Why did American Airlines dehub SJC?

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

I feel like if you search this there will be endless amounts of content already on this

LAXintl wrote:

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

Reno Air merger didn't occur until 1999...years after the drawdown of SJC.

Didn't AA dehub twice? Once after AirCal & again after RenoAir

Reno Air actually took over many of the routes at the behest of an AA codeshare in the early 1990s.

It was really a combo of oil, recession, and WN entering CA hard that did them in. AA also gave up on two small hubs at RDU and BNA in that timeframe.

AA blamed San Jose in the media not extending the runway to accomodate larger widebodies but I dont think this would have made much difference on profitability. The airport is in the middle of the city and populace resistance was huge along with the problem that the runway is hemmed in between two highways.

Wasn’t SJC and BNA part of AA strategy to develop smaller or second tier hubs? What was he original strategic objective?

LAXintl wrote:

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

AA hadn’t even built up SJC in 1993. The drawdown was in the 2001-2006 time frame.

BoeingGuy wrote:

LAXintl wrote:

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

AA hadn’t even built up SJC in 1993. The drawdown was in the 2001-2006 time frame.

Read some posters above. AA had a hub in SJC twice.

crescent wrote:

Reno Air actually took over many of the routes at the behest of an AA codeshare in the early 1990s.

It was really a combo of oil, recession, and WN entering CA hard that did them in. AA also gave up on two small hubs at RDU and BNA in that timeframe.

AA blamed San Jose in the media not extending the runway to accomodate larger widebodies but I dont think this would have made much difference on profitability. The airport is in the middle of the city and populace resistance was huge along with the problem that the runway is hemmed in between two highways.

Ultimately, though, both runways were extended and long-haul operations to Europe and Asia are common at SJC now, so the location of the airport and surrounding highways wasn't the issue.

Bobloblaw wrote:

BoeingGuy wrote:

LAXintl wrote:

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

AA hadn’t even built up SJC in 1993. The drawdown was in the 2001-2006 time frame.

Read some posters above. AA had a hub in SJC twice.

I’m aware of that. I’m from SJC. It was much bigger the second time. Most of it was taken over by QQ the first go around. It came from the Air Cal takeover.

[twoid][/twoid]

slcdeltarumd11 wrote:

I feel like if you search this there will be endless amounts of content already on this

True about so many things. What's purpose of a discussion board then? I get it but with a free site it also bring new these things.

As mentioned AA tried SJC twice. 1988-1993 and then again post Reno Air until mid 2000s

Like other airlines at that time they were dehubbing particularly smaller hubs and/or hubs located in secondary cities.

The population center of the bay area was north, now if AA attempted OAK as a hub it might have been different since OAK is closer to more of the bay area population base than SFO.

AA has ruined the market in the west and basically handed the keys to WN served on a silver platter many times. AirCal, Reno Air, and since they tied up with US you can throw in US Airways into that mix by killing off s nice west coast network from America West.

AA has a terrible track record at making any sizable west coast operation other than LAX Work all the while killing off some good carriers we all loved out west.

BoeingGuy wrote:

The drawdown was in the 2001-2006 time frame.

I was going to say, I thought SJC-NRT lasted until the mid aughts.

EDIT: Looks like it ended in 10/2006.

https://www.youtube.com/watch?v=EC079MlwCPg

Until VX came around AA was the number 2 legacy player in the Bay Area likely due to their Premium transcon service and legacy SJC hub. Clearly that is no more.

910A wrote:

The population center of the bay area was north, now if AA attempted OAK as a hub it might have been different since OAK is closer to more of the bay area population base than SFO.

WN would likely slaughter anyone who tried to build up OAK.

crescent wrote:

AA blamed San Jose in the media not extending the runway

Wasn't runway 30L 11000 ft by the end of 1992?

Offhand guess: AA and AA Eagle had far more departures in 1991 than during any later hub. (Dunno if that would still be true if you count Reno Air as part of AA.)

SFOtoORD wrote:

Until VX came around AA was the number 2 legacy player in the Bay Area likely due to their Premium transcon service and legacy SJC hub. Clearly that is no more.

910A wrote:

The population center of the bay area was north, now if AA attempted OAK as a hub it might have been different since OAK is closer to more of the bay area population base than SFO.

WN would likely slaughter anyone who tried to build up OAK.

So who became #2?

SFOtoORD wrote:

WN would likely slaughter anyone who tried to build up OAK.

WN wasn't all that big in OAK back in 1988...

twicearound wrote:

SFOtoORD wrote:

Until VX came around AA was the number 2 legacy player in the Bay Area likely due to their Premium transcon service and legacy SJC hub. Clearly that is no more.

910A wrote:

The population center of the bay area was north, now if AA attempted OAK as a hub it might have been different since OAK is closer to more of the bay area population base than SFO.

WN would likely slaughter anyone who tried to build up OAK.

So who became #2?

I slightly misstated that. AA was a strong #2 of all carriers at SFO specifically and were eventually passed by VX and now AS. I’d guess that DL is probably bigger now.

SFOtoORD wrote:

Until VX came around AA was the number 2 legacy player in the Bay Area likely due to their Premium transcon service and legacy SJC hub. Clearly that is no more.

There's still quite a few AA FFs in San Jose.

Has DL surpassed AA at SJC now? If so, that is truly amazing. SJC made a lot of sense as a hub for AA since it is the heart of silicon valley and AA was the undisputed champion of the high tech cities for a while (AUS/SJC/RDU). I know DL has become larger than AA at RDU, but was wondering if they also picked off SJC from AA?

timz wrote:

crescent wrote:

AA blamed San Jose in the media not extending the runway

Wasn't runway 30L 11000 ft by the end of 1992?

No, the 1990s extension took it to 10,200 feet. It went to 11,000 feet in 2004.

capejet wrote:

Has DL surpassed AA at SJC now? If so, that is truly amazing. SJC made a lot of sense as a hub for AA since it is the heart of silicon valley and AA was the undisputed champion of the high tech cities for a while (AUS/SJC/RDU). I know DL has become larger than AA at RDU, but was wondering if they also picked off SJC from AA?

Looks like it. This sheet shows 17 flights a day minimum by AA, 24 by DL; seems to have a lot to do with buildup at SEA & LAX.

https://www.flysanjose.com/sites/defaul ... 202018.pdf

The reason SJC was dehubbed in the 2000s was related to the dot.com and tech bubbles bursting. If you remember, the tech sector was doing very well in the run-up to Y2K. A lot of people in Silicon Valley were traveling to customers who needed hardware and software upgrades to avoid the problems that Y2K were going to cause.

But, once 1/1/00 came and went, tech spending dropped. Both businesses and individuals had spent fantastic sums of money to upgrade computer and other electronics and felt they could put money towards other needs.

As for the dot.coms, they were spending IPO money like it was a well that could not run dry. Employees were traveling often, at the last minute, and frequently in F. When the dot.com bubble burst with the stock market crash in April of 2000, a lot of dot.coms folded, and that travel dried up.

IIRC, AA had announced SJC-TPE to start in late 2000 or early 2001. That route was cancelled before it ever started.

Ionosphere wrote:

Didn't AA dehub twice? Once after AirCal & again after RenoAir

Yes, Twice!! American thought they were getting something that wasn't happening on Both mergers. Just like USAir thought they were getting merging with PSA. They bought both companies yet abandoned their hubs. all 3 carriers were Primarily North- south carriers.

nine4nine wrote:

AA has ruined the market in the west and basically handed the keys to WN served on a silver platter many times. AirCal, Reno Air, and since they tied up with US you can throw in US Airways into that mix by killing off s nice west coast network from America West.

AA has a terrible track record at making any sizable west coast operation other than LAX Work all the while killing off some good carriers we all loved out west.

IIRC, the West Coast consisted of AA at SJC and LAX, UA at SFO and LAX, and a large DL presence at LAX. In addition, you had US with some of the route structure from its purchase of PSA, and there was some NW presence going back to its purchase of Hughes Air West.

Then, WN entered the West Coast. At some point, a lot of WN's flying up and down the Coast did a number on the legacies. AA bailed at SJC. DL cut back north-south flying and focused it western operations at SLC. US parked the Bae 146 fleet and exited California. What was left of the RW system was dropped by NW. UA decided to start Shuttle by United, in order to compete with WN on flying on the West Coast. Herb Kelleher got mad and decided the days of needing to make three connections in order to fly STL-LAS or MDW-LAX were over, and WN would start flying long-haul and compete with the legacies in short, medium, and long-haul flying.

LAXintl wrote:

Pretty simple - they lost hundreds of millions running it. That's directly from the mouth of then CEO Crandal who attended an employee event to announce its drawdown in April 1993.

Lots of things were going on at the time. A global recession, reduced travel demand, run up in fuel cost after the first Gulf War, bloody fare war in California driven by Southwest(who was also growing fast in the Bay Area) and United, and a rather unbeneficial merger with Reno Air.

At the end AA had to stem the red ink across it network. and SJC was one obvious thing to get the axe.

SJC, RDU, AND BNA all went away around that time. Only RDU stayed as a “ focus city” because AA had spent so much of it’s own money on the new terminal.

SJC can't be a hub

SFOtoORD wrote:

I slightly misstated that. AA was a strong #2 of all carriers at SFO specifically and were eventually passed by VX and now AS. I’d guess that DL is probably bigger now.

How much of a presence did AA really ever have at SFO at its peak? I've heard it described as a focus city at one point, though that was long before my time here.

ckfred wrote:

IIRC, AA had announced SJC-TPE to start in late 2000 or early 2001. That route was cancelled before it ever started.

It started and operated for around 6 months. LGW was announced but never started. AA also had a CDG flight in addition to the longtime NRT flight.

intotheair wrote:

SFOtoORD wrote:

I slightly misstated that. AA was a strong #2 of all carriers at SFO specifically and were eventually passed by VX and now AS. I’d guess that DL is probably bigger now.

How much of a presence did AA really ever have at SFO at its peak? I've heard it described as a focus city at one point, though that was long before my time here.

I found a 2000 report that said SFO market share was 50% UA, 9% AA, 8% DL. Probably at that point AA flying was all to hubs, BOS, and old QQ (Reno Air) destinations. 31 flights a day for AA in 1998, dwarfed by UA at 304.

KLMatSJC wrote:

ckfred wrote:

IIRC, AA had announced SJC-TPE to start in late 2000 or early 2001. That route was cancelled before it ever started.

It started and operated for around 6 months. LGW was announced but never started. AA also had a CDG flight in addition to the longtime NRT flight.

SJC-TPE and SJC-CDG each started on the same day and ended on the same day. They lasted 6 months, as stated. It was roughly 5/2001-11/2001.

ckfred wrote:

nine4nine wrote:

AA has ruined the market in the west and basically handed the keys to WN served on a silver platter many times. AirCal, Reno Air, and since they tied up with US you can throw in US Airways into that mix by killing off s nice west coast network from America West.

AA has a terrible track record at making any sizable west coast operation other than LAX Work all the while killing off some good carriers we all loved out west.

IIRC, the West Coast consisted of AA at SJC and LAX, UA at SFO and LAX, and a large DL presence at LAX. In addition, you had US with some of the route structure from its purchase of PSA, and there was some NW presence going back to its purchase of Hughes Air West.

Then, WN entered the West Coast. At some point, a lot of WN's flying up and down the Coast did a number on the legacies. AA bailed at SJC. DL cut back north-south flying and focused it western operations at SLC. US parked the Bae 146 fleet and exited California. What was left of the RW system was dropped by NW. UA decided to start Shuttle by United, in order to compete with WN on flying on the West Coast. Herb Kelleher got mad and decided the days of needing to make three connections in order to fly STL-LAS or MDW-LAX were over, and WN would start flying long-haul and compete with the legacies in short, medium, and long-haul flying.

Always a source of pride that San Diego's hometown airline, the legendary PSA, bequeathed (or someone handed them directly to) Southwest their operations manuals, which Southwest studied and applied to their own business model, and eventually becoming a force in their own right. USAir, treated many of its intra-California flights as tag-ons from east coast-LAX or east coast-SFO flights, of which delays accumulated far too regularly. Customers left them in droves and right into the arms of Southwest, which knew certain operations needed to be isolated and protected, as consumers are letting them know with lots of $$$ that this is what they want.

AA tried an American Eagle feed in the early 90s with service from SJC to MRY/CCR/MOD/TVL/FAT/CIC/LMT/ACV/RDD/SMF/SBP/SBA & STS using Metros and Saabs. Late summer of 1994 QQ tried Reno Air Express using Mid Pacific Airlines Jetstreams J-31s with service from SJC to MRY/CIC/LMT/RDD/MFR & ACV. Not sure how the Eagle loads were for SJC? I do know the SJC QQ Express loads were pretty low and the operation was halted in the spring of 1995.

ckfred wrote:

IIRC, AA had announced SJC-TPE to start in late 2000 or early 2001. That route was cancelled before it ever started.

AA started SJC-TPE on April 1, 2001 with a 777-200ER. It ended shortly after 9/11 in October 2001, though I’m not sure of the exact date.

I'm getting SJC-TPE confused with ORD-AMS. AA announced ORD-AMS in 2001, to start either late spring or early summer of 2002. After September 11th, that route never started.

With the recession, I remember Crandall saying AMR would not be investing in the airline much going forward. It wasn't providing the returns of the other subsidiaries (especially SABRE). The other problem had is that AA went all in with the MD80 as their domestic aircraft. The MD80 had a lot great attributes however it was maybe a bit too big for many routes. In DFW where there were ~4 million people, it was fine but in SJC, RDU, BNA there wasn't enough local demand leaving a lot of sees for connection suppresing RASM on any given flight. If you had the fleet flexibility of today with 70 seaters, efficient 100 seaters (the F100 wasn't that good), and so on, it's likely those hubs could have performed better.

TWFlyGuy wrote:

With the recession, I remember Crandall saying AMR would not be investing in the airline much going forward. It wasn't providing the returns of the other subsidiaries (especially SABRE). The other problem had is that AA went all in with the MD80 as their domestic aircraft. The MD80 had a lot great attributes however it was maybe a bit too big for many routes. In DFW where there were ~4 million people, it was fine but in SJC, RDU, BNA there wasn't enough local demand leaving a lot of sees for connection suppresing RASM on any given flight. If you had the fleet flexibility of today with 70 seaters, efficient 100 seaters (the F100 wasn't that good), and so on, it's likely those hubs could have performed better.

So would an SJC hub work today with the smaller regional type jets? With an airline like AS?

AirFiero wrote:

TWFlyGuy wrote:

With the recession, I remember Crandall saying AMR would not be investing in the airline much going forward. It wasn't providing the returns of the other subsidiaries (especially SABRE). The other problem had is that AA went all in with the MD80 as their domestic aircraft. The MD80 had a lot great attributes however it was maybe a bit too big for many routes. In DFW where there were ~4 million people, it was fine but in SJC, RDU, BNA there wasn't enough local demand leaving a lot of sees for connection suppresing RASM on any given flight. If you had the fleet flexibility of today with 70 seaters, efficient 100 seaters (the F100 wasn't that good), and so on, it's likely those hubs could have performed better.

So would an SJC hub work today with the smaller regional type jets? With an airline like AS?

Anything is possible. I think a focus city is a more likely scenario. The problem today is fuel is much higher than when the initial idea of a hub in SJC (and BNA & RDU for that matter) came about. Hubs today rely on a lot of volume flight wise. Not sure you could truly build it today to a true hub.

TWFlyGuy wrote:

AirFiero wrote:

TWFlyGuy wrote:

With the recession, I remember Crandall saying AMR would not be investing in the airline much going forward. It wasn't providing the returns of the other subsidiaries (especially SABRE). The other problem had is that AA went all in with the MD80 as their domestic aircraft. The MD80 had a lot great attributes however it was maybe a bit too big for many routes. In DFW where there were ~4 million people, it was fine but in SJC, RDU, BNA there wasn't enough local demand leaving a lot of sees for connection suppresing RASM on any given flight. If you had the fleet flexibility of today with 70 seaters, efficient 100 seaters (the F100 wasn't that good), and so on, it's likely those hubs could have performed better.

So would an SJC hub work today with the smaller regional type jets? With an airline like AS?

Anything is possible. I think a focus city is a more likely scenario. The problem today is fuel is much higher than when the initial idea of a hub in SJC (and BNA & RDU for that matter) came about. Hubs today rely on a lot of volume flight wise. Not sure you could truly build it today to a true hub.

We don't need to speculate about a possible future AS focus city at SJC - it exists there today

TWFlyGuy wrote:

AirFiero wrote:

TWFlyGuy wrote:

With the recession, I remember Crandall saying AMR would not be investing in the airline much going forward. It wasn't providing the returns of the other subsidiaries (especially SABRE). The other problem had is that AA went all in with the MD80 as their domestic aircraft. The MD80 had a lot great attributes however it was maybe a bit too big for many routes. In DFW where there were ~4 million people, it was fine but in SJC, RDU, BNA there wasn't enough local demand leaving a lot of sees for connection suppresing RASM on any given flight. If you had the fleet flexibility of today with 70 seaters, efficient 100 seaters (the F100 wasn't that good), and so on, it's likely those hubs could have performed better.

So would an SJC hub work today with the smaller regional type jets? With an airline like AS?

Anything is possible. I think a focus city is a more likely scenario. The problem today is fuel is much higher than when the initial idea of a hub in SJC (and BNA & RDU for that matter) came about. Hubs today rely on a lot of volume flight wise. Not sure you could truly build it today to a true hub.

This is a good point, one I hadn’t considered. I guess a “small hub” isn’t really viable?