American Airlines has increasingly become a domestic airline. Even though it’s the largest airline, it’s less of a global airline even than it was prior to the pandemic. They don’t fly as much to Europe and they haven’t built back much of their flying to Asia.
In fact they no longer consider Los Angeles to be their gateway to Asia, and a lot of their flying to secondary cities in Europe has been halted. That’s meant a real reduction in activity in Philadelphia, where those Europe flights were based, since domestic connections were optimized to support those transatlantic trips as well.
Following American’s fourth quarter earnings call, Vice President of Network Planning Brian Znotins explained the choice to focus on new domestic routes over new international ones during an employee meeting, a recording of which was reviewed by View From The Wing.
At American, given our history and our results, the next new destination – that sexy dot on the map isn’t sexy to us unless it’s going to make a lot of money. Sexy for us is profitability. And so for us, in our network, we have a lot of strength in our domestic network.
…There are 200 cities where we have a schedule advantage versus the competition. And ultimately that’s what many customers are willing to pay a little extra for, not have to take a connection on American when on the competitors they would, or being able to get to their business meeting the morning of the meeting instead of having to go the night before.
…Our biggest strength is in domestic. So just like any company, if you’re making a lot of money on product line A, and you’re not making as much money on product line B, what are you going to make more of? ..For us, product line A is our domestic and short haul international network, that’s where we make the most money in our network right now.
So in a constrained world where we don’t have enough resources to fly everything we’d like to fly. …For us, when we have to make tough choices about where we’re growing we’re going to choose the domestic and short haul international network…and you’re seeing it in our results, hundreds of millions of dollars that we’re improving just by not flying some of the loss-making routes we flew prior to the pandemic and instead investing those airplanes in the domestic network.
American’s Asia Pacific flying focuses on transpacific joint venture hubs – Tokyo (Japan Airlines) and Sydney (Qantas) and limited additional service from Dallas – Fort Worth. For flights to Europe their main destination is London Heathrow, and they’ve added slots from Etihad to grow Heathrow flying even more. But they haven’t brought back European river cruise markets they used to fly to in the summer.
Znotins offered, “The airline bloggers…won’t be as excited about that sixth trip from DFW to Indy, that sixth trip from DFW to Indy is what we’re going to be earning a profit on instead of going to some speculative destination in Europe or Asia where you don’t have as many people wanting to go there and we’re not as successful on those routes.”
Indeed, American really isn’t in a position to experiment with new European routes since they retired their Boeing 757 and Boeing 767 aircraft. Instead, they have a limited number of more expensive Boeing 787s to deploy. And those have to be deployed on denser leisure routes, unaided by large business class cabins, because American made the strategic error to equip their 787-8 aircraft with just 20 business class seats.
Brian Znotins is shortsighted – of course airline bloggers don’t matter in route planning – but common sense does
Profitable PRASM comes from ultra luxe long haul flying. If AA had its pre-US merger reputation of half decent service quality then it would be able to pull off those sexy routes per the conventional definition of sexy.
Perhaps we should return to the good old days in which the carriers were either domestic or international . . . and bring back Pan Am. That was America’s true premium airline.
AA’s realization that their first job is to make money and not fly as many sexy routes as possible is refreshing. If domestic is where AA best makes money, so be it. AA might generate the best financial results this century as a result
Gary, why did American retire their 757 and 767 aircraft if they did not have replacements? I am curious about this part of the story.
I gotta say as a newer AA loyalist, what made me choose them in the few years of solid travel I had before the pandemic was their route network. Where is Munich? Zurich? Geneva? Berlin? Vienna? Warsaw? Barcelona? Athens? It’s literally crazy to me. I also fly to South America, where is Belo Horizonte? Cordoba? Brasilia? Sad to have their former network dissed by executives as “not exciting for bloggers”. Well I’m a paying Exec Plat customer and I’m also not excited.
The only issue I have with this is I like to earn airline miles on my domestic business and leisure trips to travel on international awards. I can’t be alone in that. The main reason I don’t fly Southwest or invest in their loyalty program is the lack of interesting international routes for vacations on miles/points. If AA doesn’t have those routes and I can’t afford the YQ on partner metal awards then why fly AA? Their loyalty program makes more money than the airline so they need to have some of those “sexy” dots to keep me interested.
American accelerated the retirement of the 757, 767, and A330-300 fleets (along with the A330-200 and the E190) in 2020 in the thick of the pandemic’s arrival. It was those planes, minus the E190s that allowed AA to experiment with long, thin, leisure routes to Europe like Prague, Budapest, and so forth.
American has always struggled to make money on long haul, outside of LHR, deep South America, and Tokyo. All the way back to the late 1980s, when it accelerated its expansion overseas, initially to Europe, it retrenched as quickly as it built up routes. It never really invested in local market sales, to drive point-of-sale from many of its international destinations, except the Caribbean and Latin America.
It is refreshing to see that AA is focused on profitability and is running a pretty clean operation relative to some of its peers (WN overshadowed issues at DL over the holiday period). However, American can’t just be a domestic carrier. It needs international service or it will risk loosing the loyalty program chasers it seems to be winning in places like NY and LA, in spite of a much smaller network at each.
But Znotins is right to write off the blog speculators, none of whom have much inside information and base their opinions on wishing their favorite airline with a silver livery and a stylized eagle were to fly as prominently overseas as Delta and United, given that it has the benefit of having a flagship name and branding.
I prefer to fly on the AA partner carrier because AA is comparatively boring. The sad part is SWUs are really worth less with less international. I used to fly LAX-HKG and they would always clear early.
If AA doesn’t fly to more international locations, their mileage program profit center loses appeal and will see less engagement.
Less competition and choice for the American consumer. Sad! Hope international carriers can pick up the slack, or some new made-in-America carrier comes along (my preference). Pan-Am and TWA were great.
I wish the old management from AA not America West was running the airline. If so then they would operate on more international destinations with a better inflight service. AW mgt has destroyed AA.
I am sure the corporate clients will just move to Delta then.
@Benjamin G
You realize AA flies to half of the European cities you mentioned? And with their JV with BA also often, but not always, have the same one stop as other airlines to all of those cities but this stop is in LHR instead of New York or Atlanta since BA flies to many secondary US cities.
Not trying to say aa is the biggest across the Atlantic but you picked some strange examples.
Per South America, no US airline flies to cordoba or Belo anymore. AA was the last to do it And they found it unprofitable from Miami … that should tell you something. Per Brasilia… the only airline that does fly to the US from their codeshares with AA, Gol.
I knew that American had indicated that they weren’t good enough to offer viable competition for most of Asia but when they can’t manage a solid network to Europe and a strong network to Latin America they need to own up that they have some serious problems that need to be addressed pronto.
I almost always fly American’s partners internationally. Primarily because hopping to an American hub to connect is a pain adding half a day to the trek. They’ve basically abandoned the west coast.
Given the US3 airlines’ prices for domestic air fare nowadays and their ability to get more plane utilization within 24 hours from “boring” domestic use than from “exciting” long-haul international or other “exotic” use, this “increased domestic focus” is what I would expect AA and/or its industry kingpin brethren to do.
Znotins left United immediately after Kirby arrived.
The two have diametrically opposed philosophies.
We will see who is right.
@Jake, heard and understood on the S. American routes. As far as my “Strange European cities go”. They took away DFW Munich, now they only fly CLT, and I flew one of the last PHL to Zurich flights. The others don’t exist. And I don’t eat to fly cramped in BA metal and earn 25% of earnings. AA needs to step up in Europe besides Rome, London, & Paris. Otherwise I’ll stop earning all the miles. I don’t want use them and my SWU’s on a 2 hour flight to “Indy”. Part of the lure of travel is Discovery.
Munich is a Star hub. CLT has that route because of the large number of car manufacturing traffic between the two cities. DFW doesn’t have that. But AA still flies to Munich.
Athens is flown by AA out of three cities. It was last year and it still is this summer.
You didn’t fly on one of the last PHL-ZRH flights if you bothered to look. There’s a nonstop 4x weekly during the winter and daily late March. You can take the next flight Monday if you’d like.
Barcelona is flown by AA out of Miami and JFK year around, PHL & Chicago seasonally.
Per the other cities, maybe they should fly them, but you named nearly all relatively small population or GDP Star hubs or heavily dominated by star carriers like Berlin (Since AirBerlin collapsed) where United and the LH Group partners would naturally dominate with O&D and connecting traffic so it wouldn’t make sense for AA to fly there necessarily unless they had some incredibly rich corporate contract.
AA isn’t everything to everyone, obviously, but picking star hubs then not even knowing where they fly in your list of cities was a unique take.
What strategy? We don”t really have one.
Indianapolis sounds really boring.
Most of my AA flights are to AK, HI, NY, WA, and CA using my Alaska Mileage Plan number.
I prefer *A partners with lie flats to Oceania, Europe, Africa, Asia, and South America. American doesn’t have enough suites.
Reminds me of AA’s old slogan “We know why you fly” to promote their vast network over competitors dangling Terra chips and in-seat TVs. As someone who mostly travels domestically and prioritizes nonstop flights over loyalty and other perks, I have found myself on AA much more than others. If their international flying shrinks, their codeshare growth shows little sign of abatement.
AA used to have a direct JFK to Nice before the pandemic, and I would take it over Milan for a trip I’m already planning/booking if they brought it back. Frustrating that Vasu Raja and Brian Znotins, who seem to have become quite a duo since Znotins joined, seemingly have an almost antagonistic relationship with the loyalty program. They’re laser-focused on trying to make the actual flying profitable, which hasn’t been a thing at most major U.S.-based airlines for 10 or 15 years now.
@Luke, AA never flew from JFK to Nice, and never served Nice with its own metal.
@Benjamin, AA flies from PHL to ZRH. The route originally operated from JFK and was shifted down to PHL in 2015. It ran from JFK almost continuously since it launched in 1987. What AA did end to ZRH was ORD-ZRH and DFW-ZRH.
It’s the horrible US Airways business model with sucky customer service we are having to endure. They are over building domestic market in certain areas and completely gutting certain domestic markets. The short haul international routes are also limited so I’m not sure what he’s talking about. Fine, build the domestic market, but improve your codeshare partnerships with one world partners so give us more AA metal flying to one world partner hubs besides BA and definitely he needs to fix this onesided code share agreement with Qatar where the AA codeshare flights are only between Doha and the US and Doha out are prime flights so it significantly reduces loyalty points
@Reidy, agreed. The USAirways ethos was terrible. USAir/USAirways was an awful airline with bad customer service, lousy products, and a route network that benefitted no one except folks that needed to fly short trips in the Northeast. It also had one of the worst safety records of any us airline. It was the product of many layers of mergers, none of which really worked out well, and it almost liquidated in 2004, had it not been for its merger with HP.
What AA got from USAirways was a fleet and a network that allowed it to densify domestic flying, a mega hub with lower operating costs in CLT, and a very profitable operation at DCA.
The AA/US merger was one of convenience and a last resort. There was no one else AA could merge with to keep its size and footprint competitive relative to DL and UA.
“get to their business meeting the morning of the meeting instead of having to go the night before”
And American has been unable to do this on a regular basis for me. Not to mention 3 lost bags in 4 trips. Yes I have to connect through ATL. However in the past 6+ years I have not had any lost luggage or missed flights on Delta. The last missed flight on AA had me driving 9 hours overnight and my bag taking over a month to be returned. That was the proverbial straw.
AA isn’t AA IS STILL US AIRWAYS JUST WITH AA NAME, AA ITS LONG GONE AND THIS AIRLINE STILL RUN BY INCOMPETENT PEOPLE THEY HAD DONE SO MANY MISTAKES THAT LITERALLY GAVE AWAY MARKETS THAT THEY COMPLETELY DOMINATED “BECAUSE SUPPOSEDLY THEY “DID NOT MAKE ANY MONEY” I REMEMBER WHEN THEY ANNOUNCED FEW YEARS BACK TO MAKE CUN A HUB AA IS DOOMED EVENTUALLY ON TOP OF THEIR MASSIVE DEBT.
The current executive management, as well as many EVP’s, VP’s and directors came from a small, single hub, low cost domestic carrier, America West Airlines, and run American Airlines in the same fashion. Until American Airlines gets an executive team that knows how to operate, market, and COMPETE on a global scale, American will continue to transform into a facsimile of Southwest Airlines.
@Jingleheimerschmidt – in fact, many of them came from Northwest
The comment that AA is still US Airways is accurate. Ever since the merger, the bottom line is the only focus, not customer service. I am not really sure though why people are getting so upset about less International routes. The current management cut seat width, leg room, etc and flying International is not comfortable unless you upgrade to Business Class. I was a Travel blogger for 10 years and if I was flying International I would use a “Partner Airlines”, especially if I was headed to Japan. JAL is a far superior airlines to American and if I was flying to Europe British Airways is great also. I only used AA if there was no possibility of a partner airline. Check it out. You will not be disappointed!
Yep typical crap! Ever since merger AA has gone in the shitter!! Management is terrible just terrible they can’t see past DFW!
Worse merger ever!! Ever since merger AA has gone!! Management is terrible just terrible they can’t see past DFW!
They need to part ways let’s AA get back to what it was! Absolutely nothing good came from that merger from management to the new colors to employees…. Very very sad!
USAir = You are still Allegheny in Reality.
Management with zero vision. Giving up Europe, giving up Asia, giving up West Coast, giving up Northeast…
And the retirement of 757s and 767s with irreplaceable mission profiles. And retiring A330s that would have made the airline less vulnerable to 787 delivery delays… Insanity.
Luckily, I live in a UA hub myself – but for competition’s sake, it’s unfortunate that AA – as one of only three remaining network carriers – seemingly has no ambitions going forward.
Translation: We are a dying airline with no motivation to improve. Next we will say it’s just more profitable to focus on regional flying, and if that doesn’t pan out then we’ll just be a contractor that organizes different regional carriers. #NoWillToWin
The fAAnboy whining here about long and thin routes reminds me of the tulip fanboy whining about the fantasyland of 3 good years at Kennedy for UA’s international ops in the late 90s, as if it was some global fortress in place for decades.
Good domestic profit will open up feed opportunities for sexy and profitable routes in the future, like it did for Delta.
mmmm, with an attitude like that Brian Znotins will end up on Lucky’s shit list
Patience gentleman. AA’s stated current strategy is just that> currently. They have 30 787/9s heavily tilted to Premium Class on order and 50 A321XLRs also heavily premium. Those planes will not be going to Boise, Idaho.,
I’m kind of the same way.. I preferred the Original AA Management over the New Woke American West/US Air..’AA’ Management Team! I give the airline 5 years before it goes belly up!
Still guessing where the XLR’s will go? Hopefully not just transcons. At first I agreed with parking the 75/76 to simplify the fleet and save all the training money. I thought international travel was done for. I was wrong. But the ineptness that Raju forgot AA had JFK slots and lost them?? Wtf?! Terminal 8 is dead only now being saved by BA and QR.
So all the problems at AA started with the merger. Hummm, let’s see. Always horrible labor relations. Had OLD MD80’s, F100’s, older 777-200’s. It wasn’t until AA screwed over labor in Chapter 11 that they decided to modernize their fleet. Yes, the current management team isnt the best by a stretch, but some of you are living revisionist history. AND, just because an airline has a vast international network doesnt mean they will be the best, much less profitable, Some of yoiu like to remind everyone about Pan Am. Guess what, it was foolish decisions at the company as well as TWA that doomed them…not their vast international presence. Yeah, lets bring PAA back witht heir seats that didn’t werrent sleepers, OLD 747s, and a big screen with one movie in each class of service.
Somehow there seems to be a disconnect here with American plans, except for Arthur. American has an order for 50 – A321XLRs. The first set to arrive in late 2023/early 2024. These planes have a real-world range of about 4,600 miles, so they’re perfect for the thinner European routes out of JFK and in particular, PHL. That range easily gets from the US east coast to places like Berlin, Dubrovnik, Stockholm and Warsaw, etc. All things being equal, AA should have about 15-20 of those planes ready to go by May/June 2024, at the latest and by late spring 2025 they should be up to about 35-40 of the A321XLRs and all of them by the end of 2025, according to the contract and the latest restructure of the order.
AA also has 30 Boeing 787-9 aircraft on order, plus 13 – 787-8s and deliveries start late this year with 4 – 787-9s in the 4th quarter according to the restructured delivery schedule. AA will then get a mix of the two sizes through 2027 of about 13 – 787s per year.
This is going to give them the flexibility with wide-bodies and narrow bodies for long range routes that they haven’t had since the beginning of the pandemic when they retired the A330s (24), the 757s (31) and the 767s (16). That’s 71 aircraft they took out of service in the first 5 months of 2020. (I thought it was a very smart move retiring the 757s and the 767s because they were old and really inefficient, but I think they made a mistake retiring the A330s, rather than remove them from service temporarily. I think they could have made a profit running them beginning last summer, until the 787 order started delivering.)
I guarantee you all that they are dreaming about these new planes and how they will be able to deploy them. These planes are what they need to return to European flights. Right now they’re talking domestic because they don’t have nearly the number of planes they need to resume international as was planned in 2019.
I don’t think that we’ll see many of these planes being used for Asia or South America, but we’re going to see AA definitely return to Europe with many, if not most of the routes they were discussing prior to the pandemic.
A hint of this future comes from seeing them not abandoning gates at PHL that if they don’t resume many flights to Europe out of PHL and new routes previously discussed by them, makes no sense at the current utilization rate. Unless they’re going to start using them far more heavily in 2024 and thereafter, according to their plans, they should have been abandoned by the third quarter of last year or sooner.