Ldnn1

They are tourist destinations. And the big difference between those three and TXL, WAW, BRU and VIE is they don't have existing service to the US.

That's not to say AA would actually do it (or even seriously consider it), but one could see the rationale if it did.

plon

AA nets 7 new gates in A, the additional gates in E are replacing existing gates.

IADCAflyer

They may or not be - I'm not sure what you standard is for a "tourist" destination. Noting that TXL is the capital of Germany, and BRU is the home of the EU. You have 5,000,000 total population in all of Sicily - and has a relatively low per capita GDP. Berlin alone (metro area) is at least 7,000,000 and has a per capita GDP that is double that of Palermo.

Naples Airport had 8.5 million passengers in 2017; Berlin had 20,000,000. If Berlin is a "tourist" airport/city, its a masively larger city than Naples.FWIW, Palermo had 5,000,000... And if you look at Palermo's destinations, the vast majority of them are -seasonal- which strongly implies tourist destinations.

Ldnn1

I'm not sure what point you're really making here. A city's resident population size is a pretty unreliable measure for inbound tourism. It's far more relevant to outbound tourism, VFR and business travel. My point was that DBV, NAP and PMO are destinations for inbound tourism (including as gateways for cruises and for nearby premium resorts such as Capri).

Passengers through the airport is of course a more relevant measure for tourism. And the fact Berlin has more passengers is reflected in the fact it has flights from the US for AA to compete with. I'm not sure what point you're making about PMO other than that, yes, it is a seasonal tourist destination.

Again, I'm not saying at all that any of these would be profitable routes for AA. Merely that if AA were to serve them, it would be primarily to serve the (seasonal) tourist markets to those destinations, with the USP of being the only TATL nonstop thereto.

Cltfc

Spot on.... TXL, VIE and Bru are all star hubs or dominated by a star carrier..... AA struggles to compete in those markets. I m not saying PMO or NAP will happen I m just reporting what I am hearing

perseus11

Actually Sicily (PMO) has some beautiful beaches and in general is a great place to visit (I've been there) - better in many respects than over crowded/hot/smoggy Naples (I've been there too). Any portion of the plane not filled by typical seasonal tourists will surely be occupied (up front) by 3 generations of "Sopranos" . These kinds of risky routes are what made the old US interesting. A potential against this route is its economics. It seems too far for a fully loaded 757 or 737MAX. So the smallest current inventory aircraft would likely need to be the 332. Consequently, I personally don't see this happening unless there are sufficient tour operator related contracts in place to support it.

Fanjet

I really can't see AA starting service to Naples. It's not even a good tourist destination. I think Pisa would be a better choice if AA wants to add another Italian summer destination. Dubrovnik is an incredibly beautiful city. However, I'm not sure how much tourist travel they could generate from the States. And the route would be heavily dependent upon U.S.-originating traffic. I think Krakow would be a better choice, as it is seeing large spikes in tourist numbers to the city.

dfw88

Given that they used the old 767s for their two "trial" routes this summer (to PRG and BUD) my money would be on that equipment being used for any of these speculative routes. Vasu Raja, the VP of network planning, has explained several times that both the operational and ownership costs of those planes is so low that they're the best chance to make money in a new experimental market like the ones being discussed here. One might think that the 787 would be cheaper to operate, and it is, but the ownership costs are much higher because of their newer leases. Apparently they consider both when matching equipment to route.

millionmiler

Exactly. AA used to serve BRU from more than one city and pulled out for a reason. Its was some time ago but the underlying basis has not changed very much.

ashill

I've seen executives make statements like that, and I really don't get why ownership costs figure into a specific route. I would think that the goal would be to maximize revenues and minimize costs systemwide. Ownership costs are basically sunk costs; AA has them no matter what the airframe does (unless they sell it, but that has costs of its own). So I would think that the goal in choosing routes and assigning planes to a route would be entirely about balancing maximizing revenue and minimizing operating costs systemwide (and operational considerations).

Then you make systemwide fleet decisions based on whether the network is profitable factoring in revenue, operating costs, and ownership costs. So the network overall may be more profitable by not flying/dropping a given route and correspondingly dropping a high-ownership-cost plane from the fleet. But once you've chosen the fleet, I don't see why ownership costs matter in whether you fly a 787 to LHR and a 767 to BUD or vice versa.

Now matching capacity (BUD probably demands less capacity per flight than LHR, although frequency also plays in there) and product (there's probably more of a revenue premium to be had for a better product going to LHR than BUD, as well as the different [F:]J:Y capacity ratio on different types) to a route certainly makes sense to me.

So what am I missing here? (Obviously I'm not an executive or an accountant [thankfully on both!] and not criticizing AA's strategy here; this is just curiosity.)

dfw88

To be honest, I can only guess. While, full disclosure, I do work for AA, I'm not in the network planning department so I don't have any insider details beyond the comments that I've heard Vasu make, most of which are either public or made public afterwards. While I follow your logic and that seems like a solid strategy for running a route network to me I can only assume that the NP team at AA thinks about things differently. Comments such as the one I mentioned above lead me to believe that they assign the ownership costs (perhaps only partially? perhaps in full?) to each route in order to be more specific about route profitability in a vacuum. I know Vasu and his team are concerned about running only profitable routes (with very few exceptions) and not just a profitable network, based on some of his comments. I can only assume that this desire is at least a partial impetus to look at the costs like that. On the other hand, it's possible that I've misconstrued his comments unintentionally.

Of course, your comment about balancing premium demand is also something I hear brought up on occasion. If you're starting two new tourist destinations on a seasonal basis it makes sense to use a plane with a smaller and not-as-well-regarded premium cabin.

I suppose in the end we can only speculate about our speculating

scnzzz

While I'm not really disagreeing with this, it's a question of where that line gets drawn. I mean applying that logic further leads to the conclusion that AA should withdraw from FRA, ZRH, and MUC since those are *A dominated, with far more *A choices to stateside destinations. Then add CDG and AMS as Skyteam fortress hubs. Obviously there's money in these routes for AA to stay there, so the idea that a destination is heavily dominated by another alliance doesn't really make much sense to me as the sole reason to exit a market. Perhaps a more precise way to put it is that certain markets that are dominated by another alliance don't have sufficient PRASM to justify service (but then again, if they're captive hubs, there should be some excess margin to be captured)

I suspect it's more complex than just "VIE/CPH is a *A fortress so it doesn't make sense for AA to go there " - clearly DL has found a way to make these work for instance.

dls25

The problem is actually point-of-sale.

AA excels on flights to Europe where they have a JV partner to help with sales on the European side (Spain and the UK) or where the passenger flow is primarily US-based passengers heading to Europe (Southern and Eastern Europe in the Summer).

AA does not well on flights where the most of the revenue is generated by Europe based passengers (see the failure of MIA-FRA or the pullout from BRU for examples ). Europe based passengers tend to chose their local carrier (or its partners) so AA can only attract these passengers with major discounting and the associated low margins.

This is why you probably wont much, if any, expansion from AA into central Europe (Germany, Austria, Switzerland) as the revenue from those markets tend to skew much more heavily towards the European point-of-sale rather than the US one.

ashill

Sure. A competing hub makes it harder for any airline to compete than they would in a comparably-sized city that wasn't a competing hub. FRA and CDG are such big markets that of course AA serves them; they just serve them less than they would if there (somehow) weren't a hub there. Similarly, UA serves LHR even though it's a oneworld (and DL/VS) hub. And similarly, there's not much non-Skyteam service to DTW or non-oneworld service to MIA, or certainly less than there would be were it not for the hubs.

Of course, there aren't many examples of good-sized cities that aren't hubs for one airline or another.

C46

I disagree on that.
The issue, of not being able to make routes work, was mostly the equipment.

Look at DUS-ORD - AA was able to drive LH436 out of the market, as the fares were quite cheap.
But when they were the sole operator of this route, they went seasonal and kept flying the 767 to DUS.
The Europeans didn't care about the flag on the fuselage - they mostly complained about missing personal IFE and powerports.
Some of the pax were confused by the security procedures, but in the end the hard product killed it!

And look at other routes to Europe, that didn't make it, since 2010...they were most likely served by the 75 or 76.