Hub Closure Sweepstakes

[700UW]

And how long ago was that?
 
Have you lived in Cornelius, Davidson or Mooresville? The lake towns.
 
Myers Park, Eastover or Ballentyne?
 
So why couldnt AA make RDU work?
 
Why do they have to have the LHR flight subsidized in order to fly it?

 

[yoyodyne]

Hub Closure Sweepstakes options (pick the one to close):
 

• CLT
• CLT
• CLT
• CLT
• CLT
• DFW
• ORD

 

[700UW]

PHX is really the only hub in danger of being shrunk.
 
So mr aviation expert, how did you come to your conclusion?

 

[yoyodyne]

PHX is really the only hub in danger of being shrunk.
 
So mr aviation expert, how did you come to your conclusion?

 
The answer is always CLT...

 

[700UW]

And the answer is:
 

 

[yoyodyne]

And the answer is:
 

I'll get back to you in a sec...
 

 

[700UW]

At least learn to spell correctly, its Break not Brake.

 

[LD3]

The current working relationship between between AA and the new CLT airport mgmnt appears to be working, so I wouldn't write off CLT right away... Growth plans are being evaluated and prioritized, landing fees are being adjusted. The low cost mantra has caught up and is causing some issues that are becoming major concerns to AA/US and the airport... The airline wants the low costs to remain but realizes that they cant get what they want at the current cost structure.. I am not sure if the new lease agreement has been signed, but when it is, I would be willing to bet it will heavily benefit AA on the profit sharing end.... I don't think people knew what a sweet deal US had in CLT in terms of operating costs..

 

[cltrat]

Hub Closure Sweepstakes options (pick the one to close):

• CLT
• CLT
• CLT
• CLT
• CLT
• DFW
• ORD

it's one thing to be thought of as a fool, it's another to bang your keys and remove all doubt.

 

[FWAAA]

The current working relationship between between AA and the new CLT airport mgmnt appears to be working, so I wouldn't write off CLT right away... Growth plans are being evaluated and prioritized, landing fees are being adjusted. The low cost mantra has caught up and is causing some issues that are becoming major concerns to AA/US and the airport... The airline wants the low costs to remain but realizes that they cant get what they want at the current cost structure.. I am not sure if the new lease agreement has been signed, but when it is, I would be willing to bet it will heavily benefit AA on the profit sharing end.... I don't think people knew what a sweet deal US had in CLT in terms of operating costs..

Don't paint everybody with the ignorance brush.
 
I know full well the sweet deal that US has enjoyed at CLT.   What will likely change things going forward is the reality that CLT and PHL produce the lowest yields to Europe and Latin America, substantially lower than AA's yields.   
 
When the US East pilots were paid peanuts because they thought it was better to fight amongst themselves (fighting the West over the Nic issue), US showed profits in recent years despite the low Europe and Latin America yields.
 
In 2013, however,  US paid its employees about $400 million more than in 2012.   About half of that went to the pilots and the other half was split among the flight attendants (finally ratified their new contract early in 2013) and other work groups.   
 
Quite a few people stress the very low landing fees at CLT and the resulting low per-passenger enplanement costs there as evidence that CLT will just keep getting bigger and bigger.   CLT per-passenger costs are less than a dollar.    
 
Don't get me wrong - CLT and PHL will remain hubs.   They serve a unique role in the new AA that no other existing AA hubs can cover.   
 
But CLT and PHL don't necessarily have to be as big as they currently are to serve those roles.   They certainly don't have to feature numerous low-yield international flights to connect the domestic passengers from the NE to the SE and within the SE.  
 
Jerry Orr has spent years bragging about his miracle airport and how it may soon be as big as ATL.   The residents and business leaders of CLT are about to get a dose of cold hard reality when they learn just how uneconomic those flights are at the new much higher payscales of new AA.   CLT won't be PIT'd or STL'd or CVG'd, but it will never resemble ATL.   CLT could pay new AA $20 per enplaned passenger and it would still never resemble ATL.    

 

[usfliboi]

Theres one fact that we all can agree on...Not one soul on this board has a clue what Doug and Scott have planned. Whatever it is will be based on sound buisness policies. 

 

[WorldTraveler]

FWAAA,
I'm going giving you a data-based response to your post but I have to warn you and others that it involves the mention of DL and UA in order to provide an adequate perspective on where both AA and US are.

According to 3rd quarter DOT revenues and expenses by region (reported in Aviation Daily on and around Jan 6, 2014,AA's Atlantic region had an operating profit margin of 15.8% while US had 16.7%.

AA's Atlantic RASM was 17.75 while US' was 19.03. UA's RASM was 15.74 was DL's was 14.95.

However, DL's Atlantic CASM was 11.13 while UA's was at 14.08, AA's was at 14.94 and US was at 15.85.

Consequently, DL's operating margin on the Atlantic was 25.5%, the highest of any US carrier in any global region, topped only by AS' domestic operating margin at 29.8%.


What these results say is that AA's RASM does not exceed US' and its costs are also lower than US'. Note that these results are not stage length adjusted and US does operate a number of 757 flights from PHL, but UA does from EWR as well and their RASM is not equally high.

These results also seem to validate that DL's Atlantic network, the largest of any US carrier in the 3rd quarter is well designed to operate extra capacity in the summer at minimal incremental costs, something that DL does well. Industry capacity is restrained such that pricing is strong even in the summer to leisure destinations.

But DL also does an outstanding job of cost control even though its employees are paid at or above average for other US airlines. It's costs are almost the same as AA and US combined on the Atlantic yet DL generated about $400M more in Atlantic revenue. That extra revenue goes directly to the bottom line.

DL undoubtedly also benefits from its size and from funneling so much traffic to AMS and CDG where its partner hubs are very efficient for distributing traffic and where handling costs for DL are relatively low.

AA also started up several new routes on the Atlantic last summer and incurred higher costs while likely not obtaining corresponding revenues.

In fact, AA's average fares from the US as a whole to both DUB and DUS, two new markets for AA in 2013 IIRC, trailed DL and UA by 15+%. US' average fares to DUB were lower than both DL and UA's as well. Yet, DL and UA's average fare disadvantage to AA at LHR has all but been eliminated, meaning DL and UA have managed to push into AA's best revenue markets but AA and US have not done the same in reverse.

While your general comments about US' cost structure is correct, the application of it at least on the Atlantic is not true esp. in comparing AA and US.

I'm also not sure where the wage increases for US employees fell during the year and relative to the summer travel season. As we saw on the earnings report, AA's labor costs went down while US' went up with the net being lower.

IT is true therefore that as long as the AA and US systems are considered separately, AA's profitability will improve while US' will go down but that separation is not going to last for long.

 

[ChockJockey]

At least learn to spell correctly, its Break not Brake.

 
http://en.wikipedia.org/wiki/Lolcat

 

[FWAAA]

FWAAA,
I'm going giving you a data-based response to your post but I have to warn you and others that it involves the mention of DL and UA in order to provide an adequate perspective on where both AA and US are.

According to 3rd quarter DOT revenues and expenses by region (reported in Aviation Daily on and around Jan 6, 2014,AA's Atlantic region had an operating profit margin of 15.8% while US had 16.7%.

WT, your entire post is irrelevant to the point that US had substantially lower yields (and PRASM) than did AA to Europe and Latin America for full-year 2013.
 
The earnings release from last week detailed the fourth quarter and full year yields and PRASM of AA and US in each region, and the US numbers were, predictably, lower than AA.   Only in domestic did US beat AA.   
 
http://hub.aa.com/en/nr/pressrelease/american-airlines-group-reports-fourth-quarter-and-full-year-2013-financial-results
 
I figured that someone, either you or 700UW would trot out the irrelevant 3rd quarter profit margin data, but that data is non-responsive to my post.   The asserted profit margins don't take into account the $200 million retroactive raise received by the US pilots, as that was paid in the fourth quarter and treated as a special item.   The future of CLT and PHL international flights rest on the going-forward yields and costs, and the historic low costs are no more.

 

[eolesen]

And how long ago was that?
 
Have you lived in Cornelius, Davidson or Mooresville? The lake towns.
 
Myers Park, Eastover or Ballentyne?
 
So why couldnt AA make RDU work?
 
Why do they have to have the LHR flight subsidized in order to fly it?

You seem to be confusing a nice place to live with the data points an airline should use to develop a hub...

EWR is the textbook example to show they're mutually exclusive measures...

RDU has continued to do well in terms of O&D, but as has been debated no less than 50 times before you discovered the AA forum, RDU and BNA were sacrificed to develop MIA.

It's well known that Glaxo-Smith-Klein generates enough traffic in premium cabins on the LHR route that it's regularly referred to as subsidized. AA's committed to keep the route there as long as the revenue from GSK meets targets. I don't know that money has ever changed hands to support a revenue target shortfall, or if that's even in their corporate travel contract.