American Airlines makes a move to dominate at LAX

[WorldTraveler]

yes, AA dumped 40% of the capacity per aircraft with the downgrade... and then added it back via more frequency - which undoes most of the supposed cost savings.

uh, DL's CASM is a whole lot lower than AA's because it puts 225 people (or 170 or so) on an aircraft - and still offers a business class cabin.

Furhter, AA's RASM premium is nowhere near large enough to justify the premium costs that AA has.

Let's see how long this premium strategy lasts with LCCs adding plenty of discount premium capacity and pushing fares down.

 

[FrugalFlyerv2.0]

uh... the fact that dumped 40% of the capacity?
 

 

yes, AA dumped 40% of the capacity per aircraft with the downgrade... and then added it back via more frequency - which undoes most of the supposed cost savings.
 

 
Nice qualifier / disclaimer in an attempt to save face. 

 
But let's play along and use your twisted logic.  If one dumps capacity (seats/aircraft), but then increases frequency what happens to the capacity?  As WT (or was is spectator?)  wrote:  "and then added it back".

 

[WorldTraveler]

there is no face saving.

there is fact presenting.

AA cut capacity per aircraft by 40% and then added the capacity back via new frequencies.

If AA actually cut it 40% and pocketed the cost savings, it would make sense.

Cutting capacity per aircraft and then turning around and adding it back with increased frequency that just erased the cost savings makes no sense in a market where AA already had the most flights.

But then this is the same company that thinks operating 15-20 flights/day on medium/small narrowbodies in a market makes more sense than putting some 757s in there to decrease CASM.

 

[jcw]

We see you made it over 15,000 posts

What percentage of them are bashing AA?

 

[robbedagain]

nearly 100%!   what a buffoon he truly is     Math clearly is not his skills either   guess that's fairly typical of a "revenue mgmt. clown)

 

[eolesen]

Considering the lower dead weight of a 321 vs. 762, higher fuel economy, and lower cockpit crew costs, it's a pretty specious argument to make that AA increased its costs by going to lower gauge on higher frequency. And that doesn't even start to consider the increased revenue AA should be getting with the higher end premium cabins.

But, WT doesn't have to prove his assertions. And neither should anyone else when he insists on proof.

 

[WorldTraveler]

aircraft costs are reported to the DOT.. and labor costs are not reduced significantly by aircraft type.

the data is publicly available and is published in Aviation Week.

It is there for those who want to do the research.... but because you don't want to take the time to learn the facts, you seem to think it is ok to argue that I don't have them.

If AA really kept its level of frequency and cut out 40% of the seats using much more efficient aircraft, then there is a real good chance that the math would have worked.

But in fact, AA added back most of the costs from downgrading by adding more frequency - and they also added more premium seats at the very time that premium fares were being forced down by new competition.

We already have one full quarter of AA 321 only operations on JFK-LAX and AA's RASM increased above the market average by less than 10%.

It is impossible for AA to have turned the JFK-LAX route's profitability around based on that kind of RASM number in conjunction with the addition of capacity that kept total costs close to what they were before.

the principle remains that AA is trying to grow at LAX into highly competitive markets. Even in JFK-LAX where AA was the largest carrier, AA's strategy involved giving up market share. How can AA expect to grow into other markets where other carriers are far stronger - including to Asia? no one has yet to articulate a valid strategy... and arguing that people at Centerpork can do it misses the fact that they haven't overcome AA's significant revenue disadvantage in key markets such as what AA flies from LAX to Asia today.

 

[Overspeed]

A brand new A321 is dramatically cheaper to operate than a much older 767-300. DL is paying for higher maintenance costs just based on age. AA is currently reaping a maintenance honeymoon, cheaper pilot costs due to type, and lower fuel burn. Of course over time those maintenance cost advantage will grow smaller. AA yields one would think should be significantly higher on the FC cabin product than a Business seat. Time will tell however.

 

[WorldTraveler]

and all of those reduced costs for AA would have been a win if they hadn't turned around and increased frequency.

Look up the fuel burn for the 321 vs the 762. Look at maintenance costs, crew costs, etc....

Yields are reported to the DOT for all carriers and despite what you would think, AA's yields went up marginally (less than 10%) in the first quarter in which AA operated a sole 321 schedule.

as for DL's maintenance costs, DL noted that it has the lowest maintenance costs per seat mile - in part because DL has a large MRO business which helps subsidize DL's own operations.

and as for pilot costs, feel free to divide out what DL pilots are paid on a 757 or 767 with 170 or 225 passengers compared to what it costs AA on a 321 with 110 passengers.

If a premium revenue strategy worked, it would be used in a lot more markets. And UA would not have added back seats to its premium transcon aircraft.

and the fact that low cost carriers are adding seats to the premium market while pushing fares down shows why a premium heavy strategy is vulnerable to low cost carriers, the exact thing AA was trying to run from by going to a premium cabin strategy that cut out many coach seats.

further, AA's average fares on JFK-SFO are number 4 out of 5 carriers - only B6 is lower. and AA also has fewer flights than carriers that have higher frequencies. AA's premium in the JFK-LAX segment is due to market strength and would have likely remained that way if they had found a way to serve the market in a cost effective, not a revenue exclusive arrangement.

 

[jcw]

Looks like you are managing to get the last word on every thread by repeating over and over and over again the same fantasy theory you can't prove

 

[WorldTraveler]

I'm not out to get the last word but when others continue to repeat their reasons for believing that AA is improving its margins in the JFK-LAX market, then it is fair to point out the most recent data that is available on the subject.

on the JFK-LAX market specifically, given that AA has increased frequency and added back much of the costs that they reduced by using a newer and more efficient aircraft, the RASM would have to increase dramatically. that so far has not happened based on public data. Given that low fare carriers are adding premium seats and lower premium fares that will make it harder for AA to push up the price of its own premium seats, it is far from clear that AA can succeed at its stated goal of increasing RASM faster than CASM.

Let's also remember and I am sure that someone will correct me if I am wrong that Mint was announced after AA decided to go with the 321T strategy.

as for LAX as a whole, I have yet to see evidence that AA has announced any major growth market and increased its presence without significant resistance from the dominant carrier in that market.


given that LAX is typically the #1 or #2 market, along with LGA or JFK for most US markets, the chances are very low that AA can enter a market from LAX that other carriers do not already extensively serve and will fight to protect.

those are just market realities.

 

[jcw]

Let's see you are at 15k in posts