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ARCHIVE: Routes (Flights) and Hubs (Speculation, News and Discussion)

ARCHIVE: Routes (Flights) and Hubs (Speculation, News and Discussion)

 
Old Oct 26, 15, 5:47 pm
  #3361  
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Originally Posted by Piedmont767 View Post
Apparently the 2 A330s from PHLTLV are being transferred to MIA, does anyone know if this is true?
The only thing I would be surprised about if it's only two birds. The one thing I am concerned about is that there is no pmUS crew base at MIA. This was a big problem after the UA/CO merger. When intl pmUA planes were sent up to EWR and pmCO ones down to IAD. When there was a crew or maintenance issue, it usually resulted in the flight being cancelled. As there was no replacement crew or aircraft available.

Since the 330s are Y-heavy, I can see them being deployed on MIA-Europe routes in the peak winter/spring tourist season for MIA (and the Carribean), and while many are not needed for CLT/PHL-Europe flights.
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Old Oct 26, 15, 6:48 pm
  #3362  
 
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DFW-HKG not profitable?????

Originally Posted by DWFI View Post
DFW-HKG is loss-making at the moment - management has said as much.
Really, is that so? I'm shocked, I just assumed this was a very profitable route with high premium pax loads.
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Old Oct 26, 15, 7:01 pm
  #3363  
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Originally Posted by DWFI View Post
I'm curious as to your definition of "success". DFW-HKG is loss-making at the moment - management has said as much.
Cite?

I know what I'm about to refer to does not specifically mention profitability of DFW-HKG specifically, but (bolding mine):

http://seekingalpha.com/article/3202...r-the-sell-off

Fig 4: American Airlines Capacity Management

American Airlines is maintaining a disciplined operation and growing capacity at less than the overall industry growth worldwide in an attempt to maintain current yields. The only exception to this is in Asia where American Airlines had little presence until its merger with US Airways. Once it became the world's largest airline, it needed to add routes to Asia in order for high value corporate clients to consider using American Airlines for their travel needs. CEO Doug Parker has described Asia as an investment, and the growth should come down to industry averages over the next few years as American catches up to competitors in Asia. The investment is paying off and Doug Parker stated their Dallas - Hong Kong route is now one of their most premium traffic heavy routes.
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Old Oct 26, 15, 7:51 pm
  #3364  
 
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Originally Posted by MiamiPrep View Post
Really, is that so? I'm shocked, I just assumed this was a very profitable route with high premium pax loads.
Originally Posted by TheBOSman View Post
Cite?

I know what I'm about to refer to does not specifically mention profitability of DFW-HKG specifically, but (bolding mine):

http://seekingalpha.com/article/3202...r-the-sell-off
I'm not 100% sure HKG is not nominally profitable as of right now but here is the evidence I use to assert my statement that it is not significantly profitable. Break even, perhaps. But I'm sure we would hear about it with great fanfare once there is a meaningful profit being made. I have flown AA metal to HKG 3 times now and each time I paid less than $800 USD. 5 of 6 times I have cleared into J.

06/2014 Earnings Call, Doug Parker:

[DFW-HKG and DFW-PVG] have not been ... profitable as of yet. We hope they will be over time. They are investments. We’ve seen nice improvement, and indeed our Asia revenue per ASM [available seat mile] over the past year has grown at a rate in excess of the industry, so we feel very good about the future prospects. But these, like a lot of routes at airlines, are investments and haven’t yet been profitable.
02/2015 Earnings Call, Scott Kirby:

“In 2014, some of those new routes [DFW-HKG and DFW-PVG] weren’t profitable at the time, though they were exceeding our forecast, and we feel actually really good about the startups that we had in 2014,” he said. “If we looked at it today, I don’t have a specific forecast that goes route by route. But I’m pretty sure that with fuel prices where they are today, we’d expect even our Asian routes to be profitable in 2015.”

Last edited by DWFI; Oct 26, 15 at 7:56 pm
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Old Oct 26, 15, 9:31 pm
  #3365  
 
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I'm not 100% sure HKG is not nominally profitable as of right now but here is the evidence I use to assert my statement that it is not significantly profitable. Break even, perhaps. But I'm sure we would hear about it with great fanfare once there is a meaningful profit being made. I have flown AA metal to HKG 3 times now and each time I paid less than $800 USD. 5 of 6 times I have cleared into J.
I think there can be an overemphasis on the profitability of Long-haul international for the large US carriers. While none of them can fly a route that bleeds money for obvious reason (well at least they shouldn't, but airlines may do stupid things sometimes) As long as they are somewhat profitable they serve their purpose allowing access to everywhere they need to go. Sure alliances help and JVs more so, but the true value of the routes, especially for paid premium demand, has to be what contributing factor does it make that allows the airline to be selected for most of that pax/corporate travel.

As an anecdote, I'm based in CRW, on an annualized basis we have almost the exact same capacity for the merged AA and HKG does with a single 77W daily. I can't argue that CRW is as important of a city as HKG (we only have 50k people here), yet currently similar capacity. The value of the long-haul routes does go beyond just the direct earnings of the route sometimes.

And since we can't get from CRW-DFW in time to catch HKG the same day, we really need an Envoy e175 to restart that route with twice per day service next year!
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Old Oct 28, 15, 10:54 am
  #3366  
 
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Re AUH, DL has announced that they're dropping ATL-DXB (snarky DL blog post and FT thread).

That makes it particularly interesting that AA (apparently) considers AUH worth throwing at the dartboard, at least if there's no antitrust immunity.
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Old Oct 28, 15, 11:14 am
  #3367  
 
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Originally Posted by ashill View Post
Re AUH, DL has announced that they're dropping ATL-DXB (snarky DL blog post and FT thread).

That makes it particularly interesting that AA (apparently) considers AUH worth throwing at the dartboard, at least if there's no antitrust immunity.
I'm not very familiar with this situation but is it possible AA and EY enter into a JBV? I don't think DFW-AUH has a chance unless EY/AA either receive a joint venture or at least significantly extend their codesharing as much as possible. Quite frankly, I don't see how DFW-AUH works with EY operating on the route, albeit four times a week. If DFW-AUH does end up working, its pretty safe to say there is zero chance of AA ever returning to India no matter how slim that possibility was even with aircraft arriving in the future that could make India profitable.
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Old Oct 28, 15, 11:20 am
  #3368  
 
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Originally Posted by ashill View Post
Re AUH, DL has announced that they're dropping ATL-DXB (snarky DL blog post and FT thread).

That makes it particularly interesting that AA (apparently) considers AUH worth throwing at the dartboard, at least if there's no antitrust immunity.
I like how DL says subsidized gulf carriers were the problem yet the do not compete with any on ATL-DXB.
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Old Oct 28, 15, 12:07 pm
  #3369  
 
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Originally Posted by Longboater View Post
I'm not very familiar with this situation but is it possible AA and EY enter into a JBV? I don't think DFW-AUH has a chance unless EY/AA either receive a joint venture or at least significantly extend their codesharing as much as possible.
Others have suggested that AA and EY might form a joint venture as part of this rumored route. I have no idea if US/UAE treaties/laws even allow this.
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Old Oct 28, 15, 12:16 pm
  #3370  
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Originally Posted by ashill View Post
Others have suggested that AA and EY might form a joint venture as part of this rumored route. I have no idea if US/UAE treaties/laws even allow this.
Generally, the big impediment to immunized joint ventures is the absence of an open skies treaty between the two countries, like the failed AA/BA attempts at a joint venture prior to March, 2008 (when USA-EU became open skies, replacing Bermuda II, opening USA-LHR to all).

The USA and UAE have had an open skies treaty since AA began flying 777s, so there shouldn't be too much difficulty getting government approval. Of course, AA hasn't been in bed with any of the ME3 the way AA and BA were cozying up all those years, so it's possible that EY and/or QR might not be alll that excited about a joint venture.

I mentioned earlier the rumoured possibility that EY and QR both team up with AA against EK, the airline that doesn't want to join an alliance but is developing joint ventures, notably with QF.
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Old Oct 28, 15, 12:54 pm
  #3371  
 
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Originally Posted by ashill View Post
Others have suggested that AA and EY might form a joint venture as part of this rumored route. I have no idea if US/UAE treaties/laws even allow this.
U.S. and U.A.E. carriers are allowed to enter into JBAs with each other.
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Old Oct 28, 15, 1:25 pm
  #3372  
 
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Thanks for the clarification that an open skies treaty does exist so a JBV is possible.

Originally Posted by FWAAA View Post
Of course, AA hasn't been in bed with any of the ME3 the way AA and BA were cozying up all those years, so it's possible that EY and/or QR might not be alll that excited about a joint venture.
EY has certainly shown a very strong willingness to engage in joint venture partnerships, so I suspect that they'd be more than willing to start one with AA. A good comparison is VA: VA operates a less-than-daily SYD-AUH flight, while EY operates a ton of Australia-AUH capacity. VA provides connections to pretty much everywhere in Australia for EY, and EY provides beyond AUH connections for VA. That's very similar to a possible AA/EY joint venture.

Of course, EY does have ownership stakes in most (all?) of its current joint venture partners, but I can't imagine they'd consider that a roadblock to a joint venture with AA.

So to me, it seems that the question is whether AA is willing to start a joint venture with EY. The more I think about (ME3 politics aside), I have trouble seeing why AA wouldn't. There just isn't much overlap between the AUH and beyond routes that EY serves from the US and routes that AA serves from the US, so it would be mostly growth for AA. And if the cost is a less than daily DFW-AUH flight, why not? It's not even clear to me that AA would have to maintain the DFW-AUH flight if it doesn't work out; AA and QF had a joint venture for several years before AA operated any Australia flights.
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Old Oct 28, 15, 1:54 pm
  #3373  
 
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If AA/EY do pursue a JV, I'd say DFW-AUH, albeit two/three times a week operated on AA doesn't sound that far fetched after all. It will interesting to see how this will work if AA does go ahead and pull the trigger in the next few weeks.
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Old Oct 28, 15, 2:26 pm
  #3374  
 
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What's interesting in this whole joint venture with EY idea is that EY is in direct competition with QR for connecting traffic, particularly to South Asia ex-US. I can imagine AAB not being terribly happy with AA routing traffic through AUH rather than DOH.
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Old Oct 28, 15, 3:49 pm
  #3375  
 
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Originally Posted by scnzzz View Post
What's interesting in this whole joint venture with EY idea is that EY is in direct competition with QR for connecting traffic, particularly to South Asia ex-US. I can imagine AAB not being terribly happy with AA routing traffic through AUH rather than DOH.
That may be true to some extent, but despite their marketing agreement (which is all oneworld is), AA and QR are competitors, just like any two airlines that don't have antitrust immunity. There are increasingly many cases in the airline industry in which two airlines are competitors on some routes or in some cases but cooperate in other ways.

Remember that QF dropped their joint venture with BA in order to form one with EK, yet QF remains in oneworld and is expanding their joint venture with AA. Meanwhile, if AA does form a joint venture with EY (or QR for that matter), they'll be competing with EK and, by extension, QF -- their joint venture partner.

Similarly, CX has a partnership with NZ, in direct competition with alliance partner QF. (And also in competition with NZ's alliance partner SQ, even though SQ and NZ each have ownership stakes in and joint ventures with VA.)

Airline partnerships are necessarily a tangled web that really can't be boiled down to three global alliances in which alliance members cooperate with each other and compete with everyone else. I just don't see QR's oneworld membership as a real obstacle to AA forming a closer partnership or joint venture with EY. (As others have suggested, it's not impossible that QR would join such a partnership anyway.)
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