How American Sees Its New York Strategy Going Forward

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.

  1. 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.

  2. 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.

  3. 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.

  4. 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.”]

  5. 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.

  6. 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.

  7. 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.

  8. 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%.

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. Lifelong NYer here and EXP for many years.

    Not feeling it. Have only stepped foot on B6 once in a dozen years. Don’t find their coach class appealing (thankfully not that I fly AA’s product in Y either). This feels like a surrender of domestic flying out of NY to B6. Will need to consider my options as this stratey is implemented. I feel free agency on the horizon.

  2. 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.

    Geniuses! Imagine how many MBA classes you need to sit through to think that the market opportunity for overseas travel is more promising from the dying city of Philadelphia than from New York! Imagine if they realize that people want to fly to South America from New York too, and year round! Seems obvious until you realize that these are the same people who decided to fly to São Paulo from Charlotte!

  3. Seems unconvincing. Delta cleaned their clock in NY and they had to run into an uncompetitive alliance. DOJ may strip some of this coordinating. I am still seeing a better schedule on Delta both domestically and internationally (except to Asia)

  4. I think it’s important to note a few items:
    1.). It seems AA will always be at a disadvantage relative to competitors due to the revenue share given to JetBlue. Therefore, while the partnership increases the numbers of passengers to AA, it comes with a price. Meanwhile, DL and UA and international carriers do not have this issue.
    2.). AA’s higher cost structure adds further pressure on making these international routes profitable
    3.). Although bookings seem solid on TelAviv and India, the question remains how profitable are these flights. You can fill almost any flight if you price it low enough.

    The partnership does not solve the root issues for AA in NYC. It is simply a way to keep AA’s brand awareness alive in the minds of New Yorkers.

  5. Mak nailed it. Philly future as a cheap getaway to Florida. Not enough demand to make an international hub.

  6. Until they think the hard product is also the product, they are doomed.

    I had my first sanwhoch ftom hell that Gary pictures last Thursday on LAX-OGG F. Had slready brought a cushion because I didn’t know which A32I I’d get (at least this one didn’t have a metal bar poking me). Six hours holding up an iPhone is not entertaining.

  7. “They can swap out one airline for another on a route, given aircraft availability and size.” I hope it’s not after I’ve already booked. I understand if the flight goes mechanical, but if a week out from the flight they see demand is low and change the operating carrier to AA I’d go f-king ballistic. If I’d pay 150 for a jetBlue flight then the price I would pay for the same flight on AA metal is no more than 60, that is it’s so low it’s below what AA would charge. If this becomes the norm I would jump ship from B6. I also wonder if there’s any legal issues surrounding putting passengers on another carrier SOLELY as an administrative decision and not the result of irrops.

  8. In addition to what has been said above, the part that is stunning is that American employees have sat by so quietly while American has outsourced both its Northeast and west coast operations to other airlines while the potential gain for AA of new international business is not very likely to succeed given AA’s industry-high unit costs and low average fares compared to DL and UA.

    Given that Delta’s A350-900s seat just about as many passengers as American’s 777-300ERs and yet the A350s burn 35% less fuel, it is only a matter of time before American’s international growth is short-circuited by high fuel prices and uncompetitive aircraft.

    The difference between the 777-200ER for AA and DL’s A330-900s is about the same and still 17% even between the 777-200ER and DL’s A330-300s.

    by the time AA employees realize that the international growth that AA has promised won’t work, they will have gutted even larger portions of their domestic system.

  9. Gene: B6 Mint product (granted only transcon from BOS and JFK) absolutely blows AA F out of the water. It’s not even a close comparison. Sure if you’re looking for free upgrades you’re out of luck, but if you’re flying paid up front, Mint is a no brainer. If anything, this alliance with JetBlue — for the transcon Mint product — has kept me with AA rather than defecting to UA or DL.

  10. Mike – Mint is great, but there isn’t first class on most of the other B6 routes, which is most of the routes. I would take Delta or AA first class on most routes over extra leg room on JetBlue or whatever.

    Also, what about lounge access? I don’t believe you get club access on JetBlue marketed flights. On Delta flights with the right credit card, you get lounge access.

  11. @ Mike — I wasn’t talking about Mint, but the other 90% of their flights…JetBlue economy may be better than average, but so is Southwest’s, and I don’t fly them either.

  12. GLN2LW – don’t want to comment for Gene, but Southwest is one of the few national airlines that is weaker out of New York than JetBlue. Southwest also lacks lounges. A lot of travelers value first class and lounges, which JetBlue (and therefore a big chunk of AA) and Southwest don’t provide.

  13. this goes to show that the people in charge of AA have no idea what they are doing. stopped flying them in 2018

  14. JetBlue’s greatest weakness is its on-time performance. When they are consistently at the bottom of the industry – they clearly aren’t willing to spend the money (more airplanes and more backup crews) to fix it. AA is not going to get or keep high quality revenue if it has to partner with any airline that has such a low on-time rating. When other airlines perform 10-20 points higher from the same airports, the issue isn’t the airports themselves either. B6 is a low cost carrier that tries to put a few premium services on a low cost carrier model and the end result still is a low cost carrier.

  15. @Tim Dunn is correct.

    JetBlue does, and has long had, a chronic problem with on time performance.

    I’ll also add that the airline often leaves its passengers completely in the lurch with last minute cancellations, the most recent of which was in September when a friend found out their flight was canceled literally as they were leaving their office for the airport.

    Or even worse, in August, 2019 when another friend, who was flying to visit a terminally ill family member found out their flight was canceled only after they arrived at JFK Airport.

    Both times JetBlue was indifferent to their needs & unable to assist them, leaving them to find alternative flights on other airlines initially at their own expense, with all of the stressful & time consuming ordeals/hassles it takes to be reimbursed at a later date.

    So, yes, until these glaring PaxEx problems are fixed, JetBlue is an unreliable, & less desirable option than Delta or United in our home & for family/friends that turn to me for travel tips (as a former travel agent & someone who follows the industry closely).

  16. The few here that are lamenting about Jetblue’s lack of first class is either bloviating elitist hot air, or being disingenuous. I did a trip recently to Charleston and flew on a delta RJ in J cabin and then flew back on jetblue A320 Y+ seat and it was far better. About the same legroom than the DL RJ Y, free wifi, free direct TV, a wider selection of snacks and great service and we landed early. I been flying jetblue since and never had any ontime issues in and out of NYC. Did we already forget about the delta meltdown this time last year? Then again for New Years and then again for spring break? I’m done with the ‘Delta #1 narrative” its hogwash. Give me a decent fare in a good economy product and I’m in. Jetblue has delivered for me in that respect.

  17. I guess it’s time for the #deltachallenge. Been EXP for decades and >4million miles with AA, but being in NY it is just getting hard to stay with them. My destinations, previously served well by AA are now a joke. I need to drive 2 hours to PHL to go to San Juan rather than a quick train to JFK? Everywhere else I want to go means a visit to Charlotte. And Europe…don’t get me started.

    It’s just sad. So sad. We had decades together, but I just don’t see it going forward.

  18. Dartagnan79,
    we all like to think our anecdotal experiences reflect what everyone else experiences – but they simply don’t.
    When airlines carry as many passengers as they do on as many flights as they do, statistics matter.

    JetBlue has not been ahead of Delta in any month in any DOT measurable statistic for years including the months when Delta supposedly had “meltdowns” – on-time, cancellation rate, lost baggage, oversales (which is remarkable), and most importantly consumer complaints.

    Service is subjective. No one can tell you what you “like” but statistics do define what the majority of people experience on something that can be measured.

    And, specific to American, JetBlue is a low cost airline which American has tapped to try to fill the holes in AA’s network but JetBlue is still a separate airline and a low cost airline to boot. There simply are people that don’t think 16 choices of snacks and having to navigate two airlines is comparable to service on one airline – and it matters not whether that single airline is Delta.

    DOT data has consistently shown that Delta gets a revenue premium to both American and JetBlue – so it is a stretch to think that American and JetBlue combined will pry the highest value passengers out of Delta’s hands and the same is true for United; Delta just happens to have the greatest direct overlap with both American and JetBlue in the NE.

    And the greatest disadvantage that American has is that they have repeatedly promised relevance in major NE markets only to pull back and come up with yet another strategy that tries to put them back into a position of relevance.

    The best part of the airline industry is that it generates enormous amounts of data. It won’t take long to figure out whether American and JetBlue’s partnership succeeds at fixing American’s long-standing strategic challenges.

  19. Tim, based on your historical comments, its hard to take your statements as if they are with full objectivity.
    you said “DOT data has consistently shown that Delta gets a revenue premium to both American and JetBlue ”
    I just will post JFK-SFO for example and you can see delta is not generating a premium and B6 has consistently hold better yields.
    JFKSFO B6 82.87 528 158.80 318.14 247.39 92.37 259.17
    JFKSFO AA 84.61 490 102.00 393.34 225.44 87.98 315.72
    JFKSFO AS 69.19 127 184.00 229.57 136.44 88.02 151.13
    JFKSFO DL 77.61 616 168.90 301.38 235.92 91.44 229.56
    JFKSFO UA 80.62 209 167.20 350.55 223.00 88.80 271.10
    EWRSFO B6 82.96 245 159.20 290.83 233.67 93.61 238.23
    EWRSFO AS 80.81 128 161.10 229.73 160.14 92.52 181.44
    EWRSFO UA 89.56 621 255.80 357.89 239.55 77.62 296.82
    JFK-LAX is neck and neck. But B6 still holds better yields
    CityPair Carrier LF Dep PerFlight NSFare ConnFare % NS Yield
    JFKLAX B6 91.49 893 159.00 319.51 201.59 94.49 286.36
    JFKLAX AA 92.64 1114 102.60 484.08 191.83 82.05 399.83
    JFKLAX AS 85.62 148 169.30 197.01 128.79 93.22 164.72
    JFKLAX DL 84.43 1123 230.80 348.89 202.98 89.03 281.07
    JFKLAX UA 84.07 208 167.20 340.47 222.76 89.84 276.18
    EWRLAX B6 91.92 487 158.90 313.25 201.96 95.38 283.20
    EWRLAX AS 88.49 138 160.10 211.23 140.05 88.26 179.53
    EWRLAX UA 93.68 606 214.40 332.11 201.74 81.43 288.42
    And Boston? jetblue holds better yields and premium than delta BOSLAX B6 88.57 494 159.00 331.97 226.55 94.54 288.92
    BOSLAX AA 92.37 233 187.20 245.27 152.94 83.73 212.69
    BOSLAX DL 79.74 554 160.00 292.79 189.69 89.13 224.52
    BOSLAX UA 84.74 68 178.40 306.41 269.54 81.22 253.77BOSSEA B6 62.57 182 159.20 248.09 172.33 90.03 150.51
    BOSSEA AS 85.31 440 183.40 233.34 165.51 49.56 169.88
    BOSSEA DL 67.37 477 160.00 237.36 170.19 52.11 138.24BOSLAS B6 79.98 389 159.30 247.56 161.88 93.91 193.83
    BOSLAS DL 74.07 164 160.00 258.89 236.13 97.18 191.28

    Also, lets be fair. Isolate deltas MSP/DTW/ATL/SLC hubs and lets truly see how they fair out comparably with jetblue in the northeast where when the weather gets slammed, thats 60-70% of jetblue operation being affected vs deltas 35% or so getting affected.. But to your point, yes in general Delta does a better job with the operation in general and can mitigate delays better than jetblue. But I think the story you keep painting for delta over and over again loses water when they have in the past year had more massive systemwide meltdowns than jetblue

  20. In both of the markets you cite, Delta most certainly does get higher average fares in the LOCAL markets. How Delta or any other airline flows connecting traffic does not change the fact that Delta outperforms in the local market which is where the two carriers directly compete.
    Delta operates a long haul international network at JFK which necessarily means that it is not going to get as high of a revenue on the local domestic segment but that passenger is worth a whole lot more to the network than B6′ network.

    And Delta uses widebody aircraft which carry cargo, something B6 doesn’t do. For JFK-LAX that is worth a couple million pounds of cargo and mail per month.

    And, finally, trying to argue that JetBlue somehow gets better revenue defies the REALITY that Delta has higher system margins and has for several years. It is pure fantasy to think that Delta’s profits all come from ATL, DTW, MSP and SLC but they have lower margins in NYC, BOS, SEA and LAX.

    You and others desperately want to see Delta as an impotent behemoth that is pushed around by a couple of low cost carriers on both sides of the US.

    And if ATL, DTW, MSP, and SLC are so profitable, why is it that no other carrier has managed to generate margins comparable to those hubs – in order, in your mind, to subsidize its highly competitive markets.

    The simple reality is that B6′ margins started falling when Delta began to build BOS, B6 not only significantly underperforms Delta in the largest local markets such as JFK-SFO and JFK-LAX (where it also carriers more total revenue) but DL gets even larger average fares and revenue in markets to DL hubs and focus cities.

    And none of this changes the fact that B6 is a low cost carrier that wants to get as much as it can from American which has not been able to effectively compete with Delta or United on either coast and AA is trying to cobble together whatever partnerships it can to reverse its slide.

    And it also doesn’t change that B6′ on-time has consistently been at the bottom of the industry along with most other DOT metrics and there aren’t very many high fare paying passengers that are willing to get burnt over and over again by lengthy delays in and out of the same airports that Delta manages to get 10-20% better on-time performance.

    You are free to manipulate data to create a world where you think DL not only doesn’t but can’t effectively compete with B6 or AS but real data seen in its proper context, including bottom line results says that Delta has very effectively built hubs on top of low cost carriers and neither AA or B6 has been capable of generating the margins at the system level that DL has and is generating.

  21. Flying JetBlue on the Transcon home from JFK didn’t work for me. I am now flying on American back home.

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