JetBlue to build up FLL looks like a challenge to AA in MIA

[WorldTraveler]

no, it isn't to conquer the world... it just happens to be the largest air market in the United States and the implications of what DL has achieved over the past 5 years there ripple thru the entire US airline industry. DL's focus for much of the past five years was on AA and US.... AA's share of NYC has fallen by more than 25% while US was sitting on a lot of slots that it wasn't using effectively. DL took them over and is using them to grow its presence there. US did the same thing at DCA on a smaller scale but now US is faced w/ divesting slots... so perhaps DL will end up gaining even more, and we still don't know how the GRU route case will turn out which was involved in the DL-US slot deal.

DL's focus is now on shifting domestic inside the perimeter traffic from JFK to LGA where DL is the largest carrier; given that LGA is the preferred airport in NYC for short-haul traffic, DL's task isn't terribly hard. B6 has the most to lose.

I said a long time ago that the slot deal would be pivotal in reshaping the east coast; there were no shortage of people who didn't take me seriously. Now that the data is coming in showing that I was indeed right, there are people who don't want to talk about it.

The DL-US slot deal will go down as one of the most significant events in reshaping the east coast and the implications of it will extend well beyond LGA and DCA and will take years to become apparent.
For now, B6's actions in FLL are very much related to what is happening at JFK for them which are related to what DL is doing at LGA.

 

[eolesen]

Gee, I thought it was just a matter of B6 diversifying their network, realizing that there is more to the country than just NYC.

FLL presents an opportunity to grow where they don't have to deal with as many facility or slot constraints, and it's a location where the range limitations of the A320/321 don't play as much of an issue as they do further up the coast. It's also a place where they have an existing customer base.

I had no idea that they only chose FLL because of DL or AA...

 

[exs]

so american eagle no longer flies thru the carribbean? does AA still have carribbean runs out of SJU or is it just mia? so it sounds like B6 took over as the largest in the caribbean wow

SJU has 7 flights to Mia, 2 flights to DFW, 3 to JFK, 1 to ORD, and 1 to CCS, that is all, and yes Eagle is completely gone, we use seabourne express now, pretty sad!!!

 

[WorldTraveler]

Gee, I thought it was just a matter of B6 diversifying their network, realizing that there is more to the country than just NYC.

FLL presents an opportunity to grow where they don't have to deal with as many facility or slot constraints, and it's a location where the range limitations of the A320/321 don't play as much of an issue as they do further up the coast. It's also a place where they have an existing customer base.

I had no idea that they only chose FLL because of DL or AA...

of course FLL represents an opportunity to expand south....
but since are the one that shows the power of statistics to tell a story (which is absolutely correct), then you and anyone else who sees them can't deny that B6 is feeling the pain of DL's expansion at LGA. There are a number of markets where DL has gained share at the expense of B6... and DL's JFK operation is stronger as well.

The slot deal took 2 years to get approved... mergers don't take this long to get approved. You can't tell me that the lights didn't start to go off in some people's heads at AA and US at least as to what was going to happen - yet nothing seemed to change the trajectory - or DL managed to put clauses in the contract that prevented US from backing out.

And we've been hearing from US employees what a disaster LGA was for them and how glad they are that all of those slots are gone... yet they don't want to hear that someone else managed to figure out how to use those slots effectively.

And now it seems all but inevitable that US will have to divest a portion of the slots it obtained as part of the slot transaction and has a terminal situation at LGA with the merger that will be very hard to resolve - while DL has gates spread out over 3 terminals at LGA.

did someone not think this through...

 

[robbedagain]

I dont know if US/AA will divest slots in DCA but i do think an argument could be made that if they have to give up some dc slots what about ny too bec with dl controllin 75% and dc would be controlled i think 60 or 65% by the new AA

 

[robbedagain]

wow ex i did not know that someone took over i do remember when ae was huge bec some friends had told me about that sad indeed

 

[WorldTraveler]

DL doesn't control 75% at any airport in NYC... it is less than 50% at LGA and about 1/3 of JFK slots.

DL would have had right at 50% of the slots at LGA but was required to divest 16, IIRC, and DL still has a smaller percentage of slots at LGA than US has at LGA before the merger or UA has at EWR.

AA/US will be far more concentrated at DCA than DL is at LGA... the closest comparison in terms of concentration is the UA/CO merger at EWR in which I believe UA had to divest 18 slot pairs to WN, IIRC. CO/UA had a higher percentage than US and still has a higher percentage of slots but that didn't stop the government from requiring a divestiture.

 

[robbedagain]

i thought dl or i thought you said at one point or anthr that dl controls 75% of nyc and ual was close behind and then aa was a distant behnd that is the way im lookin at it
but to the dca thing aa has 4 gates i believe if they gave that up and moved to us side would that be enough slots

 

[JFK Fleet Service]

/

 

[WorldTraveler]

B6, like American and United might as well declare Chapter 7 now because nobody can compete with Delta.

no... but some people don't seem to understand that there are structural reasons why AA and UA have not been able to stop the shift in power in the industry from the low fare carriers over the past 35 years of deregulation while DL has.
For much of the past decade, DL has had a cost advantage over AA - at times with a mainline CASM 10% or more lower than AA and 5% or more lower than UA. UA's CASM has been going up snce the merger with CO and continues to increase.
new AA's CASM will continue to increase with merger costs and the inevitable capacity pulldowns that will happen with the merger on top of the pay increases that Parker agreed to in order to make the merger work.
Both AA and UA are taking on billions of dollars in debt for new aircraft while DL is content to find orphan models like the M90 and 717 to make up large portions of its fleet needs.
The industry will be right back where it has been for much of the past 35 years which is that DL has been a lower cost carrier than AA and UA with the very apparent result that DL has been better able to stand up to the low fare carriers and to grow its network in key industry markets where AA and UA have been strong.

How many hubs have been closed by AA and US and taken over by low fare carriers, with those legacy carriers losing even the local market? And what network carrier has been able to grow not only against other network carriers but also hold its own and even grow against low cost carriers? The difference is striking and the implications for the networks and finances of each of those carriers are very real.

Now compare the number of people here who predicted that WN would eat DL's lunch in ATL and yet WN has announced they are dehubbing ATL, have cut FL/WN service to about a dozen cities, and the total number of WN/FL flights at ATL is down by about 100 from FL's peak.

DL pulled off a transaction in NYC which US agreed to and AA would have been most impacted by and yet they either didn't see it coming or were powerless to do anything about it.
DL's growth at LGA is making it harder on B6 at JFK.
NYC was a divided market between multiple carriers and yet it looking more and more like ORD, a market where there are two large legacy carrier hubs and other carriers are taking a much smaller position.

B6 built its hub at the airport which is furthest from Manhattan yet serves many of the short-haul markets that can be served more conveniently from LGA and EWR. It isn't a surprise what is happening and how that will impact every other airline that competes in NYC and, downwind, their entire networks, but far too many people seemed to miss it or believe that it would happen.

And now AA and US which have both pulled back in NYC will be forced to compete even more in other parts of the country against B6 and WN who do need to grow their revenue and recognize what they can do against AA after 10 years of competing against them there.

 

[eolesen]

"Second verse, same as the first..."

 

[WorldTraveler]

the song is actually about 35 years old or about the length of deregulation... it's not personal but it does very much explain the shift that has taken place in the industry over the past 35 years and how DL which was far smaller when deregulation began is now far stronger, why AA and UA are positioning themselves to continue this trend, and why the low fare carriers and DL have plenty of room to continue to pick off traffic from AA and UA.

Topics like this show that some people still don't understand these basic dynamics that have taken place in the industry.

 

[700UW]

http://finance.yahoo.com/news/united-airlines-announces-daily-flights-143000582.html