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klakzky123
Posts: 689
Joined: Mon Jul 04, 2016 4:05 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Mon Aug 07, 2017 11:48 pm

atl100million wrote:
klakzky123 wrote:
compensateme wrote:

It really isn't surprising AA left LAX/MSP; over the past year, while loads remained strong, its average fare was around $170 -- similar to UA and SY's performance, but AA likely felt it could use its LAX resources elsewhere. The good news is that AA's withdrawal should help stabilize the market, which was clearly hurt from the level of competition (against demand) as well as NK upgauging to the 321. For comparison's sake, over the last four quarters, SY averaged higher fares to MCO, and NK FLL, than they did to LAX.

DL's clearly the 800 lb. gorilla in the market, commanding greater than a 40% premium over AA, UA & SY.


Yeah something had to give. Fares to LAX have been absurdly low. Its not that difficult to find $200 round trip fares on DL either. LAX has been a bloodbath and DL has been committed to matching fares indefinitely. I guess AA wasn't getting enough connecting traffic to justify the flight. If it was just transporting passengers paying for rock bottom MSP-LAX itineraries, there's no point to the flight. That plane can be used somewhere else. I suppose they could've switched to a regional jet like they did with Miami but again that requires a solid level of connection traffic which may or may not exist. Leisure markets from MSP can get brutally competitive with both DL, SY, NK (and sometimes WN and F9). Plus AS expanded to several cities in the west so they're bound to keep fares relatively low.

Its great for consumers though. As much as MSP remains a fortress hub, DL has ceded quite a bit of the leisure market to others.


The ultra low fare environment was in LAX-MSP before AA chose to show up. They simply decided to jump into a market in which DL doesn't chase every last ULCC passenger but the economics do work of adding larger and larger aircraft and selling a certain amount of seats at economy basic/ULCC competitive fares on top of operating the most frequency in the market.

AA doesn't have the market strength to compete in other carrier hubs against the legacy carrier and one or more ULCCs.

The same principle applies to just about any other legacy carrier hub market.


I agree. As I mentioned, AA needs a minimum level of connections via LAX in order to make the math on this flight work. O&D fares are just rock bottom right now so those have to be minimized. DL has the benefit of connections with feed from both ends so they're able to keep the O&D to an appropriate level and DL gets some absurd premiums regionally. The MSP-LAX flight might cost $200 but FAR-MSP-LAX might cost $700. I'm guessing AA just didn't get enough passengers from MSP connecting through LAX (and vice versa) and got caught with too many O&D passengers which made the economics of the flight fail.
 
MSPNWA
Posts: 3698
Joined: Thu Apr 23, 2009 2:48 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 1:52 am

klakzky123 wrote:
Yeah something had to give. Fares to LAX have been absurdly low. Its not that difficult to find $200 round trip fares on DL either. LAX has been a bloodbath and DL has been committed to matching fares indefinitely. I guess AA wasn't getting enough connecting traffic to justify the flight. If it was just transporting passengers paying for rock bottom MSP-LAX itineraries, there's no point to the flight. That plane can be used somewhere else. I suppose they could've switched to a regional jet like they did with Miami but again that requires a solid level of connection traffic which may or may not exist. Leisure markets from MSP can get brutally competitive with both DL, SY, NK (and sometimes WN and F9). Plus AS expanded to several cities in the west so they're bound to keep fares relatively low.

Its great for consumers though. As much as MSP remains a fortress hub, DL has ceded quite a bit of the leisure market to others.


I don't think there is such a thing as absurdly low fares from MSP. Average airfares are still very high. And if that's absurdly low, than quite a few markets out of LAX apply. LAX-MSP fares are low now, but it's not like the true bloodbaths in LAX-SEA, LAX-DEN, or LAX-MCO. Yet you don't see AA or anyone else exiting, particularly without even trying available smaller gauges. Simply put, this was a very weak attempt by AA, and that's surprising considering it's a good business market out of LAX. For them to quickly exit while UA remains is hard to believe.
 
blhp68
Posts: 244
Joined: Wed Sep 10, 2003 9:04 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 2:28 pm

MSPNWA wrote:
AA's LAX expansion from last summer isn't going so well. SEA, MCI, and OMA are pared back, and MSP is now completely gone. Disappointing to see AA leave the LAX-MSP route. Would have thought they would stick it out or at least switch to E75s before cutting it completely. Leaves a good-sized hole in their LAX network. Adding SLC-PHL while doing it is odd. Generally the flow is away from overflying hubs to uncompetitive markets and instead shifting to key competitive markets like LAX-MSP.


I suspect MCI will get dropped sooner rather than later. Currently 4 carriers on that route, super competitive.
 
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compensateme
Posts: 3279
Joined: Wed Jan 28, 2009 4:17 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 6:33 pm

atl100million wrote:
The ultra low fare environment was in LAX-MSP before AA chose to show up. They simply decided to jump into a market in which DL doesn't chase every last ULCC passenger but the economics do work of adding larger and larger aircraft and selling a certain amount of seats at economy basic/ULCC competitive fares on top of operating the most frequency in the market.

AA doesn't have the market strength to compete in other carrier hubs against the legacy carrier and one or more ULCCs.

The same principle applies to just about any other legacy carrier hub market.


AA has a very strong consumer base at LAX and launched LAX/MSP targeting primarily LAX POS corporate traffic. While AA was successful in growing LAX/MSP, it was through cheap seats; the average fare in the market dropped while DL simultaneously grew its premium over AA/UA/SY to nearly 50% some quarters. Ultimately, with an average fare of around $170, it isn't surprising AA bowed out.

I think it's more surprising that UA has stayed in the market. UA has withdrawn from several markets that are stronger performers -- notably MSY (very similar in stage length to MSP), which, in its final year, drew average fares that were 20% higher than MSP. One can only assume the route is linked to corporate contracts important to the route as a whole.
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atl100million
Posts: 445
Joined: Tue May 23, 2017 1:28 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 7:02 pm

UA's average fares in MSP-LAX are about the same as AA's and about 40% less than what DL gets. MSP-LAX might have made more sense for AA and UA if they had moved before NK and Sun Country command so much traffic.

AA right is simply realizing that it has to start cutting some of the low performing routes in order to push its system financial performance up even if those routes are in major strategic markets. UA hasn't come to that conclusion yet.
 
Rdh3e
Posts: 3634
Joined: Wed Mar 30, 2011 2:09 pm

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 7:33 pm

atl100million wrote:
UA's average fares in MSP-LAX are about the same as AA's and about 40% less than what DL gets. MSP-LAX might have made more sense for AA and UA if they had moved before NK and Sun Country command so much traffic.

In the local market yes, but UA is getting better fares from it's flow customers and is carrying more of them. UA carrying 60% local whereas AA was at 80% local. Combine that with larger aircraft and you can see why AA was struggling.
 
ckfred
Posts: 5188
Joined: Wed Apr 25, 2001 12:50 pm

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 8:50 pm

I'm curious as to why AA is reducing ORD-FLL and ORD-PBI in November. That is when I would expect a slight increase in frequency. I know people with winter homes in south Florida who start flying down for weekends, basically from Halloween to Easter.
 
atl100million
Posts: 445
Joined: Tue May 23, 2017 1:28 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Tue Aug 08, 2017 10:21 pm

ckfred wrote:
I'm curious as to why AA is reducing ORD-FLL and ORD-PBI in November. That is when I would expect a slight increase in frequency. I know people with winter homes in south Florida who start flying down for weekends, basically from Halloween to Easter.


because AA and UA both dumped a huge amount of additional capacity into the market in response to ultra low cost carrier growth. NK is flying ORD-FLL 3X per day during the summer so AA and UA decided it had to do the same thing.

It is no surprise that fares tanked and AA wisely came to the conclusion that they can't chase market share at the cost of tens of thousands of dollars in losses per day in the market.

UA hasn't come to that conclusion.

AA also probably saw that the dirt cheap fares ORD-FLL were hurting ORD-MIA.
 
miaskies
Posts: 1268
Joined: Thu Jun 10, 2004 3:08 am

Re: OAG Changes 8/6/2017: UA Brings Back ORD-PNS; AA Exits MSP-LAX, Expands SLC-PHL

Wed Aug 09, 2017 5:07 pm

wenders825 wrote:
miaami wrote:
AA is moving some MIA flying over to Eagle, MIA-IAD down gauged to all Eagle. MIA-LIR all eagle except Sat, MIA-DTW one of three flights down gauged to Eagle

they should be all E175s too, no?


Yes all YX/Eagle 175 with 12F/64Y. So in some cases, actually an upgauge in F seats as oppose to the 8F on the 319.
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