several items floating around here....
Pass benefits are generally considered no/very low-cost, perceived high value benefits in the airline industry. It is absolutely true that their value is diminishing as carriers figure out how to squeeze more and more passengers onto flights via improved revenue management and dynamic scheduling that allows capacity to be better matched with demand.
As for AA allowing essentially differential pass benefits for different groups of employees, there is a certain amount of that which flows from differing requirements which different carriers have, esp. to jumpseats. Allowing a system that intentionally shows preference to other airline employees at the expense of one's own employees is something that each airline company could manage if it chose to do so. In the absence of a company guideline, the unions will ask and swap what they can get by with - and it is no surprise that one employee group will step on another if given a chance.
As for AA's revenue, it certainlly is true that AA underperformed its network peers on revenue by a significant amount in the most recent quarter. The Atlantic and Pacific are the two largest international regions for the industry and there were good reasons why AA underperformed there. AA does not have the presence in many Asian markets and thus did not participate in the upside... but remember that NW/DL and UA saw significant revenue decreases on the Pacific several years ago - so the fact that they are seeing revenue recovery is not surprising. In Latin America, AA grew the region faster than other carriers which depressed their revenue growth. Domestic was actually the most interesting.... UA and CO led the industry in domestic revenue growth followed by US, AA, and DL.
Note that all of these are results for the mainline operation.... and obviously regional carriers have little inflluence on the international operations.
What is significant is that DL was the only carrier that shrunk it regional operations in the quarter. DL said 2 1/2 years ago when the NW merger was announced that excess capacity would come from the regional carriers. At the same time, DL is adding mainline domestic capacity, opposite of what most carriers are doing. Mainline capacity is cheaper on a CASM basis to operate. While DL's ddmestic RASM came down, it is likelly their cost came down much faster - but that cannot be known.
AA did an outstanding job of managing its mainline costs in the quarter - but it should also be apparent that AA cannot afford to do anything to raise its costs now. Surprisingly, UA and CO both had 7-8% mainline CASM increases so that UA's mainline costs are now approaching AA's, putting AA and UA back into the same cost position they were relative to the rest of the industry. CO was a lower cost producer so even with cost increases, it isn't at UA/AA cost levels. still the merger and most of the costs of it, including the price to please labor is ahead of them. DL also had minimal cost increases in both mainline and regional operations. US does a good job with cost controls too.
As for whether regional operations are profitable, the prevailing mindset is that there is an excess of regional capacity in the US which pushes down the price of contract carriers.... AA can't do that with owned regional capacity and neither could DL. That is part of why DL made the decision to cut so much capacity at Comair. The whole value of regional carriers and their operations diminishes as there are fewer network carriers and fewer hubs which need to be fed; part of DL's reason for growing mainline capacity while shrinking regional capacity is because you simply don't a bunch of RJ flights to a half dozen cities from every hub. You can more efficiently add a few mainline flights and cut a bit more RJ capacity.
As for whether DL is doing things right or not, the proof is really in the results which is where it should be for all companies. The big difference between DL and AA and UA is that DL VERY aggressively went into bankruptcy knowing what was wrong, what needed to be done, and came out swingingi and has largely delivered on the transformations it believed it needed to do. AA is still restructuring seven years after it started, although the pace has definitely picked up. UA was very slow in restructuring but has hit its new stride of late... as long as costs don't get seriously out of line, they will be ok. US has a niche and they are working in it despite their own limitations which they recognize.
No airline has it all figured out but I think there are valid reasons to believe that DL did in its BK what CO did in its 2nd - significantly changing its culture and its business and ruthlessly pressing to maintain the benefits it has obtained. There will be a peak that DL will hit when it no longer is able to achieve those benefits and when others start to take away its ability to maintain its momentum, but that is likely still a ways off - and by staying ahead of the changes that could limit DL.
Whethr DL's aggressive approach to transformation or AA's more gradual, far less dramatic process is better remains to be seen because both are still in the middle of the process. And different stakeholders will measure the gains and losses differently.
