Now that we know AA is keeping STL as a hub.......

[LambertMan]

Now that AA is keeping STL as a hub are they going to try and turn it into CO''s version of CLE or DL''s version of CVG. From my stanpoint I dont really think so but I do think that we will see some RJ growth to about 5-6 more cities I''ve listed on my other post. Any thoughts on this?

 

[MAH4546]

My thoughts:

$15M is not commited, I'm sorry. That cannot even buy a new Boeing. It is simply a way of calming down the media and the City of St. Louis at a time where they really cannot have bad press. Want commited? Look at the money they are putting into LAX, JFK, and MIA. That is commitment, this is a simply a ploy to trick the public. I'm not saying the St. Louis hub is dead, but I really don't think it will survive more than 3-4 years. Look at Continental and Denver. Just my two cents.

 

[verhalen2003]

I think STL's future remains bright for one reason: American Connection.

AA is being forced to replace Eagle service to some cities with Connection service. Connection can only serve the STL hub (as far as I know). For this reason, STL will remain a true hub for many years to come. AA doesn't have the freedom to move all that Connection service to DFW or ORD.

I would grant, however, that AA may not try to keep up the true transcon or international connecting service at STL, though. That service may be consolidated at DFW and ORD. STL could become AA's main hub to serve all destinations in the Midwest.

 

[bagsmasher]

There was an article in Monday's Ft. Worth Star-Telegram that mentioned that one option AA has in cutting costs is to cut back or eliminate STL as a hub. I couldn't make a link to it for some reason though.

 

[LambertMan]

MAH4546, uhh....you are pretty pescimistic no offense. STL was bought for a reliever hub for ORD and DFW they are pushed to the LIMITS. If AA is going to expand anymore they are going to need to reroute the low yield connecting passengers through some other midwestern airport that is what St Louis is there for. Now, for committment they may not be committed to the existing terminal right now but there are plans to build a completely new terminal as part of W-1W. Now as far as I know, they havent released any plans but I have seen press releases stating that their is a need for a newer more efficient terminal and that there is room for a new one. The existing terminal is one of the most efficient. AA is not sorry for buying STL, my next door neighbor in fact works for them in the Domestic somethin or other section of AA and told me that they have no regrets as of now. However, I dont think they counted on the economy being in this bad of shape.

 

[sirhuey]

They will certainly make stl a rj hub. if you look at the route structure that currently serves the stl market and how they can be handle by the rjs especially in the climate
that we are in with the economy and soft demand. Also, with the scope clause the flying under the ax code for american connection they can have as many rjs as they like and any size i believe. I believe that several mainline markets are going to be changed to Eagle markets throughout the system. I also believe that if aa can't come to some agreement with their pilots union they will go into bankruptcy and escape the scope clause. Really the soft demand requires the mainline adjust their infrastructure and you either change or cease to exist. Anyway just my thoughts on the matter.

 

[Cleared Direct]

The only reason AMR is putting more money in to STL is because of American Connection. They are absolutely committed to American Connection and using the reverse codeshare AX scam to get around APA's scope and ASM restrictions. Anyone who thinks American Connection is confined to only STL better think again. They already have flights on American Connection that don't go through STL. American Connection/Corporate Airlines operates ATL-BNA and TRI-BNA. I believe you will see American Connection flying through other AA/Eagle hubs soon.

As some F-100 routes are replaced with Eagle RJs, Eagle will have to discontinue service to other cities to comply with the ASM restriction. Than AMR will simply replace that previous Eagle city with American Connection through STL.

You will see American Connection grow because it is more profitable for AMR to contract with low bidding AX carriers. The AX carriers are paid a flat fee for departure on the AX RJ flights. According to Corporate Communications AX is not only the preferred feeder to AA, but now they are even preferred code over AA! AMR actually prefers booking the AX code over the AA because they have already paid for the AX flights so now they want them full. This is much more profitable apparently. The AX carriers have to be careful not to bid to low for the departures or else they will lose money. AMR does not have to worry about labor, fuel, or any other operational costs with the AX flights.

Below is the text taken from Eagle' Marketing Departments intranet site. Specifically it is from Passenger Sales Communication Central written by a guy named Peter Birkett. It includes talking points and Q & A about the new AX code.

Here is just one juicy quote from the Q & A part of the new AX strategy taken from the text:


QUESTIONS ANSWERS

For flights from BMI to LAX over STL, how do I respond if a Travel Agency asks if they should book AA/AA or AX/AX when both appear in their CPA display? We would prefer them to book AX/AX.

For flights from PIT to LAX, when there is AX service over STL and AA service over DFW and ORD, what should I tell a travel agent to book in this situation? The first consideration would be meeting the needs of a customer's preferred departure time. When the times in this example are fairly close, we would prefer they sell AX/AX over STL.



Here is the whole text below:


Passenger Sales Communication Central

Homepage AX Background / Talking Points / Corporate Q & A For Passenger Sales
Q & A - Click Here Questions?

Contact:
Peter Birkett Click above to e-mail or phone at 817-967-9011 Corporate Communications Talking Points Date: July 29, 2002
Subject: Trans States (AX)

Codeshare Deal BACKGROUND (For internal use only)

The American Airlines contract with the Allied Pilots Association (APA) contains several provisions in the Scope clause that limit the total flying done by regional carriers for American. One of these provisions limits the number of available seat miles (ASMs) that can be sold using the AA code by commuter carriers. Further, the Scope provision says that when any AA pilots are on furlough, the amount of regional flying using the AA code must be frozen at the levels of ASMs which existed as of the furlough date until such time as all pilots have been recalled. The freeze affecting the regional flying went into effect on October 1, 2001, when the first AA pilot furlough occurred. As a result of September 11, approximately 600 American/TWA LLC pilots and 292 American Eagle pilots remain on furlough.

Because American Eagle continues to take delivery of three regional jets per month, the total ASMs for all of American's regional carriers must be managed to maintain compliance with the Scope clause limit. This already is being done by grounding turboprops, eliminating regional routes, closing stations and reducing the number of available seats on turboprop aircraft.

To help achieve a further ASM reduction, American is going to reduce the number of flights carrying the AA code operated by the independent regional carriers, Chautauqua, Corporate and Trans States, which operate as AmericanConnection and feed the St. Louis hub. Removing AA from these carriers' operations may have a negative revenue impact on American's operations, if there is less feeder revenue, and on each of the regional carrier's operations. In order to offset this negative revenue impact, Trans States will place its AX code on American and its AmericanConnection operations at STL, with a phased implementation that starts in August.

This will allow Trans States to market connections between its services and American's services under the AX code. Trans States also plans to enter into negotiations with both Chautauqua and Corporate Airlines to market the remainder of the AmericanConnection flights at STL under the AX code.

American, which is in the process of rebuilding a business that sustained significant damage from the events of September 11, is standing by its commitment to honor the AA/APA contract, while protecting the greatest possible amount of feed from commuter operations to mainline American operations. Nearly 7 percent of American's load factor comes from passengers connecting from American Eagle and commuter operations - equivalent to the passenger volume on 29% of all MD-80 departures YTD April,
2002. This feed is critical if American is to successfully rebuild.

While AMR's regional carrier capacity is flat relative to October 1 (when the first AA pilot was furloughed), Delta Connection has grown 24.4% and Continental 15.0%. The expanding Delta and Continental networks come at American's expense at a time when every passenger is crucial to AMR's comeback. Regional locations around the American Eagle system and the AmericanConnection hub in STL are dependent on these carriers as their connection to the American Airlines network.

Talking Points

The events of September 11 could not have been anticipated. American signed a contract that is going to be honored and that means making some tough decisions, such as the removal of AA code from certain regional flying, which puts AA revenue at risk.

· While American and American Eagle are working to minimize the negative impact on mainline services, this situation does slow the company's recovery and its efforts to bring employees on furlough - including pilots - back to work. American hopes to work together with the APA to find a long-term solution to the ASM cap issue.

· To reduce ASMs operated by regional carriers under the AA code, American will begin removing the AA code from some AmericanConnection flights beginning in August. Trans States will place its AX code on its flights and flights of other AmericanConnection carriers with whom Trans States is negotiating codeshare agreements.

· Trans States is a privately held company based in St. Louis, Missouri. It has provided connecting service to St. Louis since 1985 when it began serving the former TWA.

· American's agreement with Trans States will benefit AMR by keeping flow traffic on American planes.

· Trans States is involved in talks with Chautauqua and Corporate Airlines to attempt to reach a codeshare agreement that would allow the AX code to replace the AA code on the STL service of those AmericanConnection carriers.

· American's agreement with Trans States will also benefit American Eagle. It will allow Eagle to continue taking delivery of new regional jets through the end of 2002 by providing a reduction in AA coded ASMs operated by other regional carriers.

· The St. Louis operations remain extremely important to AMR.
The company remains committed to the St. Louis hub and the local communities served.

If asked.
1. Why is American cooperating with Trans States Airlines?

Trans States Airlines is a quality partner with which AA and TWA have had a successful relationship.

2. What happened to the Corporate Airlines 3C codeshare agreement?

Because of regulatory issues, Corporate's 3C code became less attractive as the process of implementing the Letter of Intent unfolded. The Trans States DOT classification is more flexible where regulatory issues are concerned.

3. Does Eagle still plan to spin-off Executive Airlines and Eagle's Miami operations?

No one at American or Eagle wants to sell Executive. However, this is one of the options being considered should continued relief be needed from the ASM cap issue. If there is no resolution with the APA, additional actions may be required.

4. What will happen with the Eagle RJ aircraft on order?

Eagle will continue to take delivery of the RJ aircraft. Competitors, particularly those that do not have similar cap restraints like Continental Express and Delta Connection, are growing rapidly in many American and American Eagle markets. In fact, Continental has more regional jets than Eagle, although Continental's mainline operation is about half the size of American. Delta's commuter partners have more that twice the number of regional jets than Eagle even though Delta is considerably smaller than American. If American's regional network does not continue to grow and compete, American risks losing its preeminent network position. Additionally, binding agreements with the manufacturers exist for the delivery of new Eagle aircraft, and the contracts include substantial penalties if the orders are canceled.

5. Why does Eagle not just take over the routes currently flown by AmericanConnection?

American intends to honor its obligations to the AmericanConnection carriers. All three carriers are high quality partners that had existing infrastructure at STL that allowed American to continue regional feed without interruption throughout the TW transition. Such a move would only exacerbate American's compliance challenge with the ASM cap.

6. Why doesn't American just bring back the furloughed APA pilots?

American would like to recall all APA pilots, but sadly the economic environment currently suggests that schedule plans will not drive the recall of all pilots until sometime in the 2004-2005 timeframe. To recall the pilots without having work for them would just increase the losses American is currently experiencing.

7. Why doesn't Eagle have the APA pilots fly Eagle RJs?

The primary competitors fly RJs with pilots paid at commuter salary levels.
It would be unsustainable to have such a significant cost disadvantage in the markets where RJs operate.

8. Will this cause additional AE/AA employees to lose their jobs?

We certainly hope not. Removing the AA code from the AmericanConnection carriers will expose American to the risk of losing flow traffic on American mainline services. The intent is to do everything possible including the new codeshare arrangement with Trans States to minimize the impact on AMR and its employees.

9. Are there any restrictions on American's ability to carry the Trans States code?

No. In the past APA has always welcomed other airlines placing traffic on American jets, which creates jobs and growth for APA members. There is no basis for an APA objection.

10. What happens to Corporate and Chautauqua?

Codeshare arrangements with these carriers are being explored with Trans States. This could allow the AX code to be placed on all AmericanConnection flying, an important step in protecting the vital feeder revenue provided by these carriers at STL.

11. For how long will removing AA code from the AmericanConnection carriers provide relief from the ASM cap?

We believe that it will provide relief until 4Q2002.

12. Will further action be necessary to maintain compliance with the ASM cap?

Hopefully, American can reach an accommodation with the APA that prevents further action that damages the network. If no agreement is reached, further actions will be required.

13. Is American removing the AA code permanently from the AmericanConnection carriers?

The events of September 11 have made it clear that predicting the future is challenging. The hope is to return American's network to pre-September levels and recall all employees eligible for recall as soon as possible.



Passenger Sales Communication Central
Homepage Questions & Answers - Page 1 Page 2 Q & A from Corp Comm Questions?

Contact:
Peter Birkett Click above to e-mail or phone at 817-967-9011

QUESTIONS ANSWERS

Where do I send questions I have about any AX issue? Send them to Peter Birkett or Mark Carroll via email.

Are Obitz, Hotwire, Priceline, etc selling seats on the AX code? Yes

Will tickets still be plated on 001? Yes Will Flight Attendants make landing
announcements using AmericanConnection terminology or will they continue to refer to it as American Eagle? They will use AmericanConnection in their announcements.

Will Frequent Flyer numbers appear differently in AX PNR's? Yes, they will appear twice. When an AAdvantage number is added to any PNR using the generic AA FQTV entry, an identical generic AX FQTV entry will also be added. This will ensure they get credit whether they are on AA metal or AX metal.

Are we going to do this with other airlines? There are not currently any plans to do so. This project will be evaluated for its effectiveness and future consideration in other situations.

What will travel agencies screens look like? CRS Screen Examples

Will AX be included in both PD model and account segmentation model? Yes.
(Update not available until September QSI is available)

Is the AmericanConnection codeshare only a temporary arrangement? A substantial investment has been made to convert systems and prepare for a smooth adjustment to the new codeshare arrangement. While this is a business decision that addresses today's climate, the success of the program will be evaluated and balanced with any changes that occur in the business climate in the future.

When will all affected flights/markets have the AX code? This is a phased approach (see Timeline) with all markets available for booking by 8/25/02 and operating on 9/1/02.

QUESTIONS ANSWERS

For flights from BMI to LAX over STL, how do I respond if a Travel Agency asks if they should book AA/AA or AX/AX when both appear in their CPA display? We would prefer them to book AX/AX.

For flights from PIT to LAX, when there is AX service over STL and AA service over DFW and ORD, what should I tell a travel agent to book in this situation? The first consideration would be meet the needs of a customer's preferred departure time. When the times in this example are fairly close, we would prefer they sell AX/AX over STL.

Will existing PNRs need to be rebooked? AA will do a PNR re-accommodation for those passengers with existing reservations on AX Carriers in impacted markets.

Will AA ticketed passengers need to have their tickets reissued? No need to reissue tickets if they are validated on 001 Ticket Stock When will AX flights begin operating The first flights using the AX code will appear in the reservation systems on July 28, and will operate beginning on Aug 01, 2002. AX flights will be gradually added, in several phases over a period of 30-45 days. All AX flights should be operating by Sep 01.

How can my customers support AX? All customers can support us by booking and flying AX coded flights to/from and thru STL. Corporate customers with preference software will need to have AX added to their systems right away.

How can I support AX? Learn as much as you can about AX, then educate your customers. Find out who, in your territory, has business in AX markets and find and deliver that business. Tell them what AX is and why it's important to support it.

Can AAirpass customers use their pre-purchased miles on AX flights? Yes Will Business ExtrAA customers get credit for flying on AX? Can they use the points they've earned on this program for AX travel? Yes, to both questions.

QUESTIONS ANSWERS

Can Incentive TrAAvel customers use their certificates on AX flights? Yes

Can transportation vouchers be used on AX flights? Yes

Are the AmericanConnection regional carriers part of the American Eagle network? No

Updated 8/30/02

Are the AmericanConnection regional carriers members of oneworld? Technically no, however most of the same services are provided.

Do all three AX regional carriers offer pre-reserved seats, in-flight beverages and meals?
All three regional AX carriers offer pre-reserved seats on flights of 50 minutes or longer. Trans States and Chautauqua serve beverages on their flights of 50 minutes or longer (Corporate does not). None of the three AX regional carriers offer in-flight meal service.

Will AAdvantage members earn miles for flying on AX and can they use their earned mileage for travel on AX? Yes, to both questions.

Will flown AX miles be counted towards earning or maintaining AAdvantage elite status? Yes.

 

[mrman]

One has to look over at Love Field to see millions spent on upgrading terminal and then abandoning the market

 

[BeenThere]

Everyone needs to understand that AMR will spend millions upon millions on facilities and upgrades only to pull out years later. Does anyone remember the BNA and RDU hubs American once built only to abandon years later. $21 million dollars is nothing but a day at the spa makeover.

 

[JFK777]

Mah4546,

You're right $15,000,000 is a drop in the ocean at AA. How many billion dollar projects can AA finance in times like these? Not as many as they are. MIA, JFK and LAX were on the drawing board way before 9/11 and the TWA purchase. 15,000,000 FOR SOME CARPET AND PAINT is a lot of money but at least they are trying to fix ST. Louis after being neglected for so long by TWA. Cut CARTY a break Mah4546. The man is trying, everyone at TWA seems to resent AA. Give them a few years and AA at STL will be on par with ORD, DFW, JFK, MIA and LAX.

 

[capeman]

[P]Here it comes! The newest and brightest RJ hub in the world. It will be the CVG management dreamed of. The only problem will be that there will be very few AMR employees around. American Connection (AX) will take over quicker than the paint will dry during the transition. (IMHO)[/P]
[P] [/P]

 

[Get Over It Already]

[blockquote]
One has to look over at Love Field to see millions spent on upgrading terminal and then abandoning the market
[/blockquote]

AA had no choice but to upgrade the DAL terminal. They had to do asbestos abatement regardless if it was used for a terminal or offices (it was office space before abatement), so why not also spend a couple bucks for some new carpet and a jetbridge?

 

[FibberMcGee]

[blockquote]
----------------
On 9/19/2002 9:18:37 AM JFK777 wrote:

The man is trying, everyone at TWA seems to resent AA. Give them a few years and AA at STL will be on par with ORD, DFW, JFK, MIA and LAX.
----------------
[/blockquote]
Stop generalizing. Everyone at TWA does not resent AA. Geesh. I applaud the efforts of upgrading Lambert.

 

[HI-LOCK]

[blockquote]
----------------
On 9/19/2002 7:38:54 AM BeenThere wrote:

Everyone needs to understand that AMR will spend millions upon millions on facilities and upgrades only to pull out years later. Does anyone remember the BNA and RDU hubs American once built only to abandon years later. $21 million dollars is nothing but a day at the spa makeover.
----------------
[/blockquote]
What about San Jose also? I have watched this company waste hundreds of million dollars or more.