The way American pitches its plan, it’s not clear that the airline understands that to be the case. (American says its will be gone by the end of the decade.) With that in mind, American needs mid-size markets with high fares to make this work. Also, smaller aircraft are just not being made, and 50-seaters are on their way out. For example, pilot costs have gone through the roof, and when you only have 65-76 seats to spread that expense out, unit cost problems creep up quickly. My two issues here are 1) I don’t think the opportunity is as big as American suggests it is and 2) Business travel is key for this market segment, and American has a self-inflicted disadvantage in competing for that traveler.Īmerican isn’t wrong that smaller cities have suffered since the pandemic with dwindling service, but some of that is due to structural issues that American can’t overcome.
![southwest airlines seating map southwest airlines seating map](https://i.pinimg.com/originals/a3/6e/e5/a36ee54ee0ad07777f54f94fbb90e2aa.png)
If Delta and United are going to zig, then American may be better off zagging. On the surface, this doesn’t sound like a bad idea. Though it is retiring its 50-seaters by the end of the decade, it wants more 65-76 seaters in a dual-class configuration that it can use to better serve these smaller markets and get all that high-dollar flying It is proud to say that it wants more regional aircraft, focusing on lower trip costs instead of lower unit costs. With Delta and United going to the bigger end and investing heavily in the customer, American thinks it should go the exact opposite way. With larger airplanes, unit costs go down, but of course, the number of people you need to fill an airplane goes up. In American’s view, this is being exacerbated by both Delta and United opting to upgauge their fleets to larger aircraft. Less competition and higher fares is the norm, and that has only accelerated as of late. Why on earth would American prefer smaller cities? People in those cities are generally held captive by fewer airlines. But what American showed yesterday is that it doesn’t want to focus on big cities in general, at least not outside of its fortress hubs.
![southwest airlines seating map southwest airlines seating map](https://www.sanspotter.com/wp-content/uploads/2020/11/southwest-airlines-business-select-48.jpg)
This has been very clear for quite some time. We already know that American is most interested in the southern half of the country where it has the biggest presence - primarily on domestic, short-haul flying - and that it will lean heavily on partners for long-haul flying. This is apparently now American’s strategy systemwide. Instead of trying to cater to New Yorkers with their plentiful alternatives, US Airways was trying to cater to the people of Charlottesville (VA) or elsewhere who didn’t have other options. When American didn’t know what to do with its remaining LaGuardia slot portfolio right after the US Airways merger, it used this exact plan. If I had to sum up the strategy based on the presentation, I’d say it is to use the network and AAdvantage to avoid competing and cater to those small city folks who don’t have other better options. Either way, it’s going to be a lot tougher to make work than American is letting on. The bad news is that it either doesn’t understand its own strategy or it’s just playing coy about it.
![southwest airlines seating map southwest airlines seating map](https://thriftytraveler.com/wp-content/uploads/2022/08/aerolopa-seatmap.jpg)
The good news here is that American does now seem to have a coherent systemwide strategy. Instead Chief Commercial Officer Vasu Raja spoke about the only two things the airline thinks matter on the commercial side: the network and the AAdvantage frequent flier program. American didn’t talk at all about its product. American Airlines held its first investor day in years yesterday, and while several execs did a good job highlighting many of the changes going on around the airline, it was the commercial strategy that I found to be wild.