AA to begin DFW-HKG and DFW-PVG in 2014; cancels JFK-HND

[eolesen]

Whatever, guys. Argue semantics all you wish, but the fact is that the changes in the flight attendant contract or outsourcing overhauls didn't suddenly make it affordable for AA to expand in Asia. Those flights were coming regardless because of the fleet expansion.

About the only work rule change that may have impacted route planning decisions is the fourth crew member in the cockpit, and even thats of dubious value when you consider it is only the difference between a FO and CA's hourly rates.

 

[WorldTraveler]

Whatever, guys. Argue semantics all you wish, but the fact is that the changes in the flight attendant contract or outsourcing overhauls didn't suddenly make it affordable for AA to expand in Asia. Those flights were coming regardless because of the fleet expansion.

About the only work rule change that may have impacted route planning decisions is the fourth crew member in the cockpit, and even thats of dubious value when you consider it is only the difference between a FO and CA's hourly rates.

it is not any more affordable to fly to Asia than it was before. AA just decided to use the reductions in employee expense (which clearly according to you involve no reduction in pay) in order to waste $200M per year to develop a Pacific system - at the very time that capacity into the major cities of China is increasing at 20% per year.

AA is hell bent to gain a Pacific route system and they are going to create it regardless of whether the economics will ever work or not. They have managed to cut the pay of their employees by more than enough to support their follies and they will not be stopped.

 

[Rogallo]

Whatever, guys.

Sounds like my 13 yr old!

 

[FWAAA]

Funny that the AA employees don't seem to be complaining about the money-losing international expansion, even if it will (to paraphrase WT) "burn thru all of their wage givebacks and then some." Wonder why that is? Why aren't the employees up in arms about new long-haul flights that are doomed to fail?

It's a rhetorical question, of course, as I know the answer (or at least think I do). AA employees, especially pilots and FAs, like new long-haul routes because their wage and benefit givebacks were going to happen anyway, and at least an expanding airline means more long-haul trips where you can rack up a month's worth of hours in very few trips.

If management had extracted those wage and benefit concessions and then engaged in the kind of shrinking that some of the other airlines had done, the employees would be livid - even more so than they are now. Airline employee self-interest seems to carry the day, just like the merger. Promise them that the merger means higher wages and benefits and all of a sudden, union members are aligned with the capitalists. Pure genius by Parker, who is adept at playing people to get what he wants.

 

[WorldTraveler]

because they have no idea how these routes are performing. Of course airline employees want to see growth.
The default assumption is that your company is doing something rational.

The reason I keep pushing on the issue is because no other US airline has been as persistent in throwing capacity into a money-losing region as AA has been in the Pacific.

Just like the wage increases, employees find out that the Pacific flying was just a scheme to keep from having to lay off a bunch of employees because there were no profitable growth opportunities to match the aircraft orders - but personnel have to eventually be cut. The bleeding will stop eventually. AA just happened to get a short term blood transfusion that has given them a little more time to keep from falling into a coma.

And of course AA is betting that they can develop a Pacific route system at the expense of UA whose costs are higher than AA's. AA has made the miscalculation that others would fail and thus eliminate the need for AA to cut its own costs and this stunt looks like too much of the same thing.

UA is in deep trouble for sure. AA's bargain that it can win at UA's expense has been shown to be a foolhearty effort in which both loose far more than others.

 

[Jacobin777]

The reason I keep pushing on the issue is because no other US airline has been as persistent in throwing capacity into a money-losing region as AA has been in the Pacific.

Going from a -25% profit margin to a -19% profit margin is an improvement.

 

[FWAAA]

I don't know whether AA can take away enough USA-Asia traffic from UA to make all this expansion payoff in the future, but I do know one thing: If AA doesn't begin several new risky routes to Asia, it will not gain any ground in Asia at the expense of UA. Ya can't win if ya don't play.

Yes, it's disappointing that both AA and JAL formerly served NRT from JFK when they were just codeshare partners (before the joint venture) and then, once AA won the HND route, the new joint venture between JAL-AA rationalized service in NYC and cancelled the AA JFK-NRT flight. Now that the HND flight will be terminated, is it possible that AA re-starts JFK-NRT?

 

[WorldTraveler]

ON what basis would AA restart JFK-NRT? Even after the JV, AA had the lowest average fares in the NYC-NRT at levels well below DL and UA. The JV might have helped some, esp. on the DFW-NRT market, but it simply didn't do enough to bring AA's Pacific routes to a level of financial performance where they can be long-term profitable.

JAL is being dissed in the Japanese market while no one has yet to be able to explain why CX wants nothing to do with AA on this new route... and yet AA thinks JL is going to help make AA's new route work into CX's home market?

I have no problem for AA to add new routes in a region where they need to grow but they have to solve the strategic reasons why they haven't made routes in that region work already, including high costs and lack of viable strategic partners.

AA is growing into highly competitive routes such as DFW-ICN against much stronger carriers and is now adding service into China without a strategic partner and against carriers on both sides of the Pacific that have much lower costs.

Add in that capacity to China is growing rapidly and AA is competing with costs above those of most of the carriers that are adding that capacity and the likelihood of profitability is even further reduced.

AA's costs are only a few percent better than UA, both of which are being beat by DL and by a host of Chinese carriers. The advantage that AA has is that they have managed to keep their operation on target better than UA and AA has not ticked off its core customer base. So far, that may have helped AA in other regions of the world but hasn't translated into profitability for AA to Asia where AA and UA directly compete on nearly all of AA's routes. The DFW expansion does have the advantage of having more and more Pacific routes away from UA.

Further, AA has yet to fully get rid of its money-losing routes including from LAX-Asia where the chances that it will ever be profitable are very, very slim.

I might be missing something but I sure don't see any viable explanation as to how AA will succeed when so many of the key factors that both prevented AA from succeeding in the past and which are fueling success for DL's competitors are still major determinants of success or failure today.

 

[jimntx]

Going from a -25% profit margin to a -19% profit margin is an improvement.

You know, I hadn't thought of that. Bonusses all around at Centerport for the 24% improvement in profit margins.

 

[JFK Fleet Service]

 

[Kev3188]

**HAWT**

 

[TDR1502C]

JFK, you're missing the computer keyboard colored by markers to be a Cargo Cult version of a Westinghouse terminal.

 

[Kev3188]

I hate to say it, but I kinda miss the green screens...

 

[Glenn Quagmire]

I hate to say it, but I kinda miss the green screens...

There you go again holding on to the failed past. At least Delta was smart enough to be an industry leader on eliminating the green screen that is longed for by wannabe union leaders like you.

Did I miss anything! Lmao...

 

[Kev3188]

No, I'm pretty sure you covered it all.