Seattle will become the primary American Airlines Asian gateway. American explains that they make money when there’s little competition in the schedule. And they perform poorly when they have to compete against Asian carriers. Here’s the future of the LAX hub, and the airline’s Asia flying.
At an employee question and answer session last week, a recording of which was reviewed by View From The Wing, an LAX-based pilot asked airline President Robert Isom about the carrier’s plans for Los Angeles. Isom turned the question over to Brian Znotins, American’s Vice President of Network Planning who made 5 key points:
- American Airlines was losing money on it’s Los Angeles – Asia flying before the pandemic, because these markets were too competitive.
- South America doesn’t work for them out of LA, either.
- There will still be some long haul – like Sydney, London Heathrow and Tokyo Haneda – where there’s less competition (and joint venture partner hubs).
- LA is a profitable domestic hub and they’ll focus on their Airbus A321T cross country flights there. Domestic will substitute for international, with the overall size of the airline remaining about the same there.
- Seattle will become their “more predominant Asian gateway.”
American Airlines LAX
Here’s Znotin’s longer explanation,
LA has been a challenge to us to Asia for a number of years. We have faced profitability hurdles because every Asian carrier feels like they need to serve LA so even though we were serving Hong Kong and Beijing and Shanghai prior to the pandemic. They all underperformed for us because every other Asian carrier served those routes as well. And there was far too much capacity in the LA market.
Normally the way you generate profits as American Airlines is that we differentiate ourselves through different schedules, being the only non-stop or one of a few non-stops but in this case we were one of dozens of non-stops.
And so for us what we’ve decided is to scale back LA widebody flying. Shanghai moves to Seattle… Beijing will focus more on Dallas. Hong Kong will focus more on Dallas as well. But then the Sydneys and the Heathrows will remain at LA because those markets aren’t the Asian markets that are overserved.
Then on the narrowbody side we’ll continue to focus on the 321T flying transcons and then we’ve added a number of small [regional jet] routes out of LA to support the hub because LA as a domestic hub does very well for us, as an Asian hub it did not do very well for us. So we really focused on that profitable part on mainline narrowbody and regional with some long haul flying like Sydney and Heathrow in the mix, Tokyo Haneda we’ll have two trips there once the pandemic’s over.
And then going forward we think that’s kind of the run rate size, and we’ll focus with our partner in Seattle on Alaska adding long haul routes like Bangalore and Shanghai out of Seattle once the Chinese bilateral opens up that’s a whole ‘nother ball of wax. And that will be our more predominant Asian gateway going forward instead of LA.
…[South America were] underperforming routes as well to put it plainly. You’re just in the wrong part of the country to serve South America there, from Buenos Aires, you’re not connecting any passengers from across the country, so focusing on DFW and Miami to our Latin America points is a better focus as well. It’s a competitive challenge on the Asian side and a geographic challenge on the Latin side for us.
Isom pointed out the substantial capital investments that American is making at the airport to underscore, though, that they aren’t reducing their commitment to flying from Los Angeles overall. That presence won’t grow, however, because “they don’t make more real estate in LA…there’s no new runways, if gates are redone they’re done for the purpose of replacement.” The airline will “use every available asset” that they have out there.