American Airlines: “We Do Love New York, I Know It Doesn’t Seem Like That With What We’ve Done”

At this month’s American Airlines employee question and answer session with senior executives, the airline’s downward spiral in New York came up. The response to this was “We do love New York, I know it doesn’t seem like that with what we’ve done.”

Two major excuses were offered why American flies less to New York than they did:

  • They blamed the reduction in New York flying on runway construction at New York JFK, but Delta and JetBlue didn’t pull down their flying. The runway is an excuse – they could reduce flying without giving up their slots, so they stopped squatting slots. But the runway is now back online.

  • And then there’s the MAX grounding that gets blamed for the reduction, but American decided which flights to drop and those disproportionately centered on New York JFK. They suggested that’s because of the transcons flown from New York, but they killed the second Austin flight too and they dropped about 20 routes from New York before the MAX was grounded.

They boast “all 777s” long haul international from New York (‘product does matter’) but limiting themselves to 777s for long haul itself limits their ability to serve destinations that cannot support such a large airraft.

By reducing flying out of New York, American becomes less relevant to New Yorkers and has fewer customers to support the flying that’s left. Fewer flights make it harder to sell corporate agreements too. The reverse effect of a hub happens as you de-scale. And that means American becomes less relevant to the wallets of New Yorkers, making it harder for Citibank and Barclays to attract cardmember spend for the American Airlines co-brand – which is the biggest driver of profitability for the airline.

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 »

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Comments

  1. Oh goodness the hyperbole about New York. Sounds like the same thing all the tulip fanboys were saying about UA at Kennedy. And now look where the airline is. Doing just fine without it.

  2. “Sounds like the same thing all the tulip fanboys were saying about UA at Kennedy. And now look where the airline is. Doing just fine without it.” – the same UA that said leaving Kennedy was a mistake??

    #clapback

  3. I’m honestly looking forward to what excuses they give once the max is no longer grounded. Seems like they won’t have any even moderately viable excuse (even though the max one is pretty bad).

  4. You wouldn’t know it from this blog (or AA’s stock price), but that airline is growing quarterly earnings now by about 20% year-over-year. And they’re doing it by increasing flying where they make money, and decreasing flying where they don’t. JFK isn’t an easy place to make money. It’s been widely reported over the years that DL’s large JFK operation isn’t very profitable. If that’s the case, why would anyone believe that AA would make lots of money by increasing its much smaller JFK operation? In contrast, AA’s DFW, CLT and DCA hubs are extremely profitable for them. And — surprise — that’s where the airline is growing the fastest. DFW has already seen dramatic growth — to over 900 daily flights and these new flights have been reported to have significantly above-average margins. So maybe Doug Parker knows how to run his airline better than Gary Leff?

  5. Every time the thought leader focuses on JFK, it’s the same regurgitation. (Maybe the key points are rearranged just to keep it fresh) Reductions of flights, New Yorkers clamoring for credit cards, blah blah blah.

    The big relevance that is either omitted or de-emphasized is AA claims the JFK operation is finally profitable after many money-losing years. If that’s the case, then it seems they DO know what they are doing.

  6. @chopsticks, I think sometimes an airline stays at a place not only because of its profit, but also because of they need take the share, at least now Delta seems very strong at JFK, UA has its unique EWR, it makes certain customers like me stays with their network while AA totally lost the game, I would not transfer so many times to fly to other places while other two offer comparable prices and direct routes. New York City is a place you should never lose unless you are a budget airline or regional airline. Look at its stock, I would say I have earned a lot from AA’s stock.

  7. DL’s a far more profitable and better airline than AA, and yet DL is huge at JFK — bigger than AA at JFK. And guess what, DL has a huge number of flights at LGA (at times it’s more than it has at JFK). And yet with all its massive NYC presence — and certainly at least in part because of its massive NYC presence — DL is still more profitable and better than AA. And it could well be that AA@JFK vs DL@JFK turns out to be to a window into AA@LAX vs DL@LAX.

    It seems like DL has been gaining at and from corner hubs in the same period in which AA has become the loser — deserving of a capital “L” for its loser status — amongst the US3 industry cartel kingpins despite once having been far ahead of DL at those very corner hubs.

    DL seems to make things work for DL that AA abandons and ruins for itself.

    What’s AA got left going for it that neither DL or UA has? MIA?

  8. Guess what, AA fanboys? 20MM people live in the NY metro area, so you don’t need to have 90% of pax be fed in through across the network, but you also can’t survive in a highly competitive market on O&D alone. AA wants to be both a LCC and a premium carrier. They also want no competition and only high-value pax. If AA wants to only play where they can make money (i.e. fortress hubs) than you risk losing the premium pax to Delta and United, which quite frankly have much better options out of NY airports. Sorry, but the E190 hop from LGA to Filthadelphia is not appealing to anyone residing in the NY metro area.

  9. @GUWonder — Each of the 3 major hub-and-spoke USA airlines have valuable assets that the others would like to have. DL has ATL and, to a lesser extent, New York. UA has EWR, DEN and SFO. AA has DFW, CLT and DCA (and to a lesser extent MIA which, like MIA, “should” be highly profitable, but currently isn’t). For obvious reasons, expanding on your strengths is usually a good strategy. Expanding in major markets just because they’re major markets doesn’t seem as good a strategy. In a perfect world, I’m sure AA would like to be bigger in NYC. But if nobody is currently making a lot of money in NYC, it’s a hard sell to convince me (and, it would seem, AA management) that beefing up a relatively small operation to a slightly less small operation is going to be a great investment.

  10. @Gary: your arguments pertain JFK only. How about La Guardia? Have they shrunk there, too? And their minimal existence at Newark: shrunk?

  11. I am a frequent flyer between JFK and LHR . There flights are loaded with premium pax . They have 4 services . Most of the time when I travel its sold out and it’s so difficult to get evip upgrades . So AA plan to operate JFK flights premium heavy is working. Its definitely working for me and my friends who also Explatinum . Not only that they made it very easy for us to change the flights in case of any difficulties. And brilliant staff at their clubs at JFK and LHR . Gary AA management definitely know what they are doing…stop acting like ex employe who got fired .

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