Be patient, AA is gearing up to grow. It takes time to get things in order. AA has been shaping up it's finances so that it has the ability to grow. The steps AA is taking now will fuel our successful growth. It's coming .
Additional widebody aircraft
- Thread starter damajagua
- Start date
FrugalFlyerv2.0
Veteran
- Joined
- Oct 29, 2003
- Messages
- 2,931
- Reaction score
- 3,341
What's the big deal about being #3? DL used to be #3 for a long time and somehow, managed to survive.
jersey777
Veteran
- Joined
- May 24, 2006
- Messages
- 627
- Reaction score
- 73
I just don't get you. I mean, are you THAT defensive of the status quo that you can't see what is going on before our very eyes. It would be one thing if we were consistently profitable and offered a superior product to defend your position. Read Worldtrevelers posts on this site. He seems to be the only amateur analyst on here that seems to see what is going on. You and the other management shills on here seem to want to defend this business plan no matter what the situation.
There is nothing wrong about being #3. But what kind of #3 we should be is the question.
The point that I was trying to make is that we if are going to be a truly global airline we need
to fly our "own" metal beyond europe,latin america and the few cities we go in Asia.
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
It should be noted that while DL was #3 for a long time, it was never content w/ that role... DL's continued growth is because they know full well that they cannot secure their place in the industry until they become dominant in all of the key markets that they can.... it is no surprise that so much of DL's growth for 2011 is focused on Asia, esp. outside of Japan where NW was not strong relative to UA. Its growth IN Japan is largely to take advantage of opportunities at HND and protect its NRT operation from a bunch of new flights by competitors from HND.
DL has and continues to be very strategic about its growth which is why they have recognized their network shortcomings, sized up potential against competitors, and moved aggressively to fix those deficiencies.
The new LHR routes (from BOS and MIA) are probably more than DL really would like to take on at one time... but DL can't pass on the opportunity to grow its presence at LHR and, esp. in BOS to finally bypass AA as the largest network airline.
UA is going to be very aggressive at going after AA's strengths in NYC, CHI, and LAX, all markets where the new UA will be bigger than AA. AA's success w/ large corporate accounts has been tied very closely to its size in these three markets... but that is all well up for grabs now.
While size in and of itself is not a goal for any company, serving key markets IS key and if you can make money and still be large, you should be... if you can't make money AND be large, then making money is your priority. Unfortunately, AA mgmt has been content in downsizing in hopes of returning to profitability. Even w/ AA's recent growth and
The problem w/ AA's strategy as espoused by current management is that there has never been an example of an airline that has consistently not been a market leader and remained strong long term. The airline industry, like other network businesses such as telecommunications, uses size to leverage pricing power and ability to serve the market. Who wants to have a cell phone from a company with a small local market? Sure you can sign roaming agreements with other companies to expand your coverage, but at your core you are a small company competing against other carriers which provide strength you do not have.
Consider that AA, despite focusing on CHI, LAX, and NYC as key markets is not now the #1 carrier in any of them.... DFW and MIA are AA's only large markets where it is the dominant carrier. In NYC, AA's former headquarters, AA is now #3. AA is ceding dozens of smaller cities to competitors by reducing capacity by using regional jets.
Further, while the UA/CO merger still is a work in progress, AA has the highest costs in the industry. You can be a niche player with high costs if you dominate your markets... think the former Midwest Airlines... a high cost, niche airline that worked well for MKE UNTIL lower priced competitors came to town.
On the international front, arguing that AA now has alliances and therefore will do fine is simple foolishness. DL and UA are parts of alliances that are far bigger than oneworld - and they both have true SIX continent networks of their own.
The notion that AA can THRIVE and not just survive long term with high costs, a smaller network than its competitors, and less expansive network than its peers is a combination of strategies of which not one has been shown to be successful long term for a US netrwork airline.
eolesen
Veteran
- Joined
- Jul 23, 2003
- Messages
- 15,959
- Reaction score
- 9,375
I'd say having to fly on AA's partners almost as much as I do on AA is a benefit, not a weakness. As already noted, the carriers in oneworld are generally those with good reputations, especially in the upper cabins.
If I knew I would only fly on DL to the places they fly for an entire year, and never set foot on another brand, it would get boring really quickly.
If I knew I would only fly on DL to the places they fly for an entire year, and never set foot on another brand, it would get boring really quickly.
jersey777
Veteran
- Joined
- May 24, 2006
- Messages
- 627
- Reaction score
- 73
Maybe that is what corporate sales tells potential customers when they make their presentation...."Our customers have told us they find it boring to fly on one airline and like to switch around."
I guess its even more fun when you have to switch terminals and go through security again!
WorldTraveler
Corn Field
- Joined
- Dec 5, 2003
- Messages
- 21,709
- Reaction score
- 10,662
No body is saying that flying on a partner airline is a bad thing... but the simple reality is that partnerships in the airline industry exist in order to expand the coverage that a carrier has with its own network. The airline industry, as a network industry, depends on mass and size and AA doesn't have a leadership position in size either with its own network or with its partners. That is just the brutal reality of the industry and to try to somehow argue that AA will be an industry leader in any sense of the word when others have larger networks, lower costs, and bigger alliances is blind faith because not one of those tenets of AA's plan have been proven to be valid in the real world at how any point in the past in the industry.
You can look at China and Hong Kong as examples.... DL and UA have a significant presence in the region and are growing, both internally and through acquisition. Every move AA has made has been matched by UA.. and its not hard to see why when you look at revenue data because UA obtains a revenue premium relative to AA on every route to China and UA isn't about ready to let AA develop an advantage in LAX.
Related to this topic, even if AA acquired JAL aircraft in order to add capacity that JL is losing, DL still operates more capacity to Japan now than AA could possibly add and DL does it with a lower cost base.
Despite the JL "win" for AA, DL is still larger than AA and JL combined between the US and Japan. And, again, the revenue data clearly shows that NW/DL have had a revenue premium to Japan from the US for years and that will only continue as DL grows its Japan network while JL is shinking its own.
While AA has finally gained ATI in Europe, other carriers have developed substantial operations at LHR (UA/CO is now about the same size as AA alone at LHR now), AA's historic European bread and butter, and have stronger alliance partnerships at larger hubs on the continent.
Domestically, AA's real network advantage is DFW and MIA.... AA will lose that advantage as the Wright Amendment is phased out and MIA exists really more as a Latin gateway since other carriers have domestic operations in S. Florida that carry as many domestic passengers as AA does from MIA.
Which brings us to the point that AA's only remaining network advantage is Latin America and that is almost entirely driven by the fact that neither DL or UA have a presence in S. Florida to Latin America - and you can't be the leading airline in Latin America without serving S. Florida. But given that DL has decided that starting a European route into MIA is within the realm of possibility, and Star is large enough that they have some network presence (even again if it isn't UA's own metal) it isn't too far fetched to think that AA could well lose its network advantage to Latin America in the next couple years, esp. since the US and Brazil are signing an Open Skies deal that will open up capacity to the largest Latin America market (remember that it was Bermuda 2 and the restrictions on access to other carriers that protected AA at LHR - and in just 2 years, AA has been able to retain its position at LHR only through an alliance and one that still doesn't give them the network size in the rest of the region that other carriers have.)
So, from a strategic standpoint, AA is very much becoming very close to being backed up to the proverbial wall. Given that AA still carries alot of premium revenue, it is absolutely certain that DL and UA will be aggressively targeting AA revenue and with lower costs, should have no problem winning any market share contests they choose to start. Given WN's success in taking over AA markets in the past (RDU, BNA, SJC, STL), it isn't at all far fetched to think that AA will lose a significant amount of share in DFW as the Wright Amendment falls.
AA has to make some major strategic moves and none of them are likely to allow AA to overcome missing several major strategic challenges including a lack of its own presence in Asia and the choice of alliance partners who don't provide the network mass that competitors partners can add to their already larger networks.
You can look at China and Hong Kong as examples.... DL and UA have a significant presence in the region and are growing, both internally and through acquisition. Every move AA has made has been matched by UA.. and its not hard to see why when you look at revenue data because UA obtains a revenue premium relative to AA on every route to China and UA isn't about ready to let AA develop an advantage in LAX.
Related to this topic, even if AA acquired JAL aircraft in order to add capacity that JL is losing, DL still operates more capacity to Japan now than AA could possibly add and DL does it with a lower cost base.
Despite the JL "win" for AA, DL is still larger than AA and JL combined between the US and Japan. And, again, the revenue data clearly shows that NW/DL have had a revenue premium to Japan from the US for years and that will only continue as DL grows its Japan network while JL is shinking its own.
While AA has finally gained ATI in Europe, other carriers have developed substantial operations at LHR (UA/CO is now about the same size as AA alone at LHR now), AA's historic European bread and butter, and have stronger alliance partnerships at larger hubs on the continent.
Domestically, AA's real network advantage is DFW and MIA.... AA will lose that advantage as the Wright Amendment is phased out and MIA exists really more as a Latin gateway since other carriers have domestic operations in S. Florida that carry as many domestic passengers as AA does from MIA.
Which brings us to the point that AA's only remaining network advantage is Latin America and that is almost entirely driven by the fact that neither DL or UA have a presence in S. Florida to Latin America - and you can't be the leading airline in Latin America without serving S. Florida. But given that DL has decided that starting a European route into MIA is within the realm of possibility, and Star is large enough that they have some network presence (even again if it isn't UA's own metal) it isn't too far fetched to think that AA could well lose its network advantage to Latin America in the next couple years, esp. since the US and Brazil are signing an Open Skies deal that will open up capacity to the largest Latin America market (remember that it was Bermuda 2 and the restrictions on access to other carriers that protected AA at LHR - and in just 2 years, AA has been able to retain its position at LHR only through an alliance and one that still doesn't give them the network size in the rest of the region that other carriers have.)
So, from a strategic standpoint, AA is very much becoming very close to being backed up to the proverbial wall. Given that AA still carries alot of premium revenue, it is absolutely certain that DL and UA will be aggressively targeting AA revenue and with lower costs, should have no problem winning any market share contests they choose to start. Given WN's success in taking over AA markets in the past (RDU, BNA, SJC, STL), it isn't at all far fetched to think that AA will lose a significant amount of share in DFW as the Wright Amendment falls.
AA has to make some major strategic moves and none of them are likely to allow AA to overcome missing several major strategic challenges including a lack of its own presence in Asia and the choice of alliance partners who don't provide the network mass that competitors partners can add to their already larger networks.
FrugalFlyerv2.0
Veteran
- Joined
- Oct 29, 2003
- Messages
- 2,931
- Reaction score
- 3,341
Sure it would be nice to fly to many more places in Aisa, and even in EU & LatAm. But then what is the point of codesharing and ATI, especially if your alliance partner(s) can do it profitably for you?
FrugalFlyerv2.0
Veteran
- Joined
- Oct 29, 2003
- Messages
- 2,931
- Reaction score
- 3,341
What? Are you sure about that? You might want to take another look at the AA size/network. You make it sound like AA is a TX and FL regional airline that's going to get clobbered by big bad DL and UA.
While there is always room for improvement in the management at AA/AMR, and certainly AA has a cost disadvantage, one could argue that AA, as the current #3 network legacy carrier, is in a much better position then DL was when all they had was ATL, the token daily flight to NRT and secondary EU cities from JFK.
What hub(s) does DL operate that can be compared to DFW and MIA? MSP and DTW are probably most similar to DFW and MIA, but WN is making inroads at MSP and DTW, while an awesome facility, is located in a state where the economy is in the cr@pper.
Given WN's success in taking over markets in the past It'll be interesting to see how the landscape at ATL will look like once WN takes over the Airtran ops. Looks like DL will have its back against the wall 😀
D
Deleted member 17588
Guest
Will you please do us all a favor and stop spreading ridiculous falsehoods about our high labor costs? This has been rehashed over and over and shown not to be true, yet you keep banging that drum. As a flight attendant, I'm going to borrow a phrase from the TWU: "Shut your pie-hole!"
You may not like hearing it, but the fact is that AA's labor costs are substantially higher than any other US-based airline. The data compiled by Bob Herbst confirms it and the APFA's own economist admitted that AA's FAs are the most expensive per ASM. While Delta's pilots are just beginning to overtake AA's pilots on certain equipment, AA's pilots are still the most expensive.
Of course you'd like to earn more $$$ (who wouldn't?) but AA's FAs are more expensive than even WN's FAs, and the WN FAs make more $$$ per FA. High labor cost doesn't mean you're the highest paid. But you (collectively) are the most expensive FAs. Instead of insulting others, why not devise arguments that you deserve more $$$ despite your high labor costs? Or is that too difficult?
jimntx
Veteran
As another AA f/a, let me say that you and a lot of other AA f/as need to stop looking at payrate alone as the only cost of a f/a. Granted we are not the highest paid on an hourly basis; however, the difference between us and the most highly paid (WN) is negligible--less than $10/hr. Plus, they are more productive than we are--a normal day is at least 4 legs for them, AND they clean the plane every leg which they get done as passengers are deplaning.
AFAIK, we are the only major airline f/as in the U.S. that still have a defined benefit pension plan. The cost of a DBP is enormous in this day and age. The company can not choose to not contribute to it. Under Federal law, the funding of the program must be kept at some minimum percentage or higher. That is not optional. Do you understand why the DPFs were the first thing most airlines dumped in bankruptcy?
We have to maintain a higher number of reserves each month because you and I know there is no real penalty from the company for f/as who use their sick leave as "supplemental vacation time." (I will add here that if the company would just pay f/as for at least half their accrued sick leave upon retirement, a lot of the sick calls would end abruptly.)
Yes, we deserve raises for the concessions we gave almost 8 years ago, but not because other f/as have a higher hourly pay rate. The world has changed since 9/11, and we have to get out of the mind set that we deserve a raise for no other reason than showing up to work on occasion, not retiring, and not dying.
