Upcoming AS Route Cuts
Feb 21, 2018, 6:12 pm
#61
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You have to remember, WN is a 700+ plane operation- over twice the the size of AS* post VX acquisition. So I find the idea that they're somehow an easier target than UA to poach passengers from to be rather dubious. Maybe you don't like their deal, but enough people do to make them a 700+ plane operation. And I think having denser planes without coach on one hour to 90 minute flights works rather well- quite frankly if the market for shorthaul F was super important, LCCs that neglect it like WN, FR, U2, AK wouldn't exist, and European carriers wouldn't be dumbing down their "business" class to compete. So where's AS's advantage over WN?
At that point, if all you're left with is trying to beat WN over the head in SJC/SAN, which AS was doing before buying VX, what was the point of spending 2.6 billion? Eliminating a competitor? Yeah, as if SFO and LAX are going to let gates go empty if AS pulls back to just a pre-VX level of traffic. B6 could walk right in. So could DL. Ooops.
* and remember some of those planes are Q400s and E75s, so really on an ASM basis AS is a lot smaller.
Last edited by eponymous_coward; Feb 21, 2018 at 7:46 pm
Feb 21, 2018, 7:18 pm
#62
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I agree. They need to make the network more efficient by eliminating some of the redundancies. That will likely mean elimination of OAK vs SJC, (eg. UA doesn't serve OAK). UA made and seem regretting the pull-out of JFK, but UA is more efficient systemwide because of NYC and SFO area efficiencies. I don't know if AS has the guts to make such move however....
Jiburi
Jiburi
Feb 21, 2018, 8:14 pm
#63
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LAX is different, there is not one dominant carrier like most places.
It's going to be difficult because I find it hard to believe that SFO is getting buried but LAX is doing just fine (LAX was generally the weaker sister for VX). It's likely they would have to strip both SFO and LAX AND some frequencies PDX and draw down from SEA just to handle all the intra-CA frequencies (it's a LOT, we're talking multiple SFO/LAX/OAK/SAN/SMF/SJC/ONT/SNA/LGB frequencies between most of those cities), and AS will never have hubs like DEN, PHX, LAS, DAL, STL or MDW to funnel people to for a connection. Everything east of the West Coast is hub-spoke for them (that puny DAL operation does not count). WN isn't just flying people SAN-LAS or SAN-OAK- they fly people SAN-LAS/OAK-XXX. That helps make their model viable.
You have to remember, WN is a 700+ plane operation- over twice the the size of AS* post VX acquisition. So I find the idea that they're somehow an easier target than UA to poach passengers from to be rather dubious. Maybe you don't like their deal, but enough people do to make them a 700+ plane operation. And I think having denser planes without coach on one hour to 90 minute flights works rather well- quite frankly if the market for shorthaul F was super important, LCCs that neglect it like WN, FR, U2, AK wouldn't exist, and European carriers wouldn't be dumbing down their "business" class to compete. So where's AS's advantage over WN?
At that point, if all you're left with is trying to beat WN over the head in SJC/SAN, which AS was doing before buying VX, what was the point of spending 2.6 billion? Eliminating a competitor? Yeah, as if SFO and LAX are going to let gates go empty if AS pulls back to just a pre-VX level of traffic. B6 could walk right in. So could DL. Ooops.
* and remember some of those planes are Q400s and E75s, so really on an ASM basis AS is a lot smaller.
It's going to be difficult because I find it hard to believe that SFO is getting buried but LAX is doing just fine (LAX was generally the weaker sister for VX). It's likely they would have to strip both SFO and LAX AND some frequencies PDX and draw down from SEA just to handle all the intra-CA frequencies (it's a LOT, we're talking multiple SFO/LAX/OAK/SAN/SMF/SJC/ONT/SNA/LGB frequencies between most of those cities), and AS will never have hubs like DEN, PHX, LAS, DAL, STL or MDW to funnel people to for a connection. Everything east of the West Coast is hub-spoke for them (that puny DAL operation does not count). WN isn't just flying people SAN-LAS or SAN-OAK- they fly people SAN-LAS/OAK-XXX. That helps make their model viable.
You have to remember, WN is a 700+ plane operation- over twice the the size of AS* post VX acquisition. So I find the idea that they're somehow an easier target than UA to poach passengers from to be rather dubious. Maybe you don't like their deal, but enough people do to make them a 700+ plane operation. And I think having denser planes without coach on one hour to 90 minute flights works rather well- quite frankly if the market for shorthaul F was super important, LCCs that neglect it like WN, FR, U2, AK wouldn't exist, and European carriers wouldn't be dumbing down their "business" class to compete. So where's AS's advantage over WN?
At that point, if all you're left with is trying to beat WN over the head in SJC/SAN, which AS was doing before buying VX, what was the point of spending 2.6 billion? Eliminating a competitor? Yeah, as if SFO and LAX are going to let gates go empty if AS pulls back to just a pre-VX level of traffic. B6 could walk right in. So could DL. Ooops.
* and remember some of those planes are Q400s and E75s, so really on an ASM basis AS is a lot smaller.
Feb 21, 2018, 8:26 pm
#64
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Jiburi
Feb 21, 2018, 11:24 pm
#65
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AS is a solid fifth place at LAX, well behind the top four. VX isn't going to move that needle to #4 .
Anyways, about dominant carriers, UA has about 40% market share at SFO. It's not a fortress hub like IAH or EWR. It's also WAY bigger than OAK/SJC.
In fact, 40% is about WN's market share at (1/3rd the volume) SAN and slightly less than their market share at SJC (an airport 1/5th the volume of SFO, so it's not remotely a replacement for SFO). So how is UA impregnable at SFO because AS is floundering but WN is vulnerable?
Additional fun fact: WN has a bigger operation by pax volume at SFO than VX or AS had. So does AA. So does DL. All of them have bigger operations than VX at LAX as well (and WAY bigger ones at LAX/SFO than AS has at SAN/SJC- in fact, WN, DL, AA and UA are also, wait for it, bigger than AS at SAN, at least pre-merger). Contemplate all that for a moment before you decide AS needs to bail at SFO, but it's no big deal, they'll make it up in much smaller airports.
Last edited by eponymous_coward; Feb 21, 2018 at 11:46 pm
Feb 22, 2018, 4:39 am
#66
Join Date: Dec 2016
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This does raise a good question. What did AS get for spending $2.6 billion? Which is how much DL paid for NW iirc. It's definitely not interested in the majority of VX's leased aircraft. Even the A321NEOs don't have the greatest terms on them and AS could always get its own lease at probably lower rates. It hasn't shown any interest in keeping the higher yielding customers that VX did manage to capture.
So it seems like the assets were crew/staff for operating the legacy VX network, 7 or 8 gates at SFO, 4 gates at LAX, 1 gate at SAN, 2 gates at DAL, 4 slots at LGA and 4 slots at DCA (including one beyond perimeter). Those within perimeter LGA/DCA slots will probably be sold at some point because they are doing terribly on the DAL-LGA/DCA flights and are more focused on west coast anyhow. I don't see how AS can do anything other than forge ahead keep trying to making stuff work at those new resources it got. Maybe that will mean reduced growth at PDX/SAN/SJC. Also would be interesting to see what AS management think it was buying, since it approached VX abut M&A first.
So it seems like the assets were crew/staff for operating the legacy VX network, 7 or 8 gates at SFO, 4 gates at LAX, 1 gate at SAN, 2 gates at DAL, 4 slots at LGA and 4 slots at DCA (including one beyond perimeter). Those within perimeter LGA/DCA slots will probably be sold at some point because they are doing terribly on the DAL-LGA/DCA flights and are more focused on west coast anyhow. I don't see how AS can do anything other than forge ahead keep trying to making stuff work at those new resources it got. Maybe that will mean reduced growth at PDX/SAN/SJC. Also would be interesting to see what AS management think it was buying, since it approached VX abut M&A first.
Feb 22, 2018, 6:07 am
#67
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What I would do and what Alaska is doing is two different things. Alaska is waving the flag on SFO-MSP, and it appears, their strategy in adding many of the mid-haul markets from SFO looks like it's being scaled back.
I maintain that SFO is a good spoke in the network, but with the competition, is not a good wheel. I maintain that Alaska is much better positioned at San Jose. As for LAX, with no dominant carrier, Alaska has a decent network and a decent following in their own right before the Virgin America purchase. San Diego has been built up in recent years as well. Right now I would do what they know works. They know San Diego works. They know San Jose works. SFO is not working well for them. it is really that simple. It takes decades to build a reliable following and a credible route network. Simply step back, regroup, and refocus efforts on what works in the short term. I wouldn't kill everything in SFO, but I certainly would scale it back. In SFO they don't have the same brand loyalty. This is what I would do.
I maintain that SFO is a good spoke in the network, but with the competition, is not a good wheel. I maintain that Alaska is much better positioned at San Jose. As for LAX, with no dominant carrier, Alaska has a decent network and a decent following in their own right before the Virgin America purchase. San Diego has been built up in recent years as well. Right now I would do what they know works. They know San Diego works. They know San Jose works. SFO is not working well for them. it is really that simple. It takes decades to build a reliable following and a credible route network. Simply step back, regroup, and refocus efforts on what works in the short term. I wouldn't kill everything in SFO, but I certainly would scale it back. In SFO they don't have the same brand loyalty. This is what I would do.
That doesn't actually help AS. No dominant carrier = very difficult to undercut a dominant carrier with pricing and an LCC model, because everyone is fighting over moving their market share a percentage point and prices are extremely competitive.
AS is a solid fifth place at LAX, well behind the top four. VX isn't going to move that needle to #4 .
Anyways, about dominant carriers, UA has about 40% market share at SFO. It's not a fortress hub like IAH or EWR. It's also WAY bigger than OAK/SJC.
In fact, 40% is about WN's market share at (1/3rd the volume) SAN and slightly less than their market share at SJC (an airport 1/5th the volume of SFO, so it's not remotely a replacement for SFO). So how is UA impregnable at SFO because AS is floundering but WN is vulnerable?
Additional fun fact: WN has a bigger operation by pax volume at SFO than VX or AS had. So does AA. So does DL. All of them have bigger operations than VX at LAX as well (and WAY bigger ones at LAX/SFO than AS has at SAN/SJC- in fact, WN, DL, AA and UA are also, wait for it, bigger than AS at SAN, at least pre-merger). Contemplate all that for a moment before you decide AS needs to bail at SFO, but it's no big deal, they'll make it up in much smaller airports.
AS is a solid fifth place at LAX, well behind the top four. VX isn't going to move that needle to #4 .
Anyways, about dominant carriers, UA has about 40% market share at SFO. It's not a fortress hub like IAH or EWR. It's also WAY bigger than OAK/SJC.
In fact, 40% is about WN's market share at (1/3rd the volume) SAN and slightly less than their market share at SJC (an airport 1/5th the volume of SFO, so it's not remotely a replacement for SFO). So how is UA impregnable at SFO because AS is floundering but WN is vulnerable?
Additional fun fact: WN has a bigger operation by pax volume at SFO than VX or AS had. So does AA. So does DL. All of them have bigger operations than VX at LAX as well (and WAY bigger ones at LAX/SFO than AS has at SAN/SJC- in fact, WN, DL, AA and UA are also, wait for it, bigger than AS at SAN, at least pre-merger). Contemplate all that for a moment before you decide AS needs to bail at SFO, but it's no big deal, they'll make it up in much smaller airports.
Feb 22, 2018, 7:00 am
#69
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Well, you are certainly entitled to your opinion. But this thread is two routes, SFO-MSP and SFO-FLL, but it is also the failure to follow through with the 30 route addition that was supposedly coming this year. And just the other day in the investor calls Alaska revised it's growth projections downward. So there's a lot more going on than a single route.
Feb 22, 2018, 7:43 am
#70
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Well, you are certainly entitled to your opinion. But this thread is two routes, SFO-MSP and SFO-FLL, but it is also the failure to follow through with the 30 route addition that was supposedly coming this year. And just the other day in the investor calls Alaska revised it's growth projections downward. So there's a lot more going on than a single route.
Last edited by ryandc99; Feb 24, 2018 at 9:33 pm
Feb 22, 2018, 7:57 am
#71
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SFO-FLL isn’t cancelled, it is returned to being seasonal. You’re also playing fast-and-loose with statements regarding “30 additional routes,” changing the application every few posts. As I said earlier, Alaska made the statement in 2017 about the entire network. Alaska ended up adding 44 new routes in 2017.
We in SFO would love to have a carrier that offers an in the air product that is much better than the rest at a reasonable premium to other carriers. Instead, AS falls well behind as a carrier of choice either due to their product or their limited network. Overnighting in SEA to get to ATL is just not going to cut it. It would be great if they had a clear strategy but unfortunately, they don't at the moment and it shows.
Last edited by ryandc99; Feb 24, 2018 at 9:35 pm
Feb 22, 2018, 7:59 am
#72
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SFO-FLL isn’t cancelled, it is returned to being seasonal. You’re also playing fast-and-loose with statements regarding “30 additional routes,” changing the application every few posts. As I said earlier, Alaska made the statement in 2017 about the entire network. Alaska ended up adding 44 new routes in 2017.
When they made the statement about 30 additional routes, it wasn't clear at the time whether that was referring to new routes or on top of what they had announced already. There was a lot of discussion about it here and people had different opinions on that. There certainly hasn't been 30 new ones since.
30 more markets in 2018?
SFO-FLL is in schedule in late November. But looking at how horrible it has performed in light of mint pressure, I doubt it's coming back.
And it's more than just MSP. If MSP is cut, then SLC could be on the chopping block since it has similar terrible yields. If SFO-CUN and SAN-MEX is cut (along with one daily LAX-MEX), what does that mean for SFO-MEX.
AS has to show its willingness to sustain some of these loss making markets out of SFO and LAX now that it has the additional gate space. Going back to SAN/SJC is not really an option now that WN has added a lot of capacity there along with entrance into HI.
Last edited by ryandc99; Feb 24, 2018 at 9:35 pm
Feb 22, 2018, 9:16 am
#73
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Feb 22, 2018, 10:40 am
#74
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Here is what was said on the Q3 call regarding the network:
Originally Posted by Brad Tilden
We know our growth rate is high even for us over the next few quarters, and this is during a period of yield softness in the industry. As has been reported by others, this quarter, we saw pricing pressure especially in our transcon and inter-Cal markets with walk-up fare levels being well below historical norms. While we believe these prices are not sustainable, they are nonetheless continuing into the fourth quarter. And as a result, I've asked our network planning and RM teams to evaluate every market we fly to, to ensure we have the right amount of capacity deployed to generate acceptable margins and returns. And we will talk more about this in a moment.
Originally Posted by Andrew Harrison
As Brad affirmed, our customer utility is rising. As a reminder, we define utility as the percentage of total demand for geography where we provide a nonstop flight to help meet that demand. We are on track to achieve 70% utility out of San Francisco by year-end, and that's up 11 points from the acquisition. Now, utility is also growing across the State of California, and by year-end, we'll offer 44% utility to California customers. That's up 28 points from our 2016 pre-merger network of only 16 points.
Originally Posted by Hunter Keay
Okay. Thanks. Yeah. Okay. I appreciate it. And then, Brad, when you say you're asking your network team to review new markets, that felt like you're trying to tell us something there. I mean, you emphasized this. I think there's a headline in Bloomberg about it. Don't you do that anyway? I mean, I would assume that doesn't mean you guys always do. And then on the comments around sort of like the inflexibility around capacity, I mean, what can you really do there? And then like what's new? What were you trying to tell us in that statement that's actually new and what are the potential outcomes from it?
Originally Posted by Brad Tilden
Right. Good question. So, in the last 12 months, we bought Virgin America. We got a lot of revenue, a lot of markets that we don't – these weren't our market decisions. It's not our history. Then on top of that, we've added 44 new markets on it. And I think what we're saying is I am not only pleased, but I'm like really impressed with this team's ability in legacy markets to go in and understand the natural demand to build a schedule day of week, time of day, number of frequencies that is exactly right for that amount of demand and our competitive position.
I would say, yeah, it's a fair point is don't you do that anyway, but it's a good question, but I would just say we haven't done that with the Virgin Network. And I think what you'll see us do, go into that network and I'll – just to really say, a lot of this stuff is extremely important to us strategically. So, a lot of this stuff isn't going to change, but there are some things in there that you might see change. There are frequencies, markets that were three a day that two a day may be a better or more profitable outcome with this, and there may be things geographically that you see us change. So, that's what we're really trying to say is that we are getting our arms around the Virgin Network. We're starting to think about it. We're not making an announcement today, but I think you will see something down the road. You'll see some adjustments to the part of the schedule that we inherited from Virgin America.
I would say, yeah, it's a fair point is don't you do that anyway, but it's a good question, but I would just say we haven't done that with the Virgin Network. And I think what you'll see us do, go into that network and I'll – just to really say, a lot of this stuff is extremely important to us strategically. So, a lot of this stuff isn't going to change, but there are some things in there that you might see change. There are frequencies, markets that were three a day that two a day may be a better or more profitable outcome with this, and there may be things geographically that you see us change. So, that's what we're really trying to say is that we are getting our arms around the Virgin Network. We're starting to think about it. We're not making an announcement today, but I think you will see something down the road. You'll see some adjustments to the part of the schedule that we inherited from Virgin America.
He is not misrepresenting facts.
When they made the statement about 30 additional routes, it wasn't clear at the time whether that was referring to new routes or on top of what they had announced already. There was a lot of discussion about it here and people had different opinions on that. There certainly hasn't been 30 new ones since.
When they made the statement about 30 additional routes, it wasn't clear at the time whether that was referring to new routes or on top of what they had announced already. There was a lot of discussion about it here and people had different opinions on that. There certainly hasn't been 30 new ones since.
What is a fact is that Alaska added 44 routes in 2017.
Feb 22, 2018, 10:56 am
#75
Join Date: May 2010
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Just, some perspective... There are a lot of comparisons to the Jet America acquisition, usually representing that acquisition as failure. I think there are way to many variables to analyse these acquisitions from the outside without a lot of detailed information. Since 1987 and the Jet America acquisition AS has done pretty well for itself. It is very early in the process. I think we will all be much better informed after the merger is complete and AS has a couple of years to play.
There are a lot of comments maitiaining that AS can't compete with multiple frequencies on XXX-YYY, but AS has fueled a lot of growth with one daily flight in many major markets, and with major holes in their network (when did they restart SLC?). Maybe they have gotten to big for that now, but we won't know until they start shrinking and loosing money.
There are a lot of comments maitiaining that AS can't compete with multiple frequencies on XXX-YYY, but AS has fueled a lot of growth with one daily flight in many major markets, and with major holes in their network (when did they restart SLC?). Maybe they have gotten to big for that now, but we won't know until they start shrinking and loosing money.