Originally Posted by
LoopsMcDoops
The biggest problem with NK in places like DFW/DTW/ORD (which we are currently reducing) is that NK simply cannot demand a higher priced ticket. Take DFW for example, AA will simply closely match our pricing on routes we both operate. AA can do this both as a loss leader and as a subsidy where those losses can be made up somewhere else in their system. AA calls NK "The Weed" at their HQs. As a passenger shopping for a fare, when the pricing on a third party site has AA and NK closely priced, almost always a person is going to choose AA. Whether or not their product really is that much better than ours, and we know its not necessarily, a regular everyday pax would prefer travel on AA.
You make a good argument. But, this is exactly the same way new (and cheaper) airlines have always entered new markets. If I recall correctly, it just came out last week that, on a per route operational cost-basis, NK is 46% cheaper to operate than United. AA, and Legacies, can price match all they want, but they'll certainly be losing money on a per route cost. Sure, they'll keep doing it (particularly from AA towards South Florida), but they're also on track to lose more than $1 Bill this year; whilst United and Delta are expected to make profit.
They can price match all they want, but they can't compete in the long term. Well... there's always bankruptcy. Which, AA will need a miracle, over the next few years to avoid it anyway.