FlyerTalk Forums - View Single Post - Corporate travel is about to get harder: lower fares to be removed from legacy GDS
Old Feb 21, 2024 | 6:49 am
  #288  
TBD
All eyes on you!
15 Years on Site
 
Join Date: May 2010
Location: Tampa, FL
Programs: All The Programs
Posts: 2,333
Originally Posted by npretnar
I feel like AA's decision, here, is a by-product of a ridiculous and obsessive focus on cost minimization at the sake of revenue maximization. It's a mistake that you cannot make in an oligopolistically competitive industry (for context, see Boeing vs. Airbus), but it's one that AA has continually made since the US Airways merger. Even if AA eventually ends up "permitting" most major managed travel agencies to be listed as "preferred," the rollout of this whole scheme is really clunky and probably already turning off business from booking AA. How does AA expect to compete, in the long run, against UA and DL when they cannot compete for all business travelers?

At AA the Chapter 11 writing is on the wall with this pilot contract just signed, relatively low profit margins, lack of a cohesive strategy, labor strife with other front-line workers, etc. Perhaps cutting off the corporate hand (business travelers) for the sake of short-run cost minimization at the expense of long-run profit maximization will only accelerate the company's eventual journey toward bankruptcy again, while allowing them to slog along at minimal profit levels in the near term.
Just about everything the airline industry tries to do is clunky and mismanaged.

I think you're right that they're focusing on the easier method of increasing margins (cutting costs) rather than increasing revenue. It takes years to establish yourself as a premium carrier that can command premium fares. And that's very difficult to maintain. See Delta pre- and post-pandemic.

I don't see an alternative as AA shareholders, rightly, demand improving returns. Unfortunately for those shareholders, AA execs have never demonstrated any real leadership/competency.

Bankruptcy seems like a stretch.
TBD is offline