This candid interview from
www.planebusiness.com can be viewed in whole on the APC American Forum.
American Airlines' New Chief Revenue Officer Vasu Raja Dishes On Capacity, The Old AMR, And Why You Need To Zig When Others Zag
PBB: So why did you guys decide to zig, when everyone else decided to zag?
Vasu: Well, you know, we were looking at all of this like everybody else and Scott [Kirby] was talking about having to shrink and everybody was expecting us to take out a lot of capacity as well. At the time, early on, that thinking made sense.
But then, we start looking around and hey, credit to Zed [Brian Znotins, VP Network and Schedule Planning]. I mean, he came and said, look, "Our break-even load factor at $35 fuel is like 25%. But then when fuel went into the tank – that number dropped to 9%.
So then we began to look at what other people were doing with their schedules. So we looked at Delta and United – and both airlines completely ****-canned their hubs. They literally broke all of their connectivity.
And it was at this point that we were also just about to go cut a ton of capacity.
But instead, what we did was, we actually went in and completely rebuilt our hub structures.
Go pull up any set of O&D markets. Take a look.
And guess what happened. In May, load factors got bigger.
For June, we’re looking at a system load factor of 55%, but in our [core] domestic system, our load factor is runnning at 70%.