muralir wrote:Lamp1009 wrote:United787 wrote:
I think you are downplaying what AA has become at ORD. When I first joined A-Net 18 years ago I would say the airline loyalty of friends and family was split 50/50 in Chicago with status reflecting their loyalty. A lot of frequent business travelers here were very loyal to AA especially for those that had frequent travel to Latin America and Europe. Today, I do not know a single person that is loyal to AA and carries status with them. Of course my experience is anecdotal but I think it is indicative of AA's pullback. Chicagoans expect to be able to get most of their destinations non-stop and the lack of international destinations has not gone unnoticed by the general public. I am sure this has impacted the fares they are able to demand.
Even with destinations that require connections, UA is winning. Of course, UA's merger with CO levelled the Latin America playing field with IAH offering a lot of what MIA can offer. But to Europe and Asia, UA can offer so many destinations with a much larger breath of airlines and hubs.
BTW, UA is not heavily skewed to ORD as it is a similar size now to it's other mid-continent hubs, IAH and DEN. EWR and SFO are powerhouses on their respective hubs and LAX and IAD both have their roles.
Isn't AA in the middle of a massive wide-body shortage though? They seemed to let go of more than what was reasonable when they retired their a330s, 767s, and 757s (not a widebody but it fills some of the widebody roles), especially since they can't get 787s quickly enough, and want to retire some of their 777-200ERs. It seems like they don't really have much of a choice when it comes to focussing their long-haul operations at their costal hubs and DFW, at least until they can get more planes. They, like delta but to a much greater extent, made a huge miscalculation with their fleet management during the pandemic, and now it's UA's opportunity of a lifetime for international growth, and they clearly jumped right on it with their 100 + 100 option 787 order.
I'll give AA the benefit of the doubt for the next couple of years. Covid scrambled everyone's plans, so it's not fair to take the last few years and assume that's their long-term strategy. Furthermore, the reduction in flights really began when the FAA implemented voluntary flight caps years ago before the ORD runway reconfiguration happened. You can't blame them for focusing on places like DFW which had room to grow vs ORD where getting slots was always a battle.
But that said, even before covid, AA's strategy seemed to be to gradually de-emphasize ORD. And despite ORD's flight restrictions, UA managed to maintain more service, and also brought on more service more quickly once the caps were lifted. I agree with @United787. Looking back a few years doesn't really give you a full picture of AA's death-by-a-thousand-papercuts approach to ORD. In the 80s/90s, UA and AA both had loyal customers, and international service was comparable. But now, I know of only one person in my network who still has AA loyalty, and he doesn't fly much and it's mainly a historical thing for him. In the 90s and even early 00's, AA had more TPAC and TATL flying out of ORD than DFW. Heck, the first direct flight to India from Chicago was ORD-DEL on AA (not even AI; they stopped in London). The amount of reduction in travel over the past couple of decades has been breathtaking.
What remains of AA's ORD hub is largely domestic connections to regional cities and small towns, and of course connections to their OW partners. Sure, that still technically constitutes a hub. But in a city like Chicago, that doesn't really build loyalty. You can get away with a domestic-focused hub in smaller cities that don't have much competition. But in Chicago, people expect an extensive global network. You're not going to build a loyal base of flyers -- especially frequent business flyers -- by telling them that they can get to Duluth IA nonstop but if they need to fly to anywhere in Europe ex-LHR, they'll have to connect through DFW or PHL. Not when United is offering more. And if AA's just going to codeshare on their partners, it's not like OW's partnerships at ORD are more extensive than SA (or even SkyTeam, depending on where you want to go). So I really don't think AA's strategy for ORD will set it up for long-term success. I don't know their numbers, but I suspect they're bleeding FF members and corporate contracts in Chicago. And if you're not getting a good chunk of Chicago's massive O&D market, then you're right; there's no advantage to hubbing in Chicago vs DFW or PHL or CLT.
@onwFan: it's not just AA that decides which cities are hubs. In cities like Chicago that have options, your customers have to go along with it. If what AA wants out of an ORD hub is not the same thing as what Chicagoans want from a hub airline -- and if UA does give them what they want -- then AA's hub will whither whether they want it to or not. It takes 2 parties to make a hub work, and in big cities like Chicago, plus LA, NYC, and others, we see that AA is losing that competition.
Note, this may be the right strategy for AA: perhaps they really can be more profitable staying away from brutally competitive markets like ORD (and LAX, NYC) and focusing on where they can overcharge customers in captive hub cities. But if you decide you're going to cede every top-10 city outside of Dallas to your competitors, maybe you'll be profitable, but you won't be a very big airline.
A lot of things to comment on. But I’ve covered the essence of it already in the my previous posts. As discussed in the UA thread as well, UA has cut a lot of destinations as well and ceded them to AA post covid at ORD; and thanks to the loss of the Air Wisconsin deal, reduced frequencies on many existing routes that compete with AA. In fact, based on the schedules from May/June onwards, we are pretty much seeing a swap of UA and AA’s schedules in the midwest from ORD with Air Wisconsin (many destinations with several frequencies a day on UA are now reduced to just 1 or 2 per day on two class jets, when the AA frequencies move up). It wouldn’t be surprising to see even more smaller destinations (that are just not best served by larger jets) be dropped by UA. While it makes a convenient argument to say that UA is ‘further ahead in the game’ of dropping single class jets, for the next 5 or so years, AA will be the one better poised to serve many of those destinations effectively, and even in the future by building those markets. That, taken with the fact that DL has been continuously reducing in the midwest as well from MSP and DTW should only help AA at ORD. It is well known that most of the money is made in not on the fancy long haul routes, but rather these smaller inner destinations.
Let’s look into the long haul from ORD. Firstly, your point that AA’s offering from ORD is not more comprehensive than SkyTeam is simply false. SkyTeam is nothing but marginal at ORD with a token presence of 2 flights a day to Europe and one flight (not even daily now) to Asia.
As for AA vs UA, let’s first consider TATL summer. AA and its JV partners offer ~15x daily flights to Europe, whereas UA and its JV partners offer ~21x daily flights. You can choose to boost the numbers by including other alliance partners, just remember that while AA offers codeshares on all those carriers, UA does not offer codeshare on even one of those international flights from ORD, and wants you to just connect on their JV partners.
As for TPAC, yes AA’s offer is currently 1x daily flight vs UA’s 3x daily (~ 5x daily if you include China’s suspended routes). Your statement that ORD is just a network of regional destinations for AA is nothing but a gross exaggeration. Even to your point of UA getting people to more nonstop destinations in Europe, what are they? They are also basically almost all to their JV hubs of FRA, MUC, ZRH, VIE, BRU; plus AMS year-round. EDI, SNN, MXP are seasonal and not necessarily captive markets. Both AA and UA serve CDG, FCO and BCN (UA added recently) while AA offers MAD, HEL and ATH that UA doesn’t.
Compare that to IAH/DFW where UA is 6x daily TATL flights vs AA’s ~ 13x daily flights. As for TPAC, UA is just 2x daily vs AA’s 4x/6x daily. So, clearly AA uses ORD as much as DFW for TATL while UA’s is heavily skewed to ORD. At the same time the total TATL offering from ORD + DFW/IAH is still very similar. On the other hand, AA and UA use these in complementary ways for TPAC, with UA using ORD primarily and AA using DFW.
But your last last point basically sums up the error in your logic perfectly, because despite all you said they are the largest airline in the world by most metrics. This 10% difference in market share between UA and AA at ORD has been there for ages, as has been this hypothesis that AA will wither away in ORD into irrelevance.