AA continues to attract the highest average fares on JFK-LAX/SFO transcons

[FWAAA]

In the fourth quarter of 2014, AA continued to attract higher fares on its 3-class transcons than any other airline:

JFK-LAX 4Q2014

AA $521.46
UA $363.04
DL $323.25
VX $321.62
B6 $311.49

JFK-SFO 4Q2014

AA $513.64
UA $418.16
VX $325.08
DL $321.83
B6 $295.68

The carrier that has flooded the market with economy seat capacity (DL) actually saw its average fare decline in both markets in the fourth quarter, by about 6.7% on JFK-LAX and about 4.5% on JFK-SFO. AA's average fares on JFK-LAX fell by a dollar and increased on JFK-SFO by about 3%.

We've heard (numerous times) that if you're in third place or fourth place, then you aren't winning. Once again, Delta isn't winning.

For reference, here were the third quarter average fares:

JFK-LAX 3Q2014

AA - $522.43
UA - $392.82
VX - $373.10
DL - $346.54
B6 - $319.42

JFK-SFO 3Q2014

AA - $497.78
UA - $433.34
DL - $336.02
VX - $331.83
B6 - $275.67

 

[WorldTraveler]

good for finding the data. Not sure why you want to reopen this discussion one more time.

but AA's total transcon revenue went down. DL's went up.


in the fourth quarter, DL's LOCAL JFK-LAX revenue went up by 30% compared to 12% for AA.

for SEGMENT revenue, which includes all connections, DL's revenue went up by 20% while AA's was down by 6%.

high average fares are great but reducing revenue is hardly a strategy for success.


AA moved to a niche market strategy that has seen it give up share and total revenue while costs have probably not gone down much if any at all because of the need to add increased frequencies.

and B6 is the carrier that is seeing the fastest growth in average fares as a result of adding Mint which is a far bigger threat to carriers like AA and UA that have heavily premium configurations since B6' coach capacity is virtually unchanged.

VX is being hurt the most by B6' growth. DAL and the transcons combined are putting the squeeze on VX.

and let's also remember that DL is carrying 2 1/2 million pounds of cargo per month that AA used to carry as well.


finally, it is worth noting that AA and UA both get far less of their revenue from NYC originating passengers than DL does and DL's revenue on the west coast is growing faster than AA's or UA's on the California end.

So, DL has already locked up the NYC end of the transcons as the dominant carrier and is increasing its share of the California market at a faster rate than AA and UA.

oh, and I think I read somewhere that DL is adding another roundtrip to each of JFK-LAX and SFO this fall... feel free to let me know if I am wrong.

 

[FWAAA]

good for finding the data. Not sure why you want to reopen this discussion one more time.

To demonstrate that AA's 3-class transcons, that some ignorant US pilots labeled "an experiment," continue to beat the competititon.
 

but AA's total transcon revenue went down. DL's went up.

in the fourth quarter, DL's LOCAL JFK-LAX revenue went up by 30% compared to 12% for AA.

for SEGMENT revenue, which includes all connections, DL's revenue went up by 20% while AA's was down by 6%.

high average fares are great but reducing revenue is hardly a strategy for success.

and let's also remember that DL is carrying 2 1/2 million pounds of cargo per month that AA used to carry as well.

So you say. Post the data to back up some of these fantasies. I posted data, so Put up or shut up.

 

[DNTULSA]

FWAAA,
 
When will you learn?
 
Delta Never Loses!!! (Even when they do, it doesn't count!)
 
Just ask WT...... 

 

[WorldTraveler]

To demonstrate that AA's 3-class transcons, that some ignorant US pilots labeled "an experiment," continue to beat the competititon.
 

So you say. Post the data to back up some of these fantasies. I posted data, so Put up or shut up.

wait.

you can find average fare data but you can't find total local revenue and not segment revenue? Since it all comes from the DOT, I find it hard to believe you can't find it.

and, no, it isn't a matter of only DL can win. AA, not DL, made the decision to pursue a niche market strategy - and that is exactly what it was by significantly reducing its percentage of coach capacity.

UA did it before and AA had years of data to use to decide. UA got very hefty average fare increases but as FWAAA has noted, UA has lost their attractiveness as a premium carrier because of their operational and service delivery problems that have gone on for years.

still, even before their average fares began to decline, UA's share of transcon revenue fell as well as its total amount of revenue. UA is much smaller in total size in the transcon markets.

and while AA has dropped from #1 to #2 in the JFK-LAX market, it is #4 and will likely become #5 in the JFK-SFO market in terms of local market revenue which doesn't even include the connecting revenue which DL carries to a much greater degree than do AA and UA.

AA might well be comfortable that they achieved their goal of getting rid of their 762s and replacing them with lower cost 321s but the strategy has resulted in less passenger AND cargo revenue and I predict the decline will increase.

furthermore, with the possibility that transcon flights might start operating from LGA, the amount of premium traffic at JFK will fall while the 321 will not be used to fly nonstop to the west coast.

 

[Kev3188]

To demonstrate that AA's 3-class transcons, that some ignorant US pilots labeled "an experiment," continue to beat the competititon.
 

So you say. Post the data to back up some of these fantasies. I posted data, so Put up or shut up.

I hope you're not holding your breath...

 

[WorldTraveler]

I've provided the links to the data sources from the DOT.

If FWAAA can find the average fare data, he should be able to find the revenue data.

and lest you think this is simply on a nice pretty web page waiting to be copied and pasted onto airline forums, it is in fact a file with HUNDREDS OF THOUSANDS of lines of data and dozens of columns per line.

I have also made multiple offers to send data files to people...but a select few group of people have received various types of data.

but let's not pretend that the data isn't telling a story that anyone should be able to figure out.

even if all you or anyone else did was count the number of seats that were sold based on even more publicly available schedule data than what the DOT provides, it isn't hard to see who offers what in terms of seats.

I have also never argued that AA's average fares wouldn't go up or that they haven't.

the question which some don't want to admit is that the reduction in the number of seats has been greater than the increase in average fare.

further, when I have posted direct lines to data such as from the Airline Data Project which is filled with data directly from the DOT, I am met with whines of "it is all made up, manipulated data"

If some people don't believe the truth with the data that is available, it is doubtful that any amount of data is going to change their mind - because the intent is really not to know the truth but to argue a point which is not defensible and which every big picture realization of the market validates.

AA has taken a niche market strategy in the transcons while DL is expanding capacity and still is seeing average fares go up as it takes a larger share of the JFK transcon market than ever before.

btw, schedule data is pretty easy to locate and seats are easy to calculate.

For Oct, DL will be the largest carrier between LAX and JFK with more than 20% more seats than AA; DL will have 9 flights on most days, 4 of which are on 767s and 5 on 757s for a total of more than 1600 seats per day. AA has more flights but remember that DL's 767s seat twice as many passengers as AA's 321s and the 757s seat 60 more passengers.

To SFO, DL will also have the most seats with 1160 seats on up to 8 flights/day on 757s.

DL also will have the most flights of all carriers from JFK to SFO.

DL is also the largest carrier from JFK to SAN, LAS, PDX, and SEA and B6, not AA, is the number two carrier from JFK to the west.

DL has seen the greatest increase in absolute revenue of all carriers from NYC, including EWR, to the west coast. DOT data shows it.

perhaps the 321 strategy is accomplishing what AA wanted to do.....perhaps someone else had a different strategy and has executed it with different results.

The data provides pretty good insight into each carrier's strategy not just in those two markets but in each of the cities on the two coasts.

 

[commavia]

It bears repeating ... Scott Kirby at an investor conference on March 3:
 
"... our customers love it ... it's helping us with corporate accounts ... because we have customers who we don't have corporate accounts with but they have executives who want to fly on the transcon product and we can use that to get ourselves on the shelf with them to fly the Shuttle or fly other markets, so it's been a huge success ..."
 
So despite the fact that everyone knows AA's management is the gang that couldn't shoot straight, and AA is obviously on the verge of going bankrupt due to the onslaught of competition from Delta, AA's executives seem to believe that the A321T was a worthwhile investment that is paying off.

 

[WorldTraveler]

good morning, commavia,

I am not questioning whether AA is getting traction with corporate accounts. I am also not saying that AA made the wrong decision.

They might well have achieved all the goals they wanted to achieve.

FWAAA made a comparision regarding average fares and anyone should have recognized when the announcement regarding the 321T strategy was made that AA would be increasing its average fares faster than the industry.

However, two other players in the market have grown their presence in the market... DL by adding more overall capacity, esp. with coach seats and B6 by adding premium cabins which they did not have before.

all of the industry is seeing stronger yields and while AA is leading the growth because it has reduced the most coach capacity, other carriers have added back that capacity and more.

Average fares are part of the revenue formula. Because of the stronger yields across the board, other carriers have been able to grow their average fares as well, but have also grown overall revenues - both local and segment - at a faster rate because they are also increasing capacity.

I'm not sure that anyone is losing in AA's new transcon scenario.... but the evidence is there that other carriers have taken advantage of AA's strategic moves to the advantage of those other carriers with respect to both passenger and cargo revenue as well as the halo effect that the transcon markets have on overall corporate accounts.

 

[dariencc]

To demonstrate that AA's 3-class transcons, that some ignorant US pilots labeled "an experiment," continue to beat the competititon.
 

 

 
Actually, the ignorant person would be you.  No pilots "labeled" the service experimental.  The person who did call it an experiment was Doug Parker, at a crew news session.  The pilots were referring to that.
 
Try to keep up.

 

[cltrat]

in a related story 25 years ago today DL invented the internet

 

[WorldTraveler]

Actually, the ignorant person would be you.  No pilots "labeled" the service experimental.  The person who did call it an experiment was Doug Parker, at a crew news session.  The pilots were referring to that.
 
Try to keep up.

since UA did the same thing on 757s years ago, it isn't even experimental.

What was different is using the 321 but since US has used 321s from PHL to the west for years, even that part isn't terribly novel.

It might have been novel for Parker only since he and US weren't experienced in a premium configured aircraft in the transcon market.

 

[N628AU]

Obviously this cannot be true because WT proved to everyone in another thread that AA has been proven to have chosen the wrong aircraft type for transcon service.

Once again, say what you will but the AA Exec team seems to have more of a grasp on the business than WT will ever give them credit for. DL is going to add more capacity into the market? I see DL fares continuing to slide.

 

[topDawg]

It bears repeating ... Scott Kirby at an investor conference on March 3:
 
"... our customers love it ... it's helping us with corporate accounts ... because we have customers who we don't have corporate accounts with but they have executives who want to fly on the transcon product and we can use that to get ourselves on the shelf with them to fly the Shuttle or fly other markets, so it's been a huge success ..."
 
So despite the fact that everyone knows AA's management is the gang that couldn't shoot straight, and AA is obviously on the verge of going bankrupt due to the onslaught of competition from Delta, AA's executives seem to believe that the A321T was a worthwhile investment that is paying off.

not that i want to jump into yet another pissing contest here
 
but i will point out that the above doesn't really mean jack. Its only that important till some bean counter says its not important anymore. (not saying AA is going to dump the 321T or anything, but I'm just saying don't take executives for their word on issues like this)  

 

[WorldTraveler]

Obviously this cannot be true because WT proved to everyone in another thread that AA has been proven to have chosen the wrong aircraft type for transcon service.

Once again, say what you will but the AA Exec team seems to have more of a grasp on the business than WT will ever give them credit for. DL is going to add more capacity into the market? I see DL fares continuing to slide.

the only thing that is inherent to the 321 that affects the route is that it is a narrowbody compared to the widebody AA used to operate. Despite what many said would happen, AA has not retained the vast majority of the cargo market that it once carried, DL has added 767s that it intends to retain (despite what many said), and DL is carrying most of the cargo that AA carried plus has expanded the market somewhat based on the most recent DOT data.

The other part of the 321 is the configuration which is not specific to the aircraft. AA pursued a premium strategy at the expense of maintaining all of the coach market it had served. Again, DL and other carriers have added capacity to pick up that market.

No one has to sit in the executive offices anywhere to realize that the 321 was going to result in the loss of the cargo market and that the configuration would leave a part of the market unserved.