One of the more chatter-provoking events in the airline industry in recent weeks is American’s announcement that it would begin daily flights from Los Angeles (LAX) to Atlanta (ATL). Many expressed surprise. The armchair CEOs pronounce it impossible to make money. MJ raises an eyebrow and says “hey, I thought these guys didn’t compete anymore?!” Yuh huh.
The fallback comment to anything said about airlines re-engineering their “loyalty” programs revolves around something like…. they’re only doing this because they can…and the mergers….and no competition. Less competition than before does not equate to no competition, and there’s no better example than this one little route announcement. Nonstop flights between two of the largest cities in the country isn’t necessarily news, but it seems to be in the airline world. I think that’s because many had begun to get comfortable with the idea that the big airlines were going to retreat to their corners and play with their toys. That ain’t going to happen.
American has the data on this. They know their loyalty membership numbers, and they know their corporate contracts. I do not. I do know that Atlanta is not an unimportant market, even if it’s dominated by Delta. Add in an opportunistic management with manageable costs, fleet availability, attractive airport real estate in ATL (T concourse gates and an Admirals Club), and I’m not the least bit surprised AA is trying something different – even if they have to compete with Delta and Southwest. I’m pretty sure AA is not doing this so they can lose money. We’ll have to talk about the news that AA is calling LAX a hub in another post.
-MJ, October 14, 2014