AA to End Interline Agreement with Delta

[Glenn Quagmire]

The posturing isn't from AA. From people much closer to the situation, it's an attitude that DL doesn't need AA if they're running the better operation, and they saw the agreement as lopsided in terms of who benefited.The reality is that there are few places where AA and DL are that UA or WN isn't. Eventually, I expect WN to do some limited interlining when they cut over to the new res system, which should be any month now.

That sounds like the most plausible explanation.

Thano you E.

 

[NewHampshire Black Bears]

Hey, when you're # 3  Legacy, you've got to cut costs where ever you can  !!!!!!!!!!!!

 

[eolesen]

Cranky is out with some added details today. DL was getting more invol transfers from AA than they were sending to AA, so they wanted an offset.

http://crankyflier.com/2015/09/14/deltas-reason-for-killing-its-interline-agreement-with-american-makes-no-sense/

I agree with Brett -- if DL was able to get a few more seats filled at a lower rate, they're being pound foolish to try and make that more profitable. Those seats will now go empty, and AA will retain the revenue or send it to AS, UA, etc. instead of DL.

Dumb. DL seems to thing they can survive alone in the airline ecosystem.

 

[700UW]

United put following out dated yesterday.


Other airline rebooking policy
Our irregular operations policy for rebooking on other airlines (OA) provides flexibility when there are no options on United. Settlement rates vary between OA carriers and preference should be given to rebooking first on United, then Joint Venture (JV), followed by other Star Alliance carriers before considering other interline airlines.
Although our OA rebooking policy has not changed, Delta (DL) should only be considered when all other options have been exhausted as our settlement rate with DL is significantly higher than with most carriers.
As a reminder:
 OA may be used if the United rebooking option is not acceptable to the customer and does not get the customer to their final destination within four hours of their originally scheduled arrival.
 Always offer options on United first, followed in order of preference by JV partners, then other Star Alliance carriers. Use DL only as a last resort.
 Make every attempt to book long-haul portions on United and consider using a United connection before offering a non-stop flight on an OA.
 Avoid rebooking on DL and other interline airlines, as their settlement rates are higher.United put following out dated yesterday.

 

[jcw]

Funny how one airline thinks it can go it alone

 

[Kev3188]

Not sure how DL & UA's agreements have been historically, but I can say that at NW we were always told to use UA only as a last resort due to the high(er) costs of rerouting customers...

 

[topDawg]

Cranky is out with some added details today. DL was getting more invol transfers from AA than they were sending to AA, so they wanted an offset.

http://crankyflier.com/2015/09/14/deltas-reason-for-killing-its-interline-agreement-with-american-makes-no-sense/

I agree with Brett -- if DL was able to get a few more seats filled at a lower rate, they're being pound foolish to try and make that more profitable. Those seats will now go empty, and AA will retain the revenue or send it to AS, UA, etc. instead of DL.

Dumb. DL seems to thing they can survive alone in the airline ecosystem.

thats a pretty big if. 
 
its also a pretty big assumption that Delta and its management is stupid enough not to think about that. 
 
I am going to say Delta looked at just how much money it was making off the interline with AA and figured out the above wasn't cutting it. 
 
having said that, this is a very up and down industry..... if it were me I would play nicely with others. 

The posturing isn't from AA. From people much closer to the situation, it's an attitude that DL doesn't need AA if they're running the better operation, and they saw the agreement as lopsided in terms of who benefited.

The reality is that there are few places where AA and DL are that UA or WN isn't. Eventually, I expect WN to do some limited interlining when they cut over to the new res system, which should be any month now.

exactly. 
 
and at the end of the day I would be a little surprised if they didn't end up getting to an agreement.  

 

[PHL]

What I read was that the interlining between AA and DL had been a 5:1 ratio in favor of AA.   In other words, AA was sending 5x as many distressed pax to DL than the other way around.  Given that, DL felt they should be better compensated.  I think AA might have done the same if it were the other way around.

 

[jimntx]

It may also mean that DL had a lot of empty seats that AA was filling for them, but AA had all their seats full already.  That's why we make interline agreements; so that we can accommodate passengers at OSO times.  And, we do not interline unless there is no way to re-route the customer on AA metal.  $10 for an empty $100 seat is better than nothing.  (No, that is not what DL was paid by AA.  It's just an example.)  However, an empty $500 seat is still EMPTY and not earning revenue.  And, once that plane leaves the gate, that revenue is forever lost.
 
If AA was filling seats for DL--regardless of price--but not vice versa, it seems that DL will be the loser in this latest move.  I doubt DL was refusing boarding to its own customers to make room for AA interline customers.

 

[MAH4546]

What I read was that the interlining between AA and DL had been a 5:1 ratio in favor of AA.   In other words, AA was sending 5x as many distressed pax to DL than the other way around.  Given that, DL felt they should be better compensated.  I think AA might have done the same if it were the other way around.

That "fact" is useless without context.

Firstly, it was for a grand total of one month (July 2015).

Secondly, it could just as well mean that AA was more willing to reaccommodate passengers on another carrier than Delta was.

Thirdly, it could be the result of a major weather or tech delay that adversely affected AA operations and not DL.

Fourthly, it could have meant that DL had more empty seats to fill.

Regardless all the customers lose in this scenario, and that's never good.

Though funny, AA is now launching LGAMSP, LGACVG and ATLDCA in January.

 

[topDawg]

It may also mean that DL had a lot of empty seats that AA was filling for them, but AA had all their seats full already.  That's why we make interline agreements; so that we can accommodate passengers at OSO times.  And, we do not interline unless there is no way to re-route the customer on AA metal.  $10 for an empty $100 seat is better than nothing.  (No, that is not what DL was paid by AA.  It's just an example.)  However, an empty $500 seat is still EMPTY and not earning revenue.  And, once that plane leaves the gate, that revenue is forever lost.
 
If AA was filling seats for DL--regardless of price--but not vice versa, it seems that DL will be the loser in this latest move.  I doubt DL was refusing boarding to its own customers to make room for AA interline customers.

Pretty sure AA's load factors (system) are in the same ball park as Delta......? 

 

[WorldTraveler]

no, DL's load factors and have been consistently above AA's - between 1.5 and 2% higher on a fairly consistent basis. Traffic reports published by each of the carriers validates that fact.

DL has LESS space available to accommodate IROP passengers than other carriers.

DL's own schedule reliability means DL is able to better save last minute seats to SELL. Protecting IROPS, regardless of who that is far, reduces DL's revenue generating ability. There absolutely is a market for last minute demand that cannot be met if seats are used for IROPS purposes.

AA chose to terminate the agreement because they didn't want to pay the prices DL was charging. UA apparently did not. WN doesn't have interline agreemeents with other airlines and neither do a number of other smaller carriers.

 

[robbedagain]

or DL was over charging both airlines and hence that's why the 2 don't really want to pay DL the interline agreement    not to mention that DL load factors are consistently along similar as AA

 

[WorldTraveler]

except DL load factors are not the same as AA's.

If you want to believe they are when the evidence is overwhelming that DL runs higher LFs, then whatever conclusions you make have to be colored by your unwillingness to accept the basic fact

IROPS cost money and limit revenue generating ability. DL doesn't use near as much of its own seats for IROPS and certainly isn't going to do it for other airlines unless it is going to get revenue that is comparable to what it can sell it for.

AA chose to end the agreement.

 

[700UW]

Which had nothing to do with DL wanting to increase the fees above market rates.

Has to be a reason why no legacy wants to have an interline agreement with DL and chooses to use them last.