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. 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. 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.
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