Additional widebody aircraft

[eolesen]

Whatever, WT. I know your allegiances, but no carrier can be all things to all people or in all markets. What DL and UA are doing is more a matter of trying to justify all the aircraft and employees they kept post-merger. Whether or not it is going to be successful is yet to be seen.

UA will be consumed for quite some time with the merger, and it's no longer just a matter of UA matching AA, but now oneworld has upped the ante a bit, and CX will be serving ORD-HKG starting in September, and just added another JFK-HKG frequency effective in late March. DL's adequate, but I know which one I'd rather fly on.

The same will eventually start happening in other DL markets. But UA's the easier target.

 

[damajagua]

How about AA flying to HKG. I find it ridiculous that we do not fly to Hong Kong or Sydney. Two of our oneworld partner are base there and our pax's would be able to connect to other destinations from there on either of them.

 

[FWAAA]

How about AA flying to HKG. I find it ridiculous that we do not fly to Hong Kong or Sydney. Two of our oneworld partner are base there and our pax's would be able to connect to other destinations from there on either of them.

And those two partners specialize in long-haul flights and serve the US with plenty of capacity, codeshared with AA. CX offers more capacity to HKG from North America (including cities in Canada) than UA, CO and DL combined. QF offers more capacity to Australia than UA and DL combined. Both airlines offer superior premium cabin service (better than AA's Business and First classes), so why would AA want to compete with QF and CX? AA doesn't have antitrust immunity with those two, so AA cannot collude with QF and CX the way it can with JAL or BA/IB.

AA metal to HKG and SYD would chiefly benefit two groups: cheap-fare buyers who want to upgrade with miles or certificates (can only be done on AA metal at this point) and Non-Rev flyers who would love AA metal (especially its premium cabins) to Hong Kong and Australia.

You make it sound like AA passengers have a difficult time getting to HKG or SYD; the truth is that both CX and QF feed AA with lots of passengers which AA flies all over the USA. QF and CX also fly a lot of AA passengers to HKG, SYD and points beyond both hubs. Maybe with the 787-9s (which will have more range than a 744), AA can begin to shoulder some of the load to places like HKG and SYD. But for now, AA is partnered with the best airlines in the world in CX, QF, JAL, BA, IB and the others. Ever wonder why DL flies its one daily flight to SYD? It's because the leftover alliance (Skyteam) doesn't have any other options for getting to Australia. AA's got QANTAS, and anyone paying for Business or First would choose QF unless they need the DL miles for elite status.

 

[jersey777]

And those two partners specialize in long-haul flights and serve the US with plenty of capacity, codeshared with AA. CX offers more capacity to HKG from North America (including cities in Canada) than UA, CO and DL combined. QF offers more capacity to Australia than UA and DL combined. Both airlines offer superior premium cabin service (better than AA's Business and First classes), so why would AA want to compete with QF and CX? AA doesn't have antitrust immunity with those two, so AA cannot collude with QF and CX the way it can with JAL or BA/IB.

AA metal to HKG and SYD would chiefly benefit two groups: cheap-fare buyers who want to upgrade with miles or certificates (can only be done on AA metal at this point) and Non-Rev flyers who would love AA metal (especially its premium cabins) to Hong Kong and Australia.

You make it sound like AA passengers have a difficult time getting to HKG or SYD; the truth is that both CX and QF feed AA with lots of passengers which AA flies all over the USA. QF and CX also fly a lot of AA passengers to HKG, SYD and points beyond both hubs. Maybe with the 787-9s (which will have more range than a 744), AA can begin to shoulder some of the load to places like HKG and SYD. But for now, AA is partnered with the best airlines in the world in CX, QF, JAL, BA, IB and the others. Ever wonder why DL flies its one daily flight to SYD? It's because the leftover alliance (Skyteam) doesn't have any other options for getting to Australia. AA's got QANTAS, and anyone paying for Business or First would choose QF unless they need the DL miles for elite status.

Yea, why would anyone want to fly on AA when we suck so bad. You can fly CX or QF into the USA and get on a dreary narrow body or regional jet anywhere we fly.

 

[WorldTraveler]

The simple fact is that AA gets minimal benefit from alliance partners with whom it has no ATI or a joint venture.
ATI and a joint venture involves joint scheduling, planning, sales, and revenue sharing. Without ATI/JV, those airlines, not AA sets the schedules, fares, and obtain 100% of the profits on the flights... AA prices its seats based on market fares because codeshare partners without actual metal in the market have no pricing power.
Because AA has chosen not to fly to HKG or Australia, it only has the option of buying seats from those carriers and reselling them. There is no financial reason why those carriers should sell seats to AA at a price that is better than what they can sell seats to any other airline that wants to sell seats on their carrier - or for what they could sell them inhouse.
There is no way that you can argue that AA obtains the benefits of serving a market without antitrust immunity or a joint venture that other carriers obtain by serving the market with their own metal or in an immunized relationship. Remember that AA had a codeshare relationship with JAL for years and states that they will obtain additional revenue because of the ATI that is in place now. You cannot argue that AA will gain a benefit from converting the JAL relationship to an ATI/JV and argue that AA is obtaining the best deal it could by serving Australia and Hong Kong.

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.

You will certainly be surprised to learn that MSP and DTW are both larger hubs than MIA in terms of passengers carried and revenue generated.

DL's local ATL operation alone (not even counting all of the connecting traffic) is 15% larger than DFW in terms of both passengers and revenue boarded- probably not a surprise but AA at MIA is very close to the same size as DL at DTW and MSP but DL generates about 11% more revenue at both hubs (DTW and MSP as local markets are both about the same size and larger than AA at MIA). DL's JFK operation generates more revenue than any AA hub except for DFW and JFK is DL's 5th largest hub. DL's JFK hub generates 33% more revenue than AA does at the same airport.

WN's size in DTW has barely changed in years and WN still has less than 5% of the revenue market; in MSP it is less than 3%.
WN's presence in SLC is only 12% of the total market where DL has 60% of the total revenue.
IN contrast, DL already has 12% of the revenue in the MIA market and they are still adding new flights to DCA, intra-Florida, and of course LHR.
Other than JFK, AA's largest presence in a DL hub is ATL where they have 5% of the market. Yet DL has 8% of the DFW local market even though DFW is 6% smaller than ATL.

ATL has always been a bigger hub than DFW and DL has had more revenue at ATL than AA has had at DFW.

I've thrown alot of numbers at you but hopefully you see that in fact DL does dominate its hubs more than AA does, DL has more hubs that are larger than AA's hubs, and even in AA's two largest uncontested hubs (DFW and MIA), DL is the #2 carrier in both cases and DL's revenue share of MIA will push past 15% in the next couple years.

Broadening the discussion to AA/UA competitive hubs/major gateways, the new UA will be 30% larger than AA at both ORD and LAX...

So, again, the notion that AA has a revenue advantage extends solely to Latin America which is the smallest of the four DOT global regions (transatlantic, transpacific, Latin, domestic which includes US and Canada) and Latin America is the smallest DOT revenue region.

And again, AA is competing in all of these markets at costs that are almost 20% higher than DL's.... while UA"s costs are in flux because of the merger, they will undoubtedly end up w/ a cost advantage relative to AA.

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 😀

You might want to check and see whose markets WN has had success in.. it has not been DL's hubs. SLC up to this point has been the biggest DL-WN overlap market and WN's market share is lower while DL's is up.
OTOH, you can cite RDU, BNA, SJC, and STL all as former AA hubs which now have substantial WN operations.

Sorry to be the bearer of bad news but perhaps you can understand the significant strategic challenges that face AA.

 

[eolesen]

The simple fact is that AA gets minimal benefit from alliance partners with whom it has no ATI or a joint venture.

You're right. All the sharing of FF's, lounge privileges, cross feeding of customers... that's of no value. Really.

even in AA's two largest uncontested hubs (DFW and MIA), DL is the #2 carrier in both cases and DL's revenue share of MIA will push past 15% in the next couple years.

Wrong. OAG and CAPA just posted new data, and US (2.8%) is now bigger at DFW than DL (2.4%)

Look, we know you believe that DL is going to rule the world, and it's a fact that AA is now the third place carrier.

But why don't we wait to see what happens when DL and NW are finally integrated. Because they're not. The ink is barely dry on the NMB's vote count.

And UA/CO? I flew CO to GRU yesterday, and if that's what the combined company's service is going to look like, I think AA will probably be just fine as long as they focus on service and not trying to keep up with the other two behemoths.

 

[FrugalFlyerv2.0]

You will certainly be surprised to learn that MSP and DTW are both larger hubs than MIA in terms of passengers carried and revenue generated.

Sorry, I should have clarified when I was comparing MSP & DTW to MIA & DFW. I meant to say that MSP & DTW are probably the only DL hubs that could be compared to AA hubs of DFW and MIA in terms of where each carrier has a similar dominant position, where each hub plays an important role. For example, just as MIA is an important gateway to LatAm for AA, MSP is an important gateway for DL to the Dakotas, Wyoming, etc.

Sorry to be the bearer of bad news but perhaps you can understand the significant strategic challenges that face AA.

WT, I'll grant you that AA has a cost disadvantage, but I will disagree that it is in such a terrible possition as you make it out to be. Did you ever think that AA can still go through the chapter 11 re-organization process and come out with a cost advantage? Furthermore, despite being "#3" AA is still strong at ORD and holding its own at LAX against the new UA. For years AA has been thriving at DFW despite the WN hub at LUV. Who knows how well DL will do at ATL with WN, which will be a more formidable LCC that Airtran ever was. As far as New York is concerned, you make it sound like UA is coming to town and combine that with DL it is all over for AA. I say BS, AA has been holding its own against CO for years in New York, not much is going to change now that CO is UA. DL has certainly grown into a big-time international player, a long way from the ATL-centered carrier it used to be, and kudos for them. But your statements that it is game over for AA because they're only big in DFW and MIA, second in ORD and LAX, and 3rd in JFK and BOS is nonsense. I say that at #3, AA is in a better position, network size wise, than DL was when it was #3.

 

[WorldTraveler]

E,
Comparison schedule data or seat capacity doesn't tell us how well airlines obtain business. Revenue is a far better indication of how well a company is performing; after airlines don't make money flying planes - they make money collecting revenue from passengers.
Of course AA shows a higher percentage of seats flown from DFW when you compare seats vs revenue but half of the revenue that flows through DFW on AA isn't DFW revenue... it is from hundreds of other cities around the world going someplace else. DFW is merely a transit point for them.

The amount of revenue that AA gets at DFW from local passengers is far more significant - and is true for every other market as well. On that basis, again, DL carries a higher percentage of DFW revenue than AA does from any of DL's hub. It isn't hard to see why when you break it down by global regions - in the regions like Africa, the Middle East, and continental Europe where AA has minimal or no presence, DL carries a higher percentage of revenue. Likewise, UA carries a disproportionately high percentage of DFW-Asia revenue because it connects DFW with its SFO hub which is a logical connecting point to Asia from DFW. The ability of the DL network to shift revenue at DFW from AA to DL is apparent when you realize that among US network carriers, DL has one of the highest percentages of revenue that is DESTINED for DFW. While AA controls nearly 70% of the revenue that ORIGINATES at DFW, DL's larger network makes it much eaiser for DL to increase its overall share of the DFW market. So, DL's presence in global markets that AA doesn't serve, its larger network in other parts of the world which favors DL over AA in other markets, and its former hub presence make it possible for DL to disproportionately control revenue even in AA strength markets.
Part of DL's network strategy has always been to control many small and medium sized markets that are not hubs for anyone... AA has already decided they will focus their attention on the biggest cities in their network meaning that AA's position in many smaller cities continues to fall.
Problem is that you can't decide you are going to ignore lots of little cities which combined provide enormous amounts of revenue.
Combined with the fact that AA isn't the largest revenue carrier in NYC, CHI, or LAX and you see why AA's network cannot generate revenue premiums - which is exactly why AA's RASM growth is trailing that of its competitors and the gap between AA and the DL and UA esp. continues to grow.

And yes, all of those partnership benefits do have some value - but in comparison to what AA or other carriers obtain from immunized alliances, it is minimal esp. since other carriers have everything that AA has and more - in more places. The only reason why AA can't use its immunized alliance partners to increase revenue share is because even with its revenue sharing partners (BA,IB,JL predominantly), AA/oneworld are still the smallest carriers in those global regions.

As for service, I'd like to hear your experiences on CO (and why you flew them in the first place) but the brutal reality is that service on any of the US network airlines is not appreciably different than any of the others - enough to the point that it affects buying decisions. Granted, CO and DL are investing/have invested a lot of money in upgrading the product to be above industry average and that may or may not be enough to shift revenue - but they are trying as if it matters... when you consider that the competition is global carriers in int'l markets and carriers like Virgin America and JetBlue in the US, the measurement is less against other network carriers and more against high quality LFCs and foreign carriers - and by those standards, all of the US network carriers fall short; it's simply a question of how far short they are willing to fall. Size and access to the huge US market does have advantages for the US network carriers.

Frugal,
the whole point is that AA COULD file for BK - and they might obtain some of the benefits that other carriers obtained in BK... but that isn't certain since BK laws have changed. Since AA employees already make comparable amounts to DL/UA employees (on average including benefit costs), the price AA employees would have to pay in order for AA to become competitive would be painful.

The point here simply is that AA has some major strategic challenges to overcome and there are no answers that seem to be coming for how to fix the problems. Absent fixing those problems, AA will continue to watch its revenue be poached by larger and/or more efficient airlines. In the case of DL and the new UA, they have both advantages. IN the case of WN, what they lack in network size, they make up for in cost advantage - which is a huge determinant of success in the airline industry.

Just to be clear, I am highlighting DL's progress solely because they were the first to conclude a merger among the big six in the 2000s, a strategy that was pushed by analysts for more than a decade. Deregulation was predicated on fewer, larger airlines that would be more efficient, better able to control capacity during industry downturns, and better able to compete with larger global carriers. DL's BK and subsequent merger with NW provided the opportunity to do what analysts said should have happened and based on DL's results so far, they were right.
UA likely will receive at least some of the same benefits DL has gained - and perhaps more or others. DL simply went first and now provides a case study of the benefits of a larger global network US airline.

 

[eolesen]

The point here simply is that AA has some major strategic challenges to overcome and there are no answers that seem to be coming for how to fix the problems. Absent fixing those problems, AA will continue to watch its revenue be poached by larger and/or more efficient airlines. In the case of DL and the new UA, they have both advantages. IN the case of WN, what they lack in network size, they make up for in cost advantage - which is a huge determinant of success in the airline industry.

Again, you say DL and UA have advantages, yet they're not done with their merger integrations. All the people I've talked with on the labor side at UA & CO say that UA is going to have to pay a significant price for labor peace. Otherwise, they'll be sitting like HP and US -- one brand, two sets of labor contracts, and lots of inefficiencies.

And WN? They've slipped to eight place in dependability, their costs are rising on all fronts, and some analysts are already saying privately that WN is really just an efficient legacy carrier, and not a LCC. They've run out of easy markets to operate in, and as you said, are not doing quite as well in OA hubs. PHL hasn't become the bloodbath that it was said to be, ATL is yet to be consumated, and expanding at EWR & LGA are only going to negatively impact their dependability *and their costs* more & more.

I'm not a big fan of AA's "wait for the others to do X" strategy, but in this case, they are going to see labor costs equalize to the level at AA, which is why management at AA has been so stringent about a cost neutral contract --- the gap with the other carriers *will* eventually close if AA's costs don't rise.

Unfortunately, the unions still won't believe there's a cost disadvantage. Well, maybe the APFA does. And they should be lobbying for variable comp if they're indeed setting the bar for everyone else in terms of total comp. But the TWU? They have their heads in the sand on this one. I'm sure Bob is going to post lots & lots of isolated data points that don't take into account other factors, but the fact remains that the only way AA is going to stay in the black and create job security is to get as close to a cost neutral agreement as they can.

 

[Birdman]

But the TWU? They have their heads in the sand on this one. I'm sure Bob is going to post lots & lots of isolated data points that don't take into account other factors, but the fact remains that the only way AA is going to stay in the black and create job security is to get as close to a cost neutral agreement as they can.

Proof? What other factors?

 

[damajagua]

AA rhetoric about high labor cost is getting old. Just read
an article tha DL profit for 2010 will be around 1.4 billion .
Predicting higher profits in 2011. AA has a revenue capturing problem. There is no way we can be performing so poorly and just blame it all on labor.

 

[WorldTraveler]

Again, you say DL and UA have advantages, yet they're not done with their merger integrations. All the people I've talked with on the labor side at UA & CO say that UA is going to have to pay a significant price for labor peace. Otherwise, they'll be sitting like HP and US -- one brand, two sets of labor contracts, and lots of inefficiencies.

And WN? They've slipped to eight place in dependability, their costs are rising on all fronts, and some analysts are already saying privately that WN is really just an efficient legacy carrier, and not a LCC. They've run out of easy markets to operate in, and as you said, are not doing quite as well in OA hubs. PHL hasn't become the bloodbath that it was said to be, ATL is yet to be consumated, and expanding at EWR & LGA are only going to negatively impact their dependability *and their costs* more & more.

I'm not a big fan of AA's "wait for the others to do X" strategy, but in this case, they are going to see labor costs equalize to the level at AA, which is why management at AA has been so stringent about a cost neutral contract --- the gap with the other carriers *will* eventually close if AA's costs don't rise.

Unfortunately, the unions still won't believe there's a cost disadvantage. Well, maybe the APFA does. And they should be lobbying for variable comp if they're indeed setting the bar for everyone else in terms of total comp. But the TWU? They have their heads in the sand on this one. I'm sure Bob is going to post lots & lots of isolated data points that don't take into account other factors, but the fact remains that the only way AA is going to stay in the black and create job security is to get as close to a cost neutral agreement as they can.

For all practical purposes, yes, the DL-NW merger is finished. They have yet to fully pass out pay raises which will certainly impact DL's costs but DL was starting with a 20% cost advantage over AA...DL is not giving out pay raises anywhere close to the levels that are needed to close the cost gap w/ AA.
A large portion of the merger benefits came from new revenue and DL's performance on the Pacific is proof that DL's 777s coupled with NW's hubs (esp. DTW and NRT) provided a great platform for growth. The fact that DL registered the highest RASM increase on the Pacific among US carriers while also growing the region faster than anyone else says that DL found - and is talking like they still have huge revenue upside. The schedule for 2011 is built very heavily on continuing that growth in Asia.
As for UA, you are absolutely right that it is far from clear how their merger will shake out - and as I have noted, both UA and CO saw fairly substantial mainline cost increases in the last quarter while AA's mainline costs were flat. UA/CO will have to pay some sort of premium to obtain labor peace but it is also very possible that they aren't real interested in pushing the process forward very quickly. UA's capacity for next summer is about 5% less than it was this summer while CO is slightly growing; UA mgmt is undoubtedly going to shift flying from UA to CO as long as they can since CO is a lower cost producer.
You are also right that it isn't as clear how the revenue benefits will work for UA - but they are moving into markets in the Middle East and Africa where DL found high growth and well above average fares.
Specific to AA, UA will likely push very aggressively to get many of the corporate contracts which AA has held; because AA had the largest combined presence in both NYC and CHI of the network carriers, they could argue they could deliver the best proposition to corporate clients. Now, UA will have that title and will undoubtedly try to wrestle those contracts from AA. Given that AA has already started pulling down ORD-Europe flying and UA sits on top of AA in every Asian market from ORD (to UA's revenue benefit) and will do the same thing from LAX), it is hard to see how AA can continue to hold onto the revenue it has had as the backbone of its domestic system.
So, if UA lacks in cost advantages that DL has gained, they have the potential to inflict more pain because of the greater traditional network overlap AA and UA have had.

Yes, AA has a revenue capturing problem and is directly related to the fact that AA is slipping in size relative to its peers, not only on a system basis but also in key markets. There simply is no credible argument to be made for being a niche network carrier with higher costs than your competitors.

You are right that AA's labor unions do need to realize the huge disadvantage AA has and provide mgmt with the tools necessary to fix the problem but historically pilot groups have had the most influence at setting the pace for other unions so if APA "does the right thing" other unions might well have no choice but to follow.

 

[midnights]

You are right that AA's labor unions do need to realize the huge disadvantage AA has and provide mgmt with the tools necessary to fix the problem but historically pilot groups have had the most influence at setting the pace for other unions so if APA "does the right thing" other unions might well have no choice but to follow.

You're kidding me right???? we have given them the tools they needed with several years of concessions, give backs, shared sacrifice. we have come up with dozens of ideas to save costs and streamline the operation only to be talked down to and shot down. I see thousands of dollars wasted everyday here at DFW, we've seen MILLIONS wasted on consultants and outside help. AA has had every chance in the world to fix the problem and has screwed the pooch time and time again. IMO, these guys and gals couldn't manage a sunset without screwing it up. I'm tired. Tired of the company not ressecting us and our union for selling us out and letting this drag on and on. Give me a decent, respectable contract for the work and responsability i take or lets shut the place down, and sell it off, scrap it and junk it. end of rant.

 

[FWAAA]

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.

You're correct about one thing: You just don't get me.

I'm not really defensive of the status quo; I just don't let an airliners.net fanboi for Delta (WT) get me worked up in a lather based on some "AA's gonna fail and Delta's gonna rule the world because Delta bought Northwest and AA didn't" posts to an internet message board. Part of it may be that I'm not an AA employee and thus I don't take it as personally as AA employees might.

If you'd read my posts on this board over the years you'd know that I pined for AA to buy NW (and later, UA, after DL bought NW) so that AA could obtain all those valuable China frequencies and all those valuable NRT slots as well as the valuable Tokyo fifth freedom rights.

Well, AA didn't purchase any airline, and that may prove to be a big mistake. Arpey may have screwed up by sitting on the sidelines. Still, there are dozens of unallocated China frequencies available now and next spring and with open skies with Japan, the NRT rights held by DL and UA don't look as valuable as they used to. With the new international terminal at HND, I predict that NRT will gradually fade away as more slots at HND are made available to US-based carriers. If AA had bought NW or UA, my guess is that you'd now be second-guessing Arpey based on the subsequent changes outlined in this paragraph, but I might be wrong. Isn't it a universally-held belief among AA employees that the purchase of TWA assets "brought nothing valuable to AA"? Wouldn't you be saying the same thing about NW had AA bought NW?

DL did get one valuable thing from its purchase of NW: Lots of frequent flyers to Asia along with lots of NRT slots. AA didn't. All AA can do now is try to take away some of the DL customers (which WT will shortly assert is impossible) and try to capture any new customers in the Japanese market (which WT will also assert is an impossibility). When you buy an airline, you get valuable customers. Organic growth is sometimes slow and difficult.

About the CX and QF passengers who will be stuffed into AA RJs: I don't know how often you fly the morning 767s from LAX and SFO to ORD, DFW, MIA and JFK, but I do fly those planes, and invariably my seatmate is an Aussie businessperson continuing their trip in NGBC seats and usually fairly happy about it, since QF doesn't offer lie-flat J seats on its transcons or mid-cons. That's one area where AA shines - nice domestic connections for the premium class international traveler arriving on CX, BA, JAL and QF.

But on a flight to NRT or HKG or SYD? First or Business on JAL or CX or QF blows away the equivalent service on AA. Lotsa reasons why, some of which are within AA's control and some of which are not. If I'm buying coach and upgrading to C or buying cheap business class (D or I) and upgrading to F, then AA is ok. But when spending OPM (other people's money) on expensive premium class tickes, businesspersons will choose CX, JAL and QF in a heartbeat unless there's some overriding reason they have to fly AA metal.

 

[jersey777]

You're correct about one thing: You just don't get me.

I'm not really defensive of the status quo; I just don't let an airliners.net fanboi for Delta (WT) get me worked up in a lather based on some "AA's gonna fail and Delta's gonna rule the world because Delta bought Northwest and AA didn't" posts to an internet message board. Part of it may be that I'm not an AA employee and thus I don't take it as personally as AA employees might.

If you'd read my posts on this board over the years you'd know that I pined for AA to buy NW (and later, UA, after DL bought NW) so that AA could obtain all those valuable China frequencies and all those valuable NRT slots as well as the valuable Tokyo fifth freedom rights.

Well, AA didn't purchase any airline, and that may prove to be a big mistake. Arpey may have screwed up by sitting on the sidelines. Still, there are dozens of unallocated China frequencies available now and next spring and with open skies with Japan, the NRT rights held by DL and UA don't look as valuable as they used to. With the new international terminal at HND, I predict that NRT will gradually fade away as more slots at HND are made available to US-based carriers. If AA had bought NW or UA, my guess is that you'd now be second-guessing Arpey based on the subsequent changes outlined in this paragraph, but I might be wrong. Isn't it a universally-held belief among AA employees that the purchase of TWA assets "brought nothing valuable to AA"? Wouldn't you be saying the same thing about NW had AA bought NW?

DL did get one valuable thing from its purchase of NW: Lots of frequent flyers to Asia along with lots of NRT slots. AA didn't. All AA can do now is try to take away some of the DL customers (which WT will shortly assert is impossible) and try to capture any new customers in the Japanese market (which WT will also assert is an impossibility). When you buy an airline, you get valuable customers. Organic growth is sometimes slow and difficult.

About the CX and QF passengers who will be stuffed into AA RJs: I don't know how often you fly the morning 767s from LAX and SFO to ORD, DFW, MIA and JFK, but I do fly those planes, and invariably my seatmate is an Aussie businessperson continuing their trip in NGBC seats and usually fairly happy about it, since QF doesn't offer lie-flat J seats on its transcons or mid-cons. That's one area where AA shines - nice domestic connections for the premium class international traveler arriving on CX, BA, JAL and QF.

But on a flight to NRT or HKG or SYD? First or Business on JAL or CX or QF blows away the equivalent service on AA. Lotsa reasons why, some of which are within AA's control and some of which are not. If I'm buying coach and upgrading to C or buying cheap business class (D or I) and upgrading to F, then AA is ok. But when spending OPM (other people's money) on expensive premium class tickes, businesspersons will choose CX, JAL and QF in a heartbeat unless there's some overriding reason they have to fly AA metal.

Well I may get my wish soon. I absolutely believe that we are going to hear of a new aircraft order at the beginning of 2011. The buzz has been too strong and from too many angles and credible sources for me to think otherwise. Maybe Arpey is gonna let 2011 pass gearing up for significant growth in 2012. THEN we can compete!