SESGDL wrote:The jury's still out on whether AA's strategy of deploying more capacity than competitors to cover marginal cost (and/or to grab market share) was the right one. AA's Q4 results certainly don't seem to showcase any crystal ball that AA has access to - it was once again outperformed by DL and UA (or continued to underperform).
I'm unsure of the reason for the recent pullback on capacity but it could be an indicator that AA is no longer employing its previous Covid strategy. We shall see how things continue to play out and how the overall industry adapts to the continued reduction in demand.
Jeremy
Arguing this point based on Operating Results - which include items like Aircraft Rent, Depreciation, and Amortization - is misleading. These costs are not incremental to the short term decision to operate a flight. An airline will pay these costs whether or not it flies tomorrow's (or next month's) flight. Because these costs don't go away in the short run if a flight is canceled, they should not be considered when deciding. Or in judging short run decisions retrospectively.
Instead, what's relevant is the concept of covering the "cash" costs of a flight - only those which truly change based on the short-term decision to operate it or park the aircraft. For instance only fuel, landing fees, a portion of crew costs, a portion of maintenance, etc.
The folks at AA are extremely good at parsing these costs -- I suspect even first-year employees in their entire Network Department understand these concepts fluently -- and that AA makes well informed decisions based on the
correct criteria.