AA's future & the Seeking Alpha article
Apr 27, 2011, 9:55 am
#46
Join Date: Jan 2007
Location: Mostly AUS or rural England
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AA gave that up years ago, in fact they've given up markets like AUS-SJC on mainline as well. The problem is they're now flying CRJ's to ORD from AUS. If they drop those they can pretty much forget AUS for many of their international routes, and if they do that from more similar cities there will pretty soon be no AA left. About the only chance they seem to have is to push in exactly the opposite direction and run small, premium services to ORD to connect with the international banks. Changing the ERJ's and CRJ's so all premium and focusing on key markets just might be part of an imaginative move to differentiate themselves, instead of following the herd to oblivion.
Apr 27, 2011, 10:35 am
#47
FlyerTalk Evangelist
Join Date: May 2001
Location: LAX; AA EXP, MM; HH Gold
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Anyway, with two-class CRJs, AA is well-positioned to retain premium connecting traffic at a much cheaper trip cost than MD-80s full of bargain basement leisure traffic.
Apr 27, 2011, 11:01 am
#48
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Join Date: Jul 2001
Location: Phoenix, AZ
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I agree that if I carry 50 local pax at WN prices, then the flights make no sense whatsoever.
Apr 27, 2011, 11:19 am
#49
Join Date: Mar 2001
Location: Dallas
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Interesting and educational discussion for someone like me who's less conversant re the issues involved. So far it's mostly focused on the domestic dimensions. Does AA's tightening links with OW, particular BA and IB, affect the calculations here at all? Or are they marginal considerations in view of its slow downward domestic spiral?
With respect to BA and IB, I don't know enough about the particulars of their joint business arrangements to make any specific comments.
However, generally speaking, I worry that over time, the U.S. legacy carriers, encumbered by more costly and inflexible labor contracts, will gradually cede market share to foreign carriers that are able to deliver a higher quality product at a lower price (due primarily to lower labor costs). This is what happened to the U.S. international maritime industry--- for all intents and purposes, it ceased to exist long ago--- that's why virtually all cruises are on foreign-flagged ships. It seems like a reasonable expectation that the same pattern will repeat itself in the international air passenger markets.
If that becomes the case, the best the U.S. legacy carriers can hope for is to enter into revenue sharing arrangements on these international routes, contributing their domestic passengers to connect on the international flights for a piece of the action.
However, generally speaking, I worry that over time, the U.S. legacy carriers, encumbered by more costly and inflexible labor contracts, will gradually cede market share to foreign carriers that are able to deliver a higher quality product at a lower price (due primarily to lower labor costs). This is what happened to the U.S. international maritime industry--- for all intents and purposes, it ceased to exist long ago--- that's why virtually all cruises are on foreign-flagged ships. It seems like a reasonable expectation that the same pattern will repeat itself in the international air passenger markets.
If that becomes the case, the best the U.S. legacy carriers can hope for is to enter into revenue sharing arrangements on these international routes, contributing their domestic passengers to connect on the international flights for a piece of the action.
Apr 27, 2011, 12:31 pm
#50
Join Date: Jan 2007
Location: Mostly AUS or rural England
Programs: BAEC redundant Bronze, AAdvantage Lifetime PLT, CO, WN, B6
Posts: 6,526
Exactly. One, maybe the only, option for AA given their cost base is to focus on premium traffic to the exclusion of all other, and the CRJ's give them one way to do that.