TWU informer said:
That's pretty good fuzzy math.
Now can you calculate the lost revenue? Your math assumes not one passenger, not one ticket sold.
Not quite - I assume that AA will attempt to reaccomodate the passengers on the 15 domestic R/T's on the remaining 3 to 15 R/T's that will still operate in each of these markets, not that there are no tickets sold. Obviously, a far different assumption. Also notice that I never said that the profit for October would be that much larger or that the loss would be that much smaller. I only said the costs would go down (see below).
TWU informer said:
Surely out of those 48 Trips there was some revenue that is now lost and should be deducted from your so-called fuel savings.
It's quite possible. If you can quantify it I'll be glad to deduct it. Since I had no way to quantify it, I didn't deduct it, but I did assume it would be a small number (see above).
Will 0, 5, 10 or what number of passengers that would have been on the cancelled flights end up taking their money to another carrier rather than be reaccomodated on one of the remaining AA flights in those markets? And how much did each lost passenger not therefore spend on an AA ticket? Give me those numbers and I'll gladly use my fuzzy math to calculate the revenue hit from the calculations, so everyone can see if this is an economically sound decision or not.
TWU informer said:
Imagine the savings AA would have using your math if they shut down 2200 flights per day.
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There would most certainly be very large savings if AA shut down the entire mainline operation (just going by the number of flights per day given in another post). How much does AA spend on fuel per day? Can you honestly claim that the fuel bill would stay the same if every AA plane was parked, even if all other expenses stayed the same?
Where your statement becomes absurd is on the revenue side, not the cost side.
It's not much of a stretch to assume that:
1 - AA is choosing to cancel the lightest booked flights in each of these domestic markets, and
2 - that most if not all the passengers originally booked on the cancelled flights will be reaccomodated on the remaining AA flights in these domestic markets, given
3 - there will still still be a minimum of 3 R/T's per day operating in these markets.
On the other hand, one would be very foolish to assume that the revenue impact of cancelling 100% of the mainline flights would be no greater than the revenue impact of cancelling a little over 1% of them.
Like all airlines, AA routinely cancels flights. According to the DOT, the cancellation rate was 1.4% in July - about the same as that contained in this announcement. So whatever revenue impact there will be from these cancellations should be roughly the same as that from the July cancellations and possibly less since presumably they can better plan around these pre-cancellations that they would be able to with last-minute cancellations.
Jim
