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On 5/20/2003 1:23:44 PM nimbus wrote:
Hi folks. I am usually of the silent majority viewing your postings.
Whereas many of the responses here are very subjective (understandably given the morale at AA) I want to thank the objective posters that post insights into the many factors and confluences involved in operating a successful airline.
As for Arpey, he has a tough job ahead. Hoenstly, employees sceptism is 100% justified. He is seen as "cut from the same cloth" as his two predecessors ( 21 years under Crandall and Carty.)
As for a AA''s business plan. For the past two years, AA harked our most dangerous competition aere low cost carriers (eg. JetBlue). Yet, very little is ever mentioned about how we will compete with them. Delta has managed to come up with Song. I applaud Delta''s management for taking the initiative. Delta is showing itself determined to protect its territory by trying another marketing plans.
AA seemed focused alsewhere. JetBlue had a lower cost structure so AA cut its costs (Union/Mgmt pay and benefit cuts). Last week they anounced some supplier renegotiated contracts too. Where is AA casm now in regards to the competition??
AA hinges their success on 30% premium that passengers are go to pay on AA metal. Perhaps in places AA holds a dominate position but that position has eroded domestically in former strongholds markets like Transcons and SJU as Jetblue moved in.
In this economy a 30 % premium seems very ambitious. Ticket price is still the #1 determining factor by the majority of the flying public. For the past two years, we have been stagnantly waiting for enough passengers to pay that 30% instead of creating new marketing plans to promote business. Don;t we pay management team for this??
I look forward to hearing Mr. Arpey''s ideas. I hope its full of imaginative marketing ideas, solid utilization of of AMR/AA technology, and a human approach to employee relations.
BTW, This weekend, my friend flew Song to Florida and JetBlue back to NYC. They enjoyed the Song product very much. They see Song giving JetBlue a run for their money.
Some quick remarks of a subjective nature...
Has AMR went after the Top tier managers (and fomer AMR retirees/consulant)pay and perks? (eg. country club dues, leased cars, pensions, etc.)
Also, as far has JetBlue being a competitor, I still pay non-rev charges on AA (my employer) for International and Domestic trips. On top of my pay cut, I can not afford to use my travel benefits anymore🙁 Well thats not totally true. As an airline employee, JetBlue (my airline''s competitor) allows me to fly free. I occassionally use them to commute to work. Why does my competitor treat me better than my employee?? That makes it hard to say anything bad about JetBlue🙂 It also makes me like JetBlue management more than my own home team.
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AA''s mainline yield for Q1 2003 was 37.9% higher (12.19 cents/mile) than B6''s Q1 2003 yield (8.84 cents/mile). So apparently AA IS getting a 38% revenue premium over B6.
And that''s with AA''s greater reliance on business travelers and a far-flung domestic and international network. During a war and media-driven SARS epidemic that killed international bookings. Plus, AMR carries far more profitable freight than B6 can ever hope to carry.
What more can you ask for? And just wait til B6''s costs begin to escalate (when they have to start maintaining their all-new fleet and face union pressures).
Not to pile it on B6, but their Q1 2003 yield was DOWN 10.7% from 2002, while AA''s mainline yield was down only 2.6% from 2002. Think anyone is ever going to want to pay MORE for to fly B6??
JetBlue is not, I repeat, NOT as spectacular as some think. Don''t get me wrong - they are more successful than most startup carriers - but B6 does not walk on water.
WN is a different story, as their Q1 2003 yield was UP 2.6% to 11.99 from 11.69 in 2002. But they will never fly to Japan or Europe or SA, and it''s doubtful that its customers will willingly pay more than they are currently paying. Can AA get its 30% premium over WN? Who knows?
And UAL? AA''s Q1 2003 yield was 20% higher than UAL''s. AA''s full-year 2002 yield was higher than UAL''s 2002 yield.
Will AA always have a 30% revenue premium? Maybe not. But with a 38% revenue premium over everybody''s darling, B6, it is certainly possible. Things aren''t as bleak at AA as the doom and gloom crowd keep saying they are.