onwFan wrote:muralir wrote:Lamp1009 wrote: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.
Thanks for your counterpoints. I'm not anti-AA by any means (although I currently do most of my flying on United),and I *want* AA to succeed in Chicago. Chicago derives enormous benefit from having the only dual-hub airport in the country. It keeps both AA and UA honest. UA fares are for sure lower than they would be thanks to AA competing with them.
I'll also admit that comparing AA/OW to SkyTeam was a bit of trolling
. But that said, I do disagree with some of your statements:
"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."I do think you're discounting the importance of international flights in building a hub, especially in a competitive city like Chicago. I'm not an aviation insider, so I have no actual hard numbers, but I'd be surprised if short-haul, regional flying was really the backbone of their profits. If so, why do so many such routes need subsidies to keep flying? And if short haul domestic routes are where the profit is, why is AA trying to outsource that to Alaska in Seattle and JetBlue in NYC and focus on international routes from those cities? And again, a smaller city might be content with being a regional, domestic hub -- or even a focus city. But not a place like Chicago where flyers have the option of much more extensive hub operations from competing airlines.
There's a reason why there's no dominant hub in LAX or JFK. It's not like airlines wouldn't love to have a fortress hub and overcharge 20 million rich, captive residents. But those pesky residents have other plans, and if one airline gets too uppity, they'll switch to another one providing equally extensive service. The same goes for Chicago. If you don't offer extensive regional connections, frequent nonstops to all the big domestic cities, *and* convenient international service, then there's another airline 1 terminal over who will. While I'd agree that AA provides #1 and 2, I do think it's lacking in #3.
And regarding international service. I do think the JV vs codeshare vs alliance distinction is overblown. Most flyers, even frequent flyers, don't even know what airlines have a JV. And they don't care. All they want to know is which airlines can they use/earn their miles on, which ones provide reciprocal status, and maybe which ones share lounges. Not even codeshare really matters (I doubt anyone cares what the exact flight number is on a ticket). I think this is one area where OW and SA are different. My understanding is that in OW, whether you earn miles or not depends on whether you buy your ticket with an AA number or the operating airline. In SA, it doesn't really matter. When I book a flight, I don't really look and see whether it's an LH / SQ / etc flight or a UA codeshare. I just book whichever one is cheapest. (Actually, that's not true; I actively avoid codeshares and try to book with the operating airline because with irrops, I don't want to deal with the merry-go-round of each airline saying it's the other airline's responsibility to help me out. Again, in SA, it doesn't matter my benefits are largely the same -- and sometimes earning by miles on a discounted LH fare is better than earning by dollars on the very same flight booked as a UA codeshare).
So I think it's totally legit to compare all of SA with all of OW, and not just limit to JVs. Because I can guarantee that's what flyers do. And if SA is twice as large than OW? Yes, and that gives UA a huge benefit. You can't just say that's not fair and then discount it. All of these things are competitive advantages in building a loyal base of customers, which you need to sustain a hub.
Re: throwing IAH into the mix: I'm not sure what your point with that is. I'm a Chicago homer, I couldn't care less what United does with Houston, aside from transfer more service from there to here
If what you're saying is that UA at ORD + IAH has the same number of flights / service as AA at ORD + DFW, then I think you're making my point since UA is much weaker at IAH than AA is at DFW, so ORD is comparatively a much bigger piece of the pie for UA than it is for AA. Am I missing something in your logic?
And my point with the final paragraph wasn't actually a logical error. It was just throwing AA a bone, giving it the benefit of the doubt that maybe their bigger picture moves make sense from a profit standpoint. But truth be told, I don't think it's a profitable strategy either. In fact, it's clearly not since AA is the least profitable of the Big Three + Southwest. It can't be profitable to give up a pre-existing hub in the 3rd largest metro area, located in one of the most ideal geographical points that's served as the dominant, natural transportation hub of the entire country since the days of the steamboat and rail. Maybe international service isn't the be-all and end-all of airlines. After all, Southwest does fine with basically no int'l service, and they carry more pax in Chicago than AA. But there has to be *some* strategy besides gradually letting it whither on the vine. Again, I'm willing to give it a few years for the post-covid chaos to settle down. But I don't really see a strategy here, and regardless of metric, be it overall passenger numbers, profitability, international service, flight ops, etc. it seems that American is clearly on a downhill slide at ORD, regardless of how they're doing in their other hubs.
Note: this isn't a binary thing where either American turns ORD into its version of Delta's ATL or else it dehubs it completely and only provides 1 flight a day to DFW. I personally believe AA will always have a "hub" at Chicago if you look at pure passenger numbers and flight ops. It has too many advantages (geography, local economy, pre-existing operations) for even a poorly run airline to mess it up too badly (how's that for trolling?
). And given ORD's overall size, even being second fiddle at ORD gives you bigger numbers than anything out of the top-10 hubs in the country. It's not going the way of TWA's hub at STL or something like that, unless Chicago as a city dies off.
But there are hubs and there are hubs. American at ORD used to be a much bigger hub, truly equivalent to UA's operations. That's no longer true. Doesn't mean it's not still a hub, even one that other cities would love to have. But relative to what AA used to be, and what it could be again if it chooses to invest in Chicago (in fairness, that would probably have to come at the expense of other cities), AA's hub is clearly diminished and seems to be on the road to diminishing further rather than growing. Again, we'll see how things shake out in a few years when the post-covid mess settles down -- and even more, when the terminal expansion is further along. At that point, if gates are plentiful, as are pilots and planes, and AA still chooses not to grow ORD, then we'll know AA's real intentions with Chicago.
