FlyerTalk Forums - View Single Post - AA to fly Columbia MO / COU-ORD and -DFW with 1 year $3M local subsidy
Old Oct 20, 2012 | 5:41 pm
  #26  
ksweeney
 
Join Date: Jun 2010
Location: DCA and STL
Programs: AA Concierge Key, Marriott Lifetime Titanium, National Car Executive Elite
Posts: 524
Originally Posted by FlyerChrisK
Poor decision making (on the part of the subsidy) is the local government's fault, not AA's. I can't blame them for accepting it, as presumably it's a no-lose outcome for them.
I agree one hundred percent. AA is doing the right thing for AA (and for me since I prefer to fly AA) but as you say if its a poor decision, the local government is where the blame lies.

Here's the profit/loss problem. The market is very small and although DL is profitable without subsidy, there are only so many travelers to pay for a doubling of flights. It's my understanding that DL is averaging around 45 of 50 seats full from COU to ATL. If 1/3 of the COU passengers switch to AA (I would be one of them) then DL will drop to 30 passengers with 20 empty seats. That is probably enough to cause the market to be unprofitable for DL. Assuming AA picks up 1/3 of the current DL passengers, they will still need to find another 20 or so passengers who currently don't fly out of COU for AA to be profitable. Realistically both to be profitable, the pie needs to double in size. I don't see how the pie will double in size, but hope AA succeeds. I will fly AA out of COU, but will be extremely frustrated if a year later we have no carriers and have foolishly squandered $3 million dollars. This is a very small town and $3 million is real money.

Last edited by ksweeney; Oct 20, 2012 at 5:50 pm
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