AA is doing many of the same things that DL is doing. Acquiring larger capacity aircraft, and adjusting frequencies. Upgauging some aircraft in the regional markets and reducing frequencies to maintain seat counts and reduce CASM. Replacing 3 44-50 seat regional jets and replacing them with 2 76 seat regional jets can maintain capacity and help deal with the pilot shortage on the regional front. Also AA is moving some of the regional capacity into mainline with the introduction of the 319 to it's fleet mix. So a market that is slot constrained can still be grown.
New AA is going to grow in NYC.
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WorldTraveler
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and I have never slighted AA for doing any of those things, which I too have noted puts AA in a lot better position than UA, who is far behind.
Your point about growing the market by upgauging is the EXACT argument I have used about DL at LAX - with the difference being that DL can operate a much higher percentage of mainline flights solely because DL has no remote RJ only facility.
I have never said AA can't grow - and I expect they will win over traffic from UA at EWR.
But EWR and LGA/JFK are hubs for UA and DL and AA has a structural advantage of having a lot less to work with than UA or DL has.
In hub markets, size matters and it has been repeatedly shown that the bigger carrier gets a higher percentage of a revenue and disproportionately higher revenues.
NYC is a hub with duplicated services by multiple airlines; DL and UA serve most of the same domestic and many of the same int'l markets. AA does not.
Each carrier at LAX offers a significantly different offering of flights which cannot be duplicated by other airlines because there isn't space to do so.
AA can fight to regain some of the position it has lost at NYC. But they will always be at a structural disadvantage to DL at LGA and JFK.
That, like it or not, is the reality of the NYC situation.
DL uses more than half of the C terminal. US retains about 1/4 of the gates for their use. There are DL and WestJet gates on the opposite side of the same pier in C in addition to all of the gates at the security checkpoint and on the other C pier - plus what DL has in the D terminal.
And I have yet to see a plan as to how US is going to connect its services with AA's, esp. since the US Shuttle is dependent on connections while the DL Shuttle, which operates in the Marine Air Terminal by itself, does not connect with DL's other LGA flights.
Your point about growing the market by upgauging is the EXACT argument I have used about DL at LAX - with the difference being that DL can operate a much higher percentage of mainline flights solely because DL has no remote RJ only facility.
I have never said AA can't grow - and I expect they will win over traffic from UA at EWR.
But EWR and LGA/JFK are hubs for UA and DL and AA has a structural advantage of having a lot less to work with than UA or DL has.
In hub markets, size matters and it has been repeatedly shown that the bigger carrier gets a higher percentage of a revenue and disproportionately higher revenues.
NYC is a hub with duplicated services by multiple airlines; DL and UA serve most of the same domestic and many of the same int'l markets. AA does not.
Each carrier at LAX offers a significantly different offering of flights which cannot be duplicated by other airlines because there isn't space to do so.
AA can fight to regain some of the position it has lost at NYC. But they will always be at a structural disadvantage to DL at LGA and JFK.
That, like it or not, is the reality of the NYC situation.
DL uses more than half of the C terminal. US retains about 1/4 of the gates for their use. There are DL and WestJet gates on the opposite side of the same pier in C in addition to all of the gates at the security checkpoint and on the other C pier - plus what DL has in the D terminal.
And I have yet to see a plan as to how US is going to connect its services with AA's, esp. since the US Shuttle is dependent on connections while the DL Shuttle, which operates in the Marine Air Terminal by itself, does not connect with DL's other LGA flights.
LGA is a problem which will hopefully be taken care of in the next few years with the remodeling of the CTB. LGA is in the middle of a masterplan/design to rebuild the CTB.
Meanwhile at JFK, AA has a completed terminal with no construction to impede aircraft movements, unlike DL which will be dealing with JFK construction issues and constraints for the next few years.
If you add in the JV numbers, AA is only a few percent behind DL's JV numbers at JFK, and is larger than B6.
Meanwhile at JFK, AA has a completed terminal with no construction to impede aircraft movements, unlike DL which will be dealing with JFK construction issues and constraints for the next few years.
If you add in the JV numbers, AA is only a few percent behind DL's JV numbers at JFK, and is larger than B6.
WorldTraveler
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new terminals don't create slots. All 3 NYC airports are slot controlled. Given that the NYC airports still have some of the worst On-time in the US, any airspace/system capacity improvements that take place will be used to improve on-time and the ability to handle bad weather than to add slots.
In the latest DOT airline consumer report, DL's on-time was the highest of the big 3 operators at JFK - 5 points better than AA/US and 11 points better than B6. doesn't appear to be any construction delays there.
JV flights are not AA flights and there are no JV partners for any airline serving LGA.
Even in a JV, revenue is still split.
thank you for the civil discussion on the issues.
In the latest DOT airline consumer report, DL's on-time was the highest of the big 3 operators at JFK - 5 points better than AA/US and 11 points better than B6. doesn't appear to be any construction delays there.
JV flights are not AA flights and there are no JV partners for any airline serving LGA.
Even in a JV, revenue is still split.
thank you for the civil discussion on the issues.
ChockJockey
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WorldTraveler said:
Is that the reality in which the market-dominating and premiere on-time carrier in NYC (DL) can't turn a profit there while its lesser with a diminished presence (AA) does?
Or do the iron-clad laws of hub dynamics and market fundamentals not make that an impossibility?
WorldTraveler
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the laws of hub dynamics say it is costly to push oneself into a very competitive and divided market like NYC.
I'm sorry but if AA was making a profit, they wouldn't be continuing to pull out of markets and not grow when other carriers are.
When other competitors grow and you don't, it isn't too hard to figure out that your share of the market will get smaller and smaller.
AA's mgmt. knows that market size translates into pricing power.
DL has been willing to invest the money to gain the size to be the dominant carrier in NYC. No one ever said it would be easy or cheap to do that.
Yes, it is possible to be profit, on-time, and dominating. CO did it for years at EWR.
DL decided to replicate what CO accomplished at LGA and JFK, the two preferred airports for local NYC passengers for short and long-haul travel.
I'm sorry but if AA was making a profit, they wouldn't be continuing to pull out of markets and not grow when other carriers are.
When other competitors grow and you don't, it isn't too hard to figure out that your share of the market will get smaller and smaller.
AA's mgmt. knows that market size translates into pricing power.
DL has been willing to invest the money to gain the size to be the dominant carrier in NYC. No one ever said it would be easy or cheap to do that.
Yes, it is possible to be profit, on-time, and dominating. CO did it for years at EWR.
DL decided to replicate what CO accomplished at LGA and JFK, the two preferred airports for local NYC passengers for short and long-haul travel.
"...if AA was making a profit..."
American Airlines Group 1Q14 net profit = $480M (pretax margin = 4.9%)
Delta Air Lines 1Q14 net profit = $213M (pretax margin = 3.8%)
So in New York specifically and/or elsewhere, clearly AA is doing something right. But now back to our regularly scheduled programming about how AA's chances in New York and LA are hopeless but Delta is going to "win" in North Texas ...
American Airlines Group 1Q14 net profit = $480M (pretax margin = 4.9%)
Delta Air Lines 1Q14 net profit = $213M (pretax margin = 3.8%)
So in New York specifically and/or elsewhere, clearly AA is doing something right. But now back to our regularly scheduled programming about how AA's chances in New York and LA are hopeless but Delta is going to "win" in North Texas ...
WorldTraveler
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700UW said:
and where does this say that AA is profitable in NYC? Nowhere.commavia said:
Did you miss the part about how AA employees - the people who work there now - say that the company's profits mean nothing to them if they can't share in it.
Can you tell us how much of AA's profit went to employees this past year, how much will go this year based on even a $3B profit, and the difference in average compensation between AA and DL employees?
Further, AA is still in the honeymoon period of its merger and post BK period and has yet to pay any of the price for the merger.
Get back with us then when those factors are baked in as well as tell us how big AA will be at that point in NYC.
Maybe it will all work out the way you hope.... maybe not.
Let's be clear, though, that I have absolutely no objection if AA or anyone else succeeds.
In fact, I hope they do.
MetalMover
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HEY EVERYBODY!!!!!!! WT SAYS IT'S OK IF AAL SUCCEEDS! HE HAS NO OBJECTIONS! OH WHAT A GLORIOUS DAY!WorldTraveler said:
MetalMover
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Well, they're just plain wrong! WT (aka NOSTRADAMUS) has said otherwise!MAH4546 said:
WorldTraveler
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just not on the Pacific where they are unprofitable whether they say it or not, right?
or LAX where even by their admissions they were just barely profitable = or perhaps you can give us their exact statement on that market.
I'm still waiting for you to tell me why AA would cut markets where it is making money and allow competitors to grow?
can you tell me what business school teaches that profitable companies give up market share and shrink in profitable markets?
Indeed it is a glorious day.
But, pray tell, where did you ever get the idea that I EVER said I didn't want AA to succeed?
