New Merger Routes

[Crash Pad DCA]

Short Story:

US/AA Position by Region: East, Midwest, West

The Hubub:

East Coast:
UA/AA #1
More International out of PHL. JFK domestic and International adjustments. PHL/JFK international routes added to match DL/JFK(EWR/PHL) offerings and UA/EWR offerings. Probably see a return to ARN or (possibly) a Helskinki/Finnair linkup. Hub Combo of PHL-JFK (international) used to squeeze DL at JFK and UA at EWR.

Not much (if any!) domestic growth. US/AA rules the roost all up and down the East coast (including BOS!) even if DL continues to dominate LGA. However, US/AA is (domestically) too big. Expect capacity cuts but not destination cuts.

Non-reving on the DCA-LGA-BOS Shuttle will become more difficult as the Shuttle is increasingly used to connect domestic passengers. (Tommy "The Chair" Horton came up with that one..or (to remain relevant) he will in an upcoming press statement...stay tuned...or not...)

South/South East:
US/AA #1
DFW-MIA-CLT triangle used to squeeze/strangle the (pesky and ornery) DL/ATL superhub. CLT does not shrink. Year-round CLT-MAD service to connect with oneWorld partner IB. AA RDU-LHR stays because of LHR slot restrictions and gets leveraged. Capacity cuts as appropriate...

Midwest:
US/AA #1
ORD grows to match UA/ORD offerings. Possible US/AA international growth to match UA/ORD Europe Asia offerings. Stable north-south domestic Midwest battle between US/AA (ORD-DFW) and UA (ORD-IAH). MSP-DTW-mem/ATL configuration leaves DL at north-south disadantage. Domestic adjustments but no major destination changes. Again, US/AA is (domestically) too big. Expect capacity cuts.

West:
US/AA #3
Get ready for (major) change! West is problematic. US/AA cant stay #3 in the West forever (or even today!). US/AA has (very) week Asia offerings and LAX has to be bulked up domestically to match UA. (So we lost NYC...Let's win back LA!)

Two big problems out West: 1. DL (SEA/PDX-SLC-LAX) and UA (SFO-DEN-LAX) both have west coast geographically triangulated, and 2. Both UA and DL have two (2) Asia gateways: DL (SEA-PDX,LAX) and UA (SFO,LAX).

1 in 10 US Citizens live in CALIFORNIA! (Sorry Gov Brewer...but wasn't she born an educated in Cali? Anyway...) PHX at 316 daily departures and LAX at 180 daily departures seems not to meet the needs to grow LAX to match UA, and to find/create a third leg of the triangle in the northwest to support a second Asia gateway. (US/AA SJC return anyone? No, we are not going to pick up Frontier in DEN to get this done...)

LAX grows, LAX-Asia offerings increase to match UA and DL. PHX "adjusts" and the "no northwest leg/only one Asia gateway" problems get addressed. (VX/SFO tie up like DL AS/SEA-PDX agreements?)

PHX Hawai'i capacity stays to enhance ORD/DFW offerings and to remain competitive with UA (#1in the market) and DL.

Expect West changes to be quick, agressive, decisive and devestating. (You know Nocella doesn't play around...)

 

[Crash Pad DCA]

Long Story:

East
US/AA #1
PHL/JFK May see increased European/South Asian service to compete with UA/EWR and DL/JFK offerings.

US, AA, DL PHL/JFK,EWR,JFK Europe and South Asia Routes

However, ARN is the only place that both DL an UA serve from NYC that US/AA don’t serve. That might be a target.

PHL most likely will not shrink. The PHL-JFK duo nicely hems in UA in EWR. It also serves to hem in DL at JFK. And there is also the supporting argument that growth at JFK is slot limited. So PHL stays (and grows!)

Further, despite the transatlantic joint-venture with BA, the hourly JFK-LHR shuttle isn’t bringing flow through connections to AA in JFK since BA directly flies to every major AA domestic connection. However, BA’s PHL-LHR connection will be better utilized. US’s PHL-FRA and/or PHL-MUC connections are probably in trouble.

South/Southeast:
US/AA #1
The DFW-MIA-CLT combo nicely triangulates (strangulates?) DL’s ATL super-hub. The combo provides a compelling selling point for corporate accounts. CLT is NOT going anywhere!

But what to do about AA’s RDU offerings?

Will be interesting to see how AA’s RDU-LHR connection fares after the merger, given CLT-LHR is just around the corner. But with slot restrictions at LHR, AA’s RDU-LHR probably stays.

Midwest:
US/AA #1...However...

ORD needs to grow to match UA. More than possible with added planes from US.

As with JFK/EWR in the East, US/AAs need to match UA Europe/Asia offerings in ORD.

In the big picture, the Midwest is a north-south battle between UA and US/AA at ORD in the north of the Midewest, and between UA at IAH and US/AA at DFW in the south of the Midwest. MSP-DTW-mem (small letters)/ATL appears to be a slightly disadvantaged competitive arrangement. US/AA will have too much capacity . No destination cuts, but capacity cuts are coming.

West
US/AA #3
Problematic. Can’t be No 3 for too long (if at all!).

Both UA and DL have the west very nicely geographically triangulated. UA has triangular coverage in the west with DEN-SFO-LAX. DL has de facto triangular coverage with SLC-LAX and the AS partnerships in PDX and SEA. Plus DL has announced plans to make SEA an Asia gateway. That will match UA’s two west coast Asia gateways – LAX and SFO.

US/AA’s PHX-LAX west hub setup then appears to be (extremely) weak with only one Asian gateway and no third leg in the north or northwest for coverage.
Will the combined US/AA come back to SJC or is there a better option than trying to bulk up in either SFO, PDX or SEA?

The West #3 problem has to be solved. It’s probably not going to be pretty. The PHX metro area is big…but 1 in 10 US citizens live in CALIFORNIA! Accordingly, PHX appears to have (way) too many US departures compared to AA’s LAX (anemic?) departures.

PHX (unfortunately) appears to be ripe for a draw down to solve the triangle problem and indirectly the Asia gateway problem. Bring down PHX’s 316 daily departures, boost LAX’s daily 180 departures to match UA and return to SFO and/or SJC to solve the western triangle problem (or Partner with Virgin America domestic in SFO with more international widebody Asia feed on AA? Longshot with Virgin Atlantic DL tie up&hellip
And go to more places in Asia (out of two gateways)

Asia:
US/AA #...ugh..we'll get back to you on that..hold on Tommy Horton (aka "The Chair") is giving a press interview....might say somethign important....but seriously...

Matching DL’s PDX, SEA and LAX Asia offerings and UA’s SFO and LAX offerings seems to be necessary.

And something has to be done about (not) having Asian hub(s). DL and UA have Tokyo hubs. HNL is becoming a de facto DL mini-hub. UA has Guam, too.

Despite all the hoopla, oneWorld trans-Pacific joint ventures with JAL and Cathay don’t solve US/AA’s problem long term or even short term (People want to go to/come from Mainland China! Not Hong Kong...or Taiwan for that matter..). But where are the wide-body a/c for all of this?! (Keep ‘em coming Boeing and Airbus!)

Mexico, Carribean, Central America, South America
US/AA #1
Phew! No worries there! US/AA will be the undisputed powerhouse in the region. More so when LANTAM joins oneWorld. (Yeah, yeah...Copa is in Star and DL has investments in Mexico and Brazil...yawn...)

Europe - oneBigProblem for oneWorld
Long term oneWorld has a big problem on the Continent.

LHR is near capacity and the UK Air Passenger Duty makes almost all UK airports (utterly and completely!) unattractive.

MAD is not a viable alternative continental hub. IB’s (and Spain’s) financial and labor problems and IB’s 90 degree strategy exacerbate the issues with MAD (and no one coming from Asia wants to stop in MAD! They want to buy (lots!) stuff in PARIS!).

Air Berlin in TXL/fra (small letters) might help, but there is a cultural/service mismatch for oneWorld elites on US/AA/BA as Air Berlin is more leisure oriented - Air Berlin just simply IS NOT LH!

IAG’s potential acquisition of TAP post-privatization also doesn’t solve the oneWorld continental Europe problem (LIS really? Besides South America is already sewed up!).

Yeah, Finnair is pushing Helsinki, too....but really?

So, in the present day SkyTeam with power house hubs CDG and AMS (+Alitalia at FCO?) and Star through LH and its subsidiary minions (FRA,MUC,BRU,ZRH,etc) currently have continental Europe sewed up. oneWorld has some work to do.

Appendix
What's the Hubub all about?

Combined US/AA, Delta and United (% of daily departures): Feb-2012

For $20 million dollars and lifetime travel (not FCFS mind you) you did this?

AA Market Share Slippage 2006-2011...Feeling Cornerstoned yet? No? Just breathe in some more. I think I just passed some more gas...

 

[nycbusdriver]

Chip? Is that you?

(That livery is even uglier than the Pepsi livery. Keep the US livery with the traditional AA eagle on the tail, and "American"...lose the "Airlines"... in huge lettering...reaching below the windows...on the fuselage. If absolutely necessary, put that stylized eagle in front of the fuselage lettering.)

 

[Non Rev]

Oneworld sees the merger as and opportunity to add flights.

http://www.dallasnews.com/business/airlines/20130221-oneworld-ceo-us-airways-hubs-could-see-more-international-flights-with-pending-merger.ece

I was thinking it might be possible some airlines might make the jump from *A and Skyteam to Oneworld.

 

[FWAAA]

Will be interesting to see how AA’s RDU-LHR connection fares after the merger, given CLT-LHR is just around the corner. But with slot restrictions at LHR, AA’s RDU-LHR probably stays.

RDU-LHR is subsidized by the Research Triangle partnership thru potential revenue guarantees. That flight continues to exist as long as the subsidy ensures that it is sufficiently profitable.

I'm surprised that the author didn't know that.

 

[Crash Pad DCA]

RDU-LHR is subsidized by the Research Triangle partnership thru potential revenue guarantees. That flight continues to exist as long as the subsidy ensures that it is sufficiently profitable.

I'm surprised that the author didn't know that.

I guess more surprises coming 'cause the author did not know that! But now he does. Thanks for the info!