AA can finally compete in China without buying NW

[FWAAA]

In the past, conventional wisdom was that AA would have to buy NW to acquire any substantial presence in China. With the recently expanded bilateral, I contend that is no longer necessary.

In 2010, 21 more weekly frequencies become available. In both of 2011 and 2012, 14 more weekly frequencies become available. A total of seven more daily flights by March 2012. These numbers don't count the frequencies dedicated to Zone 2 (which nobody seems to want). While it would be unrealistic to plan on getting a majority of these frequencies, winning two or three of the seven available shouldn't be unrealistic.

Where should AA next apply? LAX. UA said that its request for 2009 LAX-PEK would provide one-stop connectivity to 36 domestic cities behind LAX. AA's current LAX schedule would permit AA to offer one-stop connections to 31 domestic cities behind LAX (including its Alaska/Horizon codeshares). DOT's recent denial of the proposed UA PAX-PEK was a huge gift to AA; it permits AA to go head to head with UA in the next round of frequency allocations.

What should AA do? Spend the next 2-3 years bolstering its LAX schedule to provide even better connections to its proposed LAX-PVG and LAX-PEK flights. AA then argues that its LAX proposals would provide excellent inter-gateway competition to UA at SFO.

JFK? CO and the Chinese carriers seem to have that covered.

DFW? O&D traffic to China is almost as small as from ATL. Not worth wasting another application on this (even assuming the pilots agree to longer duty days). Let's see how low DL has to price its ATL-PVG flights to cover expenses before applying for DFW-China.

End result: AA could have four or five daily China flights by March 2012 without buying NW (or anyone else).

NH/BBs: I thought AA would have to buy the Red Tail to get it done. Now I'm optimistic that AA can do it alone.

 

[donttouchthebeauty]

End result: AA could have four or five daily China flights by March 2012 without buying NW (or anyone else).

NH/BBs: I thought AA would have to buy the Red Tail to get it done. Now I'm optimistic that AA can do it alone.


Absolutely, that is definitely possible!!! You also have to consider that everyone else will be getting route authorities by that time as well, UAL will have LAX service more IAD service and if consolidation occurs possibly more. AA will still be second to NWA and UAL in this aspect. THE LAX route wasn't awarded to UAL this year because AA US DAL CAL NWA would have screamed to the top of their lungs for 3 awards going to UAL in three years. However the SFO-CAN route was much more important for UAL to win. AA can definitely build up it China routes in the coming years on its own, The hub structure at AA is less desirable for Asia O&D traffic. Think DFW, JFK, ORD.. ORD has the service as does NYC. DFW well we already saw that one come down. AA doesn't have it in CA where the majority is at. 3 more routes shouldn't be impossible to win however.

 

[Kev3188]

In the past, conventional wisdom was that AA would have to buy NW to acquire any substantial presence in China. With the recently expanded bilateral, I contend that is no longer necessary.

NH/BBs: I thought AA would have to buy the Red Tail to get it done. Now I'm optimistic that AA can do it alone.

I never ever thought I'd see this in print...

FWAAA no longer thinks AA is going to buy Big Red? Has the world gone mad?

 

[MCDP]

Besides, why would anyone want to buy Big Red in the first place? Other than Asia, what would they have to offer other than a more disgruntled workforce than AA, if that is possible.

 

[FWAAA]

I never ever thought I'd see this in print...

FWAAA no longer thinks AA is going to buy Big Red? Has the world gone mad?

Hell hath surely frozen over!

I've been pining for a purchase of NW for over 7 years now, since Carty and NW couldn't agree on price.

Some say the jury is still out on NW - but it appears that it has successfully reorganized. If NW and DL appear to be pairing up, however, I still want AA to get in the middle; if only to make it more expensive for the newlyweds.

The talk about UA being broken up and sold in pieces is just that: talk. Ain't happening.

 

[LGA Fleet Service]

I'd rather see organic expansion, settle the pilot contract, order 777-300LR's to reach into China, that sort of thing.

 

[NewHampshire Black Bears]

LGA Fleet Service,...I KNOW you meant to type..777-"200"LR

(THIS is gonna' KILL me to have to admit)..........But Eolesen "nailed it" when he said that AA could bypass NW, with non-stop routes, that overflew NRT !!!!!!

FWAAA,
To your question............you used a "key"(IMHO) word, when you said that CO and the chinese carriers "seemed" to have NYC covered, so my answer is DEFINETLY ...JFK !!

Here's why.

If you think that the NYC market(for china service) is crowded, just look at "your own back yard"(LAX), plus NYC has a huge O+D chinese market(think BOS)

Look how AA was'nt afraid of NW by driving them out of JFK/NRT(same theory applies)

For AA, ORD/China is now saturated....DFW is...(well) still(podunk) DFW !!!!!!!!

MIA ??.......NOPE !
The answer CLEARLY(IMHO) is JFK.

Uncle (bobby) CRANDALL showed us all, that we did,nt need the MOST frequency to make the most $$$$$ (Just ask UAL, in the 90's)

If I had to pick THE route out of JFK*(knowing full well that CO is flying both PEK/PVG from EWR), I'd look at where the National Carriers out of Kennedy are going(probably PEK), and fly JFK/PVG.

Also, CO has the same "birds"(777's) we do, so you know that AA could make the JFK/China trips, without having to buy the 777-200LR's(thought I wish to HEL* they did, because if so, they "might" be tempted to fly ORD/SYD) !!!!!!!!!!!

 

[FWAAA]

FWAAA,
To your question............you used a "key"(IMHO) word, when you said that CO and the chinese carriers "seemed" to have NYC covered, so my answer is DEFINETLY ...JFK !!

Here's why.

If you think that the NYC market(for china service) is crowded, just look at "your own back yard"(LAX), plus NYC has a huge O+D chinese market(think BOS)

Look how AA was'nt afraid of NW by driving them out of JFK/NRT(same theory applies)

For AA, ORD/China is now saturated....DFW is...(well) still(podunk) DFW !!!!!!!!

MIA ??.......NOPE !
The answer CLEARLY(IMHO) is JFK.

Uncle (bobby) CRANDALL showed us all, that we did,nt need the MOST frequency to make the most $$$$$ (Just ask UAL, in the 90's)

If I had to pick THE route out of JFK*(knowing full well that CO is flying both PEK/PVG from EWR), I'd look at where the National Carriers out of Kennedy are going(probably PEK), and fly JFK/PVG.

Ya know, Bears - you're right. I'm convinced.

Even better for AA is that CO has written three excellent briefs in support of AA's JFK-PVG application. The first got them EWR-PEK, the next failed to win (UA won its IAD route instead) and the third just won them their EWR-PVG route. NYC is a huge market and AA could make the same intra-gateway competition arguments that were successful at ORD where AA argued that UA needed some competition.

So AA applies for JFK-PVG and one or both of LAX-PVG/PEK. That's two or three new China routes where AA can probably succeed, both in the application process and with the flights if awarded.

I'll submit an invoice to Arpey for our services and send you half the money. Thanks for the help.

 

[donttouchthebeauty]

Ya know, Bears - you're right. I'm convinced.

Even better for AA is that CO has written three excellent briefs in support of AA's JFK-PVG application. The first got them EWR-PEK, the next failed to win (UA won its IAD route instead) and the third just won them their EWR-PVG route. NYC is a huge market and AA could make the same intra-gateway competition arguments that were successful at ORD where AA argued that UA needed some competition.

So AA applies for JFK-PVG and one or both of LAX-PVG/PEK. That's two or three new China routes where AA can probably succeed, both in the application process and with the flights if awarded.

I'll submit an invoice to Arpey for our services and send you half the money. Thanks for the help.

I agree that JFK is the best shot for AA, however there are many carriers in the area that do those routes, including foreign carriers, LAX will be a tough one for AA to win, considering UA is a bigger player in the LAX market. Also, knowing full well they wouldn't be awarded the route this go round they will be expecting it on the next one.

 

[MAH4546]

If AA gets 787s, MIA-China should not be ruled out for one reason, and only one reason: Delta. Delta is one-upping American in offering Latin America-China services via Atlanta, and Asia in general. AA knows this and is watching this closely. With 787s, Miami-China is extremely viable, and will offer quick connections to Latin America, which is a very, very fast growing market from China. And with the visa waiver expanding - Argentina, Brazil, and Uruguay now qualify for transit without visa - transit traffic will be going back up. And don't forget cargo.

That being said, for the next round, I think AA will aim at LAX- or JFK-China. Maybe even a combo of both, JFK-PVG and LAX-PEK?

It be cool if they were to ask for 4x MIA-PVG/3x MIA-PEK, though. 787s make it viable, but there are better options from JFK and LAX.

 

[Boomer]

LGA Fleet Service,...I KNOW you meant to type..777-"200"LR

(THIS is gonna' KILL me to have to admit)..........But Eolesen "nailed it" when he said that AA could bypass NW, with non-stop routes, that overflew NRT !!!!!!

FWAAA,
To your question............you used a "key"(IMHO) word, when you said that CO and the chinese carriers "seemed" to have NYC covered, so my answer is DEFINETLY ...JFK !!

Here's why.

If you think that the NYC market(for china service) is crowded, just look at "your own back yard"(LAX), plus NYC has a huge O+D chinese market(think BOS)

Look how AA was'nt afraid of NW by driving them out of JFK/NRT(same theory applies)

For AA, ORD/China is now saturated....DFW is...(well) still(podunk) DFW !!!!!!!!

MIA ??.......NOPE !
The answer CLEARLY(IMHO) is JFK.

Uncle (bobby) CRANDALL showed us all, that we did,nt need the MOST frequency to make the most $$$$$ (Just ask UAL, in the 90's)

If I had to pick THE route out of JFK*(knowing full well that CO is flying both PEK/PVG from EWR), I'd look at where the National Carriers out of Kennedy are going(probably PEK), and fly JFK/PVG.

Also, CO has the same "birds"(777's) we do, so you know that AA could make the JFK/China trips, without having to buy the 777-200LR's(thought I wish to HEL* they did, because if so, they "might" be tempted to fly ORD/SYD) !!!!!!!!!!!

Bears,

Give me your take on the following:

Primary: The problem with an origination to China from BOS is the JFK multibillion terminal. There is no way that AMR Senior Executives are not going to make the new JFK terminal appear profitable, even if they have to rape the flights from the whole northeast to accomplish it.

Second, the continued pressure on yields out of BOS from JetBlue and LUV (PVD and Manchester) is going to require some sort of response that will most likely reduce the markets serviced directly from BOS.

Third, rumor has it that in response to FAA threats to ration the number of flights in the NY market to reduce congestion and delays, AA will take over some of the AE flying into the NY market from BOS: fewer frequencies through the use of the MD-80, B-737.

 

[eolesen]

I don't see JFK-China happening -- isn't flying time beyond the limits in the pilot agreement?

My money is on LAX. AA appears to have been quietly building that franchise just like it did with JFK and BOS. AA is already a decent option to Europe, and many of us in the western states would love an alternative to UAL when heading to Asia. I've got that with AA to Japan, and LAX would offer one-stop three-class service from both MIA and JFK.

 

[lpbrian]

In the past, conventional wisdom was that AA would have to buy NW to acquire any substantial presence in China. With the recently expanded bilateral, I contend that is no longer necessary.

In 2010, 21 more weekly frequencies become available. In both of 2011 and 2012, 14 more weekly frequencies become available. A total of seven more daily flights by March 2012. These numbers don't count the frequencies dedicated to Zone 2 (which nobody seems to want). While it would be unrealistic to plan on getting a majority of these frequencies, winning two or three of the seven available shouldn't be unrealistic.

Where should AA next apply? LAX. UA said that its request for 2009 LAX-PEK would provide one-stop connectivity to 36 domestic cities behind LAX. AA's current LAX schedule would permit AA to offer one-stop connections to 31 domestic cities behind LAX (including its Alaska/Horizon codeshares). DOT's recent denial of the proposed UA PAX-PEK was a huge gift to AA; it permits AA to go head to head with UA in the next round of frequency allocations.

What should AA do? Spend the next 2-3 years bolstering its LAX schedule to provide even better connections to its proposed LAX-PVG and LAX-PEK flights. AA then argues that its LAX proposals would provide excellent inter-gateway competition to UA at SFO.

JFK? CO and the Chinese carriers seem to have that covered.

DFW? O&D traffic to China is almost as small as from ATL. Not worth wasting another application on this (even assuming the pilots agree to longer duty days). Let's see how low DL has to price its ATL-PVG flights to cover expenses before applying for DFW-China.

End result: AA could have four or five daily China flights by March 2012 without buying NW (or anyone else).

NH/BBs: I thought AA would have to buy the Red Tail to get it done. Now I'm optimistic that AA can do it alone.

I agree completely. With east coast and the midwest saturated with China service, LAX is a no brainer. With UA's China services out of SFO, AA would have an excellent shot. DFW can wait. It will always be there, no one will come in. Best to wait when 787's arrive.

 

[FWAAA]

If it had another mile of runway, Northwest Arkansas might be a possibility with a 787-8. B)

Seriously - XNA has AA/AE connections to DCA, ORD, LGA, RDU, LAX, DFW, MIA and STL.

I don't see JFK-China happening -- isn't flying time beyond the limits in the pilot agreement?

Probably exceeds 16 hours of duty time, but we're talking about March 2010 to March 2012 here - if AA can't solve that problem with the APA in the next 2 to 4 years, then AA's got some serious problems besides a lack of dominance to China.

CO swore up and down in its serial applications that NYC was a huge China O&D market; it had better be, since connecting traffic from other than East coast waterfront (Florida to BOS or so) would probably make more sense at ORD than at JFK. On top of that, DL and B6 seem hell-bent on turning JFK into a giant CF in their quest to cause constant gridlock there, so planning on more connectivity at JFK may be foolish.

 

[eolesen]

Congestion at JFK had better be solved by 2010 as well...

I'm sure AA can resolve the contractual issue, but then again, the number of markets where a 16+ duty day is really required is fairly small, so is it worth solving? I would say no. I also think the profitability of JFK-China would be questionable with three or four carriers in the NYC market. Far better to exploit LAX, where there's a bunch of one-stop opportunities, rather than expect people to backtrack to JFK (something DL had hopes will work out for them at ATL).

If AA decided to make LAX into a real international gateway... NHBB might finally get his wish. A new US-Australia open skies agreement is likely to be in place by next year, which would open the door for AA to start up LAX-SYD to combat Virgin Blue (QF probably has to be a little more restrained than AA would have to be).

XNA-China would be a good choice -- then Walmart would have a nonstop for all their buyers to check out the slave labor factories producing the crap they line their shelves with....