Who Will Be Connecting More On The New American?

@GlobeTrotScott Tweeted part of a newsletter American sent out to their employees recently.

It’s titled “Hub Rollcall,” and explains how “each hub plays to a particular strength in our network.”

American-Airlines-Business-Class-777-62

How they describe each hub says a lot about what we can expect going forward:

Charlotte/CLT: Provides customers with domestic connections and access along the East Coast; well-suited to serve international destinations that complement oneworld and AJB partners’ networks

Washington National/DCA: Supplies nonstop feed to all of American’s seven international gateways and operates regular flights daily to major hubs connecting important markets from the nation’s capital

Dallas Ft. Worth/DFW: Provides good feed for East and West Coast customers via its central location and service as a global gateway to Asia, Europe and our network in Latin America

New York/NYC: A destination in itself that connects the largest air travel market in the U.S. to our international network, with an emphasis on Europe via JFK and domestic network via LGA

Los Angeles/LAX: The second largest air travel market in the U.S. and continues to be strengthened with markets that match domestic and international demand from customers in Southern California

Miami/MIA: Placed perfectly to access Mexico, Caribbean and other Latin American markets, and a growing trans-Atlantic and domestic gateway; connects traffic from our oneworld and AJB partners

Chicago/ORD: A key business market that provides connecting customers a central location to access service to all points in the U.S., Europe and Asia

Philadelphia/PHL: A domestic and international gateway serving destinations to support our domestic and international network, as well as our oneworld and AJB partners

Phoenix/PHX: Connects customers from coast to coast and to leisure destinations in North America

I think American is being incredibly honest with the above descriptions, which says a lot. From my perspective:

  • Charlotte will primarily be a domestic hub and probably continue to lose international service, which will likely be transferred over to Miami instead, allowing more connections to Latin America
  • Washington is all about origin & destination traffic, as it’s a big enough (and profitable enough) market to sustain service
  • Dallas will continue to be the center of American’s route network, and we’ll continue to see international expansion there, especially to Asia
  • New York is a huge origin & destination market, and will likely see less connecting traffic, which will instead go through Philadelphia (which is operationally a more reliable airport)
  • Los Angeles is a confusing market for American, and they don’t really know what they want — they should be focusing mostly on serving the local market, though they’re unnecessarily trying to add service from there to markets in which they simply can’t compete (ie Atlanta)
  • Miami, after Dallas, is probably the second “strongest” part of American’s network, given their strength in Latin America
  • Chicago probably won’t see much change — I wouldn’t expect much growth, but I also wouldn’t expect it to lose much traffic
  • Philadelphia will likely become the premium east coast hub for international travel, as it’s a much more reliable airport than JFK to route people through

And that leaves us with Phoenix, which will be to American as Cleveland was to United. It’s pretty telling that American isn’t even trying to pretend that Phoenix has a future at the “new American.”

American-Phoenix-Hub

Does anyone have a different read on things?

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Daren Guest

Phoenix is the #7 Originating and Destination airport in the country so it would be a lot of volume for American to walk away from, even if it isn't high yielding. Another thing is that DFW is smaller O&D but much higher yielding. With the Wright Amendment ending I expect the yields to fall given SWA's competition. 2012's numbers are below... Airport - Daily Pax - Length - Yield cents 1. LAX - 90,338 - 1611 - 12.0 2. LAS - 78,786 - 1239 - 12.0 3. ORD - 75,392 - 1056 - 17.3 4. MCO - 71,836 - 1128 - 12.9 5. LGA - 62,162 - 981 - 16.7 6. BOS - 59,766 - 1307 - 13.7 7. PHX - 58,876 - 1217 - 12.2 8. DFW - 58,736 - 1065 - 16.3 9. SEA - 54,272 - 1491 - 12.3 10. DEN - 52,008 - 1056 - 14.1

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Tony Guest

@ Brain PHX is my home base, if AA would fly 5-8 international flights a day into PHX, trust me you would still be able to get through PHX much quicker then the other mega hubs. I'm sure PHX could handle twice that and still not be a problem as other airports report.

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Brian L. Gold

@tony - Part of the reason PHX is easier for customs & immigration is that it has nowhere near the international service that LAX, DFW, and ORD do. If AA started a lot of TATL/transpac flying out of PHX, that advantage would lessen.

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tony Guest

Can PHX sustain the size it is now, yes. Could AA use PHX for some transpac flights to allow easier connection instead of LAX and or even DFW and ORD? YES. Having flown on BA flight PHX-LHR-PHX going through customs is a breeze compared to LAX, ORD, or DFW. With US getting the A350 this would allow AA to be able to fly transpac routes and even European routes from PHX. Allowing people to connect through PHX would be much easier then other cities, wouldn't this be a positive for AA ?

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chasgoose Gold

@ Max M The thing is though is that PHX is a much much bigger city than St. Louis (the metro area has about 4.4 million people, almost 2 million more people than St. Louis, not to mention a far more robust economy) and STL was about an hour from AA's megahub in DFW and one of its largest hubs in ORD. Phoenix is a lot further from DFW, and LAX still doesn't really have the domestic connectivity that ORD does. Phoenix just has way too much O&D (even leisure O&D) for AA to just give up on completely. If DEN (which is between just as large hubs for UA) can work for UA than I don't see why PHX with similar business activity, a much larger local population, and more tourism (PHX's tourist season is longer than the ski season in DEN). I don't think PHX is going to expand (and most likely it will contract a bit) or even be as robust of a hub as DEN, but it will serve a similar purpose within the AA network. The AA/TWA merger was at the beginning of the drastic consolidation we have seen of American legacy carriers. At the time there were still too many other airlines for one airline to support so many hubs. As we have seen with UA/CO and DL/NW, only hubs that are super redundant are being eliminated (you don't need CVG or MEM when you have ATL, DTW, AND MSP/you don't need CLE when you have ORD, EWR, and IAD). Now that there are only three legacy carriers left, more hubs are needed to maintain their much larger operations. After all AA is going to be the largest American airline once its fully integrated with US. As DL and UA have shown there is a market for whom connecting at an airport between the west coast and the midwest makes sense, and yes PHX is not quite as well located as those ones, but if AA completely dehubs PHX, they are going to end up completely ceding that market to DL and UA. I predict that there will be some rightsizing and capacity reductions to accommodate the fact that AA has significant operations at LAX and DFW, but I don't think PHX is going to lose too many destinations. There still won't be significant international operations from PHX because the market probably can't support too much more, although there is probably enough for a 5x per week 787 flight on JL/AA to NRT, especially if they maintain a lot of the route network (even with frequency reductions). tl;dr The consolidation of legacy airlines has changed what we previously thought about hub operations/route networks. The airlines are so big now that they need to have at least some hub/spoke sized operation in every region of the country. There are enough flyers out there and few enough airlines for AA to easily sustain a smaller hub sized operation in PHX in addition to LAX and DFW.

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