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I fly southwest for work exclusively. Ill even drive 100-200 miles after flying just to use them. Their rewards program is the best around and their service is fantastic. Once the wright amendment is gone they will get even more popular. I love SWA!
I fly southwest for work exclusively. Ill even drive 100-200 miles after flying just to use them. Their rewards program is the best around and their service is fantastic. Once the wright amendment is gone they will get even more popular. I love SWA!
Actually the one thing American has in their favor over the others is that their frequent flyer program benefits are by far the best in the industry for elite flyers. Once you hit Gold (25k miles in a calendar year), the benefits are far better than Delta, United, Southwest, or any of the others. They also unblock more space for frequent flyers than any other carrier. The one catch about AAdvantage is that you have to be Gold or better to see the benefits, but thats elites are any airlines bread and butter.
I dont agree. AA's problems are very, very much costs. The opperating costs are much higher than both DL and UA. A huge part of the costs stems from the pilots. The pilots at AA are much higher paid than UA or DL and the pilots at AA still have pensions while DL and UA got rid of their pensions when they went through Chapter 11.
Granted, AA's management wont win any awards for being good at their job either, but the big problems for AA right now are cost and productivity. Not only do AA's pilots make more, they also do less.
The clock is ticking for AA and I while I think there is less than a 1 percent chance AA will liquidate, they do have some tough decisions ahead of them and BK is a very real possibility. But even without Chapter 11, they still have to do some things that are going to be very painful for a lot of people at AMR.
Appreciate your analysis and insight Justme02.
I heard an airline analyst on CNBC this morning recommend AMR based upon his thoughts of the company and I thought about taking a shot (short-term trade only, of course), but will now also consider your thinking on the subject.
Thanks again for your comments Justme02.
Appreciate your analysis and insight Justme02.
I heard an airline analyst on CNBC this morning recommend AMR based upon his thoughts of the company and I thought about taking a shot (short-term trade only, of course), but will now also consider your thinking on the subject.
Thanks again for your comments Justme02.
A lot of things are going to happen to AA over the next year. One of them may be Chapter 11. It also may not happen. It could go either way as of now.
However, given the inflexability on behalf of the pilots and the short sightedness of the management, my money is on something drastic (in the way of Chapter 11).
A lot of things are going to happen to AA over the next year. One of them may be Chapter 11. It also may not happen. It could go either way as of now.
However, given the inflexability on behalf of the pilots and the short sightedness of the management, my money is on something drastic (in the way of Chapter 11).
The lack of utilization of their hubs for starters.
American Airlines has always taken a more conservative strategy than some of their competitors and they have missed out on many, many golden opprotunities. See below:
1) Africa. American has a great jumping off point for service to Africa in Miami. Its geographical perfect and the Miami-Africa market is comparitively large. They could have sent planes to markets like Lagos, Accra, Johannesburg/Capetown, and Dakar 5 years ago. Instead, they did nothing and Delta (from their hub in Atlanta) launched all these destinations and they are CASH COWS! Like Miami, Atlanta has the geographic location, but its local market is smaller. Yet Delta raked in the cash while AA did nothing.
2) Europe. American used to serve more destinations from their hub in Chicago. Yet, United got more agresive and AA abandoned Chicago-Brussels, Edinburgh, Shannon, and Moscow instead of trying to think outside the box to rework its Chicago-Europe network. The one exception to that last statement was the launching Chicago-Helsinki route. As of this winter, DFW will have more Europe flights than Chicago on American.
3) New York. American was a number one in New York for years. Instead of gradually building on their success, AA sat on its a** while Delta started flights from New York to over a dozen European cities and Jetblue over took American in the Carribean and Florida. Then, all of the sudden, AA tried to fight back, but it gave up a lot of market share in the interim.
Americans strategy has always been to force passengers through London and Tokyo and then dump them on partner airlines. They have done a terrible job of diversifying their network. There were opprtunities where they could have expanded and they didnt. The only area where they built up a comprehensive network is Latin America and to be perfectly honest, that has everything to do with the fact that they control Miami and nothing to do with American itself.
Then there is the horrible relationship American has with its pilots (which is beyond bad). Back in 2006, American applied for a flight from DFW to Beijing. The pilots waited until they applied and built their case, then the APA said they refused to fly it. American was the favorite to win the route, instead it went to United. However, this is also another example of the shortsightedness of management because they didnt talk it out with the APA before they applied. Under the APA contract, the pilots have the right to refuse any flight over 12 hours.
Right now, American has two bright spots in their network where they preform well, Dallas and Miami. Those are the hubs that keep American going. Other than that, they continue to slip.
Right now, American has two bright spots in their network where they preform well, Dallas and Miami. Those are the hubs that keep American going. Other than that, they continue to slip.
So I take it that you believe that AMR has lost the battle at ORD vs UAL ? Do you believe that the AMR presence in Chicago vs UAL will just continue to decline with the passage of time ? In other words will that hub eventually become just a focus city as Chicago loses its status as the last remaining dual-hub city ?
And what about the stradegy of DAL at ATL ? That airport has gone from being a "fortress hub" to being a super-fortress-hub it seems ? "2 many eggs" in one basket, afterall Atlanta is not a global city like Chicago as there's only so much local traffic in that market that they now have to share with the new Southwest presense in Atlanta ?
Atlanta is a huge connection airport, though, both for trans-Atlantic flyers and those heading elsewhere in the southeast. I'd estimate that a vast percentage of the people who have landed at Hartsfield have never actually seen the city of Atlanta.
So I take it that you believe that AMR has lost the battle at ORD vs UAL ? Do you believe that the AMR presence in Chicago vs UAL will just continue to decline with the passage of time ? In other words will that hub eventually become just a focus city as Chicago loses its status as the last remaining dual-hub city ?
And what about the stradegy of DAL at ATL ? That airport has gone from being a "fortress hub" to being a super-fortress-hub it seems ? "2 many eggs" in one basket, afterall Atlanta is not a global city like Chicago as there's only so much local traffic in that market that they now have to share with the new Southwest presense in Atlanta ?
Has AA lost the battle in Chicago, no. Are they currently on the losing side of the battle, yes.
All hope is not lost for AA in Chicago, but what they need to do with it is make it into more of an O&D opperation as opposed to connecting hub. To do this, they really need to invest in 90-100 seat planes and lots of them. The MD 80 is too big for the smaller markets in the midwest and south from Chicago given the traffic AA gets. If AA can secure those planes, AA can compete on an even playing field in Chicago and will have no trouble having a full scale hub there.
What is standing between AA and 90-100 seat planes is the pilots. Its outside their scope and they are in no mood to negotiate.
As for Atlanta, its crazy profitable for Delta. That isnt going to change. Competing with Southwest is in no way different than competeing with Air Tran which they currently do. While Atlanta is their mega hub, Delta did an excellent job of diversifying their hub structure after they bought Northwest. For example, they no longer need to use Atlanta for their Asia hub. Atlanta has a good market to Seoul and Tokyo and Delta/Korean Air serve those markets from Atlanta. But instead Delta uses Detroit for flights to Tokyo, Nagoya, Seoul, Beijing, Shanghai, and Hong Kong. It was an excellent move. Not only is Detroit better suited for traffic flows to Asia, but the local market to Asia from Detroit is almost twice as large as it is from Atlanta (thank you automotive industry).
Again (and Ive said this before), the Southwest effect is completely overblown in places like Atlanta in Dallas. The reasons I say that (again) are:
1) Dallas and Atlanta have a very, very large demand for domestic first class. Southwest doesnt offer that.
2) Dallas and Atlanta have a very large amount of international O&D. Southwest doesnt fly internationally.
3) Dallas and Atlanta have a very large flyer base that demands a frequently flyer program with huge elite benefits. Southwest doesnt offer that.
4) Dallas has a domestic O&D of 26.9 million and Atlanta has a domestic O&D of 26.5 million per year. For example, at Love Field Southwest will have 20 gates which will mean they can transport about 6.5-7 million passengers a year. But, even if they dont want to, they will end up with connections at Love Field. Projections show that Love Field post-Wright will have 20-25% connections. That means Love Field will handle approximately 5.25 million O&D from Dallas. That is no where near what the market needs. Atlanta is no different.
Atlanta and Dallas are different from cities like Denver and Phoenix where Southwest has had a big effect because of reasons 1 and 2 especially. Those cities dont have a large demand for domestic first class nor do they have large amounts of international O&D.
Southwest is not going to have the effect on Dallas or Atlanta that some are looking for. It just isnt going to happen.
Speaking of Southwest, they posted a $140 million loss today. On a per capita basis, thats much larger than the loss American had. However, Southwest will recover much faster.
Has AA lost the battle in Chicago, no. Are they currently on the losing side of the battle, yes.
All hope is not lost for AA in Chicago, but what they need to do with it is make it into more of an O&D opperation as opposed to connecting hub. To do this, they really need to invest in 90-100 seat planes and lots of them. The MD 80 is too big for the smaller markets in the midwest and south from Chicago given the traffic AA gets. If AA can secure those planes, AA can compete on an even playing field in Chicago and will have no trouble having a full scale hub there.
What is standing between AA and 90-100 seat planes is the pilots. Its outside their scope and they are in no mood to negotiate.
As for Atlanta, its crazy profitable for Delta. That isnt going to change. Competing with Southwest is in no way different than competeing with Air Tran which they currently do. While Atlanta is their mega hub, Delta did an excellent job of diversifying their hub structure after they bought Northwest. For example, they no longer need to use Atlanta for their Asia hub. Atlanta has a good market to Seoul and Tokyo and Delta/Korean Air serve those markets from Atlanta. But instead Delta uses Detroit for flights to Tokyo, Nagoya, Seoul, Beijing, Shanghai, and Hong Kong. It was an excellent move. Not only is Detroit better suited for traffic flows to Asia, but the local market to Asia from Detroit is almost twice as large as it is from Atlanta (thank you automotive industry).
Again (and Ive said this before), the Southwest effect is completely overblown in places like Atlanta in Dallas. The reasons I say that (again) are:
1) Dallas and Atlanta have a very, very large demand for domestic first class. Southwest doesnt offer that.
2) Dallas and Atlanta have a very large amount of international O&D. Southwest doesnt fly internationally.
3) Dallas and Atlanta have a very large flyer base that demands a frequently flyer program with huge elite benefits. Southwest doesnt offer that.
4) Dallas has a domestic O&D of 26.9 million and Atlanta has a domestic O&D of 26.5 million per year. For example, at Love Field Southwest will have 20 gates which will mean they can transport about 6.5-7 million passengers a year. But, even if they dont want to, they will end up with connections at Love Field. Projections show that Love Field post-Wright will have 20-25% connections. That means Love Field will handle approximately 5.25 million O&D from Dallas. That is no where near what the market needs. Atlanta is no different.
Atlanta and Dallas are different from cities like Denver and Phoenix where Southwest has had a big effect because of reasons 1 and 2 especially. Those cities dont have a large demand for domestic first class nor do they have large amounts of international O&D.
Southwest is not going to have the effect on Dallas or Atlanta that some are looking for. It just isnt going to happen.
Speaking of Southwest, they posted a $140 million loss today. On a per capita basis, thats much larger than the loss American had. However, Southwest will recover much faster.
Very interesting !
I understand that the United-Continental merger is not going that smoothly ? Amd besides Clevland, which hub in that new combination
is most at risk to loose flights ? I've read perhaps Denver ?
So ATL and Detroit are the heavyweights in DAL, which of those other hubs are also at risk of losing flights besides Memphis ?
Can you reveal where you get those airport/city O&D stats ?
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