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American Announced Route Cuts - Is ORD on the Chopping Block?
By miller22 | May 28, 2008
After warning of route cutbacks, American announced yesterday some of the routes to be hit in the initial round. Not surprisingly, ORD was hit hardest with routes to HNL and EZE (Buenos Aires) being shut down, as well as BOS-SAN. It doesn’t take a geography scientist (or in this case the winner of the Oregon-Davis Elementary Geography Bee 1990…Thank you. Thank you very much) to tell you that these are all thin long-haul markets. What I do find interesting is the ORD-HNL route, which admittedly must be lower yield, but with the recent reduction of flights to HI from the likes of ATA and Aloha, I would expect this to be lower on their list. More likely, they’re going to reroute all of their Hawaii customers through DFW to not only fill those planes, but boost yields that are lagging behind the surging fuel prices.
But as much as this will build load factors and yields out of DFW, it will also hurt them out of ORD. Could this be the beginning of a major pullback for American out of ORD? They have taken what some would consider more drastic, nay desperate measures which were announced at their annual meeting. The $15 fee for the first checked bag is something we would have expected out of an LCC long before the largest legacy airline in the country. In fact we’ve seen the exact opposite with American taking that $15 leap, and Southwest announcing they wouldn’t even join the club and charge the almost-standard $25 for the second checked bag. Remember that ORD is the fortress hub for one United Airlines, recently-ish emerged from bankruptcy, with a low(er) cost structure than American who narrowly avoided the “B” word. United is undoubtedly leveraging its new cost structure to put pressure on American, which may be too much for them to bear.
The Dallas based airline also mentioned that this would be the beginning of several announcements of cutbacks to reduce mainline capacity by up to 12 percent in Q4 2008 vs 2007. Also mentioned in the release was a “restructuring” of their San Juan hub, which is almost entirely reserved to American Eagle. This will be the first of an additional 11 percent reduction in its RJ fleet, including the retirement of the entire Saab fleet by the end of the year.
Topics: Schedule Changes, American Airlines |