OP
- Dec 5, 2003
- 21,709
- 10,721
- Thread Starter
- #16
The issue is not dropping one single market because that happens all the time for major airlines, bankuptcy or not.
Yes, US has cancelled routes but they have a fairly decent European operation even though it does not generate average fares on par with DL and UA or foreign carriers. US competes, but they can't pay their employees salaries comparable to what other employees at other airlines make.
The issue is that AA has continued to pull back in markets where it is competitive w/ other carriers and even in markets where it should have the advantage, such as to oneworld hubs, AA does not generate a revenue premium. Other carriers do generate premiums in their major partner markets as well as in markets where they compete alone. At best, AA is at parity even in its strength markets to Europe and Asia and at a deficit in markets that are competitive w/ other carriers, including DL and UA.
That is precisely why AA's int'l presence at ORD and JFK has shrunk so much over the past year. Both of those are competitive hubs where the int'l presence is not primarily focused on Latin America, where AA has been able to hold its own.
When AA mgmt says that their business plan is based on having a major presence in highly competitive markets like NYC and CHI, yet AA can't successfully compete in int'l markets from those cities, then there is a major disconnect between what AA says it intends to do and current reality.
And there is no example of a major carrier regaining market share in competitive markets that it once lost.
Add in that AA employees have expectations of having salaries on par with DL and UA but their company has 30-40% of its capacity in hubs where it can't be competitive w/ other carriers, and AA's business plan seems fatally flawed, to be blunt.
When US comes along and says they can provide the revenue synergies that would allow AA/US to compete with DL and UA, but yet US also has walked away from key competitive markets to focus on its own fortress hubs, then you have to ask how a US merger will save AA or allow the combined airline to compete in the top global markets with other carriers.
Add in that US employees are the lowest paid network airline employees and it begs the question even more whether AA employees can return to salary levels comparable with its higher paid network carrier peers.
If you pull AA and US back to only their fortress hubs where they have been able to fend off competition, then they will never be able to compete with DL and UA, which is supposedly the justification for a merger.
The question quite simply is how AA employees are going to achieve the salary levels they want and the only way that will happen is if they work for an airline that can generate revenues on par or superior to what other carriers are obtaining.
Yes, US has cancelled routes but they have a fairly decent European operation even though it does not generate average fares on par with DL and UA or foreign carriers. US competes, but they can't pay their employees salaries comparable to what other employees at other airlines make.
The issue is that AA has continued to pull back in markets where it is competitive w/ other carriers and even in markets where it should have the advantage, such as to oneworld hubs, AA does not generate a revenue premium. Other carriers do generate premiums in their major partner markets as well as in markets where they compete alone. At best, AA is at parity even in its strength markets to Europe and Asia and at a deficit in markets that are competitive w/ other carriers, including DL and UA.
That is precisely why AA's int'l presence at ORD and JFK has shrunk so much over the past year. Both of those are competitive hubs where the int'l presence is not primarily focused on Latin America, where AA has been able to hold its own.
When AA mgmt says that their business plan is based on having a major presence in highly competitive markets like NYC and CHI, yet AA can't successfully compete in int'l markets from those cities, then there is a major disconnect between what AA says it intends to do and current reality.
And there is no example of a major carrier regaining market share in competitive markets that it once lost.
Add in that AA employees have expectations of having salaries on par with DL and UA but their company has 30-40% of its capacity in hubs where it can't be competitive w/ other carriers, and AA's business plan seems fatally flawed, to be blunt.
When US comes along and says they can provide the revenue synergies that would allow AA/US to compete with DL and UA, but yet US also has walked away from key competitive markets to focus on its own fortress hubs, then you have to ask how a US merger will save AA or allow the combined airline to compete in the top global markets with other carriers.
Add in that US employees are the lowest paid network airline employees and it begs the question even more whether AA employees can return to salary levels comparable with its higher paid network carrier peers.
If you pull AA and US back to only their fortress hubs where they have been able to fend off competition, then they will never be able to compete with DL and UA, which is supposedly the justification for a merger.
The question quite simply is how AA employees are going to achieve the salary levels they want and the only way that will happen is if they work for an airline that can generate revenues on par or superior to what other carriers are obtaining.
