American Airlines $400 Million Bet On Cuts—But Slashing Costs Won’t Fix Their Revenue Problem

Delta’s vision is that they’re a premium, mostly non-union airline that pays employees well and negotiates hard with partners, suppliers and even customers. United’s vision is as the nation’s most global air carrier, an increasingly upgauged route network, and more premium seats than before.

On the other hand, American’s vision is cost cuts? Earlier in the year it was flying to Sun Belt destinations that anyone can fly to (and their competitors do), direct sales, and leaning into the AAdvantage program.

They’ve backed off direct sales. Sun Belt flying isn’t new and isn’t generating superior financial performance. And AAdvantage is in some ways marginally better than MileagePlus, United still has more airline partners and better award options globally.

During the airline’s third quarter earnings call on Thursday several questions asked about pieces of the vision – ways that American might improve relative to competitors – and the answers were essentially we’re happy with where we’re at which is troubling because the market isn’t happy with where they’re at, and for good reason.

American Airlines stock is trading for less than half of where it was before the pandemic (while Delta and United have returned to their pre-pandemic trading ranges), and mind you this doesn’t even adjust current prices for inflation since then.

  • JP Morgan’s Jamie Baker asked about how American can improve its network, and Isom responded with how happy they are with their network.

  • Conor Cunningham asked about how American’s product “stacks up to the industry at this point?” in light of United planning free wi-fi (while Delta and JetBlue already offer it, and others are much less expensive – $8 versus American charging $20-$30). Isom punted, saying they’re reconfiguring planes with more premium seats.

So what are they doing that’s different since they’re not making money, aren’t making money relative to their cost of capital, and aren’t making money like their primary competitors are?

  1. Trying to win back some of the corporate business they’ve lost (mean regression)
  2. Cutting costs

The gap between American and competitors isn’t just the loss of managed travel business, and even if they bring all that back it won’t help enough. And their costs are rising, especially labor costs.

American used to say they’d earn within a range of $3 billion to $7 billion per year, on auto-pilot, like an annuity. Now $2.5 billion is considered a home run and the CEO earning his maximum bonus potential – and that’s after 20% inflation masking much of the earnings erosion.

So it all comes down to how much cost can American wring out of its operation and their goal is… $400 million, a drop in the bucket. They’ve talked about things like purchasing efficiencies. Here’s CFO Devon May:

We continue to focus on driving efficiency and productivity through our reengineering the business initiatives.

We are on track to deliver $400 million in cost savings this year with $300 million achieved through the third quarter.

…[The higher labor cost from new union deals] magnifies the importance of all of our efforts to run a lean operation and invest in the right technology to run a more efficient and effective business.

They’re focused on controlling cost and winning back some of the customers they’ve lost in the past year, but costs are still going up overall even with their cost-containment efforts and revenue isn’t rising fast enough. They don’t have a vision to generate revenue – to attract customers who will pay a premium for their product.

American Airlines lacks a vision for the business – the direction they’re heading, the kind of flying they’ll add which will be accretive, how they’re going to win over more customers. The vision was sort of outsourced to Vasu Raja, but he was thrown overboard (and I understand that Devon May played a big role in this). So now the vision is purchasing efficiency.

In his very first question and answer session with employees after becoming CEO of American Airlines, Robert Isom implored them not to spend a dollar more than they need to. After the last earnings call he told employees that the revenue problem is easily fixed but he’s most proud of their control of cost.

Brian Sumers wrote in his wrapup coverage of the Aemrican Airlines earnings call he titled the piece “American Is Still In Denial” and concludes, “American has become a finance-driven organization just as its two biggest competitors realized it makes more sense to prioritize revenue.”

When former Chairman and CEO Doug Parker added former Northwest boss Doug Steenland to the board, effectively to serve as Isom’s rabbi, he noted that the American Airlines board lacked airline experience” and thus the board wasn’t able to understand many of the issues they faced. It was a board built on Parker’s friendships. It’s not a board that has seemed to provide leadership, or that’s held management accountable.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. Agree completely. 3 million miler here (and only lifetime Platinum which is laughable considering what DL and UA give in lifetime status for 3 million miles – for example 2 million miler on DL and that is Platinum which is equivalent to Platinum Pro on AA). Glad I only have 450,000 or so miles left in my account and use those mainly domestic trips. For international I fly almost all international carriers in J (although trying out Delta One SEA-TPE this coming February). Just glad I’m retired with lifetime elite status on AA, DL and UA so I am a free agent. Even though I’m in an AA hub (CLT) I don’t consider myself obligated to fly them and I feel sorry for business travelers (like I was for many year) that are hub captives to any US airline.

  2. Gary, it might soon be time for you to jump ship as well. Nothing is going to change at AA until the Board demands it, which apparently is never going to happen.

  3. In other news I gifted first class AA tickets to family and they said they and others spit their food out onboard 🙁
    Yus premium all the way 😉

  4. Seems like the board isn’t taking their judiciary responsibility seriously.

    AA could be the best in the business. They choose not to.

  5. Sounds like Isom forgot to bring the right meeting notes to the call, yet he always keeps a pocket copy of why he’s worth $30M+ a year…and how focusing on cost-cutting is the path to sustained margin growth.

    Whenever the AA Board decides it’s done listening to his nonsense, the stock price will increase 10% the day the announcement is made.

  6. 35K TWU-represented employees at AA just ratified a 2 year contract extension that provides immediate 12-15% pay raises and 3% more in Jan – certain to cost a couple hundred more in annual costs.

    AA is so large that it is slow-burning its way to the ground. DL and UA owe a portion of their success to AA passengers that have walked away.
    It is only a matter of time before one or both start squeezing even harder.

    WN was once a strong performer and fell hard, prompting Elliott to get involved to make money. No investor even thinks they can turn AA around or at least isn’t willing to try.

    just 25 years ago, AA was a proud, successful airline. how far they have fallen

  7. Gordon Bethune comes to mind and his many quotes… let’s start with this one: “You can make pizza so cheap, no one will eat it.” “You need to control your costs, but you can’t let cost-cutting take over your business. You need to gain the trust of your employees. You need to treat your customers well. Other guys always wanted to talk about market share. They’d lose your bags but they’d show great movies. We always focused on the fundamentals: get Joe Nocera to New York, on time, with his underwear. There’s no secret formula for this #%&*.”

  8. Generally there are two basic schools of thought when it comes to running a business: do what your competitors are doing or the Jeff Bezos (don’t like the guy but he’s correct on this one) approach of ignore what the competition is doing and instead give customers what they want. American is taking a truly novel approach by doing neither. How’s that working out for them?

  9. AA board of directors is content to keep current management and their programs. If I wrote their D & O coverage I think I would review risk vs premium. On the other hand AA directors might demand higher coverage limits and resign if not provided.

  10. What is unfortunate is that all the comments here are in violent agreement on this piece. What is even more frustrating with the AA business plan is like watching a car accident in slow motion. The old adage again is shown to be true, “you can’t cut your way to prosperity.”

  11. Sad sad sad.
    Nothing will happen to alter this course until an outside investor starts to stick their nose under the hood.

  12. Observations like these are routine here, doubt there’s much difference anywhere else. AA Board Members are representing the Shareholders, it’s their duty to oversee the management and direction. Unless they’re living in a vacuum, which is entirely possible, one or two should eventually get a clue and take casual notice of what their customers are saying. One of their highest duties is the ‘duty of care’, to make decisions based on all material information reasonably available. Not likely they’ll be sued successfully, but they do have that duty!

  13. I suppose in the age of Trump, doubling down when obviously dead wrong may be somewhat normalized. But when you have your 2 major competitors doing the right thing, growing share while consistently being much, much more profitable than AA, then all the lies, doubling down, denials, deflections, gaslighting, and false optimism will never bring respectable profits. What is most maddening in the situation is that AA has spent far more than everyone on the newest planes (mostly all delivered and bought at lower cost than their competitors, to boot), has the biggest domestic network that could feed an unbeatable global network, yet, inexplicably, is happy continuing to essentially rendering these billions of investment a waste, and forfeit billions per year in potential revenue, all to save maybe a couple hundred million $$$ by not putting in decent cushions on their seat bottoms and armrests, good free wifi, and seatback entertainment (which can also be had now at a fraction of the cost for a better product than DL and UA have), while deferring widebodies instead of taking every one they can, and not doing creative things like picking up their partner JL’s for-sale-but-not-too-old B777-300s to give AA real international growth while holding AA over for their widebody fleet for what will probably be a half dozen years until AA’s Dreamliners finally get delivered. AA will probably be studied in business management books as a case study on how not to do things. They have somehow managed to spend the most on fleet yet customers rate their fleet the worst, spend the most on people yet somehow manage to have the worst customer service and morale, and just in general be penny wise and pound foolish. Truly stunning that a management team can get it so wrong, year after year, and think they are doing a good job.

  14. The easiest way to send a message to the airlines is to simply stop flying. I haven’t been on a plane since 9-11. It’s very liberating. I took my life back when I stopped traveling for business. Filthy planes, disgusting food, bed bugs…NO THANKS. Life is too short to put up with such garbage!

  15. They want to win back customers ? That’s tough sledding when :
    1.A laughable and woefully uncompetitive million miler program
    2. Eliminating Airpass – a customer wants to give you tens of thousands of dollars upfront which are use it or lose it resulting in possible breakage that falls to the bottom line
    3. No attempt at premium catering
    4. Most clubs (non Flagship ) are worn with furniture that is literally torn and the food is sparse and often inedible
    5. If serious about getting customers back then offer a soft landing for status holders for 2025 . Easier to retain a customer than to get a new passenger and requires less spend to retain.

    I could go on and on but will spare you. In my case , they lost to me UA and Star and some DL / SkyTeam and I have no intentions of coming back if the status quo remains the same . I have even stopped spending on AA card and switched to UA personal and business cards for my spend .

  16. You’ve been the CEO of how many airlines? You’re certainly entitled to your opinion. But I question your qualifications to run an airline. I also have to ask Tim Dunn (if that’s his real name) the same question – and also question his qualifications. My qualifications to run an airline – zero. That’s why I don’t condescendingly tell airline managers how to run their airlines.

  17. In just a few short years AA shifted the focus from Elevate the Everyday Experience to Don’t Spend A Dollar More Than You Have To. Customers and employees can tell that they simply don’t matter anymore. Isom only cares about on time departures and pinching pennies. Customers care about fair prices, good service and on time arrivals. Isom will be the death of AA if the board isn’t careful, and he’ll still think he was successful because he’ll have been paid handsomely for his failure.

  18. American’s strategy is valid here. They’ve eroded market share in lucrative hubs like JFK, LAX and ORD. Their goal now is accepting this reality in that their focus has to be towards a less affluent customer in hubs like DFW, CLT, MIA and PHX, largely in red states with less disposable income than their blue state counterparts.

    Recognizing they’re Dollar General and not Target is the first step in properly aligning their product to their customer base. Everyone complaining about food and TVs and whatnot is still in denial that AA is no longer serving the same customer. They need to develop their niche, which is a lower income, red state clientele.

    Delta expanded JFK and LAX, and added SEA in more recent years, which improved their mix of customers. Much of their expansion was in affluent areas in blue states. United has the best network with SFO, LAX, EWR, IAD, ORD and DEN, most of which are in our top performing GDP per capita cities. They only have one red state hub, which is their only hub not in a Top 30 GDP per capita market. They can afford things that AA simply cannot, and you’re going to see them continue to expand as these powerhouse areas fuel the economy.

    While this is certainly going to be different from AA in the past, it’s not necessary a bad thing. AA is doing what they need to do to come to grips with the fact that their piece of the pie isn’t from the most productive or affluent parts of the country like UA or even DL. But they need to find a way to become profitable serving their customers. So if your customers don’t have money to pay more, the only move is to make cuts.

  19. Likely to go bankrupt in a few years. No loss. An awful awful airline. Was probably once great, but no more.

  20. Gary, AAdvantage redemption of BA partner awards has been broken since Oct 27. If you try to make a reservation, after selecting a flight, and entering/confirming your details, you’d land at a system error page. Can you please reach out to someone at AA? Thank you

  21. Admittedly trying to increase revenues in a business already over capacity and in many ways a commodity (not much of a difference between a coach seat in DL versus a coach seat in AA) isn’t going to be easy. But that’s typical management taking the easy way by cutting costs. Not that there aren’t areas that could be trimmed but you have to wonder what will be customer facing.

  22. Watching Isom and his halfwits try to cost-save their way out of having the worst customer experience of any legacy carrier while the AAL board of directors file their nails in disinterest is akin to observing a hapless tribe of cavemen attempt to empty the ocean with a bucket. They aren’t going to win this way, and it’s painful to be along for the ride.

  23. Where are all of the US Air fan boys that told all of us loyal and profitable EXPs that the boys in Tempe could run a great global airline?

    I guess still flying American and marveling at how amazing CLT is (rocking chairs!) while everyone else has moved on to Delta or United.

  24. ghost is clearly a relic of the old America West regime that proves it is possible to fail up.

    aaway,
    AA’s best run ended w/ 9/11. Every crisis results in failures. AA as AMR thought it could restructure out of BK while every other airline used chapter 11 to successfully restructure. AA lost a decade of growth, was forced into a merger with HP-led US and has never recovered what made AA great decades ago.

    jeff,
    companies don’t succeed or not based on whether they are in blue or red states. They succeed based on profitably providing a service based on the markets they serve which do change.

    AA has a more “red” hub network than DL or UA (higher growth rate markets post covid) but AA makes far less money.
    UA loves to tout that it has hubs in the biggest and best markets but DL is the largest airline in both NYC and LAX based on number of flights

    DL makes more money even excluding the refinery and credit card deals than AA or UA and DL generates more domestic and international profits. DL has the best balance of domestic vs. international in coverage and profits and DL is aggressively growing international.

    AA has passed the point of being able to be back in the league with DL and UA.

    The question is why people including Gary remain loyal to AA in all but a few markets where AA commands solid schedule dominance.

  25. @Tim, a company definitely makes profit based on their choice of markets because of the customers in those markets. If your money comes from premium customers, your clientele has to have the capacity to pay premium prices. Affluence is a key indicator of that, and that correlates to political affiliation.

    If a state has a high number of MAGAs living paycheck to paycheck, pretending the global economy doesn’t exist, they’re not exactly the ones who have the capacity to drop a few grand for a long weekend trip to Paris in Business Class.

    You need high incomes for a premium market – people who tend to skew professional with disposable incomes who can afford to burn money on such niceties. That market skews left. Those customers exist in JFK, LAX, SFO, etc. That’s why as you point out, Delta went after the NYC and LAX markets so aggressively.

    The growth rate that you point out is a red herring. If we’re selling a mainstream community, sure growth means more sales. More people need more groceries for example. But air travel skews higher income and affluence, particularly on full service carriers. So more customers in a less affluent area doesn’t help your situation as an airline trying to command a premium. In fact, of you dig into the demographics of who moved to these “higher growth” areas, it’s often people to failed in expensive areas. They’re not moving for better opportunities, they’re moving because they couldn’t make it in a more challenging environment. In other words the weak, not the best or the brightest. So chasing them with a high cost product they can’t afford doesn’t make sense (if they could afford it, good chance wouldn’t have moved in the first place).

    That’s why AA’s move here is spot on. They recognize their customer base can’t pay the premiums that UA and DL can command. So instead of fighting it and trying to be something their customers can’t pay for, but they’re accepting it, and trying to tailor their product (read: cut) to accommodate the reality of their less affluent, red state heavy customer base.

  26. jeff,
    you prove that asking everyday people like you to discuss relevant business issues is like throwing pearls to swine.

    Your bizarre political rant is loaded w/ factually incorrect statements but it is counter to actual reality.

    There are strong and healthy hubs in both red and blue states and cities. There is more than enough revenue from people supporting either party to support hubs where the demand is there.

    Further, hubs by nature connect people from all over the country and the world so the number of people flowing through large hubs reflects the nation as a whole, not an individual party or even the city where the hub is located.

    AA’s problem is that its costs are too high relative to the revenue it generates. It does not get the high value revenue that DL and UA do because of stupid decisions that AA has made for more than 2 decades while AA continues to have costs esp. labor costs that are comparable to DL and UA.

    The question is how to fix it – and I don’t think it is fixable by Gary’s correct assessment that the palace isn’t even willing to admit what is wrong or that anything is broken.

  27. Uncle Jeff, you aren’t too far off on your analysis. However, I’m not sure that it ties to political affiliation so much as it does income—although granted, there is a strong correlation between the two. In all of the AA hubs that you mentioned—DFW, CLT, MIA, PHX—those metro areas are becoming increasingly more “blue” (or at least, purple). But then, those aren’t AA’s primary focus points anyway. Instead, they take those areas for granted. If anything, AA continues to downgrade the experience for the folks living in those hubs. And I say that from experience, living here in the DFW area for the past several years.

    Rather, as it has for all those years now, AA continues to focus on feeder traffic to its hubs from far-outlying cities and towns where income concentration is much lower—either via flights on the smaller AA metal itself, or on its American Eagle partners. DL and UA have pretty much moved away from relying on that model so much…and instead, further concentrated on their hub cities. AA, however, has not. This continued gestalt left over from the old hub-and-feeder philosophy days of the 1980s/1990s…and still promulgated by the management tier from HP/US (two other big hub/feeder carriers)…is why AA continues to decline.

    I worked for AA during the Bob Crandall years. I parted company when Don Carty took over, and it became apparent that he was not going help the deteriorating situation…but instead, worsen it. Crandall was not the evil shark that many people make him out to be. He did have a vision of a great international carrier—but was too often hobbled by a Board that was overly-conservative in its outlook for the time. Hence, he ended up pulling maneuvers to appease them that just made for continued friction within the company. Younger contributors on here probably don’t realize it, but once upon a time AA was THE premium carrier in the country—the one most demanded by the traveling corporate (and in LA, the motion picture studios) elite. I know because I worked part-time while in college at a Los Angeles area travel agency with a primarily corporate clientele, and almost every other caller specified that they wanted AA—and only AA. When I eventually got hired by AA (which wasn’t actually my planned career path), I learned the reason why: Service. It was ingrained in the company ethos.

    Fast forward to what we see now—a company where “Service” is almost a dirty word because it costs too much. But as a result of their archaic route structure, AA has to continue to fill all of it’s new planes with lower-revenue feeder traffic—especially to international destinations. And because of that in turn, the service out of their hub cities—even in a premium cabin—has greatly deteriorated, as they have had to sink it to the lowest possible level to match the generated revenue. And also remember, the whole “new” plane philosophy wasn’t put into place to upgrade service, it was put in place to cut fuel costs.

    Because of the lock AA put on DFW years ago by pretty much forcing all other carriers out of the market (along with help from the DFW airport itself), we’re stuck with AA here. And as mentioned by a previous poster, even their partner airlines—at least to high-traffic Europe—are shabby. IB was never known for stellar service…and BA is in as fast a decline as AA. I’d love to take DL or UA (and have on minimal occasions)…but the connections are too-often unacceptable as most of the southwestern part of this country is definitely an afterthought for them. Thankfully, I’m retired…so I don’t have to travel by air too often.

    I still have family and friends in the LAX and SFO areas…as well as in and around NYC. And, oddly enough, in conversations (and in practice with them) AA only comes up as a flying option in relation to “cheap” and WN. So it’s usually a case of who is the least-offensive inexpensive option—American or Southwest. Premium travel is always with DL, or to a lesser extent UA (although the UA contingent is growing).

    Maybe AA management has read the tea leaves, and decided that DL and UA are no longer their major competition and benchmarks. Instead, it is WN.

  28. All AA cares about is cutting costs. They cut costs to the detriment of the passenger who is left feeling like they have been duped. AA does not care much about the passenger experience. AA isn’t even close to their competitors. I guess that AA needs to hit rock bottom before they ‘get it’ but I don’t have any faith that the airline really cares.

  29. When are shareholders going to revolt against the board ? It seems as though they are complacent with things as is.

  30. I wouldn’t focus on stock price. Stock price is based on market expectations, not necessarily underlying business fundamentals. In 2023, DL’s revenue was $58B and profit was $4.6B. UA’s was $53.7 & $2.6B, respectively. AA’s earned $53B in revenue and made $822m in profit.. From a revenue standpoint, the big 3 are relatively aligned.

    Assuming 2024 & 2025 are similar business conditions as in 2023, AA’s ability to generate revenue is sound. The better ? they should be asking themselves is “How can we more efficiently generate $53B+ in revenue?” Operational effectiveness and disciplined cost control are evergreen good strategies to keep more of what they earn. I agree with your article, these alone won’t bring AA’s profit into line with their peers.

    The board should be enabling conditions to efficiently and effectively generating revenue. Their corporate strategy function should be seeking board approval well placed transformational investments to increase revenue and profit. Missing opportunities in NYC, LAX, BOS aren’t what’s really causing inefficiency revenue generation. It’s what we have access to as consumers. Their numbers are telling a different story!

  31. Face it. Once Bob Crandall left, the American board was nothing but a bunch of rubber stamp robots. It was easy pickings for USAir/Parker and now his handpicked successor is demonstrating of he can run it further run it into the ground.

  32. @Tim – red states hubs typically have higher percentages of connecting traffic. CLT has one of the highest rates in the country. DFW is up there as well.

    People pay a premium for the non-stop convenience. Particularly those who are less price sensitive (read: have more money). That’s why AA has a revenue problem vis-a-vis DL or UA. In the past, business travel masked this. Today, business travel hasn’t fully recovered, but leisure has taken its place. That means people need disposable income in order to travel. To ignore the correlation between economic output and political leanings is pretty naive. You have to understand your customer in order to serve them. No SFO techie, rich Angeleno, or DEN hippie is going to fly AA to Paris though Charlotte in J. That flight is going to get the scraps of people who frankly couldn’t do better in life.

    I think we are in agreement that AA as we know it is unfixable, although we may disagree on the attribution as to why and how they got here.

    All that said, I do think their latest initiative shows they understand the issue and are going to tailor down their offering to better serve the clientele they have and are able to attract.

  33. Gary, is it possible that Elliott attacked the wrong airline based in Dallas? Southwest seems to have a plan – perhaps not perfect – but nonetheless a plan to win. American has no plan.

    And, for what it’s worth, the airline business is fundamentally about attracting revenue. Almost all of the costs of the plane are the same each time it departs on a specific route – the fuel, the staff, and the cost of financing the plane. The difference is in convincing people to pick a specific airline vs. all other transportation options.

  34. The moment UA and DL establish a sunbelt hub, and be assured one will blink first and the other will quickly follow… AA is done, will the last one out shut down the engines and turn off the lights.

    I have disdain for this, there’s no money to be made in red states attitudes. There are other profitable industries outside finance and tech. Plenty of successful and educated people that lean right, plenty of great universities outside your liberal enclaves… oil, chemicals, autos, heavy manufacturing, agri-business have all made a lot of people, a lot of money.

  35. I’m not sure where you consider Georgia to be but DL operates the world’s largest at ATL.

    And UA operates a hub at IAH; Houston has always been more international and less domestic than the Dallas/Ft. Worth metro.

    An AUS hub for DL would certainly have a significant impact.

    And given that all of the restrictions that prevent WN competing at other N. Texas airports fall in 2025, WN could be the one that takes a big swing at AA in N. Texas.

  36. yes, Gary.
    Which is why the city is supposedly negotiating gate usage contracts w/ airlines not just for space now but also for space in the new concourse.

    With AA’s focus city winding down and supposedly a new 6 gate bus/remote operation starting, there should be some room for expansion.

    It’s your home airport and I respect whatever updates you have but AUS is not permanently going to be gate constrained.
    And DL seems to be committed to growing its presence in AUS.

    none of which changes that the biggest threat for AA strategically will be if WN decides to expand to more airports in the Metroplex in 2025.

    and jeff doesn’t seem to understand that the largest airports in the US are in the South because those cities have airports that had the capacity to grow to become very large hubs esp. at lower costs. ORD is spending massively to rebuild and expand its facilities and will end up with the highest cost per enplaned passenger of any large airport.
    Coastal airports simply do not even have the room to expand – regardless of cost.

    AA can’t afford to stay at ORD due to the high costs – which will benefit WN at MDW – but won’t spend the money needed to make CLT capable of handling the volume AA pushes through it.

  37. @Amt – while there’s money to be made in red state areas, the concentration of wealth is much lower, and that’s reflected in many areas. Whether it be air service, retail shops, etc., in the premium space, the money is made where the big money is at.

    @Tim – chicken and egg. It’s the low costs in the South that allow them to expand and take marginal traffic that frankly wouldn’t be economical in the coastal hubs. This is why places like CLT, ATL, DFW, etc. have far outsized service for their markets. They try to take the connection inefficiency and hits (increased travel time for decreased fares) because the costs are lower. But to bring it back on topic, this is what’s also so burdensome for AA and why with their revenue problem, they have to work on efficiency elements.

    Costs are less of a consideration at key coastal hubs (JFK, LAX, SFO) because they get the premium revenues, particularly from O/D pax, to offset the increased cost.

  38. “ And given that all of the restrictions that prevent WN competing at other N. Texas airports fall in 2025, WN could be the one that takes a big swing at AA in N. Texas.”

    Because WN has such a long proud history of success at cross town fortress airports
    Oh wait. They don’t. At all. It’s just your weird desperate hope.

    Tim
    Stop being stupid. Your ignorance constantly shows itself
    We get it
    You desperately want delta to succeed in Austin but there’s absolutely no reason to think they will. Delta has never ever beaten Southwest in a focus city where WN dominates.

    Name one city where they’ve beaten WN when WN has the starting advantage. Delta has retreated from every fight with WN where WN started with the plurality market share advantage.
    Sjc, bna are the obvious examples. A joke of a delta “focus city” where southwest kicked that idea out the door

    Delta couldn’t leave fast enough.

    Delta always gets their butts kicked by Southwest unless delta starts with a ~70% market advantage

  39. “Delta has never ever beaten Southwest in a focus city where WN dominates.

    load it up w/ enough caveats and you are bound to start w/ a sample size of zero. –

    btw, feel free to pull up schedules but I am pretty sure that WN was larger than DL at the time that DL started building a focus city at RDU – where DL is the largest carrier.

    Sure enough, RDU airport statistics prove it.

    DL did, in fact, grow a focus city and overtook WN.

    If you would quit trying so hard to prove me wrong and actually do some basic research, you might have some credibility.

    And the big part of this is that DL is now operating more flights at AUS than AA…. just like at NYC, LAX and a dozen other cities, DL has displaced AA.

    AA continues to bleed revenue to DL.

    While you argue about what DL can and can’t do with WN – and are wrong, DL takes money from AA which is a far more direct competitor to DL than WN is.

  40. “Timmy”,

    Look at you not being able to answer simple questions because you know I’m right.

    It’s not a caveat. It’s the delta situation in austin
    But nice try
    God knows why you bring up AA. You seem to think I’m a mindless shill like yourself

    Try better. We all know you can’t reply to anything with data. But try better. 😉

  41. And you don’t know much about rdu if you think that
    Last I checked, delta was behind AA at rdu 😉

  42. So many empty lives on here. Going on page after page of the intricacies of the airline business is laughable if not pathetic. I can’t image the anguish you all go thru waiting for an upgrade to clear, checking your mail constantly, logging into your account hoping the email was not delivered. Sad.

Comments are closed.