Historically American Airlines, under present leadership, studiously avoided competition. When they ran US Airways they eliminated nearly all flights that weren’t out of hubs.
This has changed industry-wide during the pandemic, with airlines opportunistically looking for flights to leisure destinations, and in particular leisure destinations that were open. American Airlines’ Chief Revenue Officer recently described their Vice President of Network and Schedule Planning, Brian Znotins, as spending his time scouring Mexico for airports they didn’t already serve that have paved runways.
Much of the opportunistic flying goes away. That’s something United Airlines made clear. However one legacy of a willingness to experiment more is the focus city that American has in Austin, though they don’t call it a focus city because in the airline industry once you put a moniker on something like that it has seemed to fall apart.
Before the pandemic American Airlines served 8 routes from Austin, flying to its hubs. They’ve quadrupled their destinations since then and passengers are using the airport for connections in a major way as well.
For years Austin has been one of the fastest-growing aviation markets in the country, tracking the city’s growth more generally. This growth has continued – Austin isn’t just UT Austin and Dell Computers, it’s Google, Facebook, Apple, and Tesla now. It’s Oracle, Facebook, Indeed, Amazon, VRBO and eBay.
In December, with seasonal routes to Denver, Fort Myers, and Aspen, American will serve 35 destinations from Austin, for a total of 2340 flights, 327,754 seats, and 292,893,855 seat miles for the month.
During an employee question and answer session after last Thursday’s third quarter earnings call, Brian Znotins explained that they’re looking for cities like Austin where they can opportunistically grow.
The best way to think about it is what cities are growing in the U.S. attracting more corporate business. I think Austin is probably at the top of that where you’ve got companies like Tesla moving to Austin, driving a lot more corporate demand there. To attract that corporate demand you have to fly more and more non-stop. Corporate demand wants nothing more than a non-stop on that route. When we were offering connections over DFW it’s a great connecting market for us. But seeing more and more non-stops offered by other airlines out of Austin, to compete with non-stops you have to offer non-stops. We were doing the same in Austin.
If you look around the country there are other regions that are growing quickly. You could say a Nashville, Tampa, those are all markets that are seeing strong economic growth, attracting new businesses, driving that business demand. Those are the kinds of places that we would evaluate going forward.
Now we don’t have any concrete plans to build another Austin-like schedule in another city right now, but we’ll keep our eyes open and look for the opportunities and seize on them when the time comes.
I have to think that some of the Austin flights don’t wind up working, and even with the buildup in Austin American remains a distant second behind Southwest at the airport. Still, it’s great to see the airline so aggressive.
Raleigh used to be a hub for American, of course, and they build a beautiful facility there. They retained a Raleigh – London Heathrow flight supported by a strong corporate business. Before the pandemic Delta saw the opportunity in Raleigh. Re-building the American Airlines network there would be exciting.
You need only look at American’s financial results for the 3rd quarter to get the answer.
American is quickly returning to the same position it had pre-pandemic, which is the least profitable U.S. airline.
AAL management – the same team that is running the company now, not a previous generation – thought they could build a global route system that would challenge Delta and United – that was a stated goal of the AA/US merger. Instead, AA execs admitted during the pandemic that 1/3 of AA’s widebodies were not operating profitably during enough of the year to sustain those aircraft – and so the replacement of the A330 and B767 fleet will not be accelerated.
AA is now trying to generate more and more of its revenue from domestic routes and the results of its high volume strategy can be seen in its financial results.
Given that the latest DOT data shows that AA has lost its position as the largest revenue airline in key markets like LAX-AUS and LAX-RDU to Delta not because of volume but because Delta gets more revenue per passenger, then AA’s attempts at trying to take on any other carrier will fail. AA neither is the highest fare carrier in most markets but it also has costs which make it impossible for it succeed against low cost carriers in cities like AUS where WN can and will make a profit long before AA ever does.
AA is a for-profit business; they cannot continue to chase money-losing hopes of remaining relevant.
AA is still the highest cost airline in the US which makes its success even less likely but esp. in markets where it is trying
RDU, party like it’s 1985
Meltdown in progress today over 300 AA cancelations and counting
I wish JAX had enough corporate critical mass to support an AA mini focus city operation!
TIM DUNN, AA HAS DEBT BECAUSE AA HAS THE YOUNGEST FLEET!
MODERN FACILITIES AND TRAINING CENTERS.
DELTA IS FLYING OLD,OUTDATED GAS GUZZLERS.
717S,747,767!
DELTA WILL ACQUIRE DEBT WHEN ORDERING A NEW FLEET.
DELIVERY DATES YEARS AWAY!
UNITED RECENTLY PLACED THEIR NEW AIRCRAFT ORDER.
DEBT AWAITS!
IN THE MEAN TIME, SIZE MATTERS, AA GENERAYES ALOT OF CASH!!
john luffred,
forgive me for interrupting your ALL CAPS defense of American but
– American hasn’t gained a fleet cost advantage over Delta or any other US airline because of its newer fleet. The fact that American Airlines itself has never tried to make that claim tells you alot and they can’t because fleet costs are reported to the DOT.
– Delta doesn’t fly the 747 and neither does any other US scheduled passenger airline. The 717s were replacements for 50 seat regional jets and Delta has nearly eliminated that type which is the most costly on a per seat basis in the US airline fleet
– Delta has and is already post covid paying for aircraft in cash and is taking delivery of aircraft in line with its ability to generate cash just as Southwest has done. American’s debt came from and United’s higher debt will come from taking delivery of aircraft at a far faster rate than the companies can generate cash.
– American has generated the lowest percentage of free cash in the US airline industry for years. –
They may correct that as they recover since they are slowing their fleet spending but they still have the highest costs in the US industry.
none of which changes the fact that American or any company that has the highest costs will be successful in extracting market share from other carriers. When you combine that with the fact that other airlines get higher quality revenue on the same routes as AA, including on routes that AA has been flying much longer, it isn’t hard to see that AA is flailing around trying to find markets where it can generate enough revenue to support its costs – but repeatedly coming up short.
Sorry about that cold, hard reality
Tim Dunn,
With all due respect, why are you apparently cheering the fact that American’s earnings results weren’t as good as the “Perfect Airline’s” (i.e., Delta)? Delta had an excellent quarter, so why not simply leave it at that? Why the constant desire to compare? More to the point, why the need to gloat, and put down other carriers?
News flash: Airlines are different. That’s not a crime, as you consistently imply by your burning desire to compare them. There’s no way to do an “apples-to-apples” comparison among them. They have different situations. None of us knows all of the internal factors that underly a business’s earnings.
Debt repayment is an expense, so it will obviously affect net income. That’s not rocket science. It’s obvious, so why the constant put-downs? You consistently assert that you don’t want to see American liquidated when I bring up the topic, but your comments here belie that assertion. It’s a pretty sad state of affairs when people rejoice over others’ suffering but that seems to be the nature of today’s society and today’s politics.
Interesting that AA doesn’t fly ATL-AUS. That ongoing fear of competition I suppose.
I’m surprised that AA has nothing n/s to San Francisco, Oakland or Silicon Valley.
DesertGhost,
American IS a for-profit company in the same industry as other airlines and with the generally same business model as Delta and United. American is owned by its shareholders and gains capital from investors that choose which company can provide the greatest return on investment.
Similar businesses ARE compared whether you like it or not.
American has simply not generated anywhere near the level of profits as other airlines; in fact, American was the LEAST profitable US airline on a margin basis for most of the 10 years pre-covid and they are setting themselves up to take on the same distinction coming out of the pandemic.
Southwest and Delta are different but they both succeed at what they set out to do.
American is simply worse in most metrics.
Companies make choices about how they choose to invest in their business. American spent tens of billions of dollars on new aircraft that generated absolutely no cost advantage because the cost of assets includes the capital it takes to acquire those assets. According to data from each airline, American had the least efficient network of the big 3. Based on what each airline is telling investors, AA will pay the highest price per gallon in the 4th quarter. Not only is American less efficient but they pay more for a basic commodity. Delta’s refinery strategy and Southwest’s hedging strategies are saving them hundreds of millions.
American can’t run its current business as levels that generate even industry-comparable profits. AA execs finally admitted during the pandemic that about 1/3 of its international widebody fleet was not generating sufficient profits so the capacity from those A330s and B767s will not be immediately replaced – which means AA will have a smaller international network and the remaining B787 orders will likely replace the B777-200ERs in time.
AA is doing with its domestic network what it has tried unsuccessfully to do with its international network – run from one hub and multiple global destinations to others hoping to find something that sticks.
Given that AA continues to screw up its current operation so badly that a high number of business travelers that have a choice fly something other than American and that is confirmable from data.
Airline travel first and foremost is about getting where you need to be when promised and with as little drama as possible. other airlines do a far better job than American at that core function.
And, to be fair, as much as people tout United, according to the DOT, UA’s operation is not much better and is statistically worse than American’s – although they seem to have a whole lot less drama.
The chances of any success outside of AA’s current hubs is highly unlikely until AA can make its current network work. AA’s own financial results – not anyone’s bias – ensure that will be the case.
Every morning I wake up and I thank god I am not Tim Dunn ❤️