Yes, DL did indeed close its DFW hub and made DFW a one network carrier hub for AA.
DL said that it made the decision to give up its 14% share of the local market in order to redeploy resources to grow the NYC market.
E has said multiple times that AA’s closing of several of its hubs in order to grow MIA, which some have called one of the most successful hub stories of the past decade.
Let’s sniff check what AA and DL have done in terms of network development over the past decade particularly, knowing that some of AA’s hub closures go back further.
DL gave up a 14% share of the DFW hub – a roughly $5B/year market but still has an 8% revenue share, which according to DOT data still makes DL DFW’s #2 airline based on revenue.
Over the past decade, the combined LGA/JFK market has grown 17% and is now a nearly $10B/year market… double the size of DFW. Over the past decade, DL’s share of the market has gone from 18% to 30% while AA’s has gone from 33% to 26%.
The NYC market – just the NY side – was and is a larger and faster growing market than DFW.
DL gave up about $400 million in local DFW revenue in order to gain over $1.1B in new NYC revenue.
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Over the past decade, the Latin America/Caribbean market from the US has grown by 50%... by far the fastest growing global region from the US.
At the beginning of the decade, AA had a 45% share of a $7.5B market worth $4.8B/yr. AA’s efforts to hold onto its position in a region where it has invested a huge amount of resources and where it has remained the market leader is clearly the right thing to do.
Based on the most recent DOT data, AA now has a 39% revenue share of the LatAm/Carib market which is now worth $6.2 billion/year for AA.
Sounds like a great tradeoff for AA…. Close several hubs, focus on Latin America… and in the process gain $1.4B/year in new revenue. Until you consider what it cost AA…. They gave up $700M in revenue in NYC plus 1% of the entire US domestic market which has cost AA/AMR the equivalent of $1B in revenue.
And since deregulation, AA has given up its leading carrier position in 4 hubs – BNA, RDU, SJC, and STL. IN 2 of those four hubs, WN is now the largest carrier with AA the 2nd largest carrier; in 2 more, DL is now the largest revenue carrier with WN #2, meaning AA has fallen to the #3 carrier position.
So, AA’s revenue share of the US industry has fallen over the past decade as AA has thrown nearly all of its eggs into protecting its Latin franchise.
While retaining the largest revenue position in the fastest growing – but still smallest US aviation region, AA has sacrificed its position in every other region of the US – ironically except for Asia where AA’s revenue share has gone from 7% to 9% in a market that has grown almost as fast as LatAm – 43% - although other carriers have grown their revenue share faster.
Yes, I know some find the use of data boring – because it brightly shines the light on preconceived notions and puts them into their proper perspectives but aviation is after all a business and something such as market share, revenue gain, and the success or failure of closing hubs, redeploying assets etc should be measured by the results of those actions.
So, based on the claims that have been made about DL closing DFW in order to focus on NYC while AA closed multiple hubs – and now SJU – in order to strengthen its position in Latin America via MIA (and to be fair a great deal of AA’s LatAm growth has come outside of MIA, including NYC), DL made the better choice regarding redeploying its assets and gained more revenue.
Let’s take a time out boys…. For some reason you guys want to keep trying to hammer away at DL on the basis of its performance with its network… perhaps as if to attempt to defend my attacks on AA’s network moves. Reasonable enough response on your part.
Problem is that while you can criticize DL for a lot of things – no company does everything right – network strategy is NOT one of the things that you can realistically criticize DL for…. They have defended their original network from competitors better than just about everyone, they have grown their position into some of the most competitive markets in the industry, and they acquired leading positions in the top market regions in the world.
AA has done a lot of things right over their 80 plus years…. No one can doubt that the past 10 years have been the hardest in history for AA. Everyone wants things to turn around. Managing their network over the past 10 years - and largely since deregulation has not been where they have compared best to the industry.
How about instead of trying to attack someone else on the basis of AA’s own weakness right now, you simply admit that other carriers have done a better job on the basis of network management and then have the optimism – which I certainly do – that AA will turn things around?
Continuing to attack others in a futile attempt to demonstrate that they have failed only works if they really have failed, esp. when there are very factual ways to determine the accuracy of the statements being made - and it looks even worse when what you accuse someone else of is exactly where "you" have failed.
DL has not failed in its network development and revenue growth efforts over the past decade and that is probably why they moved from the #3 to #2 US airline and delivered some of the best earnings in the industry. It also explains why DAL has the highest market cap of any US network airline and has generated the best operating market among its peers over the past year. And also why DAL is worth 4X more than AMR.
AA will turn things around. They have a huge hole competitively to climb out of but talk of new airplane orders, labor agreement settlements, and major alliance wins can certainly help AA…. But AA's ability to turn things around has to be better than everyone else because others are doing some of the same things too including replacing their own fuel-inefficient aircraft. Should that stop AA? Absolutely not! AA has moved far too slowly for far too long as it is.
I wish AA well… always have… but I also know that the industry is highly competitive and that AA has to win its way back to a position of financial and network respectability in the industry.
Whether AA can put together and then use a turnaround plan in the next few months to change AA’s trajectory remains to be seen.
Just like the past 10 years, AMR will be measured by its performance on what it says it is going to do to turn things around.
and, E, if you want to form opinions on matters which are contrary to fact even when they can be substantiated by fact, then you should not be surprised when you are shown to be wrong... both now and repeatedly in the future.
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Sometimes the best thing to do is admit you are wrong or at least quit going back to arguments which you are going to lose.... not sure why you seem to persist.
