CIDFlyer
Posts: 2103
Joined: Wed Apr 13, 2005 7:19 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:27 pm

Buffalomatt1027 wrote:
mikejepp wrote:
American's CEO said there is a list of 7 things that the airline is not planning on doing, no matter if times are good or bad.

Included are:

1. Expanding service to markets that don’t touch a hub.
2. New hubs.
3. Large aircraft order, not primarily for replacement.

https://www.forbes.com/sites/tedreed/2018/03/14/when-might-it-be-time-to-sell-american-airlines-shares-here-are-seven-potential-indicators/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix&yptr=yahoo#6189c3ea5100



If this is true .... Buffalo / BNIA should get a couple new routes from AA. Currently they only fly to Philly and Charlotte. Dallas seems like a good fit!


doesnt AA also fly BUF-ORD?
 
USPIT10L
Posts: 1998
Joined: Tue Mar 28, 2006 12:24 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:39 pm

They also fly DCABUF and BOSBUF, too.
It's a Great Day for Hockey!
 
iyerhari
Posts: 937
Joined: Sat Jun 01, 2013 4:25 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:43 pm

USPIT10L wrote:
They also fly DCABUF and BOSBUF, too.

BOS-BUF was discontinued last year and DL started the route almost instantly.
 
User avatar
keesje
Posts: 13032
Joined: Thu Apr 12, 2001 2:08 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:49 pm

Varsity1 wrote:
keesje wrote:
4. Aircraft order done in exchange for financing.

“These things all did happen in the past,” Parker said. “They aren’t going to happen again.


When did that happen?


Pan Am A300
AA A300
USAir A32X order
America West A32X order

Pretty much an Airbus thing, though Boeing has worked with some of its big foreign players: EK, Ryanair, Fly Dubai and Lion.


Air Canada, ordering their new 787/777 fleet, just after bankruptsy. And than there is the ExIm bank.
"Never mistake motion for action." Ernest Hemingway
 
User avatar
Super80Fan
Posts: 1525
Joined: Thu Jul 06, 2017 4:14 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:56 pm

IPFreely wrote:
9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.


His job is to make money for the company's owners. And despite your unsubstantiated claim, AA has a consistent and high quality product, both mainline and regional. If you want to see inconsistent and low quality, look no further than Endeavor. AA has also has no multi-day global shutdowns because their computers won't reboot properly.


Please tell me you are joking. Every single one of my Endeavor flights has been more pleasant than any of my recent AA flights.
RIP McDonnell Douglas
 
9w748capt
Posts: 1623
Joined: Sat Feb 02, 2008 10:27 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Thu Mar 15, 2018 11:59 pm

N505fx wrote:
9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.


I don't agree with this - nearly 175K revenue miles on AA last year and a very consistent experience - their policies and service have not disappointed and sometimes have even wowed. The only hiccup in my Exec Plat time has been the catering issue at LAX, but for those flights, they recovered pretty well with the boarding gate carts and such.


Cool - you must have escaped being jolted awake by a broken Concept D seat Dougie refuses to fix, nice job. Also, let us know how that goes for you next time you try to actually redeem your AA miles.
 
airzona11
Posts: 1495
Joined: Wed Dec 17, 2014 5:44 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 1:10 am

mikejepp wrote:
American's CEO said there is a list of 7 things that the airline is not planning on doing, no matter if times are good or bad.

Included are:

1. Expanding service to markets that don’t touch a hub.
2. New hubs.
3. Large aircraft order, not primarily for replacement.

https://www.forbes.com/sites/tedreed/2018/03/14/when-might-it-be-time-to-sell-american-airlines-shares-here-are-seven-potential-indicators/?utm_source=yahoo&utm_medium=partner&utm_campaign=yahootix&partner=yahootix&yptr=yahoo#6189c3ea5100


This seems like a very bottom dollar, sensible, and conservative approach. They have strong hubs and can still optimize schedules and cross fleet. Where would they invest in a new hub anyways? They have a healthy order book. Additionally, the widebody market is way oversold worldwide. There is life left in their current fleet. When there is a market downturn, the more conservative the better.
 
NYCVIE
Posts: 140
Joined: Mon Jul 04, 2016 11:01 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 1:25 am

iyerhari wrote:
BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!



Wasn't BOS-CDG a 752? If so I don't think it can be the aircraft going to PHL-BUD, it doesn't have the range.
 
acentauri
Posts: 242
Joined: Wed Jun 22, 2016 12:35 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 1:30 am

NYCVIE wrote:
iyerhari wrote:
BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!



Wasn't BOS-CDG a 752? If so I don't think it can be the aircraft going to PHL-BUD, it doesn't have the range.

PHL-BUD is a 763.
 
Buddys747
Posts: 285
Joined: Thu Jan 11, 2007 6:33 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 1:59 am

airbazar wrote:
iyerhari wrote:
Dominion301 wrote:

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);

BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!

Well they have to cut something if they are going to fit their entire operation under 1 roof at terminal B so my guess is that all of the above should be gone within a year or so.

I’ve been hearing BOS-MDT is gone for years now, and yet it’s still there!
 
iyerhari
Posts: 937
Joined: Sat Jun 01, 2013 4:25 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:35 am

Buddys747 wrote:
airbazar wrote:
iyerhari wrote:
BOS-CDG is gone and I feel will not come back. Too much competition on the route for AA to handle and I believe not worth it for them - AF, DL and 6F. I believe AA is using that aircraft to PHL-BUD. But in retrospect, there has always been a talk in the BOS forum how long the AAE routes are going to last from BOS on AA. e.g. DL and B6 serve PIT, B6 now serves SYR. The thought was that as soon as any carrier enters the route, AA would drop off the route (e.g. RDU, BUF) but AA has still kept them. How long, I do not know!

Well they have to cut something if they are going to fit their entire operation under 1 roof at terminal B so my guess is that all of the above should be gone within a year or so.

I’ve been hearing BOS-MDT is gone for years now, and yet it’s still there!

I just checked in Google flights traveling in on Monday Mar 22 and returning back Thu Mar 24 and AA is charging $1024 for the route. Traveling in 2 weeks out, AA is charging $710 for the flight! I believe AA will keep the flight as long as they have a premium and no other carrier (read B6 or DL) enter the route! Now, the same was being said about BOS-PIT too but AAE has still retained the flight.
 
77H
Posts: 1443
Joined: Mon Sep 19, 2016 11:27 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 4:16 am

MIflyer12 wrote:
77H wrote:

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H


That is gibberish. AA's hubs are in the in the biggest metro markets, so they have the most competition -- so they should just stay in those markets instead of trying to develop focus cities or new hubs (as DL has done with SEA and LAX)?

As for size of markets, you really should look at rankings of domestic O&D traffic by airport, and recognize where DL has hubs, and where AA operates. MSP is bigger than PHL. SLC (SLC!) is bigger than CLT. ATL is almost the size of ORD, but Delta at ATL is vastly bigger than AA at ORD.

Click on Domestic O&D Ranking at lower right https://orlandoairports.net/about-us/#t ... statistics


How is anything I said "gibberish"? Not once did I say that AA should look to focus cities or should stick to their hubs. I was simply explaining to another poster why I think DL makes use of focus cities to a greater extent than AA or UA. It is better situated to have focus cities because of the hubs they operate from. While AA and UA arguably hub in stronger, more valuable markets, the downside is those markets bring more competition. There is an opportunity cost associated with opening a focus city. Unless you order additional frames, you'd be taking frames away from the hubs which would ultimately impact marketshare at the hub market allowing inroads from the same competition that makes hubbing in a NYC, LA, CHI tough.

As for your comment on domestic O&D, I'm sure you're aware that CLT's primary function within the AA network is a connecting hub. And is it really surprising to you that DL's ATL hub O&D is nearly the same size as AA's ORD hub? They share the market with UA. Beyond that, I wasn't talking about airline specific O&D, I was talking about city/metro O&D as a whole. While DL's MSP hub may have a larger O&D than AA's PHL hub, marketshare potential is far higher for AA in PHL than it is for DL at MSP. Why? Because the Philadelphia metro population far exceeds MSP. Same goes for your example of DL's ATL vs AA's ORD O&D. ORD has more potential for AA than ATL does for DL. DL has a near run on the Atlanta market. Unless Atlanta grows by leaps and bounds, DL is already tapping its population base. Now consider Chicago. AA at best only taps .5 of Chicago's population base. Meaning that there is more potential for AA to gain marketshare in Chicago than DL in ATL. I would assume that this is largely what Parker is getting at. They are doubling down on their hubs, working to grab marketshare rather than explore new, uncharted territory. At the end of the day, if this strategy doesn't work for AA they can always change it a few years down the road. AUS, BOS and the like aren't going anywhere.

77H
 
flydude380
Posts: 259
Joined: Tue Nov 07, 2017 4:43 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:04 pm

Does non-hub flying include scrapping LHR-RDU and letting someone else have the corporate contract?
 
ScrantonUSC
Posts: 87
Joined: Wed Mar 15, 2017 2:49 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:16 pm

Yes, these discussions and approaches are extremely complex and hard to simplify. There are some in the camp of "Hubs make money, and airlines should strictly focus there". In a general numbers and data analysis, this is completely true and hard to argue against. However, at some point the desires and spending approach of the consumers need to considered, which is very hard to quantify when you you are obsessed with analytical data and $. An example of this is RDU, where AA and DL now have a fairly similar market share at 26% and 30% respectively. However, Delta offers 27 non-stop destinations compared to AA's 12. At some point the frequent flyers out of RDU will start to question why they fly with American, when Delta is much more likely to overfly their hubs and provide their RDU base with shorter and less complicated commute. I believe that this is happening now at RDU, and I believe the market share will continue to widen.

Who is right in the end? I have my opinions, but am still not 100% sure. I just wanted to give an example that every line of approach works up to a certain degree and then you have diminishing returns. The market provides the plateau for this.
 
tphuang
Posts: 2991
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:24 pm

While I agree that aa could do better and offer more non hub flights at rdu, they simply don’t have the resources at disposal as delta does.

My impression is that they are focused on affirming their position as top carrier in lax and not fall far behind ua in Chicago. In Chicago case, they don’t want to fall too far behind there since being a clear second largest legacy carrier means much less profit. And also toward making Dallas, phl and clt even more profitable. Everything else seems to be lower priorities.
 
jbs2886
Posts: 2112
Joined: Wed Apr 01, 2015 9:07 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:30 pm

ScrantonUSC wrote:
Yes, these discussions and approaches are extremely complex and hard to simplify. There are some in the camp of "Hubs make money, and airlines should strictly focus there". In a general numbers and data analysis, this is completely true and hard to argue against. However, at some point the desires and spending approach of the consumers need to considered, which is very hard to quantify when you you are obsessed with analytical data and $. An example of this is RDU, where AA and DL now have a fairly similar market share at 26% and 30% respectively. However, Delta offers 27 non-stop destinations compared to AA's 12. At some point the frequent flyers out of RDU will start to question why they fly with American, when Delta is much more likely to overfly their hubs and provide their RDU base with shorter and less complicated commute. I believe that this is happening now at RDU, and I believe the market share will continue to widen.

Who is right in the end? I have my opinions, but am still not 100% sure. I just wanted to give an example that every line of approach works up to a certain degree and then you have diminishing returns. The market provides the plateau for this.


Precisely. This was what I was pointing out above before a few posters jumped on me. Maybe its the attorney in me and I don't like definitive responses, but these comments that AA will never do focus cities is misguided. It is just not as simple as that - there are a lot of different dynamics in the industry.
 
User avatar
OzarkD9S
Posts: 5369
Joined: Tue Oct 23, 2001 2:31 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 2:57 pm

flydude380 wrote:

Does non-hub flying include scrapping LHR-RDU and letting someone else have the corporate contract?


LHR is the hub for that route via the JV with BA.
Finally headed to DORKFEST! Sept 7, STL-LAX-PHX-STL. :cloudnine:
 
WPvsMW
Posts: 2040
Joined: Thu Mar 23, 2017 7:30 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 6:41 pm

There's a trend: Exhibit 1, AA at JFK
viewtopic.php?t=1388865

Exhibit 2: AA at RDU. As AA grows CLT, RDU will shrink. As AA at RDU shrinks, DL at RDU will grow. That's how catchments work.

AA has circled the wagons at DFW, ORD, and CLT. Graphically:
http://www.anna.aero/2017/12/20/usb3-hu ... ourishing/
http://www.anna.aero/2017/07/13/america ... -10-years/

Note DL's growth at BOS, and the overall red-to-green ratio among the US3.
 
Austin787
Posts: 375
Joined: Fri Jun 17, 2016 11:39 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 8:07 pm

IPFreely wrote:
9w748capt wrote:
He might make the shareholders rich, but he sure as hell has no idea how to delivery a consistent, quality product. What a joke.


His job is to make money for the company's owners. And despite your unsubstantiated claim, AA has a consistent and high quality product, both mainline and regional. If you want to see inconsistent and low quality, look no further than Endeavor. AA has also has no multi-day global shutdowns because their computers won't reboot properly.

Would you still call AA's product "consistent" if you fly on a LAA A321 with power ports and PTV then connect to a LUS A321 with no power ports, no MCE, and no IFE?
And would you still call AA's product "quality" after you fly on a 737MAX with smaller than average lavatories, cramped seating, and no IFE? Or after flying a 763 with no PTV?
 
JayBCNLON
Posts: 318
Joined: Thu Aug 15, 2013 1:13 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 8:36 pm

I flew on AA’s 767 from JFK to BCN once and the IFE wasn’t working ... so the flight attendant whispered to me: “I can give you so much booze that you don’t even notice there is a seat in front of you.”
 
NWADTWE16
Posts: 646
Joined: Fri Jun 29, 2012 5:12 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Fri Mar 16, 2018 11:31 pm

To me it is clear AA has been racing to the bottom, and for the bottom tier pax for about a year or more now. Lots of little things I wont mention but were always very professionally handled before, but now a curt no, and this is a corporate partner situation, large scale.

Their prices make it clear they are aiming for low cost minded people period, and with that mentality comes "apparently" the thoughts that those clients don't need or care about seemless travel experiences, don't deserve AVOD, don't deserve even a non middle that can be reserved without a fee. The craziest thing I've seen from this outfit is charging for a reserved seat in First Class (which apparently they are downgrading to a horrible pathetic version under the same name soon). Everyone knows no airline overbooks first, so this is a direct shot at your actual premium clientele, to gouge. To me, that says everything about the "new" culture

Best of luck with it, wont catch me on even 1 plane
I haven't been everywhere, but it's on my list!
 
jetero
Posts: 4457
Joined: Sat Oct 11, 2014 3:45 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 1:47 am

cactus73 wrote:
jbs2886 wrote:
UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running ourt of new places to fly via their hubs..


Well, DL’s focus cities seem to undermine your argument. I’m not saying AA should do the same, but your argument is highly flawed.


Not flawed at all. UpNAWay is spot on. The reason they do focus cities is their second largest hub is roughly the same size as AA's fourth largest. Delta's largest and highest revenue generator is Atlanta. After that they don't have anything like a Chicago, Charlotte, or Miami. MSP, DTW, JFK, SLC, are all medium sized hubs. Because of this, they have gone the focus city route in BOS, SEA, and etc...and do some point to point international flying - mostly to their partner hubs in AMS and CDG.



Hahahahaha “anything like a Charlotte”?!
 
Buffalomatt1027
Posts: 381
Joined: Sun Aug 20, 2017 4:02 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 4:31 am

iyerhari wrote:
USPIT10L wrote:
They also fly DCABUF and BOSBUF, too.

BOS-BUF was discontinued last year and DL started the route almost instantly.



exactly ..... So AA is not a fan of BUF. Which makes no sense.
 
glbltrvlr
Posts: 971
Joined: Wed Oct 10, 2007 4:28 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 11:19 am

UpNAWAy wrote:
What would exactly be the point of another HUB or point to point flying?
Their value is their HUBS which took decades and billions to develop. Doing any flying not related to them is almost always going to be an unwise financial decision, they are at least a couple of decades away from coming anywhere close to running out of new places to fly via their hubs..


P2P flights absolutely make sense, iff AA is reasonably assured of profitable load factors, and revenue. Connections are expensive and less attractive to customers. Hubs are a necessary evil.
 
glbltrvlr
Posts: 971
Joined: Wed Oct 10, 2007 4:28 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 11:36 am

ScrantonUSC wrote:
There are some in the camp of "Hubs make money, and airlines should strictly focus there". In a general numbers and data analysis, this is completely true and hard to argue against.


Hubs do not make money. Hubs do not lose money. Hubs are network enablers. Any profitability analysis is done on city pairs, not hubs.

When you look at city pairs, you look at revenue and cost. Running a city pairs through a hub may increase revenue, because of the other city pairs you can sell, but it increases costs (which affects profits) and reduces demand from increased travel time.
 
SESGDL
Posts: 2812
Joined: Sat Jan 13, 2001 6:25 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 4:17 pm

77H wrote:
MIflyer12 wrote:
77H wrote:

To expand on this, NYC and LAX are DL’s only hubs within major population centers with massive economies.

I understand that ATL comes in above it’s weight for F500 companies but ATL is no CHI or DFW. Most of AA and UA’s hubs (with the exception of CLT and DEN respectively) are in the top 10 largest cities/metros in the company in terms of population and economic strength. Unfortunately that’s not DL’s reality so they have to look for other opportunities.

All that said, DL has really made it work to their advantage. The problem with hubbing in major cities/metros is the never ending competition. DL’s hubs are less suseptable to competition allowing them to completely dominate their hub markets.

77H


That is gibberish. AA's hubs are in the in the biggest metro markets, so they have the most competition -- so they should just stay in those markets instead of trying to develop focus cities or new hubs (as DL has done with SEA and LAX)?

As for size of markets, you really should look at rankings of domestic O&D traffic by airport, and recognize where DL has hubs, and where AA operates. MSP is bigger than PHL. SLC (SLC!) is bigger than CLT. ATL is almost the size of ORD, but Delta at ATL is vastly bigger than AA at ORD.

Click on Domestic O&D Ranking at lower right https://orlandoairports.net/about-us/#t ... statistics


How is anything I said "gibberish"? Not once did I say that AA should look to focus cities or should stick to their hubs. I was simply explaining to another poster why I think DL makes use of focus cities to a greater extent than AA or UA. It is better situated to have focus cities because of the hubs they operate from. While AA and UA arguably hub in stronger, more valuable markets, the downside is those markets bring more competition. There is an opportunity cost associated with opening a focus city. Unless you order additional frames, you'd be taking frames away from the hubs which would ultimately impact marketshare at the hub market allowing inroads from the same competition that makes hubbing in a NYC, LA, CHI tough.

As for your comment on domestic O&D, I'm sure you're aware that CLT's primary function within the AA network is a connecting hub. And is it really surprising to you that DL's ATL hub O&D is nearly the same size as AA's ORD hub? They share the market with UA. Beyond that, I wasn't talking about airline specific O&D, I was talking about city/metro O&D as a whole. While DL's MSP hub may have a larger O&D than AA's PHL hub, marketshare potential is far higher for AA in PHL than it is for DL at MSP. Why? Because the Philadelphia metro population far exceeds MSP. Same goes for your example of DL's ATL vs AA's ORD O&D. ORD has more potential for AA than ATL does for DL. DL has a near run on the Atlanta market. Unless Atlanta grows by leaps and bounds, DL is already tapping its population base. Now consider Chicago. AA at best only taps .5 of Chicago's population base. Meaning that there is more potential for AA to gain marketshare in Chicago than DL in ATL. I would assume that this is largely what Parker is getting at. They are doubling down on their hubs, working to grab marketshare rather than explore new, uncharted territory. At the end of the day, if this strategy doesn't work for AA they can always change it a few years down the road. AUS, BOS and the like aren't going anywhere.

77H


None of what you said about O&D makes any logical sense. Case in point the argument about AA having more opportunities to grow at ORD vs DL in ATL. Huh? It completely ignores that UA controls the other half of the market, is UA just going to disappear? Also, MSP has less opportunities for O&D growth than PHL? How does that work?

Jeremy
 
travaz
Posts: 845
Joined: Wed Jun 13, 2001 1:03 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 4:58 pm

NWADTWE16 wrote:
To me it is clear AA has been racing to the bottom, and for the bottom tier pax for about a year or more now. Lots of little things I wont mention but were always very professionally handled before, but now a curt no, and this is a corporate partner situation, large scale.

Their prices make it clear they are aiming for low cost minded people period, and with that mentality comes "apparently" the thoughts that those clients don't need or care about seemless travel experiences, don't deserve AVOD, don't deserve even a non middle that can be reserved without a fee. The craziest thing I've seen from this outfit is charging for a reserved seat in First Class (which apparently they are downgrading to a horrible pathetic version under the same name soon). Everyone knows no airline overbooks first, so this is a direct shot at your actual premium clientele, to gouge. To me, that says everything about the "new" culture

Best of luck with it, wont catch me on even 1 plane

Wow talk about things that are not true. I am leaving on my 3rd flight this year PHX - BDL in First and they DO NOT charge to reserve a seat in First. The service and amenities have always good. I would rather use my on device to watch any entertainment than a silly screen stuck on the seat in front of me. Personally I don't care for the drivel they provide as entertainment and would rather read or listen to an audio book. On my last trip to BDL I made a side trip to CLT in economy and for free reserved a window seat. Last year on DL in Economy I was refused a refill of diet coke "because we are only allowed to give out 1 glass to passengers in economy" AA for me
 
airzona11
Posts: 1495
Joined: Wed Dec 17, 2014 5:44 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 5:29 pm

glbltrvlr wrote:
ScrantonUSC wrote:
There are some in the camp of "Hubs make money, and airlines should strictly focus there". In a general numbers and data analysis, this is completely true and hard to argue against.


Hubs do not make money. Hubs do not lose money. Hubs are network enablers. Any profitability analysis is done on city pairs, not hubs.

When you look at city pairs, you look at revenue and cost. Running a city pairs through a hub may increase revenue, because of the other city pairs you can sell, but it increases costs (which affects profits) and reduces demand from increased travel time.


? taking the example to the extreme, look at EK and DXB. Very profitable, all because of the massive scale of the hub. DXB-LHR 7 times a day is more profitable because of the hub, not LHR-DXB.
 
User avatar
SQ22
Moderator
Posts: 1217
Joined: Sat Feb 25, 2012 9:29 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 5:29 pm

JayBCNLON wrote:
I flew on AA’s 767 from JFK to BCN once and the IFE wasn’t working ... so the flight attendant whispered to me: “I can give you so much booze that you don’t even notice there is a seat in front of you.”


Haha, this happened frequently back in the days when US was around and I was flying with them in F.
 
MSPNWA
Posts: 3305
Joined: Thu Apr 23, 2009 2:48 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 5:52 pm

jumbojet wrote:
AA is 24 billion dollars in debt (and growing). They couldn't even afford a pack of bubbalicious bubble gum if they wanted, let alone try to build a new hub, focus city or buy a new plane.

For comparison purposes, DL is now under 8 billion in debt and decreasing.


DL's debt position is arguably worse. As mentioned earlier, DL needs to add pension debt into the equation. Also, if right now DL bought enough new airplanes to reduce their fleet age down to AA's ~10 years (replacing the entire MD-88/90 and 767 fleets today would do this), a rough calculation says that would take at least 12-15B dollars to do at good aircraft values. So their real debt positions are similar, if not an edge to AA.

Considering that debt is correctly at low rates and the near-term outlook for airlines is good, it's tells us that AA is in an okay position, and DL has kicked the can down the road. Considering how smooth that road is now, delaying fleet replacement could be a more risky strategy if times turn sour.
 
MSPNWA
Posts: 3305
Joined: Thu Apr 23, 2009 2:48 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 6:10 pm

SESGDL wrote:
None of what you said about O&D makes any logical sense. Case in point the argument about AA having more opportunities to grow at ORD vs DL in ATL. Huh? It completely ignores that UA controls the other half of the market, is UA just going to disappear? Also, MSP has less opportunities for O&D growth than PHL? How does that work?


77H is right and is making economic sense. Actually DL's own strategy proves this. You know why DL is branching out into new areas? It has to do with their fortress hubs. Fortress hubs are great. However, there's a limit to them. Since fortress hub capacities can largely be controlled without significant competitor interference, margins can be optimized. However once those margins are optimized, lucrative growth opportunities dry up. When capacity is added to grow those areas and increases the overall hub capacity, it has a high effect on O&D margin dilution. In order to grow beyond natural O&D, an airline needs high yield connecting opportunities. But the issue there is that connections are usually competitive markets. So there's limits to fortress hubs. That's why we've seen DL branch away from their high-margin fortress hubs in competitive connecting environments such as MSP, DTW, and to a some extent ATL. If DL grows too much there, it's an automatic yield dilution. And that's something they have been wanting to avoid.
 
Jo8338
Posts: 131
Joined: Fri Dec 16, 2016 4:27 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 6:35 pm

Dominion301 wrote:
iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.


A city with at least 8-10 non-hub flights a day is a true indication of a focus city. For example, if you count LHR and LGA as AA hubs, RDU only has PIT as a non-hub route.

In fact, other than BOS, do AA really have any focus cities anymore now that DL has taken away the title of RDU being a focus city?

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.

A non hub route is FLL -PAP
 
United1
Posts: 3829
Joined: Wed Oct 08, 2003 9:21 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 6:42 pm

MSPNWA wrote:
jumbojet wrote:
AA is 24 billion dollars in debt (and growing). They couldn't even afford a pack of bubbalicious bubble gum if they wanted, let alone try to build a new hub, focus city or buy a new plane.

For comparison purposes, DL is now under 8 billion in debt and decreasing.


DL's debt position is arguably worse. As mentioned earlier, DL needs to add pension debt into the equation. Also, if right now DL bought enough new airplanes to reduce their fleet age down to AA's ~10 years (replacing the entire MD-88/90 and 767 fleets today would do this), a rough calculation says that would take at least 12-15B dollars to do at good aircraft values. So their real debt positions are similar, if not an edge to AA.

Considering that debt is correctly at low rates and the near-term outlook for airlines is good, it's tells us that AA is in an okay position, and DL has kicked the can down the road. Considering how smooth that road is now, delaying fleet replacement could be a more risky strategy if times turn sour.


Unspinning the numbers...meaning actual debt not debt minus cash on hand (which is how DL and a few other airlines report their debt number.) As of Q2 2017 using the airlines SEC filings:

Retirement Obligations:
DL 9.6B
AA 7.5B
UA 3.3B

Aircraft Rent (7x):
AA 8.3B
UA 4.6B
DL 2.3B

Debt and Capital Lease Obligations:
AA 24.9B
UA 13.2B
DL 9.0B

Totals:
AA 40.6B
UA 21.2B
DL 20.9B

AA is in a world of hurt debt wise...they are running almost double the levels of their two major competitors.
I know the voices in my head aren't real but sometimes their ideas are just awesome!!!
 
WPvsMW
Posts: 2040
Joined: Thu Mar 23, 2017 7:30 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 8:12 pm

And therefore AA is "chopping" routes with lower yield. The red and green tell all:
http://www.anna.aero/2017/12/20/usb3-hu ... ourishing/

Will the pruning also prune debt service ... enough to avoid ... "further pruning"?
 
davescj
Posts: 1274
Joined: Wed Jun 13, 2007 1:46 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 8:23 pm

travaz wrote:
Last year on DL in Economy I was refused a refill of diet coke "because we are only allowed to give out 1 glass to passengers in economy" AA for me


I have never had this happen on DL (either mainline or connection). If anything, the opposite. Often as they come back up, they will offer a top off in Y (esp long flights that are over an hour). If you're in Y+ I've always had them refill adult beverages with no issue.

I look at the total debt and wonder how will that play out with the new tax rates and also if they decide to play games with the accounting again so that they can claim 'longer' to pay the debt back. I would watch the money going against debt for the next several years.
Can I have a mojito on this flight?
 
ilovelamp
Posts: 297
Joined: Tue Dec 05, 2017 12:45 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 8:28 pm

MSPNWA wrote:
jumbojet wrote:
AA is 24 billion dollars in debt (and growing). They couldn't even afford a pack of bubbalicious bubble gum if they wanted, let alone try to build a new hub, focus city or buy a new plane.

For comparison purposes, DL is now under 8 billion in debt and decreasing.


DL's debt position is arguably worse. As mentioned earlier, DL needs to add pension debt into the equation. Also, if right now DL bought enough new airplanes to reduce their fleet age down to AA's ~10 years (replacing the entire MD-88/90 and 767 fleets today would do this), a rough calculation says that would take at least 12-15B dollars to do at good aircraft values. So their real debt positions are similar, if not an edge to AA.

Considering that debt is correctly at low rates and the near-term outlook for airlines is good, it's tells us that AA is in an okay position, and DL has kicked the can down the road. Considering how smooth that road is now, delaying fleet replacement could be a more risky strategy if times turn sour.


Why is it assumed Delta will take on massive debt to refresh the fleet? When they ordered the 321NEOs in December, the deal came with a MRO deal with Pratt to service up to 5000 geared engines over the life of the contract. The value of the MRO deal (revenue to Delta) will more than pay for all 100 orders plus 100 options if they execute them.

One or two more deals like that and it’s basically awash cost-wise.
 
User avatar
BroadwayLimited
Posts: 103
Joined: Wed Jun 15, 2016 5:34 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sat Mar 17, 2018 10:28 pm

travaz wrote:
Last year on DL in Economy I was refused a refill of diet coke "because we are only allowed to give out 1 glass to passengers in economy" AA for me


After 2 million miles on Delta, and now retired, and flying Delta since the late 1970's, having one of the original FF numbers (applied for Delta FF the second day offered back on August 31, 1981), I have NEVER been refused a soft drink refill. And most of my flying was in economy. I would have reported that crew.
 
User avatar
NeBaNi
Posts: 444
Joined: Sun Dec 20, 2009 10:45 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 12:00 am

BroadwayLimited wrote:
travaz wrote:
Last year on DL in Economy I was refused a refill of diet coke "because we are only allowed to give out 1 glass to passengers in economy" AA for me


After 2 million miles on Delta, and now retired, and flying Delta since the late 1970's, having one of the original FF numbers (applied for Delta FF the second day offered back on August 31, 1981), I have NEVER been refused a soft drink refill. And most of my flying was in economy. I would have reported that crew.

I've also never been refused a refill on DL or any of the other carriers, and I do most of my flying in economy as well. In fact, since I ask for drinks with no ice, the most typical response is, "Would you like the whole can?" to which I happily say yes.
 
77H
Posts: 1443
Joined: Mon Sep 19, 2016 11:27 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 6:07 am

SESGDL wrote:
77H wrote:
MIflyer12 wrote:

That is gibberish. AA's hubs are in the in the biggest metro markets, so they have the most competition -- so they should just stay in those markets instead of trying to develop focus cities or new hubs (as DL has done with SEA and LAX)?

As for size of markets, you really should look at rankings of domestic O&D traffic by airport, and recognize where DL has hubs, and where AA operates. MSP is bigger than PHL. SLC (SLC!) is bigger than CLT. ATL is almost the size of ORD, but Delta at ATL is vastly bigger than AA at ORD.

Click on Domestic O&D Ranking at lower right https://orlandoairports.net/about-us/#t ... statistics


How is anything I said "gibberish"? Not once did I say that AA should look to focus cities or should stick to their hubs. I was simply explaining to another poster why I think DL makes use of focus cities to a greater extent than AA or UA. It is better situated to have focus cities because of the hubs they operate from. While AA and UA arguably hub in stronger, more valuable markets, the downside is those markets bring more competition. There is an opportunity cost associated with opening a focus city. Unless you order additional frames, you'd be taking frames away from the hubs which would ultimately impact marketshare at the hub market allowing inroads from the same competition that makes hubbing in a NYC, LA, CHI tough.

As for your comment on domestic O&D, I'm sure you're aware that CLT's primary function within the AA network is a connecting hub. And is it really surprising to you that DL's ATL hub O&D is nearly the same size as AA's ORD hub? They share the market with UA. Beyond that, I wasn't talking about airline specific O&D, I was talking about city/metro O&D as a whole. While DL's MSP hub may have a larger O&D than AA's PHL hub, marketshare potential is far higher for AA in PHL than it is for DL at MSP. Why? Because the Philadelphia metro population far exceeds MSP. Same goes for your example of DL's ATL vs AA's ORD O&D. ORD has more potential for AA than ATL does for DL. DL has a near run on the Atlanta market. Unless Atlanta grows by leaps and bounds, DL is already tapping its population base. Now consider Chicago. AA at best only taps .5 of Chicago's population base. Meaning that there is more potential for AA to gain marketshare in Chicago than DL in ATL. I would assume that this is largely what Parker is getting at. They are doubling down on their hubs, working to grab marketshare rather than explore new, uncharted territory. At the end of the day, if this strategy doesn't work for AA they can always change it a few years down the road. AUS, BOS and the like aren't going anywhere.

77H


None of what you said about O&D makes any logical sense. Case in point the argument about AA having more opportunities to grow at ORD vs DL in ATL. Huh? It completely ignores that UA controls the other half of the market, is UA just going to disappear? Also, MSP has less opportunities for O&D growth than PHL? How does that work?

Jeremy


Let me explain my point another way.
DL already has the vast majority of ATL’s market share. You can’t grow past 100% and getting close means DL would be the only airline serving the airport. While AA splits market share at ORD with UA, AA could potentially eat away at UA’s share. Unlikely but not impossible.

As for PHL vs MSP O&D potential, the PHL Metro area has 2.2M more residents than MSP. That’s 2.2M more potential customers AA can tap. How do figure there’s not more potential in the PHL market?

77H
 
tphuang
Posts: 2991
Joined: Tue Mar 14, 2017 2:04 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 12:39 pm

AA should definitely try to grow its footprint at ORD and PHL. As said earlier in thread, they are battling UA and WN at ORD. And battling UA (at EWR) and WN (at BWI) at PHL. It's really unlikely they can chip at that. And at PHL, they are also competing as a TATL hub vs EWR/IAD for (UA) and JFK for DL. Whereas MSP/DTW/ATL are completely dominated by DL and they are milking it.
 
wenders825
Posts: 340
Joined: Thu Sep 29, 2016 7:29 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 1:52 pm

flydude380 wrote:
Does non-hub flying include scrapping LHR-RDU and letting someone else have the corporate contract?

this will absolutely not happen. the route is doing very well on the 772, even during the slow months. summer should see it packed almost everyday. DL has been performing well on their RDU-CDG, so I expect RDU TATL to remain status quo unless a WW/FI comes in.
 
commavia
Posts: 11489
Joined: Mon Apr 25, 2005 2:30 am

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 2:44 pm

ScrantonUSC wrote:
An example of this is RDU, where AA and DL now have a fairly similar market share at 26% and 30% respectively. However, Delta offers 27 non-stop destinations compared to AA's 12. At some point the frequent flyers out of RDU will start to question why they fly with American, when Delta is much more likely to overfly their hubs and provide their RDU base with shorter and less complicated commute.


Maybe.

The tradeoff is that if a carrier has a disproportionately more "convenient" (more frequency, more seats, etc.) offering in the markets that represent a disproportionate share of that O&D demand, the incremental marginal revenue generated from catering to the "long tail" of smaller O&D markets may not be worth the incremental marginal cost.

That is, in a nutshell, the divergence in domestic network strategy between AA/United and Delta. As said previously, both AA and United have hubs in many of the metro areas that often represent the largest and most important O&D markets for just about any non-hub spoke in the country. The same cannot be said, or at least cannot be said to the same extent, for Delta. So in that context, it isn't hard to see why both AA and United have concluded that the profit-maximizing approach is to leverage the economies of scale and market penetration they have in these massive O&D markets to pull local demand in non-hub spokes onto their respective networks, and accept that this may mean losing some business in non-hub spoke markets from the subset of customers who absolutely demand nonstop access on thinner routes.

Put differently - to the example above: AA seems to have concluded that there is enough high-value traffic to be captured in RDU from corporate customers who fly constantly to NYC, WAS, CHI, etc. and are willing to connect for smaller markets, and can be served on AA's multiple daily nonstop flights on all those routes that have relatively lower marginal per-seat cost because "the plane was already going there anyway," and thus if AA loses a few RDU customers who must have nonstops to CMH and BDL, then so be it, because the marginal cost of flying a plane to those cities just to cater to those few customers isn't worth the revenue potential.

glbltrvlr wrote:
Running a city pairs through a hub may increase revenue, because of the other city pairs you can sell, but it increases costs (which affects profits) and reduces demand from increased travel time.


It's not that simple. The key isn't whether one alternative "increases costs" - in the abstract - versus another. The key is "compared to what," or opportunity cost. All else equal, sure, if there is already a plane overflying the hub between two spokes, the incremental marginal cost of a seat on said plane is likely less - at least in cost-based, if not always value-based, terms - than two seats connecting over the hub. But there are undoubtedly innumerable examples of flights operating through hubs - especially hubs like AA and United have that tend to be in massive O&D markets - where the incremental, marginal cost of selling seats on two planes in a connecting city pair is almost certainly lower than selling a seat on a nonstop flight in that city pair. Economics of scale are real, and they're exceptionally powerful.
 
afcjets
Posts: 2829
Joined: Thu Jan 01, 2015 6:20 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 3:19 pm

glbltrvlr wrote:
ScrantonUSC wrote:
There are some in the camp of "Hubs make money, and airlines should strictly focus there". In a general numbers and data analysis, this is completely true and hard to argue against.


Hubs do not make money. Hubs do not lose money. Hubs are network enablers. Any profitability analysis is done on city pairs, not hubs.



Hubs definitely make or lose money, as do individual city pairs. While there may not be any monthly P&L data readily available for hubs like city pairs, that does not mean airlines never try to determine how profitable their hubs are. Why do you think AA closed RDU, BNA, SJC, SJU? Their CEO Robert Crandall said they were not profitable, as has been said almost every time an airline closes a hub.

Here is quote from Sismek in a letter to employees: "Our hub in Cleveland hasn’t been profitable for over a decade."
 
User avatar
N717TW
Posts: 521
Joined: Sun Feb 14, 2016 9:24 pm

Re: AA CEO says no new hubs, fleet growth, point to point flying

Sun Mar 18, 2018 3:44 pm

Dominion301 wrote:
iyerhari wrote:
Outside of the AA hubs, the only possible AA station that maybe close to calling a focus city is BOS although AA does not like calling it that way as they want people to connect through their hubs vs. BOS. AA also has fierce competition in practically all the hubs with the exception of CLT. DL is not in the same position. ATL is their largest super-hub but in their other hubs they are a very dominant carrier - SLC, MSP, DTW. They have the luxury to chase new cities where they see a potential and they do not have huge formidable carriers- AS at SEA and B6 at BOS.

AA also benefits from OW presence in BOS - with the exception of probably DFW they are not served direct from their hubs - HKG, NRT, GRU.


A city with at least 8-10 non-hub flights a day is a true indication of a focus city. For example, if you count LHR and LGA as AA hubs, RDU only has PIT as a non-hub route.

In fact, other than BOS, do AA really have any focus cities anymore now that DL has taken away the title of RDU being a focus city?

Again if you consider LGA to be an AA hub, the only remaining AA non-hub routes I can think of on AA are:
BOS-SYR;
BOS-ROC;
BOS-PIT;
BOS-MDT;
BOS-CDG (seasonal);
PIT-RDU; and
some weekend seasonal sun routes.


So this all makes me wonder when BOS will be cut to spokes only? They are vacating the original AA/North side of terminal B in BOS at some point in fall of 2018 and consolidating entirely into the original US(or AL)/South side of Terminal B. I think they are gaining some gates they gave to UA but still will be a net loss of space and gates. Makes you wonder when they totally pull out of all those secondary markets markets from BOS? Conventional wisdom has held that they wait until B6 or DL add...but maybe as airlines drop 50-seaters, they just drop them all together.

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos