some new routes LAX, JFK and MIA

[FWAAA]

Why not?

Seems to me that the market has adequate service, why jump in and spark a fare war? Isnt seeking out and serving markets that are undersesrved, like WN does, a better strategy?

Fare war? What are you smoking? A once-a-day flight connecting JFK to the fifth largest metro area in the country isn't being started to attract local customers; it's to connect millions of people in Houston with AA's JFK international operations, some of whom are giving up on UA/CO. Right now, of course, there aren't too many international destinations served from JFK that aren't also served from ORD or DFW, but that's likely to change as AA adds more JFK-International flights.

Over and over and over again we hear about how AA's "network" is deficient compared to UA and DL. This is the first of many expected steps to remedy that.

Dont think there is much of a market to Houston. Would rather see more International, or even more to Boston, DCA or MIA.

NYC-Houston is a huge local market, as WT and every airliner.net teenager can attest. And most all of that local traffic either flies to EWR (thanks to the huge UA/CO hubs at both ends) or LGA (as it is the preferred airport for much of Manhattan). If you want to see more international at JFK, it's not a bad idea to add some feed from the huge cities in this country, like, say, Houston.

If AA had announced six round trips a day from JFK to IAH, then I'd agree with all your posts on this new route. But that's not it. It looks like AA intends to add domestic flights so that more cities have service to all five of the cornerstone cities, and for IAH, JFK was the missing piece. Same with RDU and LAX as LAX was the only hub not connected to RDU.

Yesterday, news sources said that UA-LH made an offer to the EU to give up enough slots at JFK to permit a competitor to fly JFK-FRA.

http://www.bloomberg.com/news/2012-12-21/eu-seeks-views-on-lufthansa-continental-antitrust-approval-bid.html?cmpid=yhoo

Wouldn't surprise me if AA takes them up on that offer.

 

[WorldTraveler]

and how many markets will AA or even oneworld serve from JFK that are not served from DFW and/or ORD?

And how much of the local revenue from Houston can AA realistically expect to capture in those markets from a city when hub carriers typically carry the majority of traffic even to cities that they do not serve nonstop from the hub?

 

[FWAAA]

and how many markets will AA or even oneworld serve from JFK that are not served from DFW and/or ORD?

I thought I covered that when I said "Right now, of course, there aren't too many international destinations served from JFK that aren't also served from ORD or DFW, but that's likely to change as AA adds more JFK-International flights."

And how much of the local revenue from Houston can AA realistically expect to capture in those markets from a city when hub carriers typically carry the majority of traffic even to cities that they do not serve nonstop from the hub?

I couldn't care less. My post was to refute Bob Owens' mistaken assertion that AA was somehow attempting to provoke fare wars and go after local Houston-NYC traffic, not to argue the chances of AA's success.

Whether the route succeeds or fails is irrelevant to my post - I'm not going to pontificate about AA's chances of success - you can do that.

 

[WorldTraveler]

whether the route provokes a fare war or not is irrelevant to my statement.

I am refuting your assertion that IAH-JFK is being started to allow AA to feed traffic to its international network, which it appears you are saying, offers no different routes to Europe than what AA already flies from ORD and DFW which are already connected to IAH.

 

[FWAAA]

I am refuting your assertion that IAH-JFK is being started to allow AA to feed traffic to its international network, which it appears you are saying, offers no different routes to Europe than what AA already flies from ORD and DFW which are already connected to IAH.

BCN, MXP and ZRH are three that come to mind that are served via JFK that are not flown from either ORD or DFW. BCN and MXP are flown from MIA, but that's no reason to not connect IAH to JFK; If IAH is connected to JFK, IAH customers can help fill the JFK flights as well as the MIA flights. This spring, DUB is scheduled to begin from JFK, which is served via ORD but not DFW. And like I said, in the future, I expect to see fewer Florida flights from JFK and more European destinations.

This new flight is really no different from the daily IND-JFK ERJ - IND is connected to ORD, MIA and DFW, but a flight to JFK permits IND customers to help fill up the JFK flights. I'm willing to bet that part of running a huge network airline involves feeding the international flights at all the gateways from the spokes, not just offering spokes a choice of one or two gateways.

I'm also certain that a single daily flight from JFK to IAH and back isn't being offered in hopes of filling it up with local traffic (although if people are willing to pay high enough fares, AA won't refuse them a ticket). If AA was going after local traffic, it would offer service to IAH from LGA (like it used to) and would offer more than one flight a day.

 

[WorldTraveler]

ok...there's a good start on passengers AA COULD potentially gain.....

but if you add up the total passengers per day in those markets for all carriers it comes to about 100. Just as I noted, UA carries more than 50% of the passengers on those markets because they do serve those cities thru other hubs; the hub effect does in fact benefit the hub operator even in markets not served nonstop.

Further, these markets are served by other carriers by other well-timed single connections such as DL and US - and neither carrier gets more than about 15% market share in any of those markets.

So, if you add up all the passengers on European destinations not served nonstop from IAH and then take 20% of the total - which would be a very generous percentage for AA to obtain in whatever markets AA might open from JFK, you still come up to at best about 40 passengers per day. And these numbers are based on summer season traffic; in the winter, there aren't enough passengers up for grabs to even half fill a 50 seat RJ if one could make it that far - on top of the fact that European yields fall dramatically in the winter.

And what type airplane is this going to be operated with?

My point in going down to this detail is to show once again at how difficult it will be for AA to grow its network, esp. when they try to do it in cities like Houston, which as Bob notes is a "United city." And as much as you would like to think otherwise, UA passengers are not leaving in large enough numbers to make a flight like this to work.

So my question is still where AA is going to gain the passengers it is going to need to grow its network, esp. given that AA's costs will not be much lower than its other network competitors.

If we turn the discussion to the Caribbean or Latin markets in this announcement, AA's chances are a whole lot better.

Even RDU-LAX which was also announced will be a tough market for AA to maintain year round.

IND-JFK makes alot more sense because of the relatively short distance and the ability to use a small RJ. It is precisely because of the longer distance that it is very hard to develop longer haul flights from JFK w/o also competing in the local market.
With DL sticking its nose into LGA-IAH and WN starting LGA-HOU, I'm not seeing where alot of room to grow the NYC-Houston market beyond what has already been announced by other carriers.

I'm all for seeing AA rebuild its network - but I am not close to seeing what other airlines are going to give up the passengers they have gained or how AA is going to grow the market at fuel prices as high as they are now and w/o a significant cost advantage.

 

[Bob Owens]

I thought I covered that when I said "Right now, of course, there aren't too many international destinations served from JFK that aren't also served from ORD or DFW, but that's likely to change as AA adds more JFK-International flights."

AA cut an international and added Houston.

You over estimate the business sense and underestimate the egos of the people who consistently run this industry at a loss. UA will look at it as more encroachment on their territory by AA and will likely spark a similar move where they will start an unprofitable route just to stick it in AA's face, then one thing leads to another and before you know it they are both offering $99 fares between NY and LAX.

 

[WorldTraveler]

UA is not terribly strong at JFK compared to other carriers including AA but you are absolutely correct that they are not going to sit down and allow a competitor to gain a foothold in a market that is designed to siphon off traffic from a city where UA gains over 50% of the international passengers even in markets which UA or a partner does not serve nonstop from IAH.

AA has also cut BOS-LHR and I don't see where an equal amount of capacity has been added. Specific to JFK, AA has cut several international markets in the past several years which makes this expected growth there all the more suspect in terms of the ability to pull off.

Once again, AA has built its business strategy around highly competitive large markets such as NYC, ORD, and LAX where AA has given up a considerable amount of valuable market share to other carriers over the past several years and we are to be expected that AA is now all of a sudden going to start not only regaining what was lost but also grow beyond what they were before - EVEN THOUGH AA's costs are not going to be lower than the other network carriers from which they have to regain that share.

Actually, the $99 JFK-LAX fares have happened enough time that AA and UA have both come to the conclusion that it isn't worth competing for the majority of the passengers in the market anymore. Both couch their actions as "we are going after the top revenue customers" while also failing to note that other carriers - network and low fare - are already carrying more total onboard revenue in some of the transcons than AA or UA - and by the time AA's downgauge to 321s is complete, AA and UA will be the 3rd and 4th largest carriers in the transcons.

 

[WorldTraveler]

the schedule has been released.

it's a 738. 160 seats.

 

[737823]

JFK-IAH What a waste, CAL at EWR is much closer to Manhattan

As are DL or UA from LGA. I guess you don't get out of NYC very often, Houston is the energy capital of the US which drives considerable international premium traffic to points in Europe, Asia, Middle East, Venezuela, etc. Furthermore Houston is one of the fastest growing metropolitan areas in the United States with a growing corporate base. Many WS firms now have large offices in Houston for their oil & gas divisions. Take a drive through the Woodlands, no shortage of multimillion dollar homes.

AA is operating this route to feed international connections to AA and partner flights at JFK. Sure there will be some local traffic and its an important route for AA to serve but its not as if AA starting this route will begin a fare war with UA already in competition with B6, DL, and very soon both AA & WN.

Josh

 

[WorldTraveler]

yes, Josh, but the number of destinations which UA doesn't serve nonstop from IAH to Europe/Africa that actually generate more than a handful of passengers is small. Add in that hub dynamics thruout the industry dictate that the hub carrier gets the majority of traffic even to destinations it does not serve nonstop and the part of the pie that AA can realistically hope to obtain will fill a few rows on the 738.

Add in that BA serves far more markets in Europe via LHR, that route is already established and is operated under a JV, and the justification of providing European feed grows rather thin.

Perhaps AA wants to feed all of the other int'l carriers since there is currently no IAH-JFK service at all and AA might be able to pick up prorated revenue filling int'l carriers - that don't fly nonstop to IAH already.

Now, maybe UA will decide to aggressively get competitive w/ WN in the NYC-Houston market, fares will drop from all airports, and AA can just stand by and pick up a few extra local passengers. But JFK is not the preferred airport for local NYC-Houston revenue so the yields for AA in the local market will be lower than other carriers will get from LGA or EWR.

It's not a question of a fare war but of critically evaluating the justification that some are using for the start of a highly competitive route using a mainline aircraft when the reality is that a large RJ is the right size aircraft - if AA had enough of them.

And it also begs the question as to why AA has to start new routes to other carrier hubs when they could have just defended - or quit giving away - share they have had for years from NYC. With their downgrade of JFK-LAX/SFO with A321s, AA will no longer be the number one carrier in either of those markets.

 

[ZundappBella]

If AA had announced six round trips a day from JFK to IAH, then I'd agree with all your posts on this new route. But that's not it. It looks like AA intends to add domestic flights so that more cities have service to all five of the cornerstone cities, and for IAH, JFK was the missing piece. Same with RDU and LAX as LAX was the only hub not connected to RDU.

Delta has had seasonal RDU-LAX for a few years and it's only a few days a week. Not sure how AA will do it, it doesn't get into LAX until 8:00pm so what will it connect to?

 

[FWAAA]

In an apparent retaliatory move, Delta has announced one daily nonstop BNA-LAX beginning in April, flown with a 738.

 

[WorldTraveler]

think so?

DL also is upgauging JFK-DUB to a 763ER and adding 3 more flights/week.

DL is also retiming its RDU-LAX flight to an a.m. originating RT from RDU.

 

[silverbird007]

AA offers a superior product compared to DL, so with AAs lower cost and superior service we will be fine on any route.