AA: LUV ops will lo$e money
02-20-2006, 03:34 PM
#1
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AA: LUV ops will lo$e money
LATEST NEWS
Dallas Business Journal - 4:55 PM CST Monday
American says Love service won't make money
Margaret Allen
Staff Writer
American Airlines Inc. will compete aggressively with low-cost Southwest Airlines Co. at Dallas Love Field, said an airline executive Monday, adding it's doubtful the legacy carrier will make money flying from its newest airport.
American on Monday unveiled to the media the three gates from which the airline will operate at Love Field.
Southwest has more than 90 percent of the flights at Love Field, where the carrier has operated for more than 30 years. American plans to steal some of those customers, according to David Cush, an American vice president and general sales manager.
American starts its new service from Love on March 2, with 16 flights a day to Austin, San Antonio, Houston, Kansas City, Mo., and St. Louis.
The carrier was driven to expand from its fortress hub at Dallas/Fort Worth International Airport to serve Love Field by a recent relaxation of the federal Wright Amendment, which uniquely restricts Love to short-distance flights in jets with more than 56 seats.
With the recent relaxing of Wright to include Missouri, American is now on the defensive to stem any losses of its customer-base in the North Dallas area. American has a huge customer base in the area, said Cush.
But chances are American -- which has seen a near steady run of losses since Sept. 11, 2001 -- won't make money doing it, he indicated.
"It's tough to forecast a profit anywhere in the airline business," said Cush. "My guess is it will be tough to make a profit here. ...It will be tough sledding."
American has vigorously opposed any relaxing or elimination of the Wright Amendment. But Cush said American will do whatever it takes to compete hard against Southwest out of Love.
"As silly as it sounds, we're not here to make a profit off this operation, we're trying to serve our customers," he said, adding later, "We're going after Southwest customers."
Tim Smith, a spokesman for American, added however that "It would cost us lots more in lost business to not compete."
According to Beth Harbin, a spokesperson for Southwest Airlines, "American's interest in Love Field is to make a point, not a profit."
Even so, she said in an e-mail response to American's comments, American will no doubt benefit from the well-known "Southwest effect" that has found passenger volumes increase at airports where Southwest and other airlines compete.
However, she added, Southwest believes American's strength and best product offering locally has always been from its hub at D/FW "and not stringing itself out at Love Field."
"It's their choice, however, to locate where they see fit and we will work alongside them at Love Field as we do in many of our other cities," said Harbin.
In an aggressive marketing push, American is already offering triple bonus miles through May to frequent fliers who choose Love Field. That gives AAdvantage Miles customers the opportunity to earn 60,000 miles -- enough to fly to Hawaii, Europe or Japan in off-peak season, said Linda Johnson, American's general manager at Love.
"That's one of the richest offers in the history of our program," said Johnson. "Thousands have already signed up to qualify for this program."
American's first flight out of Love is an early morning departure on March 2 to Kansas City, Mo., said Cush.
The airline will have 1,000 seats a day out of Love Field, but Cush declined to say how many passengers might actually board the planes. A typical "load factor" for the airline is 70% to 80% full. Planes moving through Love Field won't be that full, though he declined to specify a number.
"Because we'll be carrying only local traffic we'll expect to see load factors significant lower than at D/FW," said Cush.
[email protected] | 214-706-7119
Dallas Business Journal - 4:55 PM CST Monday
American says Love service won't make money
Margaret Allen
Staff Writer
American Airlines Inc. will compete aggressively with low-cost Southwest Airlines Co. at Dallas Love Field, said an airline executive Monday, adding it's doubtful the legacy carrier will make money flying from its newest airport.
American on Monday unveiled to the media the three gates from which the airline will operate at Love Field.
Southwest has more than 90 percent of the flights at Love Field, where the carrier has operated for more than 30 years. American plans to steal some of those customers, according to David Cush, an American vice president and general sales manager.
American starts its new service from Love on March 2, with 16 flights a day to Austin, San Antonio, Houston, Kansas City, Mo., and St. Louis.
The carrier was driven to expand from its fortress hub at Dallas/Fort Worth International Airport to serve Love Field by a recent relaxation of the federal Wright Amendment, which uniquely restricts Love to short-distance flights in jets with more than 56 seats.
With the recent relaxing of Wright to include Missouri, American is now on the defensive to stem any losses of its customer-base in the North Dallas area. American has a huge customer base in the area, said Cush.
But chances are American -- which has seen a near steady run of losses since Sept. 11, 2001 -- won't make money doing it, he indicated.
"It's tough to forecast a profit anywhere in the airline business," said Cush. "My guess is it will be tough to make a profit here. ...It will be tough sledding."
American has vigorously opposed any relaxing or elimination of the Wright Amendment. But Cush said American will do whatever it takes to compete hard against Southwest out of Love.
"As silly as it sounds, we're not here to make a profit off this operation, we're trying to serve our customers," he said, adding later, "We're going after Southwest customers."
Tim Smith, a spokesman for American, added however that "It would cost us lots more in lost business to not compete."
According to Beth Harbin, a spokesperson for Southwest Airlines, "American's interest in Love Field is to make a point, not a profit."
Even so, she said in an e-mail response to American's comments, American will no doubt benefit from the well-known "Southwest effect" that has found passenger volumes increase at airports where Southwest and other airlines compete.
However, she added, Southwest believes American's strength and best product offering locally has always been from its hub at D/FW "and not stringing itself out at Love Field."
"It's their choice, however, to locate where they see fit and we will work alongside them at Love Field as we do in many of our other cities," said Harbin.
In an aggressive marketing push, American is already offering triple bonus miles through May to frequent fliers who choose Love Field. That gives AAdvantage Miles customers the opportunity to earn 60,000 miles -- enough to fly to Hawaii, Europe or Japan in off-peak season, said Linda Johnson, American's general manager at Love.
"That's one of the richest offers in the history of our program," said Johnson. "Thousands have already signed up to qualify for this program."
American's first flight out of Love is an early morning departure on March 2 to Kansas City, Mo., said Cush.
The airline will have 1,000 seats a day out of Love Field, but Cush declined to say how many passengers might actually board the planes. A typical "load factor" for the airline is 70% to 80% full. Planes moving through Love Field won't be that full, though he declined to specify a number.
"Because we'll be carrying only local traffic we'll expect to see load factors significant lower than at D/FW," said Cush.
[email protected] | 214-706-7119
02-20-2006, 08:33 PM
#2
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Joined APC: Feb 2005
Position: Lazy-boy Captain
Posts: 242
SWA will be the loser
I think AA do fine there at DAL.
"People need a choice in Air Travel."
I quoted that from the SWA corporate headlines.
It will be interesting to see what passengers AA picks up,
and what SWA passengers leave.
You are not getting worried at the home base are you?
Proudly waiving my AMERICAN FLAG!
"People need a choice in Air Travel."
I quoted that from the SWA corporate headlines.
It will be interesting to see what passengers AA picks up,
and what SWA passengers leave.
You are not getting worried at the home base are you?
Proudly waiving my AMERICAN FLAG!
Last edited by av8r4aa; 02-20-2006 at 08:36 PM.
02-20-2006, 09:50 PM
#3
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Joined APC: Nov 2005
Position: 757/767 Captain
Posts: 59
AA trying to lose money
You gotta love this quote from the American Airlines spokesman: "As silly as it sounds, we're not here to make a profit off this operation." Well not making profits seems to be their specialty these days so I'm sure they'll accomplish that goal. LMAO!
Brown Dog
Brown Dog
02-21-2006, 06:00 AM
#4
Line Holder
Joined APC: Dec 2005
Posts: 25
I would of course like to see some success for AMR as I work at Eagle. However next month I am working a line which has me and my RJ running back and forth to SAT and AUS from DAL. I don't know what equipment AA will be running over there. Maybe the 80. It just seems to me that in order to compete, in addition to low prices you need to offer a service which is a step above the competition. The Eagle RJ does not accomplish that by a long shot. Also, I road on SWA and an AA MD-80 last week. SWA was just as comfortable if not more than the 80. We'll see what happens. I could be wrong about the 80's running out of DAL. Correct me if I'm wrong on that.
02-21-2006, 09:16 AM
#5
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Joined APC: Dec 2005
Position: FO, looking left
Posts: 1,057
One day everyone will wake up and figure out that the Southwest effect is bad for the industry. Period. This is just another great example. "We will probably lose money operating at DAL." Gotta love it.
Come on 2008, can't wait until those fuel hedges run out...
Come on 2008, can't wait until those fuel hedges run out...
02-21-2006, 02:50 PM
#8
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Originally Posted by Sr. Barco
Ryan--
What happens in 2008 that you can't wait for?
What happens in 2008 that you can't wait for?
The answer is FUEL HEDGES! What are fuel hedges. While EVERY other airline pays about $70 a barrel for oil, Southwest is only paying $26 a barrel. They bought all their fuel in a "locked in" price a few years ago and they have been using this to terrorize the industry (The Southwest affect [perfect example above]). I bought stock is SWA in 2003 because I knew about how these hedges would save them from the industry downturn. But I sold my stock recently because I KNOW these fuel hedges decrease slightly in 06 and 07 and totally run out in 08.
So what happens when an airlines single largest expense (fuel) tripples? Southwest will be in trouble. Come on 08.
02-21-2006, 03:47 PM
#9
Da Man
Joined APC: Feb 2005
Position: DC-10 F/O
Posts: 436
Originally Posted by ryane946
The answer is FUEL HEDGES! What are fuel hedges. While EVERY other airline pays about $70 a barrel for oil, ...
02-21-2006, 04:38 PM
#10
The NeverEnding Story
Joined APC: Sep 2005
Posts: 7,512
You are a CFII and you want SWA to tank? WTF are you thinking, son?!?
If I were an AA shareholder, I'd be ****ed that Arpey wasn't upholding his fudiciary responsibility to turn a profit...and willingly taking a loss to fight SWA at DAL is NOT upholding that responsibility.
If I were an AA shareholder, I'd be ****ed that Arpey wasn't upholding his fudiciary responsibility to turn a profit...and willingly taking a loss to fight SWA at DAL is NOT upholding that responsibility.
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