Microwave

While what you say may seem axiomatic, I doubt Spirit has had a "tremendous" effect on AA on announcing this route. The two airlines' business models are dramatically different, and AA's high yield travellers are unlikely to be swayed by NK's entry into this market. AA may see some impact on the fringes of low yield traffic on this route, but I'd imagine that's about the extent of it. I also think MAH4546 has a pretty good handle on these things; you're welcome to disagree of course.

truthknown

Seeing that I deal with this on a daily basis, I will definitely disagree...
NK entering these markets is giving me a serious headache. Granted the word "tremendous" may be a bit over the top, it is definitely not negligible.

While AA may cater to business traffic, a large percentage of traffic is leisure. Losing leisure traffic does not mean that higher yielding business traffic replaces it. It just means either seats go empty, or the fares go down to stimulate more demand (which also causes fare dilution as others who would have paid a higher price pay the lower price made available). So from a RASM perspective, AA cannot afford to lose leisure traffic just as much as it can't afford to lose business traffic. So yes, NK does have a significant revenue impact on the markets it enters, and we will adjust accordingly.

Jacobin777

"Significant" or "marginal" impact?

Microwave

While FT does have a lot of "experts" and "insiders", MAH4546 has a track record that many who make such claims lack. As such--and I don't mean to belittle your serious headache--I'm afraid I will have to agree with him on this one. I just don't see NK of all airlines causing a sea change for AA or anyone in the ORD-BOS market. There are several other challenges to AA routes that I think would float much higher on the threatdown than Spirit.

truthknown

It's not necessarily the impact to that one market but the overall network impact. NK has announced entry into quite a few markets from ORD that impact strategies on non-stop markets from the O&Ds that NK now offers through ORD. For instance, NK announced ORD-BOS and ORD-DFW. So now, it creates a challenge for those 2 markets as well as the BOS-DFW market. Include all of the combinations that NK has now created, and it becomes a bigger problem.

Anyway, you can agree with MAH4546 if you like. However I am one who actually has to respond to this. Whether it means a price war is yet to be determined... Maybe doing nothing may be the appropriate response.

Xero

I know quite a few businesses that have a "buy the cheapest ticket" policy these days. But lucky for AA and UA, Spirit's reputation is such that business travelers will shy away from it.

zman

[QUOTE=truthknown;16606416]Spirit does not use an AA gate. It uses an old DL gate that AA does not and cannot lease. Trust me, AA has tried to gain control of those gates...


QUOTE]

Spirit flies out of the AA/AE gates in B.
DL has or had NO B gate/terminal access.
I doubt AA is trying to gain control of any new gates.
With the 30+ daily AA BOS reductions look for AA to shed BOS gates or even move out of B.

Ambraciot

Why are there so many low cost carriers offering flights from BOS to ORD and other well served destinations, but no one wants to compete with Delta Connection on BOS>DTW?

zman

DL does good out of BOS on finding non stop routes with no competition:
DTW
SLC
AMS
CVG
MSP
PIT

I am sure there are others

adambisi

BOS-MSP has competition with Sun Country

BOS-PIT has competition with US and B6

However, there are many others: DL has no competition on BOS-CMH, BOS-ORF, BOS-MEM, BOS-IND (US must have dropped the route recently).

CDKing

Now i wonder if i should book my BOS-ORD based on the WN sale match or wait for fare war with spirit?

ashill

Because Chicago is a much more lucrative market than Boston?

Spirit and JetBlue are the only low cost carriers that fly BOS-ORD, and JetBlue has a hub in Boston. Southwest flies MDW-BOS; MDW is as close to a hub as Southwest gets. None of them have a DTW hub. I'm not sure what the surprise there is.

This is really another way of saying that DL has a bunch of second-tier cities as hubs -- no other airline wants to fly to DTW, SLC, CVG, etc. enough to compete with DL.

AA has no-competition non-stops to DFW and MIA out of BOS. My guess is that both of those are rather more lucrative markets than DTW, SLC, CVG, MSP, and PIT. Obviously, DL does fly a ton more point-to-point routes than AA. I think having hubs that people want to fly to is a strength of AA.

MAH4546

Spirit's ala-carte scares away just as many passengers as it attracts. AA competing with Spirit is nothing new. Spirit's largest hub and headquarters is in AA's backyard of Miami. American has effectively competed with Spirit, not to mention it has been able to drive Spirit out of about half a dozen markets in the Caribbean. The biggest problem with Spirit is that it has a difficult problem attracting second-time customers. But it caters to the "we rarely fly" crowd in the first place.

Spirit charges for printing a boarding pass with a check-in agent, having a carry-on bag, soda, and seat selection, among many other things. Oh, and the seats on new delivery A320s since about a year ago do not recline.

Dieuwer

Regarding BOS-DTW, how much OD traffic is there really. Probably very little. DTW is a very nice connection point to Asia, but not much else.

JumboD

Forget UA/AA/B6, I can't imagine Spirit wanting to go head to head with WN on their BOS-MDW service: they're known for rock-bottom fares, quality customer service and you have the added bonus of skipping ORD.