AFTER the next(D O T) China Award

[NewHampshire Black Bears]

I"ve started this, because I have VALID questions about AA/China. ..... I'm sure everyone else does as well !

If AA does NOT get this(soon to be announced) China award, what's the "next step" ?

By the time the next award comes about, I predict that DL would be a "hands down" sure bet, to get into china.
(Competative reasons, plus A huge hub/feed like ATL)

Should the current pending award go to CO, I think "this" would be AA's "worst case scenario"(think EWR/NYC)

It's one thing to have to continue to put up with UAL and NW "owning" Asia, but to add a third carrier to the mix(CO?), could prove to be VERY difficult !

I'm not insinuating AA should rush out to buy NW, BUT....BUT I can't see AA waiting around patiently, for Santa Claus to put additional China routes under AA's XMAS tree.


????????


NH/BB's

 

[FWAAA]

Excellent question. I'm not as certain that DL wins designation next year as a new carrier to China; the 2005-06 award decision ripped apart Delta's assertions about the local traffic and connectivity from ATL to China, and that won't have changed a year from now when DL desperately begs DOT for seven China frequencies. DFW presents a stronger case, IMO. And DFW isn't a particularly strong city either.

CO's NYC decision is, in hindsight, a big winner. To complement their PEK flight, I think CO will win its PVG application hands down.

AA obviously thought there would be a big political advantage to splitting up its China flights between ORD (which it has) and DFW (which is gonna be a loser application). IMO, AA should have applied for ORD-PEK and emphasized the benefits to consumers of further direct competition with UAL. ORD's local traffic is much larger than DFW and its connections are at least as good. DOT bought AA's competition argument two years ago and AA should have continued to dance with what brung them - and that's an application to fly ORD-PEK.

My prediction: CO wins the EWR-PVG application for 2007 and AA re-thinks its poor decision to ask for DFW-PEK and reapplies for ORD-PEK - and wins it for March 2008. Although the USA-China bilateral allows the USA to name a new carrier - there's no requirement that it do so - and I don't think it will continue to spread around the flights between different new airlines (USAir is never gonna win, and neither will Delta, IMO).

With $5.5 billion of cash, even after the payment of over $1.1 billion of debt so far this year, AA is still in a great position to swoop down and gobble up NW if the price is right. And I think it will happen.

 

[jimntx]

Another argument in CO's favor...
Houston has a HUGE Asian population to the point that there are TWO "Chinatowns." One large area of SW Houston has street signs in both English and Chinese.

Also, the oil industry is pretty much headquartered in Houston. This is an industry of great interest to the Chinese as their economy continues to grow at exponential rates.

 

[eolesen]

Based on the markets selected, this filing is CO's to lose.

AA won't get DFW, and I agree that DL doesn't have a chance of getting ATL for the same reason. Moving it to ORD might work, and even JFK would be a better choice (even though it creates backhauls) than either DFW or ATL. With both ORD and JFK, there's more of a local market than ATL and DFW combined could create.

 

[WorldTraveler]

Houston has nothing to do with this route case… except perhaps to help AA out.

The DOT has as one of its primary interests to open new regions of the country to new air service and secondly to help spread the wealth among airlines in limited access route cases. However, each successive route case brings less and less of anything new or original to the market.

The south and AA and DL are both much less of players in the China market. While NYC is a big market and CO does have a good case for EWR-PVG, it does nothing for the southwest or the south and it only concentrates power to China in 3 instead of 2 airlines. CO also serves HKG which, while not part of the route case, does provide significant connectivity to South and Southeast China.

It’s really quite amazing that AA was awarded a duplicate route to UA’s ORD-PVG route but AA clearly knew not to keep pressing its luck.

And while NYC or even IAH may be much larger local markets, the comparisons very quickly start falling off when you put a route into a superhub like DFW or ATL where connectivity is so strong.

I believe AA will get the route for 2007 and DL will get it for 2008 to PVG. If AA gets the route in 2007, then DL will have a strong case to plead for PVG service to the east coast. If by chance CO gets EWRPVG next year, DL will have a strong case for adding PEK to the south.

DL’s decision to launch Seoul service is a powerful message that, despite the views of an aweful lot of armchair analysts, ATL is NOT too far south to be a viable gateway to Asia. DFW doesn’t offer service to 2 countries in east Asia. DL’s ATLNRT profit margin based on DOT statistics is well above industry average for the Pacific while ATLICN is rumored to be KE’s most profitable route. There is clearly plenty of demand for ATL to Asia traffic – as well as to all the markets DL serves from ATL.

AA at DFW can do well to Asia. I just don’t believe they have picked the right markets. AA has put too much system focus on Japan when they should have been – and still should be starting service to other cities in Asia. Hopefully, this route case will help AA see the potential for new Asian routes. DL apparently already knows the Asian potential for ATL based on its new service to ICN and DXB as well as its 777LR orders which are rumored to allow nonstop service to HKG and BOM as well as to China.

 

[NewHampshire Black Bears]

Excellent question. I'm not as certain that DL wins designation next year as a new carrier to China; the 2005-06 award decision ripped apart Delta's assertions about the local traffic and connectivity from ATL to China, and that won't have changed a year from now when DL desperately begs DOT for seven China frequencies. DFW presents a stronger case, IMO. And DFW isn't a particularly strong city either.

CO's NYC decision is, in hindsight, a big winner. To complement their PEK flight, I think CO will win its PVG application hands down.

AA obviously thought there would be a big political advantage to splitting up its China flights between ORD (which it has) and DFW (which is gonna be a loser application). IMO, AA should have applied for ORD-PEK and emphasized the benefits to consumers of further direct competition with UAL. ORD's local traffic is much larger than DFW and its connections are at least as good. DOT bought AA's competition argument two years ago and AA should have continued to dance with what brung them - and that's an application to fly ORD-PEK.

My prediction: CO wins the EWR-PVG application for 2007 and AA re-thinks its poor decision to ask for DFW-PEK and reapplies for ORD-PEK - and wins it for March 2008. Although the USA-China bilateral allows the USA to name a new carrier - there's no requirement that it do so - and I don't think it will continue to spread around the flights between different new airlines (USAir is never gonna win, and neither will Delta, IMO).

With $5.5 billion of cash, even after the payment of over $1.1 billion of debt so far this year, AA is still in a great position to swoop down and gobble up NW if the price is right. And I think it will happen.

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FWAAA,
When it comes to AA/China, we are pretty much in agreement that if AA "comes up short" this time that they've got to get there "somehow"/soon.

But I'll be damned if I can figure it out exactly :unsure: :unsure:


NH/BB's

 

[boxer]

Sure looks like all you experts have written UAL off. IAD-PKG also presents a compelling case.

 

[IORFA]

Only if the DOT wants to give all the frequency's to UAL and NWA. It really should be just between AA and CO with UAL and NWA included just to make the process look fair.

 

[JFK777]

Delta doesn't deserve China because it gave up on Asia when it closed Portland. Then 9/11 comes and it kills off LAX and JFK to Tokyo. AA saw the light and now flies from both coast to Japan. Let Delta 777's fly to places they already fly(Mumbai) or to new frontiers like Dubai and South Africa. Australia nonstop from Atlanta with 777LR looks interesting and untapped since Qantas flies to LAX 6 times daily with 70 % of its traffic coming east of the Mississippi.

 

[NewHampshire Black Bears]

Delta doesn't deserve China because it gave up on Asia when it closed Portland. Then 9/11 comes and it kills off LAX and JFK to Tokyo. AA saw the light and now flies from both coast to Japan. Let Delta 777's fly to places they already fly(Mumbai) or to new frontiers like Dubai and South Africa. Australia nonstop from Atlanta with 777LR looks interesting and untapped since Qantas flies to LAX 6 times daily with 70 % of its traffic coming east of the Mississippi.

///////////////////////////////////////////////////////////

If I remember correctly(from the Boeing site), the 777-200LR/Worldliner is just "out of reach"(range) for ATL/SYD



NH/BB's

 

[NewHampshire Black Bears]

Correction,

SYD/ATL = 9,280 km.
SYD/JFK = 9,940 km.

Boeing flew the "Worldliner" EMPTY from HKG/LHR(eastbound) a distance of 11,664 km.

I'm guessing that a Fully Loaded 777-200LR "Worldliner" could make it from SYD/ATL.

 

[MCI transplant]

<_< ----- What about STL?

 

[eolesen]

Sure looks like all you experts have written UAL off. IAD-PKG also presents a compelling case.

It's a compelling case if you ignore the facts that UAL could fly this today if they'd simply cut back on other China services, which isn't an option available to CO or AA.

The DOT has as one of its primary interests to open new regions of the country to new air service and secondly to help spread the wealth among airlines in limited access route cases. However, each successive route case brings less and less of anything new or original to the market.

Serving the public interest does not mean serving the corporate interest of those providing the service, so while "opening up new regions" sounds great, there are far larger markets which fall under that definition than DFW and ATL combined

Frankly, I don't see DL getting an award in 2008.

As already noted, they got a bunch of route awards in the 90's that were essentially squandered until they could be reallocated to other carriers. While AA has indeed pulled out of TPE, KIX, and NGO, they didn't prevent other carriers from serving those markets like DL did with their PDX-just about everywhere and LAX-NRT service. Why DL couldn't make a go of LAX-NRT yet everyone else could is beyond me.

If anything, DOT may elect to name another cargo carrier instead of a fifth combination carrier if the option exists. It's happened before, and given the demand for cargo between China and North America, it may be a better use of the resource.

 

[nbmcg01]

<_< ----- What about STL?

Surely you jest..lol Then AA would have to think about all of the full LGW, CDG, and Hawaii flights they dumped. Force people to go to ORD and DFW, yeah that's the ticket. Charge more for a non stop out of STL so that when res was called the non stops were WAY down on the list. Our regular pax had to fight to get res to book out of STL.

HOWEVER, WHEN we win the World Series, maybe.... About the time any former TWA f/as are recalled.

 

[MCI transplant]

Surely you jest..lol Then AA would have to think about all of the full LGW, CDG, and Hawaii flights they dumped. Force people to go to ORD and DFW, yeah that's the ticket. Charge more for a non stop out of STL so that when res was called the non stops were WAY down on the list. Our regular pax had to fight to get res to book out of STL.

HOWEVER, WHEN we win the World Series, maybe.... About the time any former TWA f/as are recalled.

<_< Oh!---- You were talking China? I thought we were talking Baseball! ---- Go Cards!!!!!