American Airlines Begins Rebuilding Its New York Strategy

Former American Airlines CEO Doug Parker, when he was CEO of US Airways, sold off most of his slots and gates at New York LaGuardia to Delta. Parker didn’t like to focus on competitive markets. This allowed Delta to push forward with a strategy to ‘win New York.’

When US Airways took over American, they inherited a position in New York that they’ve described as “too small to win, too big to quit.” Delta had grown in New York, American hadn’t, and United was safely ensconced at Newark, having inherited that from their merger with Continental.

So American tried to change up its strategy multiple times.

  • Around 2014 they began to focus on bringing people to New York rather than serving New Yorkers, timing flights to serve New York business day trips.

  • Then they shifted into a focus on a ’boutique operation’ where they flew to their own hubs, partner hubs, and squatted on slots. They didn’t have enough flights to generate loyalty or sell big corporate deals (except in other large American markets, bringing those customers to New York) and weren’t in a position to earn a revenue premium for their flights despite high costs.

  • Finally they considered leasing out their slots to JetBlue, packing up and going home from much of their New York position, and finally settled on the Northeast Alliance that together with JetBlue gave them the scale to compete. But after the federal government signed off on the deal (at the end of the Trump administration) they sued to stop it (Biden administration) and a district court judge agreed. JetBlue decided not to appeal, to focus on its acquisition of Spirit Airlines.

Now American Airlines is taking back slots in New York, unwinding their alliance with JetBlue. They had ‘allocated markets’ between the two airlines, something specifically that the judge called out as anti-competitive. One of those markets was New York – Boston. American retired their ‘Northeast Shuttle’ product and moved New York LaGuardia – Boston flying over to JetBlue.

Without the Northeast Alliance, it’s not yet clear what American’s strategy will be. They had no plan to be a competitor before the JetBlue partnership, so the judge’s ruling doesn’t ‘restore a competitor’ in the market it strengthens the hand of dominant competitors Delta and United. However we’re beginning to see some moves.

  • American is moving their New York JFK – Doha flight to Philadelphia. They say this isn’t because of the unwinding of the Northeast Alliance, but that’s not credible. They couldn’t reduce departing seats in New York or they’d lose slots under their deal with the Department of Transportation that had approved the alliance. And they’d focused on New York to the exclusion of Philadelphia (with limited planes and pilots and attention) because of the Northeast Alliance. With that deal done, their focus shifts back to Philadelphia. (Although this flight generated most of its traffic on the U.S. side from the New York area, and Philadelphia will mostly mean double connections to final passenger destinations.)

  • They’re restoring some limited service between New York LaGuardia and Boston.

Before the pandemic American basically squatted on slots, flying as little as possible without giving up their New York assets. More domestic short flights and less international long haul from New York could be a move back in that direction. Hopefully not – hopefully they’ve learned an important lesson they’ve articulated over the past two years.

Four and five years ago I laid out the position that American Airlines was doing the math on New York wrong. Their flights, carrying passengers, might not be making money on their own. But they needed to include co-brand credit card revenue in the calculation – spend from the New York market, and spend foregone by not having enough of a presence to be relevant to New Yorkers.

At the time American had responsibility for credit card revenue split from responsibility for flight revenue. Now all revenue reports up to Vasu Raja, and Raja has seen how the AAdvantage program grows in New York with the airline’s relevance and has spoken to it.

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, 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 »

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  1. spend foregone by not having enough of a presence to be relevant to New Yorkers.

    That amount is dwindling rapidly. AA’s atrocious quality of customer service is notorious across the country which includes New York. Perhaps contrary to the stereotype of New York being rude, New Yorkers are loathe to tolerate rude treatment — just check out the Google reviews of USPS locations in Brooklyn.

    The New Yorkers who have enough money to travel (for work or for pleasure) will not put up with an airline that treats them badly when Delta is at the same airport and United at EWR is even more convenient for the growing contingent of the New York market with home addresses in Jersey City.

    What does AA’s atrocious service look like? Well I haven’t flown them in years and it sounds like they haven’t gotten any better, but at JFK in the mid-2010s:

    – No staff member at the international business class ticketing counter when I and many other passengers were trying to check a bag on JFK-LHR. There was one staff member tending to an even longer line on the economy class side.

    – Classic low-class blank-stare, no-smile, no-greeting reception at the Flagship First Lounge in JFK with no invitation to Flagship Dining until I asked for it, then the no-manners receptionist gave my boarding pass a serious look before he handed me a dining invitation, again without saying a word or making any eye contact because AA can’t bother to hire people who were raised correctly, or to train them in simple manners for greeting customers.

  2. As a regular flyer of the then US Airways BOS-LGA Shuttle and it’s transition to AA, I’m glad to see that AA is beginning to restore some of this route. And I’m pleasantly surprised that it will be operated by mainline (A319), and not farmed out to Republic’s E175s. Four flights to start is small, but if timed so that the existing BOS-JFK flights complement, it could work out to be a usable eight flight schedule (on the BOS side) to start, then see where demand is.

  3. Problem is you can fly to places that people want to go, but if the product or customer service is terrible-no one will want to fly you.

    AA needs to have a come to airplane Jesus moment with their domestic hard product and find a way to make their FAs attempt to give a shite.

  4. American Airlines probably lost a lot of NY-based card spending market share to Delta Amex cards part and parcel of surrendering its top long-haul flying position at JFK to Delta.

    AA seems to squander its advantages time after time and then gets into trying to play catch-up after it messes itself up.

  5. Adding 4 flights and moving 1 international out is not “rebuilding” or “strategy” for the market the size of NYC.

  6. You mean become even more of a Domestic Debbie? I changed your headline for you. Sorry not sorry

  7. How much traffic does a credit card bring? That data is hard to know.

    I asked a close friend who runs a small business not in the NYC area and he sees only a few people use s credit card co-branded with the airline that has a hub in his city but does not see much Amex or practically any other airline card, including the airline that has a strong focus presence.

    My guess is that there’s a small percentage of people that use airline cards (but remember that 1% equals over 3 million people). Of those, many select the card whose airline has a lot of flights. How much revenue those small percentages generate is difficult to guess accurately. It may be exponential where, after a certain point, gets more revenue. Adding one flight to a new city may not make any difference.

    All the boarding area blogs seem to be nearly fanboy crazy about credit cards so there may be group think

  8. If you don’t like AA’s New York strategy, wait a few minutes and it will probably change.

  9. I did see the prior post about moving the Doha flight to PHL from NYC, which made no sense to me, since I would have thought more Doha-bound passengers would originate in New York, but that assumes AA cares.
    I am jaundiced because I have NEVER had a good experience in PHL. A flight attendant once described it to me as”..our worst station.” I personally think MIA might want to compete for that dubious honor but who knows…
    That said, there isn’t even a Flagship Lounge in PHL. Does AA assume the passengers will use the BA lounge?

  10. Why do comments on AA flight attendants and service seem to always be negative! The flight attendants do their best to serve and take care of customers! I don’t know what people are looking for? Three drink services on flights over four hours and full cans of Soda on shorter flights along with cookies or pretzels! The other airlines do less or the same! Entitlements and rudeness are rampant in todays world and thankfulness is almost nonexistent!!

  11. @Woofie – BA will not allow that. The BA lounge turns away Oneworld Emeralds 90 to 95% of the time. No way will BA let in J passengers not on BA metal.

  12. I think it’s hilarious to read how bad AA is or how bad any airline is when all of them are bad.
    Have top status at AA and next to top at Delta and would take AA over Delta unless the time of arrival or $ are better w Delta.
    In other words, there’s almost no difference.
    These days, if someone is a “loyal (any airline and any hotel chain) person”, they either don’t travel much or they’ve stopped thinking.
    They all give mediocre service in the aggregate, except in individual cases where the employee is simply a good person.
    There’s no standard except that the companies don’t care. Not caring is what is standard.
    And, if read Gary’s account of AA in NY correctly, Biden and the judge screwed AA and for no good reason…and by extension screwed NYers who need choices.

  13. Good to see more competition again. AA may be a dog airline targeting customers who don’t earn much, but having it in the market will help make sure the others don’t charge too much.

  14. AA would love to fly you anywhere from New York as long as you connect in Charlotte.

  15. @Frankie- Agree 100% with you. Most AA flight attendants do a good job. Not all. But it’s no different with DL or UA. I was on a recent DL flight in F class and the F/A spent the whole time during boarding fixated on her cell phone and provided the most minimum service possible during the flight while continuing to text (or play games) on her phone. Other DL f/a’s have been great. UA has the same problem- consistency.

  16. @ Alison: “What does AA’s atrocious service look like? Well I haven’t flown them in years ”

    So you have no actual knowledge.

  17. @ Alison. While I certainly agree that there are AA employees who could benefit from a trip to Charm School, there are plane loads of passengers who have no idea who Emily Post was and that etiquette never goes out of style.

  18. @1KBrad – ignore Alison. Flagship First Dining didn’t roll out at JFK until summer 2017, so she is complaining about something that wasn’t in existence for the time she is complaining about. And based on her posts here, why would anyone fault an AA employee for being rude to her. She reeks of DYKWIA.

  19. Thank you, Gary. As a New Yorker who became an AA AAdvantage member after their acquisition of TWA, I am grateful you’re telling me what AA plans for us. It’s hard for us outsiders to tell — AA took away lots of direct service and the convenient shuttle, but recently built three beautiful new lounges at JFK (thanks for reviewing), a huge lounge at LGA, and are re-building the commercial space in JFK. There’s practically a JFK-LHR shuttle. We are getting mixed messages that we aren’t/are important.

  20. So much of AA’s New York strategy is completely inscrutable to me. I’m actually on the Doha flight next month but there is usually little reason to fly AA on a route that is served so well by Qatar, and most of the destinations beyond Doha by EY through Abu Dhabi that leave from the same terminal, not to mention EK, and all have vastly better products.

    So I can see cutting Doha. But moving it instead to PHL which is also served by Qatar and EY (no EK) but is a marginal declining city without much of its own demand and I rather doubt that many people will choose to fly AA and connect through PHL given the many other options available? AA should have picked another destination without service like Bahrain or Mumbai (it would only compete with AI at JFK to one of the quickest growing economies in the world when it’s DEL nonstop is often at capacity). AA’s strategy is really the strategy of simply accepting its lot in the world and resignation to being a perpetual loser.

  21. @Mak – Bahrain makes no sense for AA – no connectivity beyond it. Whereas Qatar is subsidizing OW airlines to fly to DOH. I’m not saying that PHL-DOH is going to be a success, but there is a rational behind it as oppose to Bahrain. And EY does not serve PHL.

  22. “The New Yorkers who have enough money to travel (for work or for pleasure) will not put up with an airline that treats them badly” so lol they go to Newark where United treats them like crap

  23. Gary, you opened our eyes to the profits airlines make from co-branded credit cards. The current Atlantic magazine features an article titled “Airlines Are Just Banks Now” which underscores the profits airlines make from credit cards and points, and the history behind it. American Airlines is throwing away money if it ignores the NY credit card market. My colleagues at Citibank tell me they will never stop offering the Costco Visa card because they make so much money from it.

    Thanks for bringing this to our attention. From your mouth to God’s ear, as they say, and hope AA will value the NY market.

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