Why Is Asia American Airlines' Achilles Heel?

[AdAstraPerAspera]

If AA is going to be profitable flying to Asia from the US, they are going to have to build a network built around less competitive markets where AA has a better chance of competing.

 
And what specific "less competitive markets" did you have in mind? PDX? How about OAK, I hear they have no transpac competition there! Maybe even a LAS-Asia gateway? 
 
You are truly divorced from reality.

 

[700UW]

If you were "effective " you wouldn't be a keyboard warrior and would actually be working in the field.

 

[1AA]

If you were "effective " you wouldn't be a keyboard warrior and would actually be working in the field.

Like yourself?

 

[WorldTraveler]

The nerve of AA, thinking they should try to compete from their existing hubs........

You should email Doug Parker with that treatise immediately. I'm sure he'll get right on it. It will probably be better received at CP5 than it has been here.

 I don't have to email Dougie... he is going over the P&L statements with fine tooth combs... and he absolutely knows how AA's Pacific flights are doing.

I have said before that AA's future to Asia is from their fortress hubs and that remains true. DFW and PHL might not be ideal for having full access to Asia from all of the US but there is a much higher chance that AA can succeed to Asia from those hubs and still serve a great deal of the market.

AA can't reasonably expect that they are going to not spend the billions that DL and UA have spent to acquire Pacific networks and then have full nationwide coverage in every market segment.

It is also true that DL has so far chosen not to compete in the LAX-Asia market outside of Japan and the only reason that UA is there is because UA is not going to let AA set up a Pacific network in UA's backyard. If UA throws in the towel from LAX-Asia and/or if DL decides to venture into LAX to Asia outside of Japan, then there might be some reason to argue that AA should also be there. But if DL expands LAX-Asia, it will do so in very specific markets where it will have an advantage over both US and Asian carriers (and there are a few markets where that could be the case).

The responses I see here come from people who still don't want to accept that AA can't have a Pacific network comparable to DL and UA who spent the money and time to buy an Asia network.
 

Like yourself?

notice that comes from someone who has 3X more posts than I do over a similar level of time on the site... but that is true for him compared to most every other user too.

 

[AdAstraPerAspera]

The responses I see here come from people who still don't want to accept that AA can't have a Pacific network comparable to DL and UA who spent the money and time to buy an Asia network.

 
A laughable statement, considering an Asia network focused on NRT is becoming less and less important with every passing year.

 

[robbedagain]

Another poster pointed out to me in a thread that dl thru nwa and ua thru panam got their pacific from the 1950s so its not that we the people dont want to see aa have a comparable pacific network. Given that over the next few yrs the aa new planes and the retirement of older planes could given them sizeable presence in asia.

 

[WorldTraveler]

A laughable statement, considering an Asia network focused on NRT is becoming less and less important with every passing year.

you do realize that DL has added easily a half dozen new flights to Asia from DTW and SEA since the merger that are not to/from NRT?

Do you realize that DL bought a hub at FRA from PA, dismantled it, but still is the largest US airline to continental Europe (PA had already sold the LHR rights to UA).

Did EA operate nonstop DFW to S. America service and yet AA clearly does. AA apparently took the strength in Latin America it acquired and expanded it based on the changing market and AA's own network.

AA will succeed in Asia but it just won't be in the same gateways and on the same routes that more established carriers on both sides of the Pacific use.

 

[AdAstraPerAspera]

We'll see what happens when the 787s come on line

 

[eolesen]

Banks and liquor stores get robbed because that's where the money is....


Here's the census distribution on self-identifying Asians in the US. Note the concentrations in California, Seattle, Chicago and NYC. The 787 will certainly open up more route possibilities, but you can't expect people west of the Rockies to be back hauling to DFW or ORD.

 

[WorldTraveler]

can you do the same thing for a couple nationalities of Latins and then tell us if the answer increases the likelihood of profitability of DL or UA from MIA to Latin America?

just because the market is there doesn't mean that a company can profitably serve a market.

AA wants to try to be in the top markets without having the ability to obtain the revenues necessary.

The fact that DL and UA get average fares to PVG from SEA and SFO that are far higher than what AA or UA get from LAX highlights the huge amount of Asian carrier capacity that pushes down average fares from LAX - and which AA has to overcome in every market they try to serve.

AA just might not be able to serve the west coast to Asia market based on how competitive those markets are.... but they stand a good chance of serving the eastern two thirds of the US from DFW and PHL to Asia and a couple of flights from ORD (probably down from what they serve now)

 

[eolesen]

Feel free to do so yourself, Skippy.

 

[WorldTraveler]

doesn't matter what data you pull, it won't change the result. DL and UA aren't going to enter the market based on the size of the market. They will enter the market based on their ability to profitably serve it.

A 787 won't fix what ails AA in LAX-Asia.

DOT data shows that DL's revenue on LAX-HND - the weaker of its two LAX-Tokyo routes exceeds revenue on AA's LAX-NRT route by 50%. Further, DL's HND flights are flown on 767s while AA's NRT flights are flown on 777s which weigh and burn almost 50% more.

And both of AA's LAX-Asia flights combined generate just over the revenue on DL's LAX-NRT alone.

So either you might want to rethink your notion about how badly Japan is doing for DL or you might explain why AA's Asian operations are not solidly in the black. Apparently they were telling the truth when they said that NRT was their highest margin hub just a few months ago - which also pretty well makes it clear that DL is restructuring its Asian operations from a position of strength and profitability and not desperation and losses.

Since DL reported its Pacific operations as a whole had a 24% operating margin, just under the 25% for Atlantic operations, the NRT hub alone had to be higher than either of those numbers.

A 787 isn't going to cut trip costs by 50%.

 

[robbedagain]

So essentially E data are totally worthless but yours are perfect got it! E ur data are pretty good in my book

 

[WorldTraveler]

E's data has nothing to do with airline revenue. It tells where Asians live and where a market might exist. In fact it says nothing about the airline industry at all.

DOT data is specific to actual operating airline routes by US airlines.