SFOPeter

Yes their stock is doing great. However, historically regional carriers in the US do not have great long term prospects. And they have DL hammering them in their home turf. AS management keeps trying to make big moves rather than stay the course. And yes, they could have just made up with AA which you seem very focused on. But that is not what they did. They are joining OW which has a de facto parternship with AA. If the future is so rosy for AS what is making them finally join an alliance?

SFOPeter

Again I am not saying that AA can tell AS what to do and what not to do. However they definitely have a say in whether or not AS is in OW. Hence a bunch of proposed cancellations and codeshares to be submitted to DOT.

eponymous_coward

So AA, DL and UA have had bankruptcies.In some cases multiple bankruptcies.

AS? Zero over 85+ years. That long term enough for you?

As for OW: AS is partnering with pretty much every OW airline that touches the US other than IB already, and have a working relationship with the other IAG airline EI. It probably makes doing lounge access and elite reciprocity easier (something they already have with BA and QF); it’s competitive against DL.

The relationship with BA is well over a decade old, for instance...

NWplatinum

Is it possible we don’t see upgrade reciprocity on AA with AS status (or visa-versa) so AS can keep their MileagePlan intact? AS has been very strong in sticking to the old way of earning/redeeming miles and its allowed them to stand out. So I don’t see them changing their program. Speaking of which if you live in Seattle and hoard your skypesos, now it’s doubly dumb.

I also can’t see OW making AS shed their other partners given that QF and EK are so closely tied together, and while QR has rumbled about it, EK and QF still remain very close.

NWplatinum

Notice when the announcement was made about joining OW, they were focused more on the AA side of things. Just an observation when they announced. I think they joined OW to stick it to Delta in the eye.

SEA will now become a gateway to North America for OW with Alaska leading the way for connections onto other US/Mexico/Canada cities. Who knows we may even get a QR flight out of this to SEA?

This has definitely stopped “Seattle’s hometown airline” (you never were) DL right in their tracks and undone a lot of the investment they’ve put into SEA. So much for their strategy of gobbling up AS.

BearX220

We're not talking about price collusion. But soft de facto coordination in the form of schedule adjustments and reciprocity is inevitable. Remember, AS is the supplicant here, not the arbiter. AA walked out on AS because AS+VX was up too much in AA's grille. What's changed now? Nothing. AS will be a non-threatening junior partner to AA, because the alternative is isolation, irrelevance to most of CONUS, and decline. Example of coordinating schedule reciprocity:

... because AA is happy to see AS tear up LAX-EWR, it only hurts UA, but will have much to say about LAX-JFK.

Yep, exactly.

fly18725

Schedule coordination is illegal. I would suspect DOJ will require current competitive routes to be maintained for some period.

flytoeat

This is Flyertalk, so armchair CEOs, CFOs, CMOs are abundant. Even so, some of the speculation is fantastical and begs for its authors to peruse a 10-Q/10-K.

Eurynom0s

A key difference is that there's probably way less potential OWE members coming from UL.

MAH4546

you still don’t seem to understand collusion if you think AA “will have much to say about LAX-JFK.” It will have absolutely nothing to say.

And while AS will certainly take a look at AA’s LHR/BLR timings and look how it can beat feed them, it will do so independently without feedback or discussion from AA.

eponymous_coward

Yes, I think so, because AA doesn't have unlimited upgrades for Golds/Platinums (AS's equivalents for MVPs/Golds) except on < 500 mile routes. I think it's reasonably likely reciprocal upgrades aren't a thing, it's just everyone's a OWR/OWS/OWE.

AA's continued to underperform compared to UA and DL, and you can see that in their stock price and their operating and profit margins. AS's fleet changes are done and it's clear now that dense 738s/739s/A321s that don't offer lie-flats are serving different markets from A321Ts that have half as many Y seats and are F/J heavy, and that the pressure on AA's margins for F/J transcons isn't coming from AS, it's coming from B6.

Basically, it was a mistake for AA to walk away (they were never going to lose the premium transcon market out of SFO/LAX to AS, and LAX is too divided for anyone to really win ala Fortress EWR/IAH/MSP/DTW). They're fixing the mistake now that DL is coming for them in BOS, AUS and MIA and Latin America- apparently the DL LATAM purchase made some eyes open. Enemy of enemy is a friend, so time to fire some shots in a Delta hub, plus AS has made partners look good.

AS ASMs, 2016: 57,953*
AS ASMs, 2017: 62,070
AS ASMs, 2018: 65,335
AS ASMs, 2019: 66,654

*includes VX even though acquisition didn't become official until late 2016

EWR pricing is relevant to NYC, and UA can make AS pay much more than AA can, because it's easy for them to capacity dump widebodies in that market (as they're already doing), not so much AA out of JFK since their service is all A321T. If AS was going to leave markets because of inability to sustain profits and "we'd sure like it if our partner did some things to help us, wink wink", they'd leave NYC and BOS from CA altogether, probably IAD too (which AA flies). Which I guess they could do, but at that point they'd basically be WN out of SFO/LAX (shorthaul/Hawaii/Mexico/DCA only- AS would probably also drop ORD and DAL because "wink wink"), except without WN hubs east of the Sierra Nevada.

Having to drop anything over 500 miles east from SFO/LAX (except for the DCA routes where the DOT would give breech birth to kittens) if anything is isolation and junior partnership. I submit they won't any more than they'd drop SEA-JFK or PDX-DCA- they've basically aligned the network into suitable shape for the future as it stands right now. We'll see who is right.

Of course at that point AS would kind of be looking at AA running SEA/PDX/SFO/SJC-LAX and going "ahem, if we're colludi- I mean, making completely innocent scheduling changes, we'd kind of like you to get out of OUR grill so we can increase profits and you can dump some lower performing routes. If we're your double secret probation regional carrier and you're our double secret probation transcon/midcon carrier, let's get this right". It's a sucker bet that AS's lower pay scales and costs makes those routes cheaper for them to run than for AA.

eddiehuang97

The question is -- if you don't fly AS, what is the real benefit of switching over?
Lower qualification requirement -- since you earn as little as 25% on discounted Y, you need to fly 360,000 BIS miles/90 segments.
More benefits -- You are just getting an OWE. But if you are getting OWE already there are no more benefits for you unless you fly AS(but if you start to fly AS, isn't that what AS wants?). Also, you would lose your lounge access for US domestic flights.
Better redemption rates -- each program has its own sweet-spots and MP's sweet-spot is US-Asia flights. Overall MP could be better or worse for you depends on your travel pattern.

I could see AS raises 75k qualification requirement(making it 100k partner miles or 120 segments) and devalue redemption rate a bit but I don't see a huge devaluation coming. I think some people will switch over but I don't see people flooding MP and making MP a money loser.

eponymous_coward

Right, except BA and QF are already letting AS elite members in their lounges already.

https://www.alaskaair.com/content/mi...rtner-benefits

Hear, hear. The "ZOMG AS MVP75K is SOOOOO EASY everyone will game it" is overrated IMO. Yes, there's probably some college kid reading FT right now who will fly DFW-HKG-DFW on a $400 fare 8 times in Y plus some cheap AS $99 transcons on their vacation so they get the shiny card and be in a nice lounge. But the days of doing amazing mileage runs for cheap status are mostly dead thanks to revenue-based programs. Nowadays it's all "I'll do premium Y or a cheap J/F fare"... which I'm not sure an airline minds all that much, really (if you're soaking up F/J capacity that would have been on an award a decade ago- and Y+ is often by square footage the most profitable cabin on a plane).

onlyquestions

I think it's interesting to note that ALK is up about 1.5% since Thursday's announcement; AAL is down about 2.5%. Obviously, there are plenty of factors that might be contributing (Coronavirus is a bigger business risk to AA than AS), but I still believe that Wall Street seems to think AS is getting the better deal.

onlyquestions

Great point about the CA strategy being far more than SFO/LAX.

The focus on SAN (although its been rolled back a bit recently), plus the addition and/or increase in flights to smaller cities like SLO, Sonoma County, Monterey, Fresno, etc. suggests that AS is trying to build up business and loyalty in cities that Southwest can't serve because of its all 737 fleet and its lack of F. Those CRJs are a bit of silent weapon, especially now during this MAX debacle.