
For years airlines have battled to dominate international markets from Los Angeles International Airport. This week American Airlines effectively conceded defeat in that market. As part of its long-haul network revamp the carrier will shed most of those routes from LAX.
We’re going to rely on our hubs’ greatest strengths with our existing international network, and further integrate into our partners’ hubs to provide connectivity that’s been untapped in the past.
– Chief Revenue Officer Vasu Raja
Big cuts overall
American’s long-haul network for 2021 aims to offer roughly 75% of the 2019 capacity. Chief Revenue Officer Vasu Raja describes it as a necessary “reset” to the network, one that will emerge “using the strength of our strategic hubs” to “build and grow upon and be profitable in this new environment.”
Those strategic hubs will be Miami for the Caribbean and Latin America, Dallas-Fort Worth for Asia and Philadelphia for the Transatlantic market. Even the carrier’s fortress hub at Charlotte will lose a trio of Transatlantic destinations: Barcelona, Rome, and Paris.
In addition to cutting existing routes American no longer intends to launch service from Philadelphia to Casablanca nor from Chicago to Budapest, Krakow, and Prague. All these routes were slated for a Summer 2020 launch.
LAX let-down
The cuts at LAX are both the most significant and the easiest to understand. It is the hub where American faces the most competition. And, especially on the Asia routes, that competition comes from both the US and Chinese markets. American previously shed its China-Chicago markets facing a miserable revenue environment. But the carrier held on in Los Angeles, until now.
Map generated by the Great Circle Mapper - copyright © Karl L. Swartz.
In addition to dropping Shanghai, Beijing and Hong Kong flights American will also stop service to Sao Paulo and Buenos Aires. Those markets historically have benefitted from passenger through flow from Asia. Without that feed, however, the value proposition is much harder to realize. The shift of more Transpacific traffic to DFW allows American to combine that market into others, improving the financials.
American will also keep its Tokyo-Haneda service at LAX for now, with plans to resume those operations on 7 July.
Shifting to Seattle
In February 2020 American announced its intent to establish a “west coast international alliance” with Alaska Airlines helping to feed American’s long-haul operations at its Seattle hub. That effort is not disappearing; indeed, it is getting a boost from the LAX draw-down. American officially applied to the US Department of Transportation to shift its allotted Shanghai-Los Angeles route to Seattle. If approved that would join Bangalore and London as the initial international markets for American in the Pacific Northwest.
Unlike the Shanghai route, however, American does not intend to migrate its Beijing service to the new gateway. Those slots will be returned to the DOT, similar to its Chicago-China portfolio last year.
When the Seattle gateway was announced Raja went out of his way to make clear that it was about boosting the overall operations, not shifting from LA to Seattle.
As good as this is for Seattle, it is just as good for LA. Our partnership is a west coast international alliance. We will have a comprehensive partnership. Those domestic flights that they fly into LA will help support our long-haul service out of LA. We expect to continue to grow in LA and also now grow in Seattle and offer a really compelling network as a joint AA/Alaska marketing presence.
This latest round of adjustments, while easily justified on the balance sheet, raise a new round of questions about the operations.
No longer will Alaska routes into LAX be feeding American’s long-haul service there. And, while it is true that Seattle remains “a gateway that very much compliments the rest of our hubs” it is much harder to see it as “incremental growth” now that the LA market is closing up so much.
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AA gave up a dominant hub at JFK — the richest business market in the country — where it had invested billions of dollars in a new terminal, and walked away from it in favor of highly competitive markets like LAX and second/third tier cities like PHL and CLT. I’m sure JetBlue, Delta, and United shareholders are extremely grateful for bestowing the NYC market upon them, but it makes even less sense now in hindsight. Such a breathtaking waste of AA shareholder assets.
Thanks Seth. What does the GCM map color codes mean. Red is a route being cancelled? Yellow is reduced or season service? And green is maintained at current levels? Thanks.
As an EXP who travels to Australia and New Zealand definitely disappointed with the idea of having service reduced or eliminated from LAX
Details would be useful, right?? 😉
Red is cxld, green is flying soon (LHR expected to resume in late October), yellow is resuming eventually (SYD-Summer ’21, AKL Winter ’21).
American was designed more so for the business traveler and less so for the deep discounted passenger. It dominated the Largest Cities in America. New York City and Los Angeles being the 1st and 2nd largest. In NY it dominated, EWR,LGA and JFK. Delta now completely replaced American in the largest city. Los Angeles seems to be following NY. SInce 2013, AMR has lost the top talented leadership that it once had. The current mangement seemed to not understand the niche American Airlines had. Their experience was from discount airlines. Robert Crandall totally disagreed with their implementation of very last minute tickets (Group 9 ). It educates the public the exact opposite of the pricing practices we have had in place .” ” Last minute travel is a privilege and the public should expect to have to pay up for it ! Most of the decisions made since 2013 have undermined the very strong foundation that was is place for American Airlines being a Superior Quality Airline. It appears American is becoming another mediocre airline .. like the majority. Honestly could you expected anything else ? Looking at their history, shows they never managed a superior airline. And it was incorrect to assume they had those skills to begin with. The wrong decisions from the pressure of Bankrupcy in 2012-13 need to be rectified as soon as possible. Here is how they ended up running what was a world class airline . https://callingonthedoj.wordpress.com
It is time for long needed spring house cleaning at 1 Skyview Drive, Fort Worth, TX