EricR
Topic Author
Posts: 1223
Joined: Mon Jul 26, 2010 4:15 pm

AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:18 pm

Tom Horton is describing AA's reorg plan as unique because unlike other airlines that went through BK, his plan is not about shrinkage, "but renewal and growth". He foresees AA expanding by 20% by the year 2017. He also states that AA's planned growth would be "disproportionally international".

Any ideas on new international routes?

http://www.thestreet.com/_yahoo/stor...cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:22 pm

Quoting EricR (Thread starter):
Tom Horton is describing AA's reorg plan as unique because unlike other airlines that went through BK, his plan is not about shrinkage, "but renewal and growth".

Well, he's saying that, but in reality, it appears the plan is exactly the same as it turned out to be for Delta and United: shrink domestic mainline, grow international mainline, and grow domestic regional. AA has to compete, and thus they appear to be emulating what their competitors did in bankruptcy.

Quoting EricR (Thread starter):
He foresees AA expanding by 20% by the year 2017.

Well, that isn't quite what the plan said. The plan said AMR anticipates increasing departures by 20% by 2017. I suspect that the vast majority of that jump in departures, however, will be from more flying with smaller jets, as Horton's and others' comments have alluded to.

Quoting EricR (Thread starter):
He also states that AA's planned growth would be "disproportionally international".

Not surprising. AA is just following the lead of Delta and United, both of which have consciously moved more and more of their system capacity (especially mainline) to international in the last few years. I believe AA now generates a larger portion of its revenue from domestic than either of those peers - by a fairly wide margin.

Quoting EricR (Thread starter):
Any ideas on new international routes?

I've got tons of "ideas," but all of them are for routes that the "old AA" would never in a million years have tried. But perhaps a new, more aggressively-run, lower-cost, more competitive AA may try them ...
 
SonomaFlyer
Posts: 1879
Joined: Tue Apr 20, 2010 2:47 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:30 pm

For international departures, I could see AA trying to leverage the remaining slots at JFK to expand service to Europe and setting up service to Africa and S.America.

Asia supposedly has tons of growth potential but without a West Coast hub, they'd need to fly those out of JFK , ORD or DFW. They don't have enough a/c at present to really hit Asia given the flight times and likelihood of needing three a/c per route.

Alot of their international growth strategy hinges on appropriate a/c. To effectively compete will likely require modernizing the 767's and rotating them to where they'll make the most cash (if that isn't the case already). Their order for 773ERs isn't that large and I don't think would support a lot of long haul expansion. Perhaps someone in the know can chip in on how well they utilize their 772ER fleet...
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:30 pm

Quoting commavia (Reply 1):
The plan said AMR anticipates increasing departures by 20% by 2017. I suspect that the vast majority of that jump in departures, however, will be from more flying with smaller jets, as Horton's and others' comments have alluded to.

If the pilots union holds tight and refuses to compromise on the 50-100 seat scope clause, wouldn't the bulk of Horton's vision fall apart ? What's his plan B ?
 
AAIL86
Posts: 425
Joined: Wed Feb 09, 2011 6:00 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:36 pm

Quoting commavia (Reply 1):
Well, he's saying that, but in reality, it appears the plan is exactly the same as it turned out to be for Delta and United: shrink domestic mainline, grow international mainline, and grow domestic regional. AA has to compete, and thus they appear to be emulating what their competitors did in bankruptcy.

Plenty of us have been saying this for years- about friggin time!

Quoting SonomaFlyer (Reply 2):
For international departures, I could see AA trying to leverage the remaining slots at JFK to expand service to Europe and setting up service to Africa and S.America.

Exactly. They need to leverage the best terminal at JFK and be agressive adding new routes. There's plenty of high-yielding traffic in that area that doesn't want to truck it to EWR/ deal with the 10 year Apollo program DL is embarking on in their terminal.
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
tommytoyz
Posts: 1195
Joined: Thu Jan 18, 2007 9:08 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:37 pm

AA is laying off 13,000 employees, that's 16% of the workforce and intends to terminate the pensions for those, basically handing them over to the government ageency, the PBGC. AA also has hired Bain Capital (Mitt Romney's old company) and a few other to advise it on the best way forward. They paying these advisers $14 million a month. What they haven't counted on was a tough as nails PGBC administrator who wasn't there for the DL and NW BKs.

AA has underfunded their pension plan by a $91 million monthly payment, I guess on advice of Bain and co. and announces the layoff of 13,000 employees planning on terminating their pension plans and foisting the liabilities onto the PBGC.

So what does the PBGC do? In the past, they did nothing but complain. Now? They have attached liens worth $91 million against AA assets located outside the US, which are not a part of the BK and outside the jurisdiction of the BK court. Smart cookie and sends a message that AA will not be able to toss out their pension obligations so easily. That $14 million a month to Bain and co should be paid into the pensions to make up for the $91 shortfall last month.

If any international growth comes, it can't be substantial and the PBGC liens on foreign assets may put a wrench into that plan, if foreign assets are seized.

[Edited 2012-02-02 10:45:54]
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:38 pm

Quoting mogandoCI (Reply 3):
What's his plan B ?

The judge.

One way or another, the company will get a relaxation of SCOPE, either voluntarily at the bargaining table or from a judge's ruling. Either way, it almost certainly won't be as severe as what was proposed in their opener released yesterday - which was very extreme - but AMR will get something.

I think it's inevitable, and I think the APA knows it, but I also think - and have long thought - that there is room for compromise there. The contract proposals AMR put out yesterday were of course extreme and severe - that's how negotiation works. It's no different than the APA's equally-ridiculous proposal of 2007.

But, on the issue of SCOPE, which is so strategically critical for the company's long-term competitiveness and so financial critically for APA members, I continue to think that the two sides can work out a truly transformational deal here if they accept that they're both going to have to give a little on what they want (unlimited or near-unlimited small jet flying from the company's perspective, and no codesharing or small jet flying for the pilots).
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:41 pm

Quoting AAIL86 (Reply 4):
There's plenty of high-yielding traffic in that area that doesn't want to truck it to EWR/ deal with the 10 year Apollo program DL is embarking on in their terminal.

EWR is physically closer to Manhattan than JFK. Only passengers from Nassau or Suffolk counties find EWR particularly burdensome.
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:42 pm

Quoting tommytoyz (Reply 5):
So what does the PGBC do? In the past, they did nothing but complain. Now? They have attached liens worth $91 million against AA assets located outside the US, which are not a part of the BK and outside the jurisdiction of the BK court. Smart cookie and sends a message that AA will not be able to toss out their pension obligations so easily. That $14 million a month to Bain and co should be paid into the pensions to make up for the $91 shortfall last month.

He's saber-rattling to try and secure the best possible outcome for the already-underfunded PBGC when the inevitable comes. The reality is that no amount of noise is going to stop AMR from terminating their plans if they are able to convince the decision-makers involved that it's the only viable path forward. And I think AMR stands a very good chance of succeeding in making that case, whether any of us agree with it or not.

This guy just sees the writing on the wall - his "corporation" is already severely underfunded (by tens of billions of dollars) and adding AMR's $19B pension liability on top of that will just speed up his inevitably having to get a bailout from Congress. He's just trying to make the pain as minimal as possible for the PBGC - which, after all, is his job.

[Edited 2012-02-02 10:42:51]
 
AAIL86
Posts: 425
Joined: Wed Feb 09, 2011 6:00 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:49 pm

Quoting mogandoCI (Reply 7):
EWR is physically closer to Manhattan than JFK. Only passengers from Nassau or Suffolk counties find EWR particularly burdensome.

C'mon. 90 percent of us on here have either lived in or visited New York. We know what the deal is and no need to start that flame war again. The point is that AA should market their best asset in the area more aggressively.
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
jfk777
Posts: 5861
Joined: Tue Aug 22, 2006 7:23 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:49 pm

Quoting SonomaFlyer (Reply 2):
Alot of their international growth strategy hinges on appropriate a/c. To effectively compete will likely require modernizing the 767's and rotating them to where they'll make the most cash (if that isn't the case already). Their order for 773ERs isn't that large and I don't think would support a lot of long haul expansion. Perhaps someone in the know can chip in on how well they utilize their 772ER fleet...

They have 10 773ER's on order and by stopping New Dehli they will have 2 777-200ER available. IF we assume each route takes 2 777 then 6 new routes or frequencies could be added. LAX to Peking, DFW to Hong Kong could be another. South Africa could be a great expansion for AA, Miami is a great gateway for Johannesberg and CapeTown.
 
tommytoyz
Posts: 1195
Joined: Thu Jan 18, 2007 9:08 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 6:52 pm

Quoting commavia (Reply 8):
He's just trying to make the pain as minimal as possible for the PBGC - which, after all, is his job.

Exactly. He's making it as hard as possible for AMR to transfer liabilities. He basically said as much as necessary, but not more than necessary.

On the OP question of foreign expansion, if the PBGC seizes or liens foreign assets, that complicates foreign expansion, no? For instance if AA wants to open overseas maintenance facilities or has LHR slots or ground equipment, the PBGC can put liens on those foreign assets because the PBGC, being a US federal agency would not be denied that request by foreign governments, I suppose. The US government has a long arm and the PBGC head has shown he intends to use it, if necessary.
 
AADC10
Posts: 1507
Joined: Sat Nov 13, 2004 7:40 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:02 pm

This is all finance duckspeak. All of the majors say this because that is the "new" business plan since the current business model is clearly broken. They hire a big name consultant, they have mass layoffs and they announce a new business model to raise fares. These are moves that investors love.

Comically enough, the appeal of international is the lack of free market competition. International faces little LCC competition and on some routes, tight restrictions. The weakness of the plan is that UA and DL were built on the carcass of PA and AA fed on the remains of TW. PA in particular collapsed because of the lack of domestic feed so there is clearly a limit to the amount that domestic can really be cut.
 
kiwiandrew

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:04 pm

The growth will need to be 'disproportionately international'. Apart from Latin America AA barely has an international network. 3 cities in Asia, and 9 ( year round ) in Europe do not make a competitive network. No doubt , at this point someone will chip in with "But they have JV's so they don't need a network of their own" as if that solves everything. Well, DL and UA both have pretty major JVs, but they also have pretty major networks of their own.

One thing that has concerned me with AA is their over-reliance on the one area where they do have an major international network. If the Latin America market went into a tailspin next week AA would be much more vulnerable than either DL or UA. Yes, it is great for AA that they have more eggs than anyone else in the Latin American basket, but they really should have eggs in other baskets as well. If the ash cloud scenario from last June had played out only a little differently we could have seen significant long term closures of major airports in Buenos Aires, Sao Paulo and Rio ( and when I say 'long term' don't forget that Bariloche was closed for months). Obviously this would have a devastating effect on local carriers, but it would have also been a major blow for AA, while being painful, but far less so for UA and DL as their networks are more balanced.


To ensure the future health of the airline AA will need to grow internationally, and it will need to grow into areas which it has previously ignored or underserved.

[Edited 2012-02-02 11:22:48]
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:07 pm

I haven't read through all of the proposals for the work groups yet, but in the end, what's the guess on a relaxation of the time limits on flights that the pilots have held onto, effectively ruling out what could very well be lucrative international routes for AA in the future?
International Homo of Mystery
 
washingtonian
Posts: 749
Joined: Sat Sep 04, 2010 5:56 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:10 pm

Here are some starting ideas:
MIA-TLV
MIA-Cape Town or Joburg
MIA-NRT
 
tommytoyz
Posts: 1195
Joined: Thu Jan 18, 2007 9:08 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:13 pm

Quoting AADC10 (Reply 12):
This is all finance duckspeak

How many flights is PA operating today? Or any number in a long list of airlines no longer in existence? THese dangers are not trivial, IMHO. AMR could join PA in airline heaven. They are in a tough spot.
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:15 pm

Quoting AAIL86 (Reply 9):
C'mon. 90 percent of us on here have either lived in or visited New York. We know what the deal is and no need to start that flame war again. The point is that AA should market their best asset in the area more aggressively.

I actually live in Manhattan. It's no flame war because fact is from midtown Manhattan, the order closest to furthest is LGA->EWR->JFK, and from Financial District Manhattan, EWR/LGA is nearly equi-distant.

The perceived "preference" of JFK is 3 airlines hubbing there instead of 1 in EWR. If B6 hypothetically hubs in EWR instead of JFK, the 2 airports would have nearly identical passenger counts.
 
AAIL86
Posts: 425
Joined: Wed Feb 09, 2011 6:00 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:20 pm

Quoting washingtonian (Reply 15):
MIA-TLV
MIA-Cape Town or Joburg
MIA-NRT
JFK-BER (75L)
JFK-AUH (772) (expand EY codeshare)
MIA-HEL (763) (year-round- makes more sense then ORD)
MIA-BER (763)
MIA-LOS (763 or 772)
DFW-PEK/PVG (772)
DFW-MAN (763) (again, with JBA)
DFW-BNE/MEL (789) (after SYD is nonstop both directions)

[Edited 2012-02-02 11:23:41]

[Edited 2012-02-02 11:32:14]

[Edited 2012-02-02 11:35:38]

[Edited 2012-02-02 11:37:38]
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:21 pm

Quoting AADC10 (Reply 12):
AA fed on the remains of TW.

Other than Heathrow, which anyone with enough cash can gain access to now, what international routes from TW did AA capitalize on? Other than Spain, I'm hard pressed to come up with any.

Quoting kiwiandrew (Reply 13):
at this point someone will chip in with "But they have JV's so they don't need a network of their own" as if that solves everything. Well, DL and UA both have pretty major JVs, but they also have pretty major networks of their own.

I still can't believe that AA let DL establish a beach head in Australia, instead relying on their codeshare with QF.
International Homo of Mystery
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:29 pm

Quoting kiwiandrew (Reply 13):
One thing that has concerned me with AA is their over-reliance on the one area where they do have an major international network.

While I don't disagree with you one bit, it's interesting to note that Delta is more "reliant" (in terms of ASMs as % of system) on Europe than AA is on Latin America. And frankly, these days, I'd much rather be "over-exposed" to Latin America than Europe. But yes - AA definitely needs to grow and diversify their international network.
 
iceberg210
Posts: 131
Joined: Sun Dec 18, 2005 12:11 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:31 pm

Quoting commavia (Reply 1):
Well, that isn't quite what the plan said. The plan said AMR anticipates increasing departures by 20% by 2017. I suspect that the vast majority of that jump in departures, however, will be from more flying with smaller jets, as Horton's and others' comments have alluded to.

Maybe I'm just a bit pie in the sky here, but why haven't any of the pilot unions held fast to the scope clauses that limit flying of 50-70 seaters, but then gave up ground on the pay scale for 90-120 seat planes to make the labor cost on them much more competitive. Then you'd get some regional work moving over to that small mainline, which would be in the union's best interest, and I would think the airlines would love it, as even 70 seater economics are a tad iffy now, whereas 90-120 looks a lot better.

Just a thought...
Erik Berg (Foster's is over but never forgotten)
 
AA767400
Posts: 1892
Joined: Tue Jan 23, 2001 2:04 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 7:48 pm

Quoting mogandoCI (Reply 17):
I actually live in Manhattan. It's no flame war because fact is from midtown Manhattan, the order closest to furthest is LGA->EWR->JFK, and from Financial District Manhattan, EWR/LGA is nearly equi-distant.

The perceived "preference" of JFK is 3 airlines hubbing there instead of 1 in EWR. If B6 hypothetically hubs in EWR instead of JFK, the 2 airports would have nearly identical passenger counts.

Sorry, but EWR is not always that convienent from everywhere. Just certain parts of Manhattan it is. If you're in the UES for example, it's easier to get to LGA, and even JFK than it is to EWR. EWR is a mess to get to with traffic through the tunnels. And the PATH trains sucks. Midtown to EWR can be fast at very few times of the day. Now if you're a real house wife of New Jersey, then EWR is great!

We'll see what routes AA can bring online as a leaner company. Right now it's all speculation.
"The low fares airline."
 
migair54
Posts: 2144
Joined: Thu Jun 14, 2007 4:24 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 8:03 pm

I would like to see them to start more flights to Cuba from MIA, DFW and JFK.
 
David_itl
Posts: 5969
Joined: Wed Jun 27, 2001 7:39 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 8:11 pm

Quoting AAIL86 (Reply 18):
DFW-MAN (763) (again, with JBA)

No way that will happen. There's a greater likelihood of MIA-MAN starting or shutting any potential UA service on ORD-MAN by adding a 2nd daily service.
 
mogandoCI
Posts: 1247
Joined: Thu Jun 04, 2009 2:39 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 8:12 pm

Quoting AA767400 (Reply 22):
EWR is a mess to get to with traffic through the tunnels. And the PATH trains sucks.

People take NJTransit not PATH. LGA doesn't even have a rail option.

But we're digressing here.
 
User avatar
par13del
Posts: 6688
Joined: Sun Dec 18, 2005 9:14 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 8:31 pm

I also believe this is no different than what DL did when they emerged, try to expand international and reduce domestic, my issue is I'm still wating for the shoe to fall for all those folks who fly mainline on the international leg inbound expecting the same level of service only to get stuck on a RJ with who know what name operating as DL.

AA may have a leg up on the others since Eagle has always been recognized as an AA brand, except all indications are that they intend to abandon the Eagle brand as the only regional, so expect AA to do with DL and UA and will continue to wait for the fall, no way I see AA scope going lower than the other legacies that will allow AA to not use regionals.
 
AAIL86
Posts: 425
Joined: Wed Feb 09, 2011 6:00 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 8:45 pm

Quoting david_itl (Reply 24):
No way that will happen. There's a greater likelihood of MIA-MAN starting or shutting any potential UA service on ORD-MAN by adding a 2nd daily service.

People didn't think that Delta would expand internationally after their bankruptcy like they did. But credit to Delta management, they made bold moves to expand their international offerings. Now DFW is not as well postioned for service to Europe as ATL is, but AA need to get serious and open new international routes. As the AA/BA/IB JBA matures, AA will have to look at new service agressively, and routes like DFW-MAN should be considered.
The way to see by faith is to shut the eye of reason - Benjamim Franklin
 
Sydscott
Posts: 3081
Joined: Thu Oct 30, 2003 11:50 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 9:05 pm

Quoting AeroWesty (Reply 19):
I still can't believe that AA let DL establish a beach head in Australia, instead relying on their codeshare with QF.

Why? Realistically an AA service on top of QF's double daily SYD-LAX, daily MEL-LAX, 6 weekly BNE-LAX, daily AKL-LAX, soon to be daily SYD-DFW and daily QF/JQ SYD-HNL doesn't add much to the alliance. QF's hard product on the A380's is also superior to anything AA can put on the route and the trans-pac route has been a bit of a bloodbath up until this year where it went from one of QF's most profitable routes to having DL and Virgin come in and make it unprofitable. It's at about breakeven to small profit according to QF for the current year.

The possibility I can see for AA in this area of the world is to do something like United is doing and do a DFW-AKL-MEL route with their 77W. They could access JQ and QF feed in both AKL and MEL along with complementing the QF A332 service to LAX by adding another north American destination. Either that or wait for DFW-SYD to grow enough to warrant a second daily service and stick a 77W in to complement the QF service.
 
MAH4546
Posts: 24594
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 9:08 pm

In the short term I can see LAXSYD (yes, LAXSYD, in ATI with QF on the new 77W), LAXPEK, DFWICN, MIANRT, ORDBER and MIAMXP.
a.
 
User avatar
totesen
Posts: 74
Joined: Sun Dec 07, 2008 3:50 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 9:20 pm

Quoting EricR (Thread starter):
his plan is not about shrinkage, "but renewal and growth".

Mexicanad did the same thing, new planes, new livery, new destinations and look at them now   although, something very troubling/corrupt happened when they went down. and the mess is still here in México
Follow me on Twitter: www.twitter.com/totesen
 
ghifty
Posts: 885
Joined: Sun Jul 25, 2010 9:12 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 9:42 pm

Disproportionately international? Just how disproportionate? To the same extremity as Pan Am/TW?

I assume that they're shrinking their domestic presence in response to regional carriers gaining prominence. This is funny, because the rush for domestic presence is what killed many of the older airlines that got merged into.
Fly Delta Jets
 
ORDJOE
Posts: 648
Joined: Wed Aug 11, 2010 2:27 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 10:21 pm

ORD to Berlin now that AB is coming into OW. DFW to PEK or PVG. Maybe ORD-GRU or GIG. They should try to get some of the Intra asia fifth freedom flights UA and DL have. MIA-NRT once the 787s come in I could see doing very well.
 
MAH4546
Posts: 24594
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 10:32 pm

Quoting ordjoe (Reply 32):

ORD to Berlin now that AB is coming into OW. DFW to PEK or PVG. Maybe ORD-GRU or GIG. They should try to get some of the Intra asia fifth freedom flights UA and DL have. MIA-NRT once the 787s come in I could see doing very well.


MIANRT does not need a 787 and rumor is that AA is studyingit for the 77W. 787 is too small. It needs a large Y cabin for the lower-yielding traffic heading primarily to Japan and the Phillipines. Meanwhile higher yielding traffic, of which there is sufficient to Hong Kong, Taipei, and Singapore, can fill J.
a.
 
User avatar
STT757
Posts: 13222
Joined: Tue Mar 28, 2000 1:14 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 10:41 pm

Quoting AA767400 (Reply 22):
And the PATH trains sucks.

PATH doesn't go to EWR, yet, however when they do it will run from EWR to the gorgeous Santiago Calatrava transit hub at the World Trade Center. That's a great way to enter a great city.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
jasoncrh
Posts: 362
Joined: Wed Jun 08, 2005 10:29 pm

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 10:49 pm

There's 3.7 PDEW MIASIN and 6 PDEW MIATPE. HKG is slightly higher at around 20PDEW. MIANRT is 28PDEW. Still kind of small to fill even a 787, even with the flows, most of which already have many options to get from SA to the many destinations in Asia.

Quoting mah4546 (Reply 33):
MIANRT does not need a 787 and rumor is that AA is studyingit for the 77W. 787 is too small. It needs a large Y cabin for the lower-yielding traffic heading primarily to Japan and the Phillipines. Meanwhile higher yielding traffic, of which there is sufficient to Hong Kong, Taipei, and Singapore, can fill J.
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 11:15 pm

Quoting iceberg210 (Reply 21):
Maybe I'm just a bit pie in the sky here, but why haven't any of the pilot unions held fast to the scope clauses that limit flying of 50-70 seaters, but then gave up ground on the pay scale for 90-120 seat planes to make the labor cost on them much more competitive. Then you'd get some regional work moving over to that small mainline, which would be in the union's best interest, and I would think the airlines would love it, as even 70 seater economics are a tad iffy now, whereas 90-120 looks a lot better.

That is exactly the kind of compromise I think AA and the APA have the potential to come to, and if they do, it could be a massive and positive precedent to set for the industry and commercial pilots overall, which is precisely what the APA always says it wants to do.

Quoting ghifty (Reply 31):
Disproportionately international? Just how disproportionate? To the same extremity as Pan Am/TW?

I would say they are going to aim to be roughly proportionally international to where Delta and United are. In the last decade, both of those airlines have shifted lots of mainline capacity from domestic and international, and replaced lots of that displaced domestic mainline capacity with regional operators. AA now wants to do the same thing.

Quoting ghifty (Reply 31):
I assume that they're shrinking their domestic presence in response to regional carriers gaining prominence.

I think it's more just purely that the domestic market is not nearly as profitable. It's much more competitive with many more airlines, and much lower fares. Thus, it's logical why Delta and United have moved more and more of their system capacity out of that market and into international markets, and why AA wants to follow suit.
 
CNForever
Posts: 66
Joined: Thu Apr 07, 2011 1:24 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 11:20 pm

Quoting mah4546 (Reply 29):

In the short term I can see LAXSYD (yes, LAXSYD, in ATI with QF on the new 77W), LAXPEK, DFWICN, MIANRT, ORDBER and MIAMXP.

And what about CNF-JFK ?

What do you think ?

Rgds
 
User avatar
STT757
Posts: 13222
Joined: Tue Mar 28, 2000 1:14 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 11:20 pm

Quoting washingtonian (Reply 15):
MIA-TLV

Unfortunately AA's bankruptcy does little to change their judgement that stands against them with regards to TWA's former Israeli employees. I seem to recall it's something ridiculous like $40 million, something not worth paying for the rights.
Eastern Air lines flt # 701, EWR-MCO Boeing 757
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 11:45 pm

Quoting sydscott (Reply 28):
Why? Realistically an AA service on top of QF's double daily SYD-LAX, daily MEL-LAX, 6 weekly BNE-LAX, daily AKL-LAX, soon to be daily SYD-DFW and daily QF/JQ SYD-HNL doesn't add much to the alliance. QF's hard product on the A380's is also superior to anything AA can put on the route and the trans-pac route has been a bit of a bloodbath up until this year where it went from one of QF's most profitable routes to having DL and Virgin come in and make it unprofitable. It's at about breakeven to small profit according to QF for the current year.

Here's my belief: If AA had been the one to start LAX-SYD instead of DL, it would have disadvantaged DL, SkyTeam, and Virgin Australia from the start, plus the DL/VA alliance wouldn't be as strong if DL had been shut out of the market.

Second, I'm not totally convinced about the "metal neutral" and alliance arguments. There's obviously a healthy demand for flights by AAdvantage members to Australia but who can't use upgrade instruments on QF (can AA members use their miles to upgrade on QF yet?), and very well may use another carrier where they can use miles to upgrade or for redemptions outright. Plus you always lose opportunities by letting someone else do your flying, which is why AA still flies to Heathrow, even though BA flies on every single route AA does, except RDU. How many seats does AA sell on QF's planes vs. DL selling on their own single flight each day?

Third, it would have pushed AA and their pilots to the wall in regards to allowing ULH flights, that frankly, AA let the pilots sit in the driver's seat in regards to with limited side letters to the contract. Sorry, but AA was simply weak-knee'd when it came to getting this settled with the pilots union.

Fourth and last, had it been AA instead of DL flying the new service to Australia, my belief is that prices wouldn't have been as cut-throat. AA couldn't afford it, realistically, and they might have been kinder to their brethren on the route.
International Homo of Mystery
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Thu Feb 02, 2012 11:53 pm

Quoting AeroWesty (Reply 39):
Here's my belief: If AA had been the one to start LAX-SYD instead of DL, it would have disadvantaged DL, SkyTeam, and Virgin Australia from the start, plus the DL/VA alliance wouldn't be as strong if DL had been shut out of the market.

How do you figure that? How would AA entering the LAX-SYD market have disadvantaged any other airline - Delta or otherwise?

For starters, any new LAX-SYD flight AA would hypothetically have started would now be covered by the ATI/JV with QANTAS, which is to say that since it would be highly unlikely that either of those partners would want to see capacity dumped on the route and fares plummet (as they have), any hypothetical AA flight likely would have been in place of, not in addition to, one of QANTAS' existing flights. Thus, no real major net gain in capacity to persuade Delta to stay out, and no effective new competitor since AA and QANTAS already jointly operate all their flights LAX-SYD anyway.

I honestly don't think AA entering LAX-SYD would have had any impact whatsoever on Delta's decision to enter the market. Delta wanted in on this route one way or another - not to make money (which I doubt they are), I don't think, but to be able to serve it because its prestigious and its a reasonably large business and tourism market from the U.S. That was going to happen one way or another, so why would AA have even bothered spending huge money flying a route that was always virtually guaranteed to deliver suboptimal returns relative to the alternative (letting the specialist QANTAS serve the route for them)?

Quoting AeroWesty (Reply 39):
Second, I'm not totally convinced about the "metal neutral" and alliance arguments. There's obviously a healthy demand for flights by AAdvantage members to Australia but who can't use upgrade instruments on QF (can AA members use their miles to upgrade on QF yet?), and very well may use another carrier where they can use miles to upgrade or for redemptions outright.

Highly unlikely. Any AAdvantage member who flies enough to be really concerned about upgrades is probably one who isn't going to fly another carrier just to get one - particularly when you consider that many of the highest-yielding and most profitable customers in the category you describe are most likely often flying in at least paid J anyway.

Quoting AeroWesty (Reply 39):
Plus you always lose opportunities by letting someone else do your flying, which is why AA still flies to Heathrow, even though BA flies on every single route AA does, except RDU.

Again - how? How is AA losing any opportunity by not flying to a market they haven't flown to in 20 years? They are far better off letting their partner, which has a far stronger, more established and more competitive presence in the market do the work for them - and AA can share in the profits.

Quoting AeroWesty (Reply 39):
How many seats does AA sell on QF's planes vs. DL selling on their own single flight each day?
AA sells tons of seats on QANTAS' 4-5 daily flights from LAX.

Quoting AeroWesty (Reply 39):
Third, it would have pushed AA and their pilots to the wall in regards to allowing ULH flights, that frankly, AA let the pilots sit in the driver's seat in regards to with limited side letters to the contract. Sorry, but AA was simply weak-knee'd when it came to getting this settled with the pilots union.

Weak-kneed? What was AA supposed to do? It's called a contract for a reason - it's legally binding, and AA cannot unilaterally change it and force pilots to work more hours. If the pilots say no, it's not happening. With the costs and inefficiencies of their pilot contract already stacking up, what was AA supposed to give up in order to get the pilots to agree to longer flights?

[Edited 2012-02-02 15:58:36]
 
SESGDL
Posts: 2615
Joined: Sat Jan 13, 2001 6:25 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:20 am

Quoting mah4546 (Reply 33):

MIANRT does not need a 787 and rumor is that SA)">AA is studyingit for the 77W. 787 is too small. It needs a large Y cabin for the lower-yielding traffic heading primarily to Japan and the Phillipines. Meanwhile higher yielding traffic, of which there is sufficient to Hong Kong, Taipei, and Singapore, can fill J.
Quoting JasonCRH (Reply 35):
There's 3.7 PDEW MIASIN and 6 PDEW MIATPE. HKG is slightly higher at around 20PDEW. MIANRT is 28PDEW. Still kind of small to fill even a 787, even with the flows, most of which already have many options to get from SA to the many destinations in Asia.

Quite the discrepancy here between wishful thinking and actual numbers. If MIA-Asia were so lucrative and in such high demand, it would've been done before. It hasn't, for a reason. It will be a low-yield, longhaul, low-margin mess. This route would/will be entirely reliant on Latin American connections, the vast, vast majority of which can already be accomplished over DFW, IAH, ATL, ORD, and IAD presently.

Jeremy
 
AeroWesty
Posts: 19551
Joined: Sat Oct 30, 2004 7:37 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:21 am

Quoting commavia (Reply 40):
How do you figure that? How would AA entering the LAX-SYD market have disadvantaged any other airline - Delta or otherwise?

Added more capacity to the market. There are only so many seats a route can absorb.

Quoting commavia (Reply 40):
particularly when you consider that many of the highest-yielding and most profitable customers in the category you describe are most likely often flying in at least paid J anyway.

Right, so the best use of SWUs/eVIPs for many would be taking the troops on holiday when you're spending your own cash. I look at AA and say, "well, they don't fly here, they don't fly there", and so far have given the bulk of my business to Star Alliance. I'm not the only one making that kind of decision.

Quoting commavia (Reply 40):
They are far better off letting their partner, which has a far stronger, more established and more competitive presence in the market do the work for them

Then why does AA still fly to Heathrow? Hey, just let BA do it.

Quoting commavia (Reply 40):
what was AA supposed to give up in order to get the pilots to agree to longer flights?

Side letters were done, you know that, I know that. AA has obviously been in a position to give up something to gain a higher goal. They let themselves get strangled internationally, that other airlines didn't allow, yes, making them weak-knee'd in comparison when it came to negotiations with their pilots.
International Homo of Mystery
 
ORDJOE
Posts: 648
Joined: Wed Aug 11, 2010 2:27 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:22 am

Quoting commavia (Reply 40):
Highly unlikely. Any AAdvantage member who flies enough to be really concerned about upgrades is probably one who isn't going to fly another carrier just to get one - particularly when you consider that many of the highest-yielding and most profitable customers in the category you describe are most likely often flying in at least paid J anyway.

Go on to flyertalk and you will realize most of the highly yield PAX will say staying with your "home" airline is usually best, status goes a longer way and people view their upgrade certs as almost their own children. You also have to remember a lot of these upgrade certs are being used by people paying for the Full J ticket to get into F. As far as I know you can not upgrade a paid ticket to the next cabin on QF with either AA miles or eVIP, you can only book an F or J ticket.

Quoting commavia (Reply 40):
Weak-kneed? What was AA supposed to do? It's called a contract for a reason - it's legally binding, and AA cannot unilaterally change it and force pilots to work more hours. If the pilots say no, it's not happening. With the costs and inefficiencies of their pilot contract already stacking up, what was AA supposed to give up in order to get the pilots to agree to longer flights?

AA is supposed to get a contract that allows them to operate and grow. I see this as a lose lose, pilots who do not mind ULH routes miss out on the extra pay that comes with them, and the company loses out on opening new. While AA's hands were tied when they signed the deal, I hope they make better decisions with regards to future contracts. I do feel bad for those employees that will lose pensions and other compensation, but it could be worse. I assume ATA employees were left with absolutely nothing.
 
MAH4546
Posts: 24594
Joined: Wed Jan 24, 2001 1:44 pm

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:23 am

Quoting JasonCRH (Reply 35):
There's 3.7 PDEW MIASIN and 6 PDEW MIATPE. HKG is slightly higher at around 20PDEW. MIANRT is 28PDEW. Still kind of small to fill even a 787, even with the flows, most of which already have many options to get from SA to the many destinations in Asia.

And? I know the numbers, yours are a bit off. You have to throw in FLL and PBI (PBI won't add much; FLL will, notably to HKG), not to mention Japan traffic especially leaks heavily to MCO. Non-stop service will easily stimulate between 100 and 200% over five years. Plus, average fares to SIN, HKG and TPE are good.

It will work with a 77W and tats exactly what I expect AA/JL to use.
a.
 
caliboy78
Posts: 57
Joined: Sun Apr 10, 2011 8:06 pm

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:32 am

I think AA will start their presence in Africa. Maybe increase the asia presence and more deep europe presence. I also think that AA might build a nice little getaway to Mexico (besides the obvious AS codeshare) and key markets in central America from LAX. I don't think they can't be any stronger than AA already is in south America but who knows what's up AA marketing/strategy sleeve. That's just my thoughts.
TAAke pride on what you do and do it well.
 
commavia
Posts: 9781
Joined: Mon Apr 25, 2005 2:30 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:40 am

Quoting AeroWesty (Reply 42):
Added more capacity to the market. There are only so many seats a route can absorb.

Right - so why would AA bother dealing with that?

Quoting AeroWesty (Reply 42):
Right, so the best use of SWUs/eVIPs for many would be taking the troops on holiday when you're spending your own cash. I look at AA and say, "well, they don't fly here, they don't fly there", and so far have given the bulk of my business to Star Alliance. I'm not the only one making that kind of decision.

Okay - that may be true for some people. But overall QANTAS carriers far, far more people from the U.S. to Australia than any other airline, and AA gets to take advantage of all of that, and capture a portion of that revenue.

Quoting AeroWesty (Reply 42):
Then why does AA still fly to Heathrow? Hey, just let BA do it.

Because Heathrow is now Sydney - it's not that simplistic. AA has a massive critical mass at Heathrow, can serve Heathrow from numerous U.S. hubs and gateways, and the majority of AA's flights to Heathrow are 8-9 hours or less. Sydney, on the other hand, would be a market where the AA brand is much weaker, and where AA would have to dedicate a whole lot more resources into a far longer, costlier, and more fuel-intensive flight.

In short: I believe AA has the potential to generate superior returns at Heathrow by operating its own robust schedule alongside that of its joint business partner BA, whereas I do not believe the same is true for Australia, where jointly marketing/selling QANTAS-operated flights is likely to be more profitable for AA.

Quoting AeroWesty (Reply 42):
AA has obviously been in a position to give up something to gain a higher goal.

Well - again - you claim it's a higher goal. AA obviously didn't think so. What did the pilots union want in return for longer haul flying? Was that thing the pilots wanted going to cost the company more than the potential profits (if any at all) they might make from fling to Sydney? Probably not.

Quoting AeroWesty (Reply 42):
They let themselves get strangled internationally, that other airlines didn't allow, yes, making them weak-knee'd in comparison when it came to negotiations with their pilots.
Quoting ordjoe (Reply 43):
While AA's hands were tied when they signed the deal, I hope they make better decisions with regards to future contracts.

You say "decisions" and "allow" as if AA gets to decide what they will and won't let the pilots negotiate over. The pilots said no - the company didn't "allow" them to do so. The pilots were fully within their rights to do so, and the company couldn't do anything about it.

I suppose you could argue that AA was undervaluing the long-term strategic gain from getting long haul flying when weighing the cost-benefit analysis of what the pilots wanted in return for giving that up to the company. You may be right - I don't know - but the company obviously felt that what the pilots were asking for in return would have cost them more than what AA was gaining.
 
Sydscott
Posts: 3081
Joined: Thu Oct 30, 2003 11:50 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:50 am

Quoting commavia (Reply 40):
Delta wanted in on this route one way or another - not to make money (which I doubt they are)

They weren't making money. Nor was Virgin, Qantas or United at the beginning. The new services by DL and Virgin Australia turned what was once highly profitable routes for United and Qantas into a loss maker. (At least for Qantas it was) The fact that DL and Virgin have turned around and have ATI for co-operation on the route supports this. QF have announced that the Pacific Route is back turning a profit for them and Virgin have stated that their long haul arm is now profitable including their LAX services so it's probably safe to assume UAL and DL are also at worst breaking even at this point. I would compare LAX-Australia with LAX-HKG in that I can't see the point in AA operating its own metal on what would be a marginal service for them when their partner has multiple dailies and has been highly effective in the market.

Quoting AeroWesty (Reply 42):
Added more capacity to the market. There are only so many seats a route can absorb.

Unless QF drops its second daily 744 to SYD I can't see AA starting LAX-SYD. DFW-SYD I can easily see them doing and it would also tie in better with other potential 77W routes out of DFW.
 
AA767400
Posts: 1892
Joined: Tue Jan 23, 2001 2:04 am

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:53 am

Quoting STT757 (Reply 34):
PATH doesn't go to EWR, yet, however when they do it will run from EWR to the gorgeous Santiago Calatrava transit hub at the World Trade Center. That's a great way to enter a great city.

My bad, NJ transit. Which in my opinion is horrid to get to EWR on. But as was stated before, let's not digress Mr. NJ757.

Quoting mah4546 (Reply 44):
It will work with a 77W and tats exactly what I expect AA/JL to use.

Can the 77W accomplish MIA-NRT year round without any weight penalties? And as far as AA on LAX-SYD, I just don't see the advantage. Maybe replace QF on LAX-AKL, but really not much point with JV/ATI.

The 77W is for increase in current routes. I don't see many new routes being opened until they clean house, which, from the looks of it seems to be a drawn out blood bath.
"The low fares airline."
 
blueman87
Posts: 113
Joined: Sat Aug 22, 2009 4:29 pm

RE: AA: Growth To Be "Disproportionally International"

Fri Feb 03, 2012 12:59 am

Quoting mogandoCI (Reply 7):
EWR is physically closer to Manhattan than JFK. Only passengers from Nassau or Suffolk counties find EWR particularly burdensome.

In correct my friend i Live in westchester County i do find EWR a burdensome i prefer JFK Over EWR anyday
B6 T5 JFK DL T2/3 JFK