American Airlines dropped Los Angeles as its gateway to Asia. The remaining long haul flights American operates from LAX are to joint venture partner hubs – Tokyo, Sydney, and London.
American Airlines was losing money on it’s Los Angeles – Asia flying before the pandemic because, they believe, these markets were too competitive. And South America doesn’t work for them out of LA, either. So they’re focused on domestic flying. That makes their LA-based pilots, who don’t have the opportunities to fly widebodies, unhappy.
Delta is now the largest carrier at LAX, having displaced American. At an employee meeting in Dallas on December 9, a recording of which was reviewed by View From The Wing, a pilot asked ‘are there any intention to downsize Los Angeles any more than it has been?’
CEO Robert Isom began,
Those gates that we have out in LA, and all the money we’re putting into it – it’s hundreds of millions of dollars..those gates are really important, we’ve got to fight like crazy to make sure we keep our footprint there. The question is what kind of flying that we do with those gates.. there is a international issue that we do face that gets really hard in LA.
Vice President of Network Planning Brian Znotins continued,
The challenge we have with LA..is that LA was not profitable for us. But what we found is that the losses we were generating there were concentrated in just a handful of long haul routes. The rest of the hub actually did fairly well. So flying to China, flying to South America, that was tens of millions of dollars in losses.
The reason those routes don’t perform well, especially the Asian routes, is that any Asian carrier that wants to fly to the U.S. will almost always pick LA first. And making money flying around the country, flying around the world, is all about supply and demand. If you oversupply the market, the yields are going to be lower than what you can sustainably generate a profit off of. And if the supply is lower than demand then you can generate yields that allow you to generate a profit.
And what we found is that LA to Asia is almost in a perpetual state of oversupply because of all these foreign flags that need to be in LA even if the capacity isn’t warranted. And so flying to Beijing, Shanghai, and Hong Kong, all of these routes were very challenging for us to turn a profit. And we said if we can take these airplanes, move them elsewhere around the country, some to transatlantic, some to deep south from places like Miami, and New York and Dallas.
And then furthermore if we can take some of the airplanes that we do want to fly to China and fly out of Seattle instead where we have less of an oversupply situation, a great partnership with Alaska who can help feed those airplanes not just from connections but from the local traffic the Microsofts, and the Amazons of the world who need to go to China, we can build up a bit of an Asian connecting operation.
And LA we still do serve Sydney, we have London in the market there as well, we’ll continue to fly those routes those routes do well for us. But for the Hong Kongs, Beijings, Shanghais, and the deep South Americas those were the ones that were generating all the losses. We take those out of the equation LA looks pretty good for us. We’re really happy with what we see in the gate portfolio there. There’s no plans to further shrink LA, in fact we want to grow it in the future as part of our Alaska partnership.
The implication of what Znotins says – that Asian carriers can fly to LA, but they make money domestically (where they don’t face as much competition from as many airlines), is that American can profitably fly on domestic routes because of government protectionism. By limiting access to U.S. markets, prices are kept high and consumers have fewer options. But if foreign carriers were permitted to fly domestic routes, and had access to gates and (where applicable) slots, American wouldn’t be able to compete in Znotins’ explanation.
On point about the domestic competition. But keep in mind that American doesn’t have foreign domestic operations in China or South America for the same reason. I look at domestic fares and I don’t find them too expensive. The airlines are making their money on fees now, not fares. Fares need to cover their expenses at least, and what I know about what it costs to fly these planes, I think the fares are pretty much in line with expenses these days. So, I think your cheap shot at the airlines is unfair. If you think they can be cheaper, start your own airline.
Could it be that passengers prefer foreign carriers because of their (usually) far superior soft and hard product, especially in premium classes where the profit comes from?
Sadly there is also a service issue where American could not compete with many Asian carriers that fly into/out of LAX. Carriers like EVA, Cathay, China Airlines, Singapore, and others beat the pants of American with a far better product (service, meals, etc.) and cost. So rather than improve, American decided to give up.
EdSparks58
We consistently see airlines pull out of large market cities only to regret it later. United wants back in at JFK but only on their terms. When will AA try to recapture capacity at LAX? They’ll realize that they need the high spender LAX business; those travelers won’t want to add a stop just to fly AA from LA, they’ll move to someone who flies non-stop from there. It’s very flawed route planning to abandon due to cost losses when the overall picture is ignored
As a practical matter, do we (in the hobby) really care? Why do we need to fly on AA in particular? If AA is not in play, fly something else. If it doesn’t work for AA, I’d rather AA not fly to a particular destination . . . and stay in business . . . and I’ll take one of its partners.
Separately, if we are earning points that can be transferred to an airline in one of the alliances, who themselves have a range of partners, do we care about AA’s situation? Why not fly on Cathay Pacific to Hong Kong? Some other airline to Shanghai. Some other airline to Beijing. Etc., etc. Improvise, adapt, and overcome. Ooh, rah.
Foreign carriers don’t have expensive and greedy union pilots.
@Creditian Are you saying European carriers aren’t heavily unionized?
The NEED ADD GRU immediately, now Delta will do LAX GRU, GRU always been full and it’s nothing worse than conect forna 10 hour flight in DFW not tonsay flight always full and never premium cabin avaliable. Ridiculous Im nearly done with AA will accumulate my likes elsewhere…
No Brazil out of LAX? At least add another out of DFW!
We welcome Delta and Latam doing LAX to GRU!!!!
Bye AA
DOT data showed for years that AA’s average fares from LAX to China were well below what DL and UA got on their PVG flights (which all 3 operated pre-covid) as well as on LAX-PEK which only AA flew among US carriers.
AA simply did not compete w/ EITHER foreign carriers or its US carrier partners.
It is partly because of the reality that DL has long had a reputation – which data confirms – of being able to draw much more business traffic than AA, that talk of AA building up Asia flights at SEA make no sense. Let’s remember that AA was also run out of the ORD-Asia market by UA so there is something structurally wrong w/ why AA can’t compete against DL and UA in longhaul international markets where AA competes with one or both.
The same thing is true to continental Europe where AA does poorly compared to DL and UA.
HKG is particularly striking since CX was a partner – although not in a joint venture.
And AA dropped Australia for longer during the pandemic than DL or UA. And DL had added more flights even though it lost Virgin Australia as a partner.
as for the LAX-JFK market, AA is finally admitting that the A321T strategy didn’t work – there were simply too few seats and too many premium seats on the plane in a highly competitive market.
There is no doubt as to why UA is anxious to order so many widebodies while DL has more than a dozen coming each of the next two years – even before a potential A350-1000 order which might have actually been placed without an announcement since DL’s capex over the next two years has jumped by $4 billion based on their investor update this week.
DL and UA, like it or not, have become the US’ two major global carriers.
I have a friend coming hats been faithful to AA for years. His two annual trips to Uruguay route to Miami on AA and partners. It was never possible from SFO or LAX. With additional route cuts and elite qualification increases, he a free agent going with best fare and routes.
UA’s few international routes (LHR 2x, NRT) from LAX still operate from the domestic T7, and not the International terminal.
The problem with LAX-Asia was the random subsidized Chinese airlines flying to LAX and offering absurdly cheap fares on connecting flights just to fill their planes. My friend flew Xiamen Air to BKK once for less than $300.
Too bad the author did not learn the difference between it and it’s in sixth grade.
It’s such disappointing news. So, American lost the battle against all the international carriers in spite they’ve been in business with many ethnic partners number of years. It’s very a gutless airline not fighting back to research and crab strong potential marketing in the diverse city as well as with surrounding neighbors.
They must realize they are more international carriers that love to inaugurate the LAX route and sweep the market.
American has forgotten the importance of 5S to keep alive in the industry
So what SEA to Asia routes is AA going to announce?
That’s a lot of words to just say that American is unwilling to put out a competitive product.
Excited for DL/LA new GRU-LAX service! Also hope that DL adds LAX-AKL down the road.
AA’s problem is well…AA! If they didn’t change a thing and flew any given route to Asia I still wouldn’t pick there metal because the others that fly the same routes are just…better. AA’s soft and hard product is inferior to most of their Asian counterparts.
Rather than step up their game and get better, AA chooses to quit and go suck in another part of the country.
AA is run by a bunch of incompetent people, that is what it comes down to.
If you look at it, a lot of the people running UA right now were previously running AA, and some of the old UA people are now at AA. Znotins, who was quoted above, was let go from UA for being extremely unaggressive with their network, and now he is doing the exact same thing at AA, just surrender to everyone else.
Meanwhile at UA, Kirby has brought over the former AA network team led by Nocella and Quayle, and they’re doing the exact opposite and doing insane growth. United doesn’t have to compete against American, AA is competing against themselves and will just surrender.
I flew LAX-SEA on AA recently and it was awful. AA has a very small presence in SEA, in an older terminal, no lounge, very few flights.
@Chris@Oak, UA has more than just LHR and NRT from LAX. Right now they are currently serving LHR, NRT, MEL, and SYD. In March they’ll add a second daily LHR and start HND (in addition to NRT). That alone is 6 daily flights, and LAX-PVG is also on the schedule at the end of March, which would make 7 daily flights, but that probably won’t happen if we’re being honest.
Still, 6 flights a day is more than AA or DL from LAX. United is going to compete very aggressively in this market. Scott Kirby is ultimately going to win at LAX.
Jared Houser,
Not to derail the conversation about AA here and with all due respect, Scott Kirby was convinced he was going to succeed in rebuilding JFK and that ended with him fleeing w/ his tail between his legs.
At LAX, Delta will serve SYD, PPT, HND, CDG, and LHR by next summer with AKL and ICN expected to be announced in the next few months and SIN likely in a few years at the latest – possible with the latest version of the A350-900 of which Delta just received 2 copies even in Delta’s configuration which is higher than SQ’s standard configuration A350-900s. And DL also will resume PVG when it can.
Unlike AA and DL which have terminals which are adjacent to the TBIT, UA’s LAX terminal is isolated and will require a substantial investment to grow.
UA is #3 at LAX making even winning in the domestic market a lot harder until UA builds some new gates – which won’t happen tomorrow.
You might want to sit tight in proclaiming victory for UA at LAX just yet.
But it is DL and UA’s commitment to the west coast – where Delta has 3 west coast gateways to Asia/Pacific – that makes it hard for AA to find a place to succeed – which is part why middle of the country DFW is AA’s largest gateway to the Pacific.
In the last decade (all pre-Covid) I flew SAN-LAX -HKG -PVG -PEK 7 or 8 times, mostly on AA (a couple times on Cathay).
The AA fares to PVG and PEK were usually low. Two or three RTs came in under $300 — which I attributed (at least a little) to the fact that AeroMex and Hainan were offering (respectively) nonstop TIJ-PVG and TIJ-PEK flights several times a week (TIJ airport is 16 miles from downtown SAN). I’m fairly certain I never paid anywhere close to $1000 for the roundtrip from SAN on AA, which I regularly do for Europe.
While flying via LAX was very convenient when AA did the 22-min puddle-jump from SAN, I would happily fly via SEA if AA opts to use this as a new hub for Asia. On the way from southern CA, SEA is not much out of the way, and if the domestic leg is operated on Alaska metal I will have no complaints.
AA didn’t succeed on Asia TPAC out of LAX pre-pandemic because the yields were trash. Tons of competition on many routes, lots of capacity, and American has never had a strong POS originating in Asia. AA had, until that point, no better alternative on the West Coast and it needed a gateway to Asia with strong domestic feed, other than DFW.
COVID changed the game, likely for a good long time. Demand to China will remain low for some time, as the virus spread intensifies there so none of the US3 will rush back in from anywhere. Business travel will not recover to 2019 levels.
@Jared, okay, UA operating only 3 Int daily flights at this time. (I miss the SIN route.)
@Jared and @Tim Dunn
UA’s T7 is miserable. It’s domestic and serves 3 International departures; maybe 6 by next March.
How can they even accommodate this “growth” with crowded gates now? Take out more seating?
Lounges are crowded at peaks.
If UA could get into LGB, that would be helpful. Make it more competitive.
@Tim Dunn not sure how much you know about airlines, but let me clarify a few things. First, in regard to UA getting back into JFK, that will happen at some point. I don’t know when, but I assure you Kirby and Nocella won’t be shut out of JFK forever. That decision was bad, but was made before the current management team got there, and now they have to fix it. Everyone knows Kirby knows what he is doing more than any other airline executive, that isn’t a secret, so if you are trying to say the UA management team doesn’t know what they’re doing, you don’t know airlines very well.
To your point about Delta, the bulk of those routes will not work. The only long haul route they’re been flying the past year consistently is SYD. HND might work, although it is getting much lower yields than UA is on the same route. And then with regards to the new routes, of PPT, LHR, and CDG, I think only one or two of these will work if they’re lucky. They’re just trying to go all in on coastal cities like LA and Boston, but they’ve even admitted these are their least profitable cities, and I can guarantee all these new long haul LAX routes will not work. ICN might work because of Korean Air, but AKL would not.
Lastly to your point about UA’s T7/8 at LAX, all your logic here is flawed. Why is being next to TBIT an advantage? UA has their own gates in T7 that can support international arrivals. The only UA flights that arrive at TBIT are LAX and MEL because the T7 customs facility isn’t open at 6:30am when those flights arrive, but the rest of the flights arrive and depart from T7. In terms of expansion, UA is getting T9 at LAX which is being built next to T8 just across the street. This will give UA more widebody gates at LAX which will be super helpful (they only have 4 right now) and give them a ton of space to grow. Once this new space opens, United will easily be #1 in LA, and with routes that actually make money, unlike Delta. Don’t doubt Scott Kirby and his team.
I’ll blame the union, the difference between CX and JAL with their best cabin crew welcoming you aboard and AA with their oldest and least interested running out the clock to retirement was night and day.
If I had a warm cookie for every time AA crew on LAX-HKG/NRT literally told me first class was nothing special or not that different from business, almost laughing at the people foolish enough to pay to be there or were ignoring passengers and socialising with the employees perpetually flying in 2G/D. I’d be 300lbs.
@Chris@Oak
No, United is currently operating 4 long haul flights per day: SYD, MEL, NRT, LHR (all 1x daily). The HND and second LHR frequency in March will bring it to 6, again more than either Delta or American, both now and in March.
With regards to expansion, see my post above, but UA is getting T9 at LAX. Once this is complete UA will be the largest airline at LAX. UA is getting more gates at each hub, and has over 700 planes on order. Everyone knows United is going to be the biggest airline, and the AA and DL loyalists don’t like to hear that, but it’s just what’s happening you can’t deny that. United has a whole growth strategy called United Next, neither DL or AA have put comprehensive plans like this forward.
Lastly, regarding lounges, UA’s LAX lounges aren’t overcrowded at all. I fly UA out of LAX a few times a month, and both the United Club and Polaris lounge are always fine in terms of having enough space and finding a seat. If you want to talk about overcrowding, talk to Delta, they’re the experts at that.
PS – UA doesn’t need LAX to be a primary west coast hub, look at their SFO hub, American and Delta could only dream of having a hub like that. LAX is still very much a focus for UA and they will continue to grow it and ultimately win at LAX, but SFO will always be the primary west coast hub.
Jared,
you clearly come from an obviously biased point of view so I won’t argue….
UA’s massive fleet buy esp. for widebodies is to replace old airplanes. As much as Kirby wants to say that he intends to grow, he has no choice but to replace major parts of his widebody fleet.
Do you also realize that once the domestic 777-200s are taken out of the count of United’s widebody fleet and then add in the widebody deliveries due to each carrier in the next two years, DL and UA have almost identically sized widebody fleets?
Please tell us how United is going to push its way into an airport that is slot-controlled. There is no requirement for the FAA to open up enough slots for United to sustain any routes from JFK on a competitive basis. United blew it by pulling out of JFK and sometimes you pay for your mistakes and can’t make it better. The same thing is true with UA’s underutilization of EWR slots which resulted in the FAA pulling slot controls which brought in a flood of low cost carriers – and UA is now smaller at EWR than it was pre-pandemic.
It’s funny that you think that UA can grow but other airlines cannot – esp since Delta has a proven track record of getting the highest revenue per seat mile of any US airline and also carries a higher percentage of business travel revenue of any airline.
AA and DL have access to gates in the TBIT right now so that both of their operations extend across each of their 2 terminals in the horseshoe into the TBIT. United will have to build a facility large enough to accommodate whatever growth they want plus whatever they want for their alliance partners in their same terminal. AA and DL simply have a better facilities position at LAX.
Do you also realize that Southwest is operating more mainline flights/day from LAX right now than United? Do you realize that Delta operates mainline flights/day from LAX than United operates BOTH mainline and regional jets?
Scott Kirby would simply love to have the credit card revenue that Delta gets from American Express which explains a big reason why Delta’s Sky Clubs are as full as they are.
He also would love to have the fuel cost advantage that Delta has via its refinery but Delta has paid from 7-20% less per gallon for fuel over the past year. And Delta still generates 7.5% more seat miles per every gallon of fuel burned.
You are free to argue that Kirby knows what he is doing but United operated the world’s largest Pacific route network for years at a loss even pre-pandemic; no airline is capable of operating anything at a consistent loss.
I’m glad that Kirby has managed to pump up the team with his hooplah but you and he would do well to actually let competition work and measure the results than to be so arrogant as to think that UA can make anything they want work but no one else can while conveniently ignoring the facts that you don’t want to hear but which are still real.
@Tim Dunn I’m not denying I am a loyal United flyer, I said above I fly United every other week and I have had top status for the past 4 years. I am also not denying that Delta has been more successful in the past, they have commanded a revenue premium historically.
What I am saying is that United is set up best for the future. United navigated the pandemic better than both Delta and American, and I give Kirby a ton of credit for that. Delta retiring the 777 was a mistake. I know Delta won’t admit that and they say it was “fleet simplification” but it was a mistake. Delta was the largest airline over the Atlantic, do you think they just chose to hand that over to United? Obviously not, they didn’t know demand would come back as quick as it did, and United was able to capture that market because they kept their fleet in tact.
Delta is scrambling now to add more plans to the fleet. They are taking used 737s without even updating the interiors to the Delta standard because they need planes so badly. They are taking used A350s and not even installing the Delta One suites on them yet because they need the planes now. Clearly, retiring all the planes they retired was a mistake, and while I know they can’t say it was because it would make them look bad, everyone knows it was a mistake.
Why don’t you acknowledge some of these mistakes that Delta has made instead of just trying to rip United’s past? I fully acknowledge that Delta has been the better airline historically, all I am saying is that United is better positioned for the future.
Also just want to reply to a few of the things you stated about United that are just straight up not true at all and I have no idea where you came up with them. First about the widebodies, for you to say that in a few years United will have the same amount as Delta and American is insane. Firstly, UA has way more than DL on order, and they are not all replacements. The next jet to be retired will be the 767, and that won’t happen until the end of the decade. The domestic 777s will stick around until the 2030s, and then they will use some of the current international 777s to create new domestic widebodies. Andrew Nocella mentioned it this week, they like the economics of a high density domestic widebody, and that is not going away. United will always have far more widebodies than both AA and DL.
I am being totally realistic and acknowledging that United has made mistakes in the past, you should do the same. For you to not say the plane retirements were a mistake, or to think that all of these new DL LAX routes will work, you aren’t being realistic at all.
Jared,
your statements regarding fleet simply do not agree with what UA just announced in their announcement for new aircraft. The majority of the widebody aircraft they are buying are for replacement.
Delta has fully replaced the narrowbody and widebody aircraft it retired – even before putting the used 737-900ERs and A350-900s in service.
let us know how many widebody aircraft that United has that DO NOT have direct aisle access in business class. Delta only acquired nine used A350-900s that do not have direct aisle access in business class and only a portion of that fleet is in service now; United has far, far more than 9.
United simply did not navigate the pandemic better if money has anything to do with. Delta like American retired aircraft so it could be more efficient longer term. United will have to spend $30 billion more than Delta or American to get to the same levels of efficiency that AA and DL will have.
United held onto a whole lot of old aircraft, pays alot more to operate them, and will now spend, much, much more to become efficient. Those are simply facts and come straight from UA’s own statements.
It is clear that you subscribe to a mindset that “you have to lose in order for me to win” and that, not only is not the way the airline industry works – there are multiple successful airlines – and United’s own track record over time shows that it has not been at the top of the industry in terms of any metric – whether it be size or profitability.
Again, get back w/ us when UA achieves the domination of the industry to the exclusion of everyone else that you – and perhaps Kirby – thinks will happen.
In the meantime, American will still be a significant competitor to United on many domestic routes and Delta is setting up more and more to be United’s primary international competitor.
Let me see, do I want to get yelled at from a bossy flight attendant whilst eating garbage food on American Airlines or be treated like a king on an Asian carrier? I’ll have to think about that for awhile.
SoCal based LT Plat and PlatPro here who avoids LAX whenever possible. All because of having to connect via the abysmal Eagles Nest remote commuter terminal. Maybe Isom could address why profitable biz travels avoid LAX because of the sub-par connection process? Eagle’s Nest to T4 buses are worse than a NYC packed subway IMO.
You obviously — and wrongly — oversimply the situation by saying AA couldn’t compete doemstically with foreign carriers if they were allowed to fly domesitc routes. The reality is that every business needs profits to stay in business, and NOBODY generates profits flying to Asia from LA because there are too many carriers. The fares are ridiculously low. I remember right before Covid flying to HKG from LAX on AA for something like $220 — walk up fare! What AA is saying is that every Asian carrier feels a need to “be in LA” whether they make money on the route or not. This is obviously 100% true. AA does not feel a need to compete with them on these money-losing routes. This seems like a wise business strategy, as LAX to Asia is not an essential part of their otherwise profitable business.
Were these foreign airlines somehow allowed to compete domestically in the USA, that would almost certainly lose money doing so since they would be at a competitive disadvantage. They could only do it if they were subsidized by their gov’t or by their other operations. Undoubtedly, they would decline to do this for the same reason AA is declining to fly across the Pacific to lose money.
@Tim Dunn
> DOT data showed for years that AA’s average fares from LAX to China were well below what DL and UA got on their PVG flights
This is the type of reporting I would expect from an expert.
You put this blogger to shame, who typically just seems parrot whatever the airline says without doing the minimum of journalistic due diligence (makes me wonder whether he’s bri.bed by American Airlines?). This is all public data you cite.
This piece is about American’s narrative, and they do underperform competitors, saying they also underperform Delta and United is a bit beside the point and well known. AA’s Chicago – China flights were losing upwards of $50 million *per year*.
Ignore Amy, Gary. Amy is Tim Dunn.
AA is run a bit like the City of Los Angeles.
The DL long haul routes out of LAX are a bit pointless. DL has no feed at HND. It tried and failed to woo JL away from AA a decade ago. Same goes for SYD. It’s a P2P route for DL on the SYD end, with domestic feed at LAX keeping it going. The rest of the DL portfolio (long haul) at LAX is simply not necessary. They don’t need to fly to LHR or CDG on their own metal, given that VS and AF are there to do it, and offer a better product anyway. PPT is pure leisure and a copycat route from UA’s SFO one. PVG will take years to build back to what it was pre-pandemic.
olives,
please let us know how many routes AA flies to LHR or TYO that only it flies – without a joint venture partner. Much less than AA actually does fly. the same is true for SYD.
LAX is a highly competitive market in which AA’s execs THEMSELVES have said they do not need to try to compete against DL and UA because AA”s partners fly those routes.
AA lost far more than $50 million per year flying from Chicago to Asia, Gary, and then they proceeded to move to LAX to do it all over again.
United bought Pan Am’s transpacific route system in 1985; I can remember the headlines on the papers in Chicago. They had a 30 year headstart on AA and DL in building a Pacific route system
The reality is that Delta bought Northwest which was the largest airline across the Pacific but also lost money in every other year. Delta restructured its hub at Narita away from being a hub to being a spoke at Haneda where Delta obtained enough slots to become the largest foreign carrier at Haneda which has long been and still is a higher yielding airport for local Tokyo traffic than Narita. AA and UA both wanted joint ventures with Japanese airlines but the price that the US wanted was and still is that DL had to get more slots at HND – which does not have Open Skies – in order to offset the JVs. UA won the second largest number of HND slots while AA received service to just TWO markets – DFW and LAX. AA and UA both are committed to their partners at NRT which is why they will have lower average fares to Tokyo than Delta – because they are carrying more connecting traffic and are connecting that traffic over NRT which itself generates lower yields. By not connecting traffic other than via industry standard codeshares even at HND, DL has more capacity available for the higher yielding Tokyo market at HND.
Elsewhere in Asia, DL resurrected its relationship with Korean which is in the process of acquiring Asiana, a Star Alliance carrier. While the process is taking a long time, Asiana is not viable long term and ICN is already the largest connecting airport in Asia – and it is DL and KE’s JV hub – and it will grow. UA will lose its partnership in S. Korea.
DL bought an equity stake in China Eastern and AA did the same with China Southern; both partnerships are on ice right now while China figures out covid.
AA has a nonJV partnership with Cathay Pacific but STILL can’t make HKG work and are not returning to that market.
UA had pre-covid and will re-add several other markets including TPE and SIN which AA and DL have not flown in years but which DL now has in the A350 the ability to economically do from more of its network than it ever could with the 777LR; Delta said and industry data confirms that the 777 was not and is not an economical aircraft to use on transpacific routes – and is a higher cost aircraft ON EVERY OTHER ROUTE where it competes with either DL’s A330NEOs or A350s.
There are alot of people that have reinvented facts to try to fit their narrative but the simple fact is that UA acquired a Pacific network first, followed by DL – something that AA did not do. AA and UA are committed to JVs for connecting traffic in Tokyo based on Narita and sacrificed size at HND to DL in the process. DL has the largest Asian carrier at ICN as a JV partner for connecting traffic.
It isn’t hard to see why AA is in the position it is in and why some people simply don’t want to accept that DL is in a better competitive position than UA after 10 years in which UA was the dominant carrier across the Pacific. AA execs can clearly see all of this and are not willing to throw money down the drain chasing an unsustainable position to Asia.
note to copy editor:. the possessive of “it” is “its,” not “it’s” (that means only “it is” or “it has”).
AA is just poorly managed and continues to lack any strategic direction. They are reactionary in managing their business and as seen on both coasts, that they cry foul when they can’t compete.
The true issue is they are inconsistent, unreliable, and provide substandard service.
Would love to see DL cry foul as it relates to SEA. They spent millions to grow that market yet American once again, wants a free pass with their alliance with AS.
I just gave away 500k miles on AA. I’d rather pay for DL or UA than give that company a cent.
@MC — “AA is just poorly managed and continues to lack any strategic direction. They are reactionary in managing their business and as seen on both coasts, that they cry foul when they can’t compete.”
Come back and tell us that on AA’s earnings day next month and in April. The multi-billion dollar profits they’ll make next year might belie your claim. That’s OK, though: our very own Gary Leff actually predicted earlier this year that AA might go bankrupt soon!
The reality of course is that’s what’s best for you personally as a consumer may not be best for the company. And that’s perfectly OK. Do what’s best for you and the company will do what’s best for themselves and if the two align, that’s great. If they don”t, don’t worry about it.
The main problem with LAX is American has to compete with the foreign carriers that are mostly subsidized, forcing to make American lower their fares, thereby not making a sizable profit for those routes. What American airlines should do is expand down in San Diego, utilizing the 787 for markets not served, but as for now Japan airlines/BA/Lufthansa has already jump-started that void in San Diego. American needs to realize there’s a lot of money in the San Diego market, and a lot of diversity in the city, going back to the LAX market, American takes a lot of baggage transfers from the Tom Bradley Int’l terminal to feed its flights throughout the US from LAX, that’s why it’s so important for American to stay in LA.
Lots of nuance and historical context missing from the comments, particularly from Znotis (as well as certain commenters within the comments section). Without making this a TL:DR post, a couple of observations:
(1) LAX – South America (EZE & GRU) were initiated with the intention of ultimately becoming J.V. routes with LATAM. That particular pillar of the LAX strategy went away with the loss of LATAM.
(2) I’ve said this elsewhere – UA was in a similar situation in the Pacific, and particularly at SFO, when the PA Pacific network purchase occurred. SFO was a fragmented market both domestically & internationally. SFO wasn’t necessarily the best suited location geographically for a hub. UA has faced – with a few exceptions – international competition on on all of their ex-SFO international markets. Yet, despite the competition & internal challenges, UA committed to remaining committed.
(3) I find it laughable that APA (Allied Pilots Association) now complains about flying opportunities at LAX. In the wake of the restructuring of AMR’s labor contracts, Tom Horton threw a bone to APA (increased international flying) in order to get APA to acquiesce to the AMR restructuring plan. The LAX Pilot’s base has historically been among the most militant with regard to union representation.
APA had other ideas – the rest is history.
The bankruptcy restructuring of AMR addressed the cost disadvantages that financially marginalized international flying at AA. Unfortunately, most of that newfound advantage was given away the day the ink dried for the final approvals on the US merger. Though the new labor rules (for pilots) remained in place, Parker snapped back the wages.
The ancillary issues – diminution of soft product, the issues with yield management, less than stellar corporate sales efforts, et. al. – are just that….ancillary.
@chopsticks – “@MC — “AA is just poorly managed and continues to lack any strategic direction. They are reactionary in managing their business and as seen on both coasts, that they cry foul when they can’t compete.”
“Come back and tell us that on AA’s earnings day next month and in April. The multi-billion dollar profits they’ll make next year might belie your claim.”
You’d find with the most recent respective financial press releases of the Big 3 that the biggest – AA – underperformed the results of both UA & DL. Unfortunately, that is neither a recent, nor one off phenomenon.
very good perspectives, aaway.
other airlines managed to grow a Pacific presence and still pay their pilots market wages.
Given how much larger AA’s domestic presence was then and is now, it didn’t make alot of sense to offer concessions just to TRY and make a Pacific presence work.
Remember that AA had a Pacific hub at SJC just as DL had at PDX and neither worked.
It wasn’t until AFTER DL acquired NW and had a strong presence on the Pacific but faced the end of its Tokyo hub that it built Seattle. AA wants to try and make SEA hub using contracted feed from AS but that will end the same way it did for DL. AS simply isn’t going to feed 50 or more seats on some flights to AA anymore than it would to DL. And, this time, there is no room for a 2nd carrier to set up a hub at SEA when AS won’t cooperate
AA and JL can develop a decent connecting presence in Tokyo – as long as Narita remains viable as a hub. But NRT will always have lower average fares as long as US and Japanese carriers have a large presence at HND. AA didn’t succeed at getting a decent-sized presence of its own at HND so its best outcome in the Pacific will be DFW while it watches DL and UA add nonstop routes to non-JV hub cities along the Pacific rim, including from the west coast.
AA will get a piece of the revenue that flows over Tokyo proportionate to the capacity it flies.
“other airlines managed to grow a Pacific presence and still pay their pilots market wages.
Given how much larger AA’s domestic presence was then and is now, it didn’t make alot of sense to offer concessions just to TRY and make a Pacific presence work.”
Have you forgotten about the bk restructurings (pre-merger) of both DL / NW, and UA?
Just wait until you see Deltas fares from LAX to GRU. I’m guessing main cabin $3K and Biz $15K minimums. Neither of which I personally would pay
@Chopsticks
Which of the big 3 had the lowest margin?
Which of the big 3 has the highest debt load?
Which of the big 4 has the highest rate of consumer complaints, lowest on-time performance, and highest rate cancellations?
Here’s a clue for you; it’s not DL or UA?
Do your homework. Revenue is not profit. EBITDA IS.