With American Scaling Back in New York Their Premium Transcon Business Centers on LA

American Airlines may be the largest carrier in the world, but they’re the fourth airline in New York behind Delta, United, and JetBlue.

American management traded away their big operation at New York LaGuardia, when they were running US Airways, for more slots at Washington National (and cash). But when they took over American they had to give up slots at Washington National.

Now, in airline President Robert Isom’s words, their goal in New York is to offer “a product that’s boutique-like” for business travelers.


American Airlines Terminal, New York JFK

They seem to view business flights and leisure flights as separate, and believe they can pick and choose the business flights they want to operate. For instance they’ve pulled out of key business routes like New York JFK – Zurich. They’re focused on London, and that’s a great market, but their New York business customers have to look elsewhere for many business destinations both in the US and abroad.

Of course business customers are also leisure customers. When American doesn’t meet the needs of their business customers wherever those customers want to go, like the Caribbean, those business customers look for another airline. And they become more likely to give that other their (like Delta) their London Heathrow, Los Angeles, and San Francisco business. As American shrinks at New York JFK, they lose customers and make existing flights less profitable.

Now American reveals that the strength in their premium flying between New York and Los Angeles is coming out of Los Angeles much more than New York, which shouldn’t be surprising at all.

At a Crew News session with American Airlines employees and top management, one employee asked about flying premium cross country flights with better products, why not pick up cheap used 777s “with a really nice interior” that customers will pay a premium for and use them for cross country flights?

The airline’s Vice President – Planning Vasu Raja suggests they don’t have a lot more opportunity today for extra premium domestic flying any plans for lie flat 757s domestically notwithstanding,

We do actually have a couple of lines where we run the 777 from Miami to LA, which has quickly become interestingly enough one of the largest premium cabin markets in the system. There’s a ton of back and forth especially in the entertainment and media community there.

…About buying more airplanes to go and fly the transcon, the challenge with that is one we have enough widebodies and typically enough widebody time where we can go and utilize an airplane like Miami – LA which then turns around and flies to South America at night so we don’t necessarily need to go and buy another airplane to get the exact same thing. And two for the transcons at large not all of those markets are created equal. And increasingly a lot of the strength we see in the transcon is in LA more so than it is in the East Coast markets.

So we have the 321T in Los Angeles to New York, we have the 777 flying LA to Miami and those really enable us to go win a lot of the entertainment business. And beyond that there isn’t as much of a demand for a widebody in a market like Kennedy – Seattle or something like that.

New York JFK – Seattle is a bit of a straw man, that’s a market where Delta has struggled on and off with a lie flat product. However premium business for American airlines is increasingly centered around LA rather than New York, which is what happens when you scale back in what’s perhaps the most important air market in the world.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. No surprise.

    They could just as easily do a cabin refresh and life extension program for their already fully paid for 767-300s, install a spectacular first class product (since, apparently, there’s still a demand for a ‘true’ first class product in this market as demonstrated by the Airbus A321Ts), plus a lie flat biz class, and who knows, maybe even a premium economy class, or better yet, a “better” economy class along the lines of the “better” (as in “international style”) products that for decades were offered in just the JFK-LAX and JFK-SFO markets and were commonplace for eons on all of the then “Big Three” airlines, American, TWA and United offering an elevated service concept such as American’s “Flagship” or United’s “Ocean-to-Ocean” (long before its current “p.s.” came around, whatever TWA’s was marketed as (“Ambassadador”?)

    Alas, this would take imagination and an effort that the current managment has long lacked for anything that doesn’t have to do with running customer service into the ground.

    Oh, well.

    What a shame and what a pity.

    But so totally not unexpected given the visionless, soulless management team now commanding the good ship “Air Titantic” nowadays 🙁

  2. Yep, that new crappy Greyhound bus logo really made clear where this airline isnheading…

    That’s for sure.

    Surely, Mr. CR Smith is weeping…

  3. Typo eliminated, with corrected copy, and an a few additional words added, below:

    Yep, that new crappy Greyhound bus logo really made clear where this airline is heading…

    …to the dogs!

    That’s for sure.

    Surely, Mr. CR Smith is weeping…

  4. Everyone who’s s ever run American up til now with these…. well business school drop outs are probably scratching there heads on what the hell this current management is doing. I feel sorry for their employees even they must be out raged how their company has gone such down hill!! Such a embarrassment and shame current management should just pack their bags and leave and let REAL airline management take over!

  5. You are editorializing Raja’s comments to fit what you want to believe — not what he actually said. Logic would suggest that AA’s relatively weak market position in NYC COULD make business more challenging for the company there than in other markets, but Raja certainly didn’t say that, and there is some evidence to suggest that AA is doing fine in NYC (like the 321T flight is a big moneymaker).

  6. I want an expanded Basic Economy so I’ll have more people with which to share my misery. I would even pay a premium.

    Thank you Doug, may I have another.

  7. @chopsticks yes, I am saying “duh” to the revelation that NYC isn’t driving premium traffic for AA’s transcons, there is plenty of premium business in NYC but Raja suggests AA isn’t getting it…

  8. So essentially JFK serves three destinations (LHR, LAX, SFO). I’m sure those routes make a lot of money for AA, but when there’s nothing else, Delta certainly becomes a lot more appealing, both at JFK and LGA. For my business travel (which is mostly along the eastern seaboard), I would rather fly non-stop on B6 out of JFK or DL out of LGA. Everything on AA is routed through PHL or CLT. No, thanks. They can keep their LUS planes without power for other folks. I’m not connecting to go to TPA.

    It’s quite sad for an airline that used to be based in NYC, but that’s what happens with you let someone like Doug Parker run the show.

  9. brandote,

    To the extent AA does fly non-stop from NYC to a business travel destination, take a look because the first class cabins are increasingly empty as the company continues to shed market share. It’s increasingly easy to get upgrades on them. I fly maybe 8 or 10 transcons a year, all in business. DL and B6 have good transcon routes, but throwing four or five of those to AA in order to reach base status isn’t a bad idea.

  10. I wonder what this means for the strength of their JFK – SFO flights. At least they see strength in the LAX side of JFK-LAX due to their size over there. With JFK-SFO they’re competing against a larger DL and B6 (and to an extent, UA) in NYC and a larger UA in SFO.

  11. I just took an old book off my shelf to re read, found a batch of AA boarding passes from 2006 tucked into it. SFO to Bos. SEA to Bos. LHR to Bos (on AA metal). I miss those days.

  12. @Anthony — Take this with how many ever grains of salt you deem appropriate, since I sincerely try to avoid flying *any* of the US L3 airlines, BUT . . . I’d *much* rather fly B6 MINT on transcend routes than DL or AA; better food, better service; friendly employees both on the ground and in the air. Having status on a crappy airline isn’t worth much to me.

    I am NOT saying status is irrelevant. Indeed I held Gold (top-tier) status on VX for years, and am now MVP Gold on AS. (It helps that I’m in the SF Bay Area, and VX was my “hometown” airline.). Having status is definitely useful, but I can pretty much fly anywhere I need to on AS, B6, or WN while avoiding AA, DL, and UA *unless* the flight schedules don’t work out. (It didn’t recently, and I flew UA 777-200 SFO-BOS, just to arrive in time for a conference dinner; but I did so by transferring points, not by purchasing a ticket.)

  13. Howard MIller,

    It is not that current management is visionless, if that were the case they wouldn’t have the current 321T product! Unfortunately, what you suggest, while it sounds nice the market will not pay for it! That is why you only see premium lie-flat products is very very few domestic markets and no surprise their is overlap with 90% of them becasue those are the only markets where customers (ie their companies) will pay for it. Also, widebodies burn more fuel than narrowbodies, so to run 763s, which are extrememly fuel eneficient by today’s standards would increase the operating cost. Your idea is money loser!

    brandnote,

    AA’s downsizing in NY happened long before Doug Parker ever took control at AA so I’m not sure why you would suggest that is what happens when you let him run the show. In fact, under him the investments in NYC have substantial in the last couple years. A significant reversal from when he actual became CEO of American.

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