Old Jun 20, 13, 1:02 pm
  #810  
FWAAA
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Originally Posted by austin_res View Post
If AA is serious about JFK, they need to put those slots to good use. I'm surprised no one has raised issue with AA squatting on slots. AA has sat on the sidelines while Delta and JetBlue expanded at JFK, basically squeezing AA out of the market.
There are no procedures by which competitors can complain about the utilization of JFK slots - they are simply "use them or lose them." There aren't any "highest and best use" requirements.

AA has assembled some JFK slots while it waited for its competitors' labor costs to rise to AA's levels. Eventually, the AMR board overruled Arpey and filed a Ch 11 petition to forcibly lower AA's costs. Now that those costs have been lowered, AA has been expanding long-haul flights at JFK this spring. High-cost airlines tend to contract, and low-cost airlines tend to grow (generally at the expense of their higher-cost competitors). Sure, DL expanded - it had the benefit of bankruptcy-induced lower labor costs.

US is an odd example, as it's been a low-labor-cost airline that has not grown since the merger in 2005. In many ways, Parker squandered the huge labor savings forced on the US employees in their two bankruptcies. Once it became obvious that UA/LH/AC would not admit US to the immunized joint ventures, Parker should have acquired some TPAC-capable planes and expanded from PHL.

jetBlue is basically irrelevant as it does not fly from JFK to Asia, Europe or Deep South America. DL (at JFK) and UA (at EWR) are the relevant NYC-Longhaul competitors.

Originally Posted by austin_res View Post
Why would Parker merge with AA and then raise US costs? I would imagine he would want to lower AA's costs to match US lower costs.
That may be what Parker would want, but that doesn't line up to what he has promised his employees (both at US and AA).

The reality is that new AA has made promises to PMUS and PMAA employees that will increase its labor costs by about $400 million a year above the new Ch 11 labor costs of AA and the current labor costs at US, according to AA's Disclosure Statement. Most of that $400 million will go to the PMUS pilots and FAs.

That's one reason that some are predicting some shrinkage at CLT and PHX: those hubs have been profitable at the old, low labor costs prevailing at US. Not so sure they'll be as profitable at the new higher labor costs. Parker has for years told his employees that US could not afford to pay the same as AA, UA or DL, because the US hubs don't generate the same high revenues. CLT and PHX won't magically generate higher revenues now, and thus some right-sizing may be in their futures. For nearly 20 years, US has had the lowest yields to Europe, and that's because PHL and CLT don't generate the high yields found in NYC. Changing the name to AA won't change that.
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