Will AA pursue Alaskan?

[WorldTraveler]

Neither AS or DL has ever indicated there are less than two years left. Given that DL renewed and expanded the contract less than 2 years ago, a four year contract would hardly be considered a long term contract.

But let's face it that you and other AA fans want to get AS and DL separated in the hope that it can help AA grow on the west coast.

what do you think AS and AA are going to do if they were exclusive partners that they can't do now?

Have you not grasped that AS has specifically said their revenue opportunities are maximized by having multiple carriers as partners. Why would they ditch that in order to go with AS now?

No, AA is not the largest airline in the Midwest. DL is. Even combining AA and US for the last year (and AA/US were not one airline for all of the past year), AA/US comes out with a 22% market share compared to DL's 26.5%.


Based on revenue, DL's market share of the Midwest is 30%.

Having two hubs in the Midwest which NW developed and defended and where DL is the dominant carrier will do that for you, esp since DL's revenue at each of DTW and MSP separately is higher than AA premerger at ORD.

If you think DFW is in the Midwest, then you really have no knowledge of US geography.

There is no way that AA can claim to be the largest in the CENTRAL US without DFW.

we don't even need to talk about what AA MIGHT have at LAX compared to anyone else.

we've been reading about the MIA-NRT flight for years too.

 

[WorldTraveler]

here is what Ted Reed says about the AS-DL relationship:

(all quotes)

Note to Alaska Airlines: It's Time to Make a Deal with Delta

...



The problem is that the battle has pushed Alaska to act like an angry kid, telling Delta that if it doesn’t stop, Alaska will hold its breath until it turns blue.

....

The best U.S. West Coast hub is San Francisco, where United is long established. For years, that has left Delta and American, as well as United, fighting it out at LAX, a place where nobody can win.

The problems with LAX are that airport capacity is too limited for any U.S. carrier to build a real hub, while the many foreign carriers often set pricing below where U.S. airlines would like to set pricing. Not a favorable situation, yet you cannot abandon LAX.

As United CEO Jeff Smisek said recently “Los Angeles is a highly fragmented market. Everyone calls it a hub, (but) it’s not a hub for anyone ….So that’s why Delta is taking its actions to grow, or try to create a hub in Seattle.”

Six years ago, I was on an airplane with Glen Hauenstein, Delta executive president and resident genius, who built what is now United’s hub in Newark and then helped remake bankrupt Delta into what has become the most successful U.S. airline. Hauenstein pointed to the map in the inflight magazine and said Seattle is the best place in the U.S. for an Asian hub.

....

I say don’t fight a war you can’t win in order to save a few dollars.

If I ran a Seattle airline, my goals would be to make Delta my friend, to avoid the pain of an unwinnable battle and to convince Delta to keep its daily Seattle departures total right where it is.

Over time Delta’s Seattle-Asia flying is going to produce enough revenue to make Delta’s partners rich and enough critical mass to scare Delta’s enemies away.

I think it would be best to be in the former group.


http://www.forbes.com/sites/tedreed/2014/07/04/note-to-alaska-airlines-its-time-to-make-a-deal-with-delta/?partner=yahootix

END QUOTE

based on the thinking above and the reality that DL is not backing down at SEA, it seems hard to believe that AA could really benefit from a stronger relationship with AS at the expense of DL even if AS were contractually allowed to leave DL without handing over the farm.

 

[dfw gen]

the expert speaks again!

 

[WorldTraveler]

just think.

you could be an expert too if you just 1. knew the information and then 2. presented it as it is without your own bias.

In the meantime, specific to this thread, AS and DL have a long-term contractual relationship that isn't going away... both carriers have said as much.

and no one has said anything that AA and AS COULD do if they were in an exclusive relationship which they are doing now - nor has anyone provided evidence that AS wants to engage in an exclusive relationship with any alliance or airline - or even be a part of an alliance with the freedom to have other "side relationships."

unless someone can actually provide evidence to support their positions which are contrary to what AS has said, this thread is finished and we can ask that it be locked.

 

[eolesen]

There is a contractual break-up fee, but the contract, IIRC, has less than two years to go. It's certainly not going to be renewed

I've asked that question several times and never gotten a straight answer. My guess is that the contract runs longer than two years, but that the walkaway penalty either expires in two years or is reduced. That might explain why DL is in such a hurry to build up SEA now, instead of being a little more orderly.

 

[WorldTraveler]

Instead of thinking that the breakup penalty goes away, it is far more likely that the performance requirements under the codeshare agreement diminish over time. DL started the SEA TPAC buildup needing to know that the domestic feed would be there.

It had to be a realization to both AS and DL that, once DL started the TPAC buildup, the necessity of having domestic feed would not only become more and more important that it remain at existing levels but also would grow as DL added more int'l flights.

there were multiple reasons why DL has moved quickly to build out SEA. Diminishing ability to force AS to deliver for DL might have been part of it, but remember that there is also reciprocal requirements for DL to provide passengers for AS.

more likely reasons for DL's rapid SEA buildup are more likely:

- the opening of HND to more int'l flights and the potential that at any time the Japanese government could provide viable daytime slots that would immediately harm the value of NRT as a connecting hub - not just for DL but also JL and NH - in favor of HND.

- the devaluation of the yen - going on a year and a half - reduces outbound Japanese tourism and accentuates the need for smaller aircraft and fewer connections in Japan to the rest of Asia.

- UA's difficulties which have provided opportunities to grow in key Asia markets.

- The continued growth of demand from China and DL's relatively low number of 14 hour aircraft, the type that would be needed for DL to grow to Asia from other hubs.

- DL's own financial strength and success of its current expansion efforts which allows it to make long-term investments in its network right now. DL made the statement that its SEA-PVG route was profitable from day 1 when it was launched last year.

- the AA/US merger which was a given to have happened for years and the necessity that AA would have to develop its Asian presence, including from the west coast as well as AA's growth to Asia including from DFW.

The question still remains what AA could do in a stronger relationship that it can't do now and how any closer relationship with AA is going to help relative to the relationship AA and AS have today.

 

[jcw]

you could be an expert too if you just 1. knew the information and then 2. presented it as it is without your own bias.

 

 
you might want to think about following your own advice for your own posts - there is no doubt there is not any love lost between AS and DL - neither AA fans or DL fans no what will happen between AS and DL - all we know is it's a strained relationship at this point

 

[WorldTraveler]

Guess what?

The sentiment is not much different from my perspective

We all want to participate in the forums, share our thoughts, and be respected

You can think about whether you are enabling that to occur or serving to increase tensions.

And if there are subjects that are too sensitive or personal if the truth is spoken, then don't participate or resd them

I have yet to hear a cogent explanation of what AA will offer AS in a deeper relationship.

No one has also shown evidence that AS or DL want to or can terminate their relationship which is allowing DL to build a hub in SEA in very little time

 

[swamt]

Note to Alaska Airlines: It's Time to Make a Deal with Delta
 
Or will they go another route and end up competing against Delta?  You never know.  Time will tell...

 

[jcw]

there are many folks on here who understand your approach and constant bashing of AA and praise of DL
 
I'm not sure there will be a deeper relationship with AS - US had a cold relationship with them and with US management in charge - does seem likely either carrier will have a deep relationship with AS

 

[FWAAA]

Note to Alaska Airlines: It's Time to Make a Deal with Delta
 
Or will they go another route and end up competing against Delta?  You never know.  Time will tell...

In post #92, on the previous page, World Traveler posted the same article yesterday.   

 

[WorldTraveler]

Note to Alaska Airlines: It's Time to Make a Deal with Delta
 
Or will they go another route and end up competing against Delta?  You never know.  Time will tell...

that is exactly what is happening in the domestic market.

If the notion is that AS will start longhau int'l service, that would be quick way for AS mgmt. to lose the confidence of Wall Street.

 
 

there are many folks on here who understand your approach and constant bashing of AA and praise of DL
 
I'm not sure there will be a deeper relationship with AS - US had a cold relationship with them and with US management in charge - does seem likely either carrier will have a deep relationship with AS

it's not about bashing AA. It is about DL moving to develop a strategy on the west coast for a major Asia gateway and implementing before anyone else could. DL also clearly put the protections in place to ensure that its plans would be secure regardless of what AS did - and thus the minimum performance guarantees that are ON BOTH SIDES as well as the penalties if the relationship is terminated.

the other side of the discussion is why AA people can't accept that DL developed a strategy that will allow it to at least maintain if not grow its position to Asia while also limiting the ability of AA to do so.

As has been discussed a number of times, AA is left to develop a gateway to Asia from LAX, a heavily competitive market that is divided and about which few analysts believe any US carrier can develop a viable west coast Asian hub.

It is no different than AA fans touting that they managed to secure first right of access to any southside LAX gates that come available and which AA is doing to increase its LAX portfolio.

however, there is no certainty that AA's addition of LAX gates can't be matched by competitors thru other transactions while it is a whole lot harder to imagine a scenario where AA can overcome the obstacles to build a LAX-Asia hub where other carriers have failed and against larger competitive hubs north of LAX that are operated by carriers that already have a much larger presence in Asia.

None of that is bashing anyone.

It is the market reality.

And no one has still yet to tell me what AA could do if it had a deeper relationship with AS or why AS would decide that joining oneworld makes sense when they have repeatedly said they want to "play the field" and haven't ever said anyything that indicates they have changed their mind

 

[jcw]

you are correct DAL has a SEA stratety since NRT and LAX are no longer working for them - it's a great plan - I wish them the best of luck
 
AA will continue to execute it's strategic plans - good luck to them
 
UA will continue to execute it's strategic plans - lot's of luck of to them - not sure if they will figure it out - they need help
 
SW will continue to execute it's strategic plans - good luck to them

 

[WorldTraveler]

DL is developing an alternative plan but NRT and LAX are indeed working.

It is precisely this kind of stuff that the AA people repeatedly say and yet there are no facts to back it up.

DL didn't record a 25% profit margin on the Pacific by having a money losing NRT hub - unless they are making 50% margins on their non-NRT flying.

You are right that de have four well-run companies now, each to somewhat different degrees... different strengths, somewhat different strategies but the industry is better off today than it has been for decades.

but also don't forget that even with just Airbus and Boeing, the market for commercial airplanes is intensively competitive.

With four major US airlines and 3 of them trying to build similar int'l route systems where they don't have strength already, the competition in the industry is far from over.

 

[jcw]

if NRT and LAX are working then no need for another hub on the west coast - I think you have even said yourself that both UA and DL are trying to do less connecting in NRT and more direct flying reducing their respective NRT hubs
 
Once again - good strategy however argument is conflicted