DenverBrian

Glad to see AA has the bolded piece under control.

scnzzz

Unadvertised imminent EXP perk?

PS - Okay, sorry for the non-gender-neutral comment. Edit as you see fit

tom911

You don't fly international? How do you use your systemwides?

FWAAA

You're saying that having just 32% of the LGA slots is more than they need? And by extension, having half of them would likewise be far too many?

Thanks for the chuckle.

Somehow, Delta knows what to do with about half the LGA slots - and that is to initiate nonstop service to the largest 50 or so O&D markets, many of them with mainline planes or 2-class regional jets. Assuming, for purposes of argument, that such an endeavor was beyond the ability of a $13 billion airline (US), I have to believe that it's well within the grasp of a $39 billion airline (new AA), as Delta is demonstrating.

About the bolded portion - I think you have that backwards. US and DL fought strenuously for two years to try to prevent low-cost carriers from obtaining the divested slots at LGA and DCA. US and DL wanted to hand-pick the recipients but the government required that they be auctioned to non-incumbents. In that auction, B6 paid about $72 million for eight flights at LGA and eight flights at DCA, which both US and DL had tried to prevent.

Yes, the $66 million that DL gave US was integral to the deal, but was a much more important amount of cash in 2009 when US was trying to prevent a Ch 11 filing brought on by its shortage of cash (resulting from its huge hedging losses). By December, 2011, US had almost doubled its unrestricted cash balance and didn't need that cash infusion as much as it needed it in Aug, 2009.

Delta has set a goal of winning in NYC, the nation's richest O&D market. Its dominant position at LGA will go a long way toward accomplishing that goal. In addition, its position at JFK is substantially larger than new AA.

eponymous_coward

I think this is more a generic concern. Take, for instance, a US FFer whose sales area isn't overseas but travels a lot in the US, they fly 75-90K a year (maybe VERY occasionally they hit 100K). They're married with kids, and vacations aren't spent in the Maldives or Bali, but more like Disneyworld or the Poconos, and quite frankly, they are on a plane enough such that flying isn't all that appealing, even if there's caviar and Dom.

For this kind of person, if they're getting upgraded 80-90% of their flights as a US Platinum, telling them "sorry, 60%-70% of your upgrades will now cost $30 for every 500 miles" isn't particularly attractive.

This person is also not likely to be part of the FT "do anything for top elite status and then milk it for all it's worth" crowd- they aren't particularly into maximizing the use of miles/etc.; travel is a necessary evil for them. Especially if they are doing a lot of segment-based travel, schlepping around the East Coast and various US hubs on higher-priced fares into smaller airports with limited competition, they may well be a considerably more valuable customer to the combined US/AA entity than someone buying $300 cheap Y transcons, $700 trips to Europe or Shanghai, and complex mileage runs, and then using their EXP upgrades + eVIPs to make a nice self-licking ice cream cone of perpetual elite status using bargain-basement fares.

richarddd

Changes to either program will most likely not be particularly attractive to some people.

I doubt we have any good idea about the typical elite on either program or the likely effect of any changes on revenues or profits.

AA and US saw fit to announce that US fliers would join AAdvantage, the "best developed loyalty program in the world" and that AA has more than twice as many frequent flyer program members as US.

Ambraciot

In the short term definitely.

Have you seen the fares and load factors out of the NYC area? The majors including AA are taking significant loses trying to hold market share and keep their slots active. Right now there is simply too much capacity in and out of NYC for the market to profitably support, but no airline wants to give up its position on the theory demand will recover. Even the new larger AA couldn't afford trying to run major hubs at LGA, JFK and PHL.

Ambraciot

Making the admittedly significant assumption that premium passengers and corporate/government contracts are still a prime consideration (this is DCA after all) AA should be quite happy with the outcome. The LCCs have limited domestic networks, no international coverage or benefits and are generally Y only. DL would have been significant competition for this core group of customers, B6 and LUV are not, now unless they're willing to go to IAD, they'll be with AA.

tom911

Good point. At AA, though, do we have a lot of midtiers even clearing 90% with paid instruments? I just can't recall Platinum level flyers posting those types of numbers in the public forums. More often it seems that they're in the back of the plane due to paid F, Y-Ups, and EXP upgrades.

So how does AA win that US flyer over when they can't promise a stellar upgrade rate, be it comped or paid? Even over at UA I haven't seen reports of midtier flyers clearing in the 90% range. A lot of them are purchasing paid upgrades prior to departure, which is something new over there, jumping over higher tier elites on the list for a variable upgrade fee.

Could US be the sole carrier with that type of clearance rate for midtiers? It does really put AA into the predicament that to match that rate they would need to decrease upgrades from some other groups or just not sell F seats.

SS255

This is definitely the first -- and probably the last -- time that I will ever see the Maldives and Bali mentioned in the same sentence as the Poconos.

The good news for AA fliers, though, is that the merger will once again open up the Poconos (i.e. AVP) as a vacation destination for their segment-qualifying road warriors. ^

Ambraciot

There are "mountain resorts" in PA!? I guess when AA eliminating the SJU based flights a lot of Caribbean segment runs disappeared... I never realized how desperate some AA elites could become.

eponymous_coward

It may be as a result of US flying from the hubs they do: DCA/CLT/PHX/PHL. Sort of like CO from IAH/CLE/EWR...

AA_EXP09

$700 to PVG?
Care to elaborate?
Outside of fuel dumping I can't seem to get anything close to that on AA.
(Besides, routing via NRT makes an eVIP easier to clear rather than to PVG)
300 for a transcontinental flight is NOT cheap-that's almost 6cpm at the best.
Vacations they can purchase cheap revenue tickets rather than using miles.
To PVG I will NOT fly JL/NH/OZ/AC/KE due to limited mileage earning, nor DL due to nearly useless miles.
UA I might consider but AA has a better product.

brp

It's 6 cents/EQM, but more like 3 cents/mile for PLT or above. It equates to about $6K for EXP. Yes, that is cheap.

Cheers.

AAExPlat

Astounding that there are EXPs who think $300 transcons are expensive, use fuel dumps liberally, and consider playing with their home address to get better promo coverage, and think $6k for EXP is too much.

And people here wonder why airlines are considering revenue floors as part of status requirements....