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Inside Out – American Airline’s Intelligent New York Strategy

Inside Out – American Airline’s Intelligent New York Strategy

2014.01.23 — Hat tip to Brett Snyder, aka The Cranky Flier, who has done the heavy lifting on this issue in this recent post on his blog. If you don’t follow him, you should.┬áSynthesis: AA is going to let UA and DL slog it out to win New Yorkers, and instead focus its expensive New York resources on winning customers in the out-markets.

As brilliant as it is simple, this strategy has a great chance to succeed. There are two sides to every O&D market. An airline can succeed by winning either point of sale. One strategy isn’t inherently better than the other, so an airline’s choice should be informed by its relative strengths.

AA is relatively stronger in the out-markets than in NYC, where UA and DL are battling it out anyway. It’s like Rome in the early 5th Century AD, with AA in the role of the Visigoths. Spoiler alert: the Visigoths made out okay.

The questions are:

  • Can AA execute this strategy well? As our regular readers know, when strategies fail, most often it’s because of poor execution. In this case, ┬áto stray from this solid strategy (and reinvest in NYC point of sale) will be as tempting as it will be a likely failure. Airlines in other markets where there is already an entrenched competitor have initially adopted this approach. Can AA’s leadership buck human tendencies and, where others have given in to temptation, instead resist it and stay the course, being satisfied with the out-market win? That means no Yankees season tickets, mind you.
  • Will AA (or anyone) replicate this strategy at LAX, where the stakes and relative carrier market shares are similar to NYC’s?

We’ll be watching this one with keen interest…

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