American admits that DAL flights probably won't make any money

[FWAAA]

No profits? Whatta surprise.

The 60k bonus miles for six DAL or DFW roundtrips is a fantastic promotion - Me and the kids will be flying six DFW-AUS flights over spring break.

American says Love Field service won't make money

Tuesday February 21, 1:36 pm ET

American Airlines Inc. will compete aggressively with low-cost Southwest Airlines Co. at Dallas Love Field, said an airline executive Monday, adding it's doubtful the legacy carrier will make money flying from its newest airport.

American on Monday unveiled to the media the three gates from which the airline will operate at Love Field.

Southwest has more than 90 percent of the flights at Love Field, where the carrier has operated for more than 30 years. American plans to steal some of those customers, according to David Cush, an American vice president and general sales manager.

American starts its new service from Love on March 2, with 16 flights a day to Austin, San Antonio, Houston, Kansas City, Mo., and St. Louis.

The carrier was driven to expand from its fortress hub at Dallas/Fort Worth International Airport to serve Love Field by a recent relaxation of the federal Wright Amendment, which uniquely restricts Love to short-distance flights in jets with more than 56 seats.

With the recent relaxing of Wright to include Missouri, American is now on the defensive to stem any losses of its customer-base in the North Dallas area. American has a huge customer base in the area, said Cush.

But chances are American -- which has seen a near steady run of losses since Sept. 11, 2001 -- won't make money doing it, he indicated.

http://biz.yahoo.com/bizj/060221/1231031.html?.v=2

Well, AA has to make its point - and spend a few million doing so.

It raises one question: AA flew the slimmed-down Executive Class service (same nice F seats, but plain ole' meals) at DAL until September 11, 2001, several months after Legend folded. Was that several month period solely to make a point (and avoid the negative publicity that would have accompanied a shutdown concurrent with Legend's shutdown), or were those flights remotely profitable? Is it possible that AA DAL flights might be profitable?

 

[AMFAMAN]

Just makes ya wanna give more money back. :down: :down:

To think they had to pull a profitable DFW-PVD route to fly these money losers just to prove a point.

Give em another bonus...

 

[TWU informer]

This must be one of those great "executive" decisions that Former Moderator was talking about which would justifiy bonuses.

 

[eolesen]

The good news here is that WN's loads also suck on DAL-STL and DAL-MCI.

This must be one of those great "executive" decisions that Former Moderator was talking about which would justifiy bonuses.

No, actually as a free market believer, I'm on record for quite a while as being opposed to the Wright Amendment.

This is nothing more than grandstanding and chest-thumping, and we should just lobby to get Wright repealed along with perimeter rules at LGA and DCA.

 

[TWU informer]

Former Moderator Post

L5 on up are under blanket non-disclosures, so I really can't comment on a lot of what I do to earn my keep every year. What I can say is that my group of employees regularly comes up with ways of saving us from spending on the order of $1M annually with companies like EDS and Sabre.

 

[eolesen]

Former Moderator Post

What I said then is still true -- we regularly come up with ways of doing work inhouse which could otherwise be outsourced to Sabre or EDS.

Anyone who uses the agent Dashboard with Quantum is using something my group did for about $5000. EDS quoted us over $200K for the same work. We kept money out of EDS's pocket, and also reduced the total number of FMR and check-in system entries being made on a daily basis (which will add up to money saved with Sabre). We also built FOS.AA.Com (a disaster recovery for FOS) in less than two months and spent less than $10K doing so. EDS and ITS were quoting a minimum of eight months and a minumum of $500K.

That's just two projects where we avoided spending $700K with EDS. It's not a cost savings, it's not revenue, but it was certainly cost avoidance.

Now, what exactly does that have to do with the politics behind the Wright Amendment?

 

[TWU informer]

Now, what exactly does that have to do with the politics behind the Wright Amendment?

Topic is not about Politics and/or Wright.

It is about losing money at Love Field.

It is about management decisions to continue to fly where losses will surely be the result.

You were the one defending the idiots on the bonus thread.

 

[eolesen]

You were the one defending the idiots on the bonus thread.

Not everyone in management is a blithering idiot, :censored:. You could have had Kerry Skeen for a CEO, or Dave Siegel. I can't even start to defend the marketing folks, but the majority of people in the finance and planning areas do a pretty good job at finding ways to improve revenue and cut costs.

You're a fool if you think the decision to fly out of Love is anything but political. AA has thumped its chest for years about how allowing Free Love will destroy DFW Airport. Now they have to live up to that claim.

Ironically, Southwest is in the same boat. After all of the backroom dealing to get the Missouri exception, they have no choice but to fly there, yet their loads to/from STL and MCI are said to be miserable. WN is doing a lot of local ad buys in the DFW market to try and drum up business (I have to listen to them every morning on the way to work) which is something they shouldn't have to do in their hometown and with all the free publicity the Wright debate has provided them in the past six months.

 

[flyhigh]

AA flying STL & MCI from Love is a case of loss avoidance. If they didn't offer it, people would fly WN because it is more convienient. By having the service, they avoid losing the customers to WN. As for pulling a "profitable" PVD flight...I have a pretty good feeling that few, if any, people posting here can say it was a profitable flight. Unless you work in route planning or flight profitability, you most likely have no clue which flights are profitable. That's a pretty standard reality around the industry.

 

[AMFAMAN]

As for pulling a "profitable" PVD flight...I have a pretty good feeling that few, if any, people posting here can say it was a profitable flight. Unless you work in route planning or flight profitability, you most likely have no clue which flights are profitable. That's a pretty standard reality around the industry.

We've already gone down the PVD route a few times and the info provided in earlier threads would indicate a profitable flight or at the least a greater revenue generator than DAL flights will ever be. But hey, throwing away money to keep away customers from flying SWA every once in a while makes good enough sense to warrant bonuses for management. That's a pretty standard reality around the industry.

 

[jimntx]

I think that it's going to play out like this.

1. Mar, 2006 - AA begins DAL-STL and DAL-MCI flights.
2. Oct or Nov, 2006 - AA ends same.
3. Sometime early 2007 - SWA terminates or drastically reduces DAL-STL and/or DAL-MCI service saying that traffic does not justify service.

This is just a way of banging away at the WA. I think that most of our flights between STL and DFW have good load factors, but the traffic is not STL to DFW. It is STL to DFW in order to connect to somewhere else. I suspect MCI-DFW is same.

I know when I'm working #1 on STL-DFW the connecting gate list is usually so long that at the end instead of saying, "If I did not call your connecting gate information, please check with the agent when you deplane", I'm tempted to say, "Ladies and Gentlemen, if I did not call your connecting gate information, it's because we don't fly there."

 

[flyhigh]

MCI-DFW is actually a pretty big local market. I think it has to do with agri-business firms, but not 100% sure. It most likely does better than STL-DFW.

As for the profitability, again, I'd be EXTREMELY hesitant to believe few, if any, posters here have a clue what flights are profitable vs. those that aren't at their respective carriers. That's not something the company like to hang on the bulletin board. In addition, "profit" in the airlines is a bit of a murky measure. Is it segment, system, operating, or net profitable...or is it simply a positive system contributor???

 

[Bob Owens]

No profits? Whatta surprise.

Well, AA has to make its point - and spend a few million doing so.

So is AMR in the business to make money or make a point?

Why would they be willing to lose money in order to make a point?

Seems that my theory about how they made things worse in order to gain long term concessions is a little less far fetched.

Gives a new perspective to why the company made its workers hand over uniforms too, to make a point.

That gives you a new perspective on "pull together Win together" too.

 

[mrman]

Ironically, Southwest is in the same boat. After all of the backroom dealing to get the Missouri exception, they have no choice but to fly there,

WN would not fly there unless it was profitable. WN can fly DAL-JAN, but they don't. Unlike AA, WN makes operating decisions based upon profitability, not ego

 

[eolesen]

WN would not fly there unless it was profitable. WN can fly DAL-JAN, but they don't. Unlike AA, WN makes operating decisions based upon profitability, not ego

Big difference between Shelby and Bond --- Shelby was lobbying for himself. Kit Bond wasn't.

The Dallas Morning News has allegedly been doing deplane counts, and I can't say if AMR has been doing them or not, but what I'm hearing is 20-30 peopler per departure on a good day. I don't think it will get better next week when there's twice the capacity in the market.