it from becoming a bigger deal? Is it the fact that they need to merge their passenger service systems, and that’s a gating factor? Or are there restrictions in your agreement with Delta that prevent you from becoming – or doing a lot more with American? What’s holding you back?"

Andrew Harrison (EVP, Alaska): "Hey, Mike. I certainly could see where your thoughts are about holding us back. We feel very good about where we are and you hit the nail on the head. Until American go to a single passenger reservation system, single certificate, they’re combining loyalty programs, which basically at the end of this year they will be one, single organic entity. That’s when our ability to do more with them really accelerates. And then you’ve seen a little bit [with the Mexico transaction], we are working on some really cool and exciting things but you’ll find that accelerate from our perspective once [US and American Airlines] become truly one."[/SIZE]

 

[WorldTraveler]

I saw that too.

given that AS and DL will separate as soon as they contractually can on both sides, there isn't any real surprise that AA and AS will do as much as they can together.

But AS still owns SEA which is at the corner of the country so there is little that AA or AS can gain unless AA wants to start flying int'l flights from SEA - which will completely negate all of the arguments that AS has made about not building facilities for int'l growth at SEA.

and it also doesn't change that AA is a higher cost producer than AS by a wide margin and higher cost than DL so AA's success will be highly limited in direct competition between AA and DL whether in SEA or any other direct int'l market but esp. over the Pacific where DL already has a significant revenue advantage to AA.\The latest DOT data shows that DL is becoming much more of an equal competitor to UA in PVG and has passed them in size to ICN on top of DL's lead in Japan.

so, it is hard to believe that AA will gain much in Asia against DL or UA even if AA expanded into more directly competitive markets.

Perhaps AA and AS will feed each other more at LAX but since the two already serve most of the Mexico markets on their own, they will just transfer routes between each other or create more internal competition on their own networks such as shifting connecting traffic that AA carries over DFW to over LAX.

Perhaps AA and AS will save each other from big bad DL but the indications are that DL is doing what it needs to do in both LAX and SEA and AA and AS haven't been able to do much about DL's growth.

let us know how you think AA and AS will help each other...

on the subject of LAX, DOT data also shows that DL's share of the LAX transcon markets continues to grow and DL's LAX-LHR came out of the box with fairly decent traffic for its first quarter.

 

[MAH4546]

One of the next steps is sharing gates at LAX, where AS underutilizes its assets and AA already uses the terminal. This will further allow AA to grow its lead as the largest and most important airline in Los Angeles.

 

[WorldTraveler]

most important? define it how you want but only if you believe that Angelinos aren't interested in traveling internationally including to Latin America and Asia - because if you want to count those seats, then AA is not the largest.

again, it's amazing how the AA fan club speaks out of one side of its mouth regarding size as long as it doesn't include a statistic such as total int'l size including from the most competitive US markets or, God forbid, the topic turns to NYC.

AA is a large domestic airline and there really aren't that many synergies that AA and AS can offer each other because their networks duplicate each other and would likely only create more internal network competition for AA.

and because AA and AS can't share revenues, all AA is doing by trying to court AS' loyalty is limit AA's own growth potential in key west coast markets like LAX-SEA and PDX.

and AS just announced a red eye LAX-BWI flight, a clear attempt to use parked airplanes and slow gates and add redeye flights of which AA has relatively few.

If they can do LAX-BWI, there are likely many others that make sense.

 

[commavia]

Still stuck on "largest" long after it stopped mattering.
 
AA is not only LAX's "largest" airline, but it also offers an impressive and comprehensive international coverage of major business and leisure markets in North America (YYZ, YVR, MEX, SJD), South America (GRU), Europe (LHR, soon double-daily) and Asia (NRT, PVG) - and that's before we even consider immunized JV partners.
 
So while we all have to continually hear this droning on and on about how Delta is the "largest" here or there - the list of "heres" and "theres" keeps getting shorter with each passing year, and each passing merger, it seems - the reality is that Delta being the "largest" airline to Latin America based largely on its (shrinking) coverage of Mexican beach resorts and Central American VFR markets matters only slightly less than Delta being the "largest" airline to Asia based on the fact that it has merely more seats to essentially the same markets that AA and United also cover.
 
Reality.

 

[WorldTraveler]

no, I am not stuck on anything.

again, you want to pretend it doesn't matter unless it has to do with the number of passengers AA carries from LAX or the size of its gate holdings.

If it actually has to do with int'l traffic, then let's not talk about size.

and your statement of DL's shrinkage is not even accurate... but truth is of course the casualty when it doesn't fit your narrative.

IN fact, DL and UA have grown more in Latin America and DL's growth to/from Mexico including resort destinations has been well above AA's.

you can whine about the metrics that are used but in market after market, DL is indeed growing now and has a larger presence than AA.

Given that the distance from LAX to PVG and Tokyo is the same regardless of the airline that flies it (DL doesn't quite have the ability to move Japan 1000 miles closer to LAX for DL flights), the number of seats and the revenue generated are the only metrics that matter.

and in both cases, DL offers more seats and generates more revenue per seat to Asia than AA or UA from LAX.

THAT is reality.

uncomfortable for you but reality nonetheless.

 

[commavia]

Blah blah blah.  As said, Delta being the "largest" U.S. airline from LAX to Latin America based on its capacity to Mexican beach resorts (which are, indeed, shrinking in several cases) and Central American VFR markets, and being the "largest" U.S. airline from LAX to Asia based on flying to the same markets as AA and United, but merely hauling around more seats, matters little.  What matters, ultimately, is comprehensive, competitive network presence - and AA has that at LAX in spades.  AA has a far more comprehensive LAX network than Delta, flying to more of the largest and most important premium business markets, and offering an extensive international network that, together with partners, provides access to major markets of consequence throughout the Americas, Europe, Asia and the South Pacific.  That is what matters, along with the fact that AA is insanely profitable.
 
Reality.

 

[WorldTraveler]

so can you make up your mind?

does size matter or does it not?

If it matters, then DL IS the largest airline from LAX to both Latin America and Asia and because of those two, the largest international airline at LAX.

Even with the addition of LAX-MEX by AA (which is really just a transfer of AS' route plus an additional roundtrip), AA will not gain in size relative to DL because DL will add the same number of seats or more in just a couple months.

would NYC be one of those most strategic markets? if so, then DL has now displaced AA as the largest airline on the JFK-LAX route, one that AA has dominated FOR DECADES.

sure, AA's revenue is going up but so is everyone else's.

again, does size matter or does it not?

if it matters, then DL is the largest airline to Asia, Latin America, and now JFK

if size doesn't matter, then dispense with your "AA is the largest" nonsense about LAX and Mexico since AA isn't the largest airline from LAX to Mexico, Latin America, or Asia but only in the domestic market and to Europe - because they offer one more TATL flight on their own metal than DL and UA do. One more flight. compared to one each for DL and UA.

oh, and DL and UA both have JV partners too.

just give up this notion that AA is the largest in a market where they really aren't unless the competition is WN until they really are.