Apparently, AA is leaving BUR next month and will cancel ORD-DEL in March, according to an airliners.net rumour reposted on Flyertalk this morning. Numerous posters claim to have verified it with "internal sources" at AA. BUR is now zeroed out but DEL is still bookable. If true, I expect to see more downsizing.
AA leaving BUR in Feb, rumoured to cancel DEL in Mar
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Jacobin777
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I see this a function of bad yields. AI on the competing route has a load factor of only 73.5% versus AA's 86.7% (using D.O.T. data).
Air India is also getting a very nice taxpayer-funded govt. bailout. I've read they are trashing domestic yields-wouldn't be surprised if they are doing the same internationally.
I personally know of a number of pax who fly on AA to DEL. They aren't going to be too happy about it. 😱
Oddly enough, I don't think they will fly AI either. Probably BA or EY now.
http://www.dallasnews.com/business/airline-industry/20120109-american-airlines-to-drop-chicago-delhi-flights-on-march-1.ece
Someone just posted on Flyertalk the email sent to employees explaining the cancellation of DEL and the exit from BUR.
2011 saw the highest full-year fuel prices in history (even higher than the spike year of 2008) and fuel has been spiking higher for the last couple of weeks. Very long flights make less and less sense as fuel goes higher and will only survive if there are lots of premium fare passengers. Apparently, not enough on DEL to enable it to survive.
2011 saw the highest full-year fuel prices in history (even higher than the spike year of 2008) and fuel has been spiking higher for the last couple of weeks. Very long flights make less and less sense as fuel goes higher and will only survive if there are lots of premium fare passengers. Apparently, not enough on DEL to enable it to survive.
eolesen
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DEL is gone probably in large part due to competition from Turkish & Ethihad... Go look at Kayak, and you'll see they're pricing at about 30% less than AA is for the nonstop, and on a journey that long, it's probably worth connecting just so you can stand up. It's also just a matter of time before Emirates shows up in Chicago.
My guess is that if you have to compete on price alone, do so over LHR where there's enough frequency to absorb a few bottom-feeder fares...
My guess is that if you have to compete on price alone, do so over LHR where there's enough frequency to absorb a few bottom-feeder fares...
enough already
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It's OH's fault..
AstroLounge
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Truly a shame if AA has to withdraw ORD-DEL service but, that is the problem with carriers like Ethihad and Emirates. They basically get their jet fuel for pennies since they reside in their little sheikdom saving millions of dollars, fly the newest, Biggest A/C available and trash yields on every other carrier in the process. The existence of carriers like Emirates, Ethihad and Qatar will be a MAJOR Threat to All Carriers moving Forward. Whereas all of these Middle Eastern Carriers are very Good carriers from a Service aspect (offering a product far surpassing most carriers) it will be extremely hard for carriers like BA,LH,AF and all the US majors to compete against with such and unlevel playing field.
Despite being a state-owned airline, Emirates claims in its financial statements that it receives no fuel subsidies and for the most recent fiscal year reported that fuel costs equaled 34.4% of operating expenses, exactly the same percentage of operating expenses as AMR for the first three quarters of 2011. Fuel is not where EK has a cost advantage.
Emirates' biggest cost advantage is in labor expenses, which were only 15.6% of operating expenses for the most recent fiscal year compared to 28.8% of operating expenses at AMR for the first three quarters of 2011. Emirates labor costs are as low as Virgin America, making it easy for EK to beat anyone on price yet report healthy profits. I agree with you that it will be very difficult for any old-line airline to compete against EK unless EK's wages increase or the established airlines slash wages further.
eolesen
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Emirates pays for fuel. Urban myth that they don't.
Another factor where Emirates has an advantage is that they're headquartered in Dubai, which only has corporate taxes on oil companies and banks. It's a key factor in how they attract employees, too.
Another factor where Emirates has an advantage is that they're headquartered in Dubai, which only has corporate taxes on oil companies and banks. It's a key factor in how they attract employees, too.
But do you know if they pay market price for fuel? Some sort of subsidy (for the entire country) would not surprise me, as lots of third world and petro states tend to do that.
As for BUR and DEL... closing BUR makes perfect sense to me. It was just not necessary. DEL I am shocked! Thought that would be a hugely successful route...
Remember that half the fuel the buy is in another country after landing. Figuring out what they pay for fuel in Dubai isn't as easy as it sounds. Widebodies don't run on crude oil, they run on Jet-A which is a refined product. Even if Dubai had a ton of crude, of which I don't think they do, the Jet-A may be refined in another country and when it's bought to bring back to Dubai, it's bought on the open market at the current rate. Iran has a similar problem. Even though they are a big exporter of crude oil, they have little gasoline refining capacity and pay the going rate for refined gas to ship it back into Iran to run their cars.
Agreed that labor is where they have the advantage. With major expansion, most employees are on the entry level scale. Even worse for the ground people in Dubai performing the basic cleaning/loading/servicing. I don't know what they make but it is probably peanuts with zero benefits, healthcare and retirement. Hurt your back hurt loading a A380? Here's your passport back and a seat on the 11:00pm flight to Mumbai, see you later, you're fired. Want to interview for another job on days off? Sorry, the company holds your passport until they see fit. Same goes for their worldwide destinations. Contract people, low costs.
Even Emirates pilots are getting run ragged. They know they are tougher to keep and cost money with turnover, but they still pay somewhat decent along with healthcare, retirement, housing and education. Still, they have been ratcheting those bennies down and have started to loses pilots. One thing they do is with vacation. They'll give a pilot 2 weeks of vacation, but schedule 85-90 hours of flight time in the remaining two weeks of the month. (a full month of flying). They also don't count flight time for limits when a pilot is on break in the bunk. Bad news stuff when flying 16+ hours east, then 16+ hours west within 1 week. Long term doing that, retirement isn't an issue, just an early death.
Agree with Mach85. To add to what he said about fuel, EK does not disclose in its financials what it pays per gallon or how many gallons it burned - only total fuel costs, which were in line with AMR's fuel costs as a percentage of operating expenses and revenue.
On the subject of Iran, I recently saw that China was financing the construction of refineries in Iran so that China could import gasoline and diesel without having to build more refineries on its own soil. NIMBYism may have made its way to China - after all, who wants an oil refinery in their back yard?! Perhaps they'll build excess capacity to help with domestic demand in Iran?
On the subject of Iran, I recently saw that China was financing the construction of refineries in Iran so that China could import gasoline and diesel without having to build more refineries on its own soil. NIMBYism may have made its way to China - after all, who wants an oil refinery in their back yard?! Perhaps they'll build excess capacity to help with domestic demand in Iran?
