It’s a familiar problem at Los Angeles International Airport (LAX): with intense competition, an airline finds profit margins thin, making the carrier more likely to seek routes with higher margins. The latest cutback comes from American Airlines, with a decision to axe its seasonal Auckland route. But it’s about more than one route cut: it represents the enigma of LAX and the particular struggle of AA to find its transpacific niche.
American Airlines Will End Auckland Service From Los Angeles
American Airlines shrunk at LAX duding the pandemic, not just reducing frequencies due to reduced demand, but totally eliminating both domestic and international routes. Its “international reset” included the elimination of five longhaul routes from Los Angeles:
- Beijing (PEK)
- Buenos Aires (EZE)
- Hong Kong (HKG)
- Sao Paulo (GRU)
- Shanghai (PVG)
That left four:
- Auckland (AKL)
- London (LHR)
- Sydney (SYD)
- Tokyo (NRT)
Tokyo remains suspended, but will return, but in its latest route shakeup, American Airlines has announced that Auckland service will not return.
Instead, AA plans to operate a new Dallas (DFW) – Auckland service starting on October 29, 2022 using a Boeing 787-9. As AA explained:
Providing service to DFW allows us to connect more customers to New Zealand with a more convenient schedule.
It’s an interesting move, considering that AA has previously blamed the lack of Boeing Dreamliners for its pullback in service from Los Angeles. Now the culprit is more connections and a more convenient schedule.
AA: discussing AA’s stagnation at LAX pic.twitter.com/6NxqQkIhta
— 🇺🇦 JonNYC 🇺🇦 (@xJonNYC) April 10, 2022
Will Qantas resume its Los Angeles – Auckland service? Unlikely, unless it is able to get its hand on more aircraft or uses an Airbus A330.
AA’s LAX Problems Point To Lack Of International Strategy
I’ve discussed the problems U.S. carriers generally run into at LAX and won’t do so again here – you can check out my prior post for that discussion.
> Read More: As American Retreats, Will Delta Or United Step Up At LAX?
While that no doubt factors into the equation for American Airlines, the issue with Auckland is unlikely to be either demand or high fares. Yes, with competition from Air New Zealand perhaps there is not as high a premium AA could place on nonstop service. At the same time, demand is strong for New Zealand and therefore the move represents an annoying dilemma for local residents who might otherwise be loyal to AA. Fly American or Qantas via Australia and backtrack or fly the competition?
While AA has not provided a breakdown of the percentage of connecting traffic versus local traffic at LAX, particularly on these longhaul routes, its focus away from LAX yet its failure to focus on a single hub is perplexing. What is going on in Seattle? Will Asia travel return at all? The problem, as I see it, is not that AA has picked the wrong transpacific strategy but that it does not seem to have one at all.
We saw that when AA pulled back from New York (JFK) and focused transatlantic operations in Philadelphia (PHL), it did not go over well and we’ve seen a gradual return of service to JFK. Will we see something similar at LAX, the ultimate “can’t live with it, can’t live without it” market? I suspect so. But by then it may be too late and American will find itself further marginalized.
I am hopeful that American will continue to throw LAX enough crumbs to keep it a hub until additional aircraft are delivered and by then, it will be able and willing to restore longhaul routes to LA. I’m just not hopeful that AA has any idea what to do with LAX in the years ahead and would hate to see it cede a market with such potential.
One consolation: we may see an additional daily LA to London flight in the months ahead.
CONCLUSION
After the latest American Airlines longhaul cutback at LAX, it is reasonable to question what is going on. Delta tried serving London, Amsterdam, and Paris from LAX and has not brought any back this year, but has joint venture partners serving all three routes. Why cede a market when there is no partner that also operates it? Will it return once more Dreamliners are delivered? And more importantly, how does AA view itself as a transpacific carrier in the years to come? Right now it seems to be anyone’s guess.
image: Glenn Beltz
Literally no US carrier has ever been profitable on those markets. It’s too fragmented and too many seats on foreign airlines. Fares from lax are too low. American does have a strategy. It’s to try to make $$ on their flying. And the only place it has ever done so consistently is at DFW. So it’s going there. If it can’t be all things to all people, well that’s the way it goes.
I agree, but one could argue that if they actually offered a decent product to compete with other International carriers out of LAX they might actually do well. Even on long thin routes. They retreat to DFW because they have a captive market. It’s like really bad rock band that tries to go big but realizes in the end that the only people that care or appreciate them are those at the local road house in Dubuque.
Right. There are so many structural problems that make LAX international service difficult for US airlines — even though they WANT to offer the service. Too much competition (especially int’l competition) and the absence of giant hub feed are probably the biggest ones. I still remember before the pandemic began flying from LAX to HKG and the WALK UP fare was only a couple hundred bucks! Nobody is going to make money at those levels. And now, with high fuel prices, the fares that have to be charged on these loooong transpac routes need to be high, But you can’t charge those prices because of the competition! No US airline wants to deploy expensive and valuable widebodies on routes that make no money. So, bottomline, AA’s primary stratgegy — like all the other US airlines — is to make money, and you can’t do that right now flying international from LAX.
Maybe reading too much into the elimination of one route from LAX? International flights seem to inherently be very challenging for domestic carriers – perhaps because most non-US travelers are O&D to LAX and not connecting onward. Checking the Wikipedia page for LAX (granted, perhaps not the most authoritative voice), AA has a pretty strong 2nd-place market share, just behind DL and well ahead of UA, which was 5 percentage points back. UA’s international operation out of LAX has also suffered from similar issues, as I believe the pre-pandemic LAX-MEL route got cancelled in favor of moving the flight to SFO (a captive hub), and even LAX-SYD got cut back from daily frequencies.
I think the Seattle Bangalore route is on hold in part because it must fly directly over Russia.
Correct – AA noted that in its announcement.
That route will never launch on AA metal. I’m now questioning if UA will ever launch SFO-BLR even when Russian airspace reopens.
I doubt it. Russian airspace issue makes routes unviable.
Why would Qantas launch an Auckland route? They serve Auckland from a total of zero non-Australian airports, and Air Tahiti and Air New Zealand already operate on this route.
This was a historic Qantas route.
They could reduce fares while gaining positive margin. If so the change is good.
Why have hubs in expensive cities? Defeats the purpose of having hubs
Matthew, do you see United or Delta adding new routes out of LAX? Not only has American suspended all of these routes, but the international carriers at LAX are not back to what they were before the pandemic.
It seems like United is the most committed to LAX right now in terms of long haul, serving LHR, SYD, and NRT with MEL and HND likely to resume this fall. Could you see them adding more routes? If AA can go up to 3 daily LHR, couldn’t UA make another LHR flight work? I also find it shocking that they don’t serve FRA or MUC. I know Lufthansa does, but if I want to use my PlusPoints I need to connect.
Also, United and Star Alliance is getting the new terminal 9 at LAX, so could this lead to new routes? Delta doesn’t really have the widebody planes right now to add more routes.
Wait – is it OFFICIAL that United is getting T9 at LAX?
Still have to research this.
AA can make 3x LHR work because of BA connections. Star routes through other European hubs, as you know, so UA is only serving LHR with O&D traffic – one flight is plenty given all the other competition on the LHR route (so many airlines!). I think UA is content with letting Star carriers provide most of the long-haul service from LAX while they focus their own long-haul at SFO. If you really want to fly UA metal (for PlusPoints or whatever), it’s just a short hop to connect at SFO.
I think most people outside of American Airlines saw this coming from the onset. American had these lofty dreams that they could turn into a Transpacific Gateway that could challenge United’s SFO Gateway and Delta’s SEA Gateway. However the LAX market is so fractured it is nearly impossible for any one carrier to completely dominate either the domestic or international market. I think when it is all said and done American out of LAX will only serve LHR and NRT or HND. If American does return to SYD on their own aircraft I think I will move LAX-SYD flight over to DFW as well and let their partner Qantas take care of the SYD-LAX-SYD market for them.
The demand to come and go from 3rd world shitholes just isn’t there. I appreciate Parker seeing it.
Would be interesting to see DL try AKL. They need to beef up their South Pacific network as there is definitely opportunity, and the US carriers should be able to compete against ANZ. That said, nobody is flying a lot of international out of LAX except the foreign carriers. Makes you wonder if connections within other countries or foreign O&D are an important piece of the puzzle. Too bad DL lost VA.
Let’s not forget that AA is going to lose T4 gates in phases and not have access to T5 to match this due to an entire rebuild of T4, likely Delta did on T3. It’s still the original 1960s structure holding up T4 and it’s past it’s design lifetine. Downgauging to retool T4 is essential. Do it while 787’s are short for long haul. More domestic flights have been using TBIT lately and that would need to continue. For those not aware, T4 is two phases of demolition and rebuild, each time losing nearly half the gates for multi months
I suspect AA’s LAX strategy during their widebody shortage (as well as Asian covid lockdowns) is to hope the AS OW partnership (and the rest of OW) can hold the loyalty fort until they have the planes to come back. I’m sure they expect Qantas to restart the AUK-LAX route to fill the need.
Many points to looks at
1.. AA doesn’t presently have the aircrafts to be all things to everyone. Blame Boeing
2.. most of Asia is closed.
3.. the key is profitability and DFW provides that. Can’t fly empty planes halfway across the world just to please a few passengers
4.. most Asian traveller’s are loyal to their brand. Unlike Americans.
Any news on FS 1st Dining opening at LAX?
AA has done a horrible job with Alaska code shares. Even if you want to use Alaska flights to feed AA international and east coast flights, you often have to buy separate tickets, which opens all types of problems. Figure out how to work with Alaska on LAX code shares first and then worry about where to fly ex US.
Spot on! Very disappointed by AA’s lack of international nonstops from the west coast. West coast in general has poor direct connectivity to South America and AA should have persisted on the EZE route in addition to transpacific.