At an employee Town Hall meeting on Tuesday, November 12 at LaGuardia airport, American Airlines Chief Revenue Officer Vasu Raja shared how the airline is thinking about the New York market going forward. Here are 8 observations he offered about what’s changing for American in New York.
- The network is the product to Raja and combining American’s network with JetBlue’s gives them an advantage.
The first big thing is we’ve got to give them a great product – a great network – and in the schedule you’ll see we can now offer our customers the very best. In January we’ll be about 100 departures bigger than our competitors in New York, about 100 departures larger in Boston.
..Instead of having a world where our competitors almost consistently offered more frequencies than AA we will now be able to go to our customers and say in something like 25 or 35 cities we have a better schedule pattern than our competitors.
- Codesharing. This is how the two airlines sell each others’ flights.
In January, in the first quarter, JetBlue will be codesharing on 92% – 94% of the American Airlines flight schedule that’s there.
- Working with JetBlue to put the right aircraft on the right route at the right time. They can swap out one airline for another on a route, given aircraft availability and size.
In our partnership with AA and JetBlue, in order for us to compete, we are able to move AA and JetBlue out of markets in the same way we move a 737 and a 319 in and out of markets. And there’s going to be a lot more of that. So in the January schedule what you’ll see is there won’t be an AA in Boston – LaGuardia. It doesn’t mean were never flying Boston – LaGuardia again. What we’re designing to do, as JetBlue moves out of the Marine Air Terminal, and co-locates with us here, eventually we will run almost the entirety of the LaGuardia schedule as hourly patterns and we will move our metal in and out.
- Products will remain different, though. Customers like free wifi, and JetBlue provides that along with greater seat pitch than American Airlines offers. And despite American having been prepared to match Delta with an announcement of free wifi, expect American to start selling wifi as part of a fare bundle instead of just as an add-on.
A big part of the idea behind Main Cabin Select is that, we have business customers who want to fly us who value us because of our flight schedule right? We can fly you whatever10 times a day to Dallas or Charlotte or what have you. But what they want is a refundable fare, they want to know that when they get to the airport they get to choose any seat, they get to access the club. And that’s very much what we want to build.
Over time we want that product to expand to where when you buy it you also get free wifi on the airplane. [He pivots to operations integration with JetBlue, “making sure that the bus between T5 and T8 at Kennedy runs well.”]
- JetBlue’s loyal New York customer base will fill American’s international routes.
There’s a lot of things they do that are really really great. When 6% of JFK – Tel Aviv is coming through JetBlue.com clearly there’s a customer base that value that website that goes to them, and we don’t want any of that to change… We’re starting to look at things like man if we’re a real player in New York we may not have enough premium seats on a widebody in the future maybe we need more.
…[O]ne of the things that was most striking to us after JetBlue started coding on our flights, is suddenly like 8 or 9% of the people on Tel Aviv were just coming through JetBlue.com. It’s funny, they were just New Yorkers, they would just go to JetBlue.com and they weren’t flying on us before. JetBlue.com was bringing in actual New Yorkers that could have flown on American.
- JetBlue is more likely to run Caribbean flights than American because they have more aircraft overnighting in New York and those departures tend to be in the morning.
- New York isn’t just a gateway city to Europe. When American was de-emphasizing New York they saw Philadelphia as their primary European gateway and so New York had less relevance. However they now understand that they can make more long haul work with New York passengers than just Europe. Delhi and Tel Aviv are already working, well ahead of schedule.
Given the limited number of routes American can fly out of New York due to slot controls, that suggests we’ll see more widebody long haul routes replacing narrowbody short haul international.
We started the Delhi flight and we were, frankly we didn’t know how it would go. We thought it would be the better part of the year before we started selling out premium cabins. It took like 3 months. Indeed for the rest of the year it’s really hard to get a premium seat on JFK – Delhi on American Airlines right now. JFK – Tel Aviv the booking performance has been big.
And what we’ve never been able to quite look like at JFK is not just when we are a large originating carrier for customers in New York but we can drive a lot of connectivity over Kennedy. And that takes us to a lot of places. We would have historically thought of JFK as something which is primarily there to serve the transatlantic market. Between JFK and Philadelphia we have lots of great ways to drive to drive connectivity over transatlantic.
New York what our eyes are really starting to open to is for Israel, India, the South America flights they tend to do really really well there. And so really a lot of the problem is the problem that many of our other hubs have. It’s not where is the demand, it’s what is the best place to go put an airplane to get the most possible demand and deliver the best value to customers?
…Our bias is almost always if we can fly a widebody there we want to be able to go and do that over flying a narrowbody to Montego Bay since they both consume the same slot.
- The JetBlue partnership drives signups for the AAdvantage frequent flyer program and that means a chance to sign new members up for credit cards, and earn off a slice of their spending far beyond just airline tickets.
For years I’ve made the point that American was missing out on credit card signups because they weren’t relevant in the New York market or Bay Area, and that’s where a lot of spend is. And that means they were misunderstanding the New York opportunity – before the JetBlue alliance they’d basically blown it off since US Airways management took over (first viewing New York as a place they brought passengers from other cities, and later operating a ’boutique’ airline that wasn’t relevant to most customers most of the time). They now see the importance of AAdvantage relevance to New York.
[In New York and Boston] we weren’t enrolling people in the loyalty program at the same rate as people were leaving the loyalty program.
This past summer we set a record for enrollment in our loyalty program, the AAdvantage program. Across the domestic system we had 25% more enrollments than we had in 2019. And 2019 was our previous high. But all of that growth were paced by 4 cities: New York, Boston, LA, Seattle, in that order. New York and Boston, our AAdvantage enrollments grew at 50% – 60% while the rest of our system was growing at 25%.