Originally Posted by
gemac
This is only true if you do not credit the flight for award tickets used on it. If one route is rarely used for award flights, and another route is often used, and AA didn't give the second route credit for the award tickets, then AA would appear to lose on the second route, and close that route. Since people will use those miles, they will move on to route #3, which will then appear unprofitable and get closed, and next will be route #4. Pretty soon, the only routes AA flies will be ones where nobody wants to use miles. Of course, the AAdvantage program won't engender much loyalty then.
Gemac, that's exactly the analysis that we did at AA and why we didn't discontinue Hawaii. The flights are unprofitable on their own -- even with cargo. Unlike most European destinations, there is virtually no full fare F or J travel on the Hawaii routes. However, our best FFers wanted the flights for AAdvantage redemption. After carefully calculating how much business we might lose from our FFers, we decided that it was best to keep the routes.
For us, the FFers expected service from the West Coast (LAX/SFO) as well as DFW (and ORD) to HNL.
Just a note for the younger folks, right after airline deregulation in 1978, AA dropped a number of unprofitable routes, including completely pulling out of Hawaii. Later on in the 80's, after the advent of the AAdvantage program, AA re-entered Hawaii mostly because of its best customers' desires.