WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,662
- Banned
- #151
ok... the intent is not to rub salt in wounds... my intent is to challenge those - who say they are not AA employees BTW - that AA and its people are actually better off than their peers and that AA has succeeded where others have failed. It is not my desire to remove anyone's faith in AA - and I hope there will be enough people who believe there is something left at AA that is worth fighting for as part of a restructuring.
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It is hard to imagine that anyone could have realistically thought that AA would avoid BK in the aftermath of 9/11... I give them credit for trying to avoid it. My criticism comes in not recognizing years ago that their plan was not working. NW was the last airline to leave BK and left 4 years ago; the DL/NW merger happened 3 years ago... UA/CO has been proposed for years even though it only happened fairly recently. The point being that the shape of the industry and what AA had to work w/ has been known for years.... waiting 4 years after NW exited BK to realize that AA's plan wouldn't work is not indicative of a good management team. Perhaps they were really trying not to do the nasty business of BK and trashing CBAs... but with 35 years of deregulation history behind us, there is no secret about what happens to airlines that can't successfully compete... and AA has not been in a position to successfully compete for a number of years.
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Instead of harping on the past, how about we turn the discussion to where AA will go... how it will rebuild and how it might recover some of its market position that it has given up to competitors over the past five years esp.
I would far rather here people like Comm, FWAAA, and E - who are intelligent people who have pretty good insights into the airline industry - tell us how they believe how will recover than hear them defend AA mgmt's actions from the past. The present is a pretty good judge of the decisions that were made in the past.
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Strike,
I am obviously a strong defender of the network carrier business model and believe it can work. Lots of people praise WN's simplicity and hold it out as an example of how other airlines should work... without taking a look at WN's route map and DOT traffic stats and realize that WN's network is a mile deep but an inch wide... they carry lots of passengers over a very small network compared with the size of the network carriers. I am not saying that WN isn't a nationwide carrier but that the majority of its traffic comes from nonstops rather than the tens of thousands of combinations of connections that are created by the network airlines which serve 3-4 times more cities than WN does.
Of course if AA weren't an int'l carrier, they could fly all narrowbody aircraft... but you can't compete in transoceanic markets with 737s.
Yes, the evidence is quite strong that network airlines have improved their financial performance by increasing their int'l presence - that was the backbone of DL's turnaround; CO was the most int'l of the US airlines with almost 50% int'l revenue - and they also were quite profitable - and built their network in some of the biggest int'l markets in the world.... NYC and IAH specifically.
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DL and UA have far more complex fleets than AA will ever have - unless they merge w/ someone w/ a totally different fleet... yet DL and UA are far more profitable.
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The question for AA is to figure out how to profitably exist and compete in the US domestic market - which is still the majority of every US airlines' revenues - as well as grow in key high growth markets like Latin America and Asia and to a lesser degree Africa - while protecting AA's key historic revenue bases.
Given that even w/ the JL partnerships, AA is still a distant number 3 to Asia, and doesn't have a JV w/ CX which is the only Asian market where AA plus its partner is the dominant carrier, I'm not seeing how AA is going to compete in Asia.
Latin America obviously remains AA's strongest card - but competitors are aggressively expanding there and competitor expansion in MIA shows that AA's major network advantage is not as rock solid as some would like to believe. If AA were in a position to better defend itself, AA's grip on MIA would seem more certain.
Everyone has a piece of the key markets at LHR now... and competitors are doing well. AA plus BA/IB are again a distant 3rd to continental Europe which is far larger than the UK market, again which everyone is in now anyway.
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Domestically, DFW is still the crown jewel but the end of the Wright Amendment opens a huge threat to AA... and I haven't seen anyone here take WN seriously... looking at AA at ORD vs WN at MDW should provide some insight as to what WN can do and what AA will be forced to do to protect its market share. If WN can do at MDW what they have done from an airport that is far less geographically attractive than DAL, then AA should be very much aware of the potential.... I still think the timing of the new orders and the potential to finish a restructuring/BK is very much tied to the fall of the Wright Amendment and AA's need to be very competitive.
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AA at ORD and JFK are under full body assaults from competitors.. there is no other way of saying it... low cost carriers and a much larger, more aggressive DL at NYC and CO/UA at EWR and ORD are putting the screws on much of the northern tier of AA's network. Yet more evidence comes as AA reduces ORD-EWR to all RJs.....
Some AA people will consider it not worth their effort to go through AA's restructuring and rebuilding.... but for those who are interested in sticking w/ them, it's time to start thinking about how AA will compete and survive as a restructured company.
I haven't heard a whole lot of ideas as to how that will work.
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