WebTraveler

You nailed it. This purchase was primarily about ensuring Alaska's independence from being gobbled up and eliminating a potential west coast competitor.

Alaska and AA will only be friends for so much longer. Alaska was fine when they were a niche player in the market in the PNW. The more that changes the less it will be tolerated.

The Bay Area by itself is not a huge threat to AA since they have come and gone over the years multiple times. The AA pilot base closed.

But LA is another story. That's an AA hub that is showing substantial increases in flights each quarter from AA.

We'll need to see how this all plays out.

Fanjet

Because AS can feed off of the huge AA customer base in Dallas, Washington, and NYC. VX can't. Even better given that AA has no presence at DAL. In fact, I would say that is what over half of the passengers on those flights will be.

beyondhere

Would Washington and NY based AA customers prefer landing in DAL over DFW and choose AS for that? WN also has a loyal following in DC now, and likely can get sale for those that really want to fly into DAL.

I figured VX setting shop in DAL was for courting Dallas based locals, moreso than customers from other cities who want to fly into DAL over DFW. VX also didn't mind being aberrant. WN has the economies of scale with the hubs at these airports, but flights into alternate airports tend to be such, for those coming from the other market.

e.g. A group of business pax from company have to go to Dallas area to go to a client site. Three of them fly into DFW, as expected. One flies into DAL and isn't near his group when they have to share a rental car to reach the client site. He learns from that experience to fly into DFW next time.

Fanjet

If they want to go to the city of Dallas specifically, yes. If they want the hopes of getting a free upgrade to F off of their Y fare, probably not.I think VX was doing this more to offer LGA/DCA-SFO/LAX one-stop service for its passengers as it cannot offer them nonstop service (aside from the one SFO-DCA flight). But instead would need to use JFK or IAD. And also, because it faced too much competion on LAX-DFW and SFO-DFW.

dayone

The one tells the other three how amazingly easy DAL is to transit, how fast it is to rent a car (even Silvercar is literally across the street) and how close DAL is to their client site. The other three switch their flying to DAL.

beyondhere

I suppose it depends. If 2/4 are originating from EWR, they won't be able to get a nonstop from any carrier to DAL. DFW in general has more nonstop flights to more airports, and is considered more central in the DFW region. VX at DAL to me appeared to be for high yield leisure travelers, millenials, and maybe self made wealthy entrepreneurs. I think it was expecting to pull from WN's customer base for those that want a better flight experience, such as an F class. But I think AS would want the general business market that is more accustomed to fly to a major airport one associates with a city.

I'm beginning to think that DFW is better for AS than DAL, for another reason. The codeshare. If AA cuts out SEA-DFW in favor of SEA-DAL, AS likely will have fewer options for those that connect. I know ORD and PHX are there, but there are likely markets with greater DFW frequency than ORD and PHX especially in the Southeastern US.

If AS keeps a split SEA-DFW with SEA-DAL, frequency at either of the two isn't great enough compared to frequency at one, for it to be very reliable. Split serviced airports like DL flying ATL-EWR, ATL-LGA and ATL-JFK work well when the carrier has strong frequency through all.

I'm not sure AS would be willing to dedicate so much capacity to Dallas in general, as the focus for the VX acquisition was more for California than Dallas.

Fanjet

First, I think you meant to write AS, not AA.

VX (and now AS) will only have use of two gates at DAL. Which means probably 18-20 daily flight total. And I don't know if DAL would allow remote stand parking/bus operations there since they were quite specific in capping the airport to 20 gates. So, AS may not be able to "shutter" their operations at DFW if they intend to keep all the DAL flights to LGA/DCA/LAX/SFO. But AS already has co-terminals in their system: DCA/IAD; SFO/OAK; LAX/BUR; and soon LGA/JFK. They could keep their current SEA/PDX-DFW service and maybe add a 12am red-eye from each airport to DAL. Or they can try to completely move over to DAL and put their code on the AA SEA/PDX-DFW flights.

ashill

That makes no sense. If VX wanted to offer one-stop SFO-XXX-LGA/DCA service, why would they do it via DAL, the single most difficult airport in the interior of the country at which to get gates? I mean, obviously they'll be willing to sell the connection, but it can't possibly be a primary consideration in developing the route as you suggested.

If selling SFO-DAL-LGA service were a significant motivation, I'd expect well-timed connections. Looking for a M-F trip in April, there's a 1-stop direct flight on the outbound, but the return involves connection times of 3 hours or 2:35 in DAL. Hardly optimal.

Obviously, that's the question: AS could benefit from the connecting traffic at DFW, but they could also benefit from not directly competing with AA at DAL (and probably capturing some AA loyalists on trips when DAL is more convenient than DFW). From DAL, AS would have no beyond-DAL connecting traffic, but they'd of course still have the beyond-LAX/SFO/PDX/SEA connecting traffic. AA has plenty of DFW-SFO flights, and they have very few beyond-SFO connecting opportunities (and no unique beyond-SFO connections). So you obviously don't need connecting options at both ends of a flight for it to work. Two gates is probably about right for a robust operation from DAL to each of their four west coast hubs.

AS has the numbers (or will have them after the merger when they can fully integrate the AS and VX numbers). What they do with DFW and DAL will tell us what the numbers say about this question.

Fanjet

Keep in mind that slot pairs at DCA and LGA in addition to two gates at DAL is what was being offered up to smaller carriers by the DoJ in order for the AA/US merger to take place. The only other "newly available" option was gates at ORD. And even though VX already competed with AA/UA on SFO/LAX-ORD, they probably thought they had a better shot of just competing with WN on DAL-DCA/LGA than with AA/UA on ORD-DCA/LGA. In addition to no longer competing with AA/UA on SFO/LAX-DFW.

ashill

Sure, that all makes sense. I'm just saying that I highly doubt the SFO-LGA market and especially the SFO-DCA market (which they already served nonstop) was a primary consideration in choosing the DAL flights they did, as you originally suggested.

And the difference now is that they will have two additional west coast hubs to serve, which lets them more fully utilize the DAL gates to positions of strength.

Fanjet

There is no way AS can close DFW and consolodate their operations at DAL. Unless they abandon one of the current DAL routes (Well, they'll proabably cut DAL-LAS; but that is not enough to cover the 5 flights from DFW). Two gates is all they have to work with. And 7 of those flights need to go to LGA and DCA. That means dividing up SFO/LAX/PDX/SEA service from maybe 11 or 12 flights. And if DAL has curfews (I'm not sure), it makes things a little more difficult.

ashill

My guess is that they'll drop DAL-LGA/DCA to focus on their strengths and serve DAL-SEA/PDX/SFO/LAX. As I said before, VX doesn't have enough hubs to serve DAL only from their hubs, so they had to fly somewhere to fully utilize the gates. Since they were able to get LGA and DCA slots, that made some sense since they didn't have an obviously better option given their network. AS will.

formeraa

I would agree IF the government allows them to sell the LGA/DCA slots. If they have to give them back, I'm not so sure.

My thoughts continue to evolve. As long as AA will let people accrue AA FF miles on the AS DCA/LGA routes, it might be a win/win for both carriers. AA now would have "flights" at DAL once again for travelers going to DCA/LGA from the eastern part of the DFW Metroplex. Eliminate the LAS-DAL routes and see if there is enough room to move the SEA/PDX flights to DAL. Maybe that would work.

beyondhere

It could probably sell the DCA slots to either NK, F9 or B6, and could sell the LGA slots to one of those carriers or WN*. This assumes any of those carriers would make a decent offer.

*I think it'd be dicey if AS sold the DCA slots to WN, as the DOT might not want WN buying up essentially the great majority of AA's divested slots at DCA. It's unclear to me if UA could expand at DCA or LGA or if it would have any interest.

But all of those LCC carriers would just use those slots on DCA-Florida or LGA-Florida, so the question is what's to stop AS from just running some Florida service from LGA and DCA?

From 2015 Q3 fares, DCA-DAL stands out to me as weak with an average fare of $140. Q1 was $130. Granted this is an average between WN and VX, and VX specific data isn't listed.

However, 2015 Load factors show VX on DCA-DAL settling in the low 70s by the second half of the year, which likely isn't great. The first half seemed a struggle, but it's peak was surprisingly in May, at about 80%. In the same Q3 period, DCA-FLL had an average fare of $146, led by B6, and Q1 avg. fare was higher at $188. No doubt that FLL season is in Q1. Maybe it'd be an option for AS to switch from DCA-DAL to DCA-FLL. It could then hope that AA bows out, as AA already covers DCA-MIA. AA might anyways be ready to cover a route like DCA-IAH and will need some slots for it.

As for DAL-LGA, LFs were better for VX with it in the high 80s even by October of last year. The New York-Dallas market is large, undoubtedly.

However, fares aren't so hot, likely because of the competition. For 2015 Q3 fares, the NYC-Dallas average fare was $206, with AA being the largest carrier and it's average fare at $216. In contrast, LGA-MCO average fare was $182. Thus the average fare of NYC-Dallas was only about 19% greater than LGA-MCO, but the route was 45% longer. Granted, if AS were to switch to LGA-MCO, the average fare of LGA-MCO would likely drop with more competition (itself added on the route), but I believe it's a route that would perform well all year round, and be a popular market destination for AS FF that are in NY, that are supporting AS on the transcons.

Fanjet

I think it should be noted that the number of flights AS/VX have at EWR/LGA/JFK combined clocks in at around 24. That's the extent of their NYC FF base. Currently, VX gets no FF feed from AA and DL on LGA-DAL. That would change with AS. Whereas a route like LGA-MCO would get none of that AA/DL feed as they each offer flights to MCO from NYC.