Which of American’s Nine Hubs Are on the Chopping Block?

[DNTULSA]

Del-Duh ?
 
All this time, I thought the proper pronunciation was Delter.

 

[FWAAA]

The Answer is none are on the chopping block and all will be growing! Scott Kirby goes over all of them in the latest Crew News.
The highlights as best I recall.
JKF most improved financial performance, slot constrained. 
DCA very important but also slot constraines.
Both of which lead to why PHL will not be seeing reductions of any scale.
CLT most profitable hub.
DFW will see the most growth but mostly regional flying.
MIA great gateway, not much growth until S.A. economy recovers.
ORD- forgot what he said about ORD.
PHX - balance with SWA is very stable, sees no big changes. There are plans to add international (Atlantic) flying bit are on hold pending the International revenue environment.
LAX the most opportunity and were most of the growth will be over the next two years.

That summary doesn't exactly line up with another person's summary, which I'll quote below;

AA is committed to using PHL as its main TATL gateway. Expect most European expansion here. Also, look for upgauging of Europe routes.
JFK will remain primarily an O/D market. Expect modest expansion.
DFW will continue to be AA's main hub. Look for more A321s here.
CLT is new AA's best performing hub. It's not going anywhere, however there will likely be a reduction in intl flights.
ORD still needs some work, especially with intl flights, but is steadily improving.
MIA will expand and contract based on the LatAm economies. Right now, it's treading water until South America recovers.
LAX will see significant expansion, especially across the pacific, but also some domestic flights. Expect to see more/most 787s based here.
PHX will remain mostly stable. Expect a few TATL flights to be added here over the next few years, as well as a change in the aircraft mix.
DCA is slot constrained. No change.

Funny how different people can hear the same presentation and yet paraphrase it so differently. "Best Performing" and "Most profitable" are not synonyms.

About Charlotte: You said "most profitable hub," but others have said Kirby said "best performing hub." In case anybody's wondering why that makes a difference, remember that PHL-TLV was a "great performer" and one of US' "best performing routes" and yet it's now terminated as of the beginning of January, because it was not profitable.

Since Kirby said that Charlotte was the "best performing" hub, people in CLT should probably temper their enthusiasm, as the further reduction in international flights will cause some additional domestic shrinking in CLT - fewer international flights will require fewer domestic flights to feed those flights.

You and the person I quoted were completely consistent on JFK, MIA, LAX, PHX and DCA. Much less similarity between your recollection of Kirby's discussion of DFW and CLT.

As for CLT, it has the highest connecting percentage of any hub of any airline, and could function as a solid connecting hub and satisfy most of the CLT O&D if it were half its size. 20-25 million total annual passengers (instead of 44 million this year) would still be a big hub a for a medium-sized city like CLT.

 

[FrugalFlyerv2.0]

I'm still not convinced that PHX is toast.

What AA probably should do is *not* lean too heavily on DFW.

DFW's bag performance habitually sucks from the large real estate footprint, and when storms hit, AA's DOT standings wind up in the toilet for the entire month. I'd look at more of a parallel network for fail-over possibilities.

 
Wasn't STL supposed to serve a similar purpose, that is to relieve ORD and DFW, and yet AA did not have any problems in more-or-less dismantling it.  Why then couldn't PHX end up just like STL?

 

[UPNAWAY]

That summary doesn't exactly line up with another person's summary, which I'll quote below;


Funny how different people can hear the same presentation and yet paraphrase it so differently. "Best Performing" and "Most profitable" are not synonyms.

About Charlotte: You said "most profitable hub," but others have said Kirby said "best performing hub." In case anybody's wondering why that makes a difference, remember that PHL-TLV was a "great performer" and one of US' "best performing routes" and yet it's now terminated as of the beginning of January, because it was not profitable.

Since Kirby said that Charlotte was the "best performing" hub, people in CLT should probably temper their enthusiasm, as the further reduction in international flights will cause some additional domestic shrinking in CLT - fewer international flights will require fewer domestic flights to feed those flights.

You and the person I quoted were completely consistent on JFK, MIA, LAX, PHX and DCA. Much less similarity between your recollection of Kirby's discussion of DFW and CLT.

As for CLT, it has the highest connecting percentage of any hub of any airline, and could function as a solid connecting hub and satisfy most of the CLT O&D if it were half its size. 20-25 million total annual passengers (instead of 44 million this year) would still be a big hub a for a medium-sized city like CLT.

 
He said it was on a relative basis, so it probably doesn't bring in the most overall dollars but preforms at the highest margins.
 
But the point still stands none of the hubs will see any significant reductions unless soemthing drastic happens industry wide.

 

[john john]

Wasn't STL supposed to serve a similar purpose, that is to relieve ORD and DFW, and yet AA did not have any problems in more-or-less dismantling it.  Why then couldn't PHX end up just like STL?

The same was said about PIT relieving PHL

 

[1AA]

If DFW survives then PHX is toast.
The East coast is a mess. Whether it's a hub or a major city there are too many international flights.
JFK may not be a hub but it's a important gateway city. Mostly European and Middle Eastern as well. PHL international flights. CLT international flights. MIA international flights mostly Latin America and European market as well. Do you think AA can continue with all these hubs? ORD should survive. More international growth in LAX will take away from somewhere. Perhaps PHX? RDU I wonder what will come of it. We can all guess, speculate and give our opinions but in the end I think hubs will either consolidate international flying or just become a large city just short of hub status

 

[strangiatotheme]

 
PHX - ....There are plans to add international (Atlantic) flying bit are on hold pending the International revenue environment.

 
So basically the same line we've heard for the last 8 years or so.

 

[dfw gen]

 
So basically the same line we've heard for the last 8 years or so.

at aa we are figuring out how it works....one bullshit story after another.

 

[eolesen]

Wasn't STL supposed to serve a similar purpose, that is to relieve ORD and DFW, and yet AA did not have any problems in more-or-less dismantling it.  Why then couldn't PHX end up just like STL?

A couple reasons... PHX is about double the population of STL, and considerably further away. It's also a tourism destination and home to more corporate HDQ's, all of which helps boost the local O&D.

I also don't recall the last time there was an ice storm in PHX or other type of weather event that shut the field down for more than an hour.

 

[WorldTraveler]

Wind/dust and high temps are absolutely issues in PHX.

and there are hubs in cities that are known for harsh winter weather but not necessarily all of them have significant operational problems in winter weather.

The future of hubs won't be determined by weather. Every city gets it. Every airline is capable of working around it.

The kid author did get right that PHX has average fares that are below average for other hubs because of WN's presence. US has been able to justify its presence at PHX because of low labor costs and because of strategic necessity to serve the west.

neither of those reasons exist for AA to retain PHX in its present form.

AA will never be able to put a PHX sized operation in LAX but there is a lot of duplication between the two hubs in terms of flow traffic. and if AA really can obtain the space to grow LAX, you can bet they will push connecting traffic over LAX and start cutting PHX in a desert minute. If AA "owned" PHX then a large focus city would be fine but we all know that when you start pulling routes off of a hub, it is a process that just doesn't stop.

AA will have to decide whether it wants to maintain its flow traffic over DFW and build it over LAX or keep PHX.

AA can't do all 3.

the same principle applies to the east coast with 4 major int'l gateways which has been noted above.

and what hasn't been mentioned here is that if the perimeter rule at LGA is removed, AA's strategy in the NE will of necessity have to change dramatically.

 

[ChockJockey]

I don't expect AA's market share in PHX to fluctuate much in the nearish-medium future; there may be an upgauging of equipment with a reduction in frequencies but from what I'm seeing and hearing it looks like PHX is being better primed to do what it does already, which is accommodate a large number of tight, narrowbody connections.  A lot of money is being spent to this end and other improvements in tech, equipment, and facilities.  Most of the gates on the N1 and N2 concourse are going to be re-aligned to allow nearly all of them to take A321's (and possibly 757's) so that we can service even more of those at a given time.  What I've been hearing and what I believe Kirby said at the last town hall was that PHX will be seeing a lot of A321 and B737-8 activity with A320's and A319's being reduced over time.
 
The key to PHX is scalability with demand for domestic air travel.  We already see this with the calendars consisting of FLEX, regular ops, and reduced-ops days.  When demand is high PHX runs on all cylinders, almost bursting at the seams; when demand is low operations are limited to reduce costs.  This makes staffing a huge pain the the butt but it's a profitable practice as it allows PHX to grab the demand when it's there and retract when it's not.
 
According to the route map, DFW serves nine markets in California, LAX serves seven, but PHX serves fifteen.  I just don't see LAX and DFW being able to as efficiently provide the coverage, frequency, and volume that PHX does to California.  Let LAX focus on perfecting O&D offerings there and let PHX do the heavy connecting in the West.

 

[IORFA]

I watched the same townhall and heard Kirby say the Airbus would be leaving over time and the 737 coming in to replace them. He did say the A321 specifically would be going to other places like DFW. He also stated the 737-8 MAX would take over the PHX-Hawaii flights eventually. So after watching the same townhall I took away that the A321 and the 757's were on their wAAy out of PHX. Maybe we both need to re watch it as we got totally different information from the meeting.

 

[WorldTraveler]

I am not sure when the town hall meeting was but AA will likely have plenty of 321s. it is a very low CASM aircraft and precisely what is needed for high volume markets that are competitive with low fare carriers - and that NOW describes both DFW and PHX. the 319s are relatively high CASM aircraft and are much better suited for high yield, low volume markets - which does not describe most markets in PHX.

As for DFW's ability to serve markets in CA, remember that AA has had very few large RJs to work with and especially few Ejets. As those are added and the length of haul that can be sustained on smaller aircraft increases, smaller markets will open up from ORD and DFW.

I agree that CJ's account of high PHX will be used is rational and reflects the environment PHX has.... but all of this is dependent on the current high demand, fairly strong pricing environment that exists in the US.

Given that a number of the largest airports in the US are reaching capacity, the move will be toward upgauging across all airlines' systems.

the challenge for AA mgmt. is that they are going to have to increase their system yields somehow because a number of DFW markets are no longer going to generate the kind of revenue they once did and it will take years for Latin America to generate decent yields again. AA is being disproportionately hit by yield challenges and the only way to deal with that is to either pay employees less or get revenue up - and that means cutting lower yielding capacity.

It shouldn't take too long for airline employees to realize that flying a bunch of low yielding capacity is not conducive to wage growth. PHX developed as a hub for a low cost carrier which merged with a legacy carrier that had low labor costs; the expectation is that AA will be able to generate yields on par with other legacy carriers and pay its people accordingly. The only way for that to happen is to not believe that everything that has been a part of either carrier's pre-merger route network can remain long-term.

 

[topDawg]

the article is poorly written and says nothing that anyone didn't see years before the merger was even announced.

The only certainty is that AA will rationalize its network. it has way too many hubs competing for way too much connecting traffic.

Given that AA's RASM trails the industry and it is facing growing competition in its most important markets, it has to do something to push its revenue performance back in line with the industry or its stock value will continue to fall.

Not that long ago, AA was at parity with DL in stock value. Now, DAL market cap is $10B higher. given that all carriers are paying roughly the same for fuel, the difference is all revenue and balance sheet related.

AA has to address its revenue problem and that starts with attacking the revenue problems with its network. The latest round of route cuts won't be the last.

how that takes place remains to be seen.

 
Took all of page one for Delta to be tossed into a thread about AA. 
What
A 
Shock. 

 

[Jester]

Oddly, I think I can agree with elements of both CJ and even WT.  We are now part of a high-cost airline with high-cost wages and nearly a decade since of the America West days of FSAs topping out at $14/hour after 12 years, and I don't think PHX can support the fares to cover the costs. Interesting as to the number of CA cities from PHX, but what type of metal are the majority?  RJs? Besides the obvious LAX hub, other mainline flights being SMF, SAN, LAX, SJC, SFO, and OAK, and those are already being served through AA at LAX.
 
One of my co-workers suggested PHX might become an RJ hub, which I thought was a nutty idea, but I know that LAX moved a couple of RJ flights exclusively to PHX, as it opens up slots at LAX.  Consider that we had E175s markings on the lead-in lines painted last year, it sounds if the Fort Worth boys have plans to expand the role of RJs in PHX.  Could PHX become a true focus city of primarily a few larger east coast cities and hubs with mainline aircraft feeding into limited number of RJ banks?  That's my theory du jour.
 
If my ideas are correct, we could see some substantial reduction in mainline flying, so I will avoid buying any new home for awhile.  Finally, I have been reminded by a few former LAS guys that one of the former Tempe boys during a town hall podcast claimed there would be no reduction in the LAS schedule 7 years ago.  Less than 2 years after those reassuring words, over a hundred LAS FSAs transferred to PHX when 300 of them were furloughed when the station was de-hubbed.