American Airlines was the undisputed fortress out of JFK Airport. However, since American’s bankruptcy and the U.S. Airways purchase, things have gone awry for the airline in New York.
If you wish to read the first part of the airline relevancy-series, analyzing JetBlue’s position at DCA Airport, please read it here. Here we continue on with how American Airlines is losing relevancy at New York’s JFK Airport.
How American Airlines have become an irrelevant player out of JFK Airport
Doug Parker is the current Chief Executive Officer (CEO) of American Airlines. The only thing I’m going to say about Parker’s team is that the team members also need to understand that business travelers sometimes become leisure travelers.
Business travelers, during the holiday season, become leisure travelers when they try to make the pilgrimage to Florida or the Caribbean.
American lacks domestic nonstop flights from New York
However, those leisure passengers will find a surprise when they look for nonstop flights.
The only nonstop connection to Florida from John F. Kennedy is to Miami International (MIA)!
Or, if a New York business traveler wants a nonstop flight from New York City to Orlando, the person has two choices to fly from LaGuardia at 7:30 am or 11:00 am. Unfortunately, American is not offering the business traveler the flight optionality in that market.
I understand that in order to get bigger, American had to sell their slots to Delta in LaGuardia in exchange for those at DCA. Personally I would have preferred another option to preserve the business.
Review: American Airlines Flagship Lounge at JFK Airport (video)
New York always pays off
To me, New Yorkers represent a business market that always pays off. However, American Airlines needs to get its strategy straight to maintain the business philosophy of its competitors.
American is now doubling up on the joint venture with British Airways and Iberia on its transatlantic route. However, while doing so, they seem to be forgetting about their domestic market requirements.
One example of why American is losing relevancy out of JFK
Let me cite an example. A person like myself, flying out of Orlando, Florida, doesn’t have direct access to airports such as New York or Los Angeles. I would have to get on a plane and connect somewhere to get to those destinations. If I fly American Airlines, I have to go to Charlotte, so I can connect to New York.
JFK is supposed to be a “fortress hub” like Miami within the American Airlines network. In reality, it’s not!
Limited flight options out of JFK
At the point business travelers realize that flight options are not available, they go shopping elsewhere. This is the case even with somewhat limited competition.
As customers still have options outside of American that can fly us to Florida, Texas, and Chicago, and we also have options for international travel out of JFK.
To me, it’s rather inconceivable how flights such as JFK to Zürich (Switzerland) weren’t making money for American. New York is the domestic financial and multinational center of the world. Not making money in that market is incredible.
The money is sitting in the first half of the plane
Placing my business cap on, I can understand American’s reasoning, but it doesn’t explain everything. According to CNBC News, more than 6.4 million people flew in premium seats on North American flights last year. That is about 9% of the total 60 million seats occupied, according to industry provider Cirium.
In short, the money is left in the first half of the rows of the plane. Unfortunately, it is not an event isolated to American Airlines. Delta and United have been focusing around that first half of the plane as well!
Delta announced an operating revenue of $12.5 billion, with revenue increases by around 10%. That is about one billion higher than American Airlines’ year-over-year revenue.
Is it American’s fault?
In offering a boutique product, American is not only sacrificing its product, but they’re also sacrificing the quality of their domestic and international structure. This makes transferring passengers internationally into the American Airlines brand more difficult.
The reduction of seats and the taking out of the seatback in-flight entertainment could actually make the American experience worse.
British Airways moving in
It is not a matter of if but a matter of when British Airways will fit inside of JFK Terminal 8. When that happens you will know that American Airlines is going to be less profitable than the competition.
American will be losing connectivity for those coming from IAG (International Airlines Group) joint ventures airlines. Additionally, when that happens there is no way of telling how IAG is going to move forward.
Closing remarks and disclosure
I used to love American Airlines. I am also a cardmember. However, I would like American Airlines Vice President of Planning Vasu Raja to explain this disconnect at JFK.
Please, don’t give us the PR story of the JFK gates. Under former American CEO Gerald Arpey, American’s operating philosophy at JFK wasn’t like they are now.
Is it a management fault that American is losing relevancy out of JFK New York’s Kennedy Airport?
Do you agree with me that American is losing relevancy out of JFK Airport? Your feedback is welcome. You can send me your comments here.
Featured Image: American Airlines at JFK’s Terminal 8. Photo: Unsplash.