American Airlines will revamp its scheduling to boost revenue, improve reliability

12/24/2013 1:53 PM

12/25/2013 8:20 PM

The new leadership of American Airlines Inc. is planning big changes in the carrier’s scheduling in an effort to boost revenue and improve reliability.

In remarks last week to Allied Pilots Association leaders, new chief executive Doug Parker, president Scott Kirby and chief operating officer Robert Isom laid out their plans for the carrier after American’s Dec. 9 merger with US Airways Inc.

“From a network perspective, it’s going to be really a matter of realizing the value that we can create putting the two airlines together,” Kirby told the union board and national officers, who represent pilots from the pre-merger American. “We now have the ability to compete with United and Delta where before American had a challenge,” he said.

Kirby, who with the others came over from US Airways, laid out two major changes from American’s pre-merger practices:

Beginning with its Miami hub next August, American will “re-bank” its hubs. That means dozens of flights will all land within a narrow time period and then take off within a similarly narrow time period.

American will vary its schedule according to demand, rather than operate the same schedule throughout the month.

In the 1980s, American perfected the hub-and-spoke network. A key element was that flights arrived together and departed together. That close scheduling maximized the number of connections that the airline could offer passengers with each bank of flights.

This type of scheduling leads to airport terminals that are swarming with passengers when the connecting bank lands and disgorges its customers and then takes off. But the terminal is almost deserted for the next hour or so until the next bank arrives.

Kirby said that after the Sept. 11, 2001, terrorist attacks and subsequent industry downturn, all major U.S. carriers went to “rolling hubs,” also known as “continuous hubs.” In that setup, the arriving and departing flights are spread out over a longer period with smaller peaks and valleys of activity.

“Instead of being scheduled to maximize connections, it was scheduled to lower costs,” Kirby told pilots. “And it does lower costs — better asset utilization, better pilot and flight attendant utilization. It is lower-cost.

“But you give up some of the revenues,” Kirby said, because there are fewer flights during a time window to offer connecting passengers. “You lose all that revenue, and it overwhelms the cost savings.”

Kirby said every airline experimented with rolling hubs during the post-Sept. 11 downturn, “but in just a few months, every airline with the exception of American went back to flying a banked schedule.”

Now, he said, “We’re going to go back to a banked schedule.”

The other change involves better matching of flying to demand. Kirby cited the two weeks between the end of the Thanksgiving holiday and the start of the Christmas travel period as justification.

“There’s almost no leisure traffic. People travel for either Thanksgiving and/or Christmas, and there’s little business demand because so many people are staying at work in town for holiday parties, so it’s the slowest two weeks of the year,” Kirby said.

“At US Airways, in the back half of the month we fly 19 percent more seats than we do in the first half of the month.”

But “American flies exactly the same schedule in both of those two periods,” Kirby said.

Isom said the merged carrier also will focus on making American’s schedule more reliable — fewer canceled flights and fewer flights that depart or arrive late.

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