American Cutting Philadelphia To Tel Aviv Flight In 2016

American has been undergoing a ton of international growth the past several years. Prior to the merger they were strong in Latin America, but pretty weak in most other international markets. They were way behind Delta and United when it came to their Asia route network, and were also lagging when it came to their Europe destinations.

But American has been working on growing their international network considerably, in particular to Asia. Just the past couple of years they’ve added additional flights to Beijing, Seoul IncheonHong Kong, and Shanghai, and as of later this year, even Sydney. Going forward, apparently we’ll see more international growth out of Los Angeles.

American-Business-Class-HKG-1

American has claimed most of these routes aren’t profitable yet, but they’re a long term investment in American’s route network, as it can take a while for demand to ramp up in a new market. The good news is that they’re codesharing with Qantas to Australia, and their Asia service is to pretty established destinations (ie, there are lots of connection opportunities in Hong Kong with Cathay Pacific).

There’s no denying it’s a tough time to grow international flights, though. With the US Dollar as strong as it is, international demand for travel to the US is down. Furthermore, the worldwide economy is pretty weak, especially when you look at what’s going on in Europe, China, etc.

One of “legacy” US Airways’ unique longhaul flights has been Philadelphia to Tel Aviv, which they’ve operated for about six years. The route is flown by an Airbus A330, featuring US Airways’ excellent reverse herringbone business class product.

US-Airways-Business-Class-A330-46

US-Airways-Business-Class-A330-01

Via the APFA (Association of Professional Flight Attendants), American will be discontinuing flights between Philadelphia and Tel Aviv as of January 4, 2016. Here’s what the union had to say about the route cancellation:

Earlier this morning, the Company announced that it will be discontinuing its Philadelphia to Tel Aviv route on January 4, 2016. PHL-TLV has not performed well since its inception in 2009. Service between PHL and TLV has been a source of pride for the Philadelphia base and is a popular bid choice for Flight Attendants due to its high credit. According to American Airlines Management, in its six years, the Philadelphia to Tel Aviv route never turned a profit in any year, and has already lost over lost more than $20 million on this service in the past year alone. Philadelphia is the fifth largest city in the United States and is in the top twenty for busiest U.S. airports. We are currently in discussions with the Company regarding their plans for the distribution of time and the aircraft utilization. While we are disappointed in the loss of this route, APFA looks forward to future announcements of growth in PHL and other bases throughout the American Airlines system.

Ouch! So apparently the route hasn’t turned a profit in six years, and has lost more than $20 million in the past year alone. That’s rough!

PHLTLV

There are also the following FAQs associated with the route cut (which are obviously intended for flight attendants):

Q: Will the flight be reinstated in the future, perhaps when we have more opportunity to operate the route with a different aircraft or from a different hub like MIA or JFK?
A: We’ll certainly continue to monitor the viability of reinstating TLV service and will evaluate future opportunities as we bring in new aircraft to the fleet and our network evolves. At this time, we do not anticipate restarting service to Tel Aviv in the near future.

Q: Why did this route work for US Airways for years but shortly after the merger, it does not work for American?
A: The PHL TLV route has never been profitable for our airline. We want to give every route the chance to succeed, andwe gave it a fair shot, but at a certain point, no matter how much we want to serve a particular route; we have to make the right decision for our business.

Q: The PHL TLV flight traditionally operates with high load factors. How can it not be making money?
A: There are a lot of different factors that determine the overall success of a route. Load factor is not the only way, nor the best way, to judge a route’s performance. We also look at overall demand and the fares customers are willing to pay on that route. In the case of PHL TLV, a number of factors have resulted in poor financial performance.

Q: What will happen to customers who are ticketed on the PHL TLV service after the cancellation date?
A: American will be contacting all passengers to make alternative travel arrangements for them, or to offer a full refund. We apologize for the inconvenience that this decision will cause.

Q: What does this say about PHL as a hub? Is there enough connecting traffic for other international flights?
A: Our combined hub structure allows for each of our nine hubs to play a very important role in our overall network strategy. Looking at our international network, PHL is a prime hub for connecting customers to and from main business and leisure destinations throughout Europe and it will continue to be an important strategic hub for our partners through the Atlantic Joint Business.

Frankly I’m sort of surprised to hear Tel Aviv has been so unprofitable. It’s not all that much further from Philadelphia than much of Europe, and the fares are consistently more. Assuming the load factors were good, this is sort of a mystery.

Especially since the route has apparently lost $20 million in the past year alone, with oil prices as low as they are.

Interestingly this route remains bookable even past January 4, 2016, though I assume it will be pulled soon.

US-Airways-TLV

Bottom line

As consumers we ultimately don’t have access to the “math” on which flights work and which don’t. But this one really surprised me, given low oil prices, and (based on what I could see) both high load factors and fares. And perhaps the most surprising is that the route has lost $20 million in the past year alone.

While I haven’t taken the route yet, I really was hoping to at some point.

It doesn’t sound like American has plans to simply operate the route out of another hub, which is what I initially assumed would happen after the merger. Presumably there are markets with more demand from the US to Tel Aviv than Philadelphia.

On the plus side, I don’t think American can blame this route cut on the Gulf carriers (though if Delta canceled service to Tel Aviv, I bet they would!). 😉

In the back of my mind I do still wonder if this has something to do with American’s pension dispute in Israel, which dates back a really long time…

What do you make of American cutting their Philadelphia to Tel Aviv route?

Comments

  1. That was a heck of an intro…took you five paragraphs to begin talking about “American Cutting Philadelphia To Tel Aviv Flight In 2016”. I thought I was reading Gary for a second.

  2. I’m with you in thinking that the dispute with the old TWA staff is the reason this service is being canceled.

  3. Ha. I don’t buy it when they say, “give it a chance to succeed.” If that’s the case, give me the reason why SJC-TPE, DFW-NGO (KIX…one of those), didn’t last more than a year.

    I’m very curious how DFW-HKG performs. I can’t imagine it being a cash cow with so many EXPs buying USD 700 fares and applying an SWU to get a seat in C. At some point, DP and gang will probably make those SWU harder to use….most likely won’t be able to use them on sub y fares.

  4. Majority of pax on this route we’re connecting and US is competing with LY,DL,AC and UA. Never found a route with a few stops in USA to be cheaper with US. DL and UA (mostly) are best option for TLV based pax with multi-leg itineraries.

  5. I’ve flown this route before and was looking forward to visiting Israel on American. It’s a shame they canceled service to TLV as it was definitely a trip I would repeat.

  6. There is more to this story than what they are saying. I have used this route countless different times in the past six years and don’t remember even one time when the flight was less than 95 % full. In addition to their half baked excuse that there is more than load factor to consider, well their price were always in line to what Delta and United were charging, so why are they making money and not American? The service was great and the seats were just fine. Bring back US Airways!

  7. I actually just flew this route to TLV on Saturday in business class. Had a great flight and will be sad to see it go. Strange that the route supposedly lost money every year yet only now is getting dropped.

  8. This is very disappointing news. First AA drops EL AL and now this. Either we fly nonstop on Delta, or take an airline with a stop in Europe. Any suggestions? We’ve been saving AA miles for this flight.

  9. There has been a steady erosion of the way AA/USAir have related to Israel, severing cuts with EL AL, now cutting the route.
    Do they seriously believe Royal Jordanian is a better bet?
    Also, it makes one wonder if they are responding to pressure from Muslim countries to isolate Israel.
    Ultimately, caving in to the Boycott Israel lobby.

  10. The claim that they lost 20 million in the past year alone must be a real joke
    No Airline in the world (unless it’s a gulf carrier) would sustain such a route with such a big loss for even 1 day

    As said there must be something more behind the decision rather than just the profitability of the route

  11. “But this one really surprised me, given low oil prices, and (based on what I could see) both high load factors and fares. And perhaps the most surprising is that the route has lost $20 million in the past year alone.”

    Could there be any unusually high costs on the Tel Aviv end that were running up expenses compared to similar destinations? Airport charges, security, cost of putting up flight crews?

  12. According to Dan’s Deals, before the merger USair had stated that it was one of its most profitable routes, which would make more sense.
    Maybe they’re making calculations based on having to pay the ex-twa employees…

  13. “Going forward, apparently we’ll see more international growth out of Los Angeles.”

    Gosh, I hope not. LAX operAAtions are a nightmare for connecting pax. You fly in squeezed onto a horrible barbie jet you can’t even stand up in and arrive at a remote stand. Then you wedge yourself into a sweaty crowded bus and wait for a driver, wondering if you’re going to miss your flight while you wait on the tarmac. If you have a code share, you’ll have to actually exit security and re-enter through the TSA in TBIT.

    I’d much rather spend an extra hour or two on the plane and connect through DFW or even PHX.

  14. Hopefully American will reinstitue their Frequent Flyer agreement with El AL. I see no reason why American wouldn’t do it. The only reason they got rid of it last year was because of the merger they were not becoming a competitor on the US to Tel Aviv nonstop route. I also thin El Al has no reason to do it. It makes people want to buy El Al tickets more since they could credit the miles to AA. Any frequent flyer is probably now more attracted to United or even Delta as those miles are a lot usable that Matmid points. Also I think the partnership with El Al helped them fill up seats to AAdvantage award tickets that may have not been filled up with paying customers. Can anyone think of a reason they wouldn’t rejoin?

  15. Parker’s team at US was never keen on hanging on to unprofitable routes or strategies. So seems a bit fishy that right after the merger, this route goes away.

  16. Sounds like the $20 million was the one-time charge under accrual accounting for the liability to the twa employees AA shafted. OMG, by staying in Israel, AA would actually have to pay its debts!

  17. *naif* – actually the blame does go there …..

    The local press in Israel says that “AA is closing the route as a result of pressure from some of its One World partners, namely Qatar Airlines, Jordanian and Malaysia Airlines. The announcement came as a complete surprise to the local AA office and its 19 employees may lose their jobs now.

    Just few months ago, AA senior managers visited Israel and promised they will add more routes to Israel “…

  18. Completely bizzare decision. No way in hell the route is not profitable, and to claim that it’s been losing 20mil is just BS. there is another reasoning behind this.

  19. @Ronen – Malaysia is a ‘…Middle eastern…’ carrier? That comes as a surprise to those of us living in that part of the Southern Hemisphere – & to those living in the Middle East, too, I’d imagine

  20. @J Dee:
    Ronen stated “pressure from some of its One World partners, namely Qatar Airlines, Jordanian and Malaysia Airlines”, didn’t use the words “Middle eastern” in his whole post. Or do you consider “One World” and “Middle Eastern” as synonymus?

  21. @J Dee – no Malaysia is not in the middle-east.I agree. However, I guess you need to read between the lines of @naif comment and my quote from the Israeli press to better understand the situation.

    But even if you don’t get the Geo-political situation, so just from pure language point of view, middle-eastern airlines (Qatar Airlines, Jordanian) are being blamed for the route termination, just as @naif wisely predicated.

  22. Ronen — very strange to think it’s pressure from Royal Jordanian, given that they serve Tel Aviv themselves from Amman.

    The flight cancellation is a strange story indeed. My guess is that it has to do with the old TWA debts.

  23. As a publicly traded company, AA wouldn’t release a specific loss number if it wasn’t true — particularly one as big as $20 million. It’s a one-off route for AA in a region where they don’t otherwise operate that has relatively high security risk. It’s got to have an impact on their global insurance premiums. Combined with the high cost of operating in and out of TLV, I’m not surprised they’re losing money on a route as long as LHR-JNB with a lot of low yield leisure traffic.

  24. This is bunch of B.S. !!!!

    The truth will eventually come out!!! Who do these AA chiefs think they are fooling!

    Just few months ago, AA senior managers visited Israel and promised they will add more routes to Israel “…and declared that the route PHL/TLV is one of the best the company has. Adding more flights was on the table.

    TEVA pharmaceutical, which is the largest manufacture of generic pharmaceutical supplies in the world and is based in Israel, had a contract with US Airways and its cargo was shipped exclusively on US Airways to PHL where TEVA’S main American warehouses are. The freight could be seen on the tarmac by the aircraft every night getting ready to be loaded! As a frequent business passenger I knew some of the Israeli US Airways employees who told me several times that this flight can fly half full and still make money on the freight!!!! Many times passengers were left behind due to overweight in cargo!!!

    Do the AA chiefs think the public is dumb! 20 million dollars loses every year????? For 6 years????? What kind of company is it that allows a route to lose so much each year and fly it 6 years??? Nonsense!!!

    This is obviously a political decision! I hope will come to hunt this company -shame on them for being taking hostage by an Arab Boycott! Hopefully the federal government will check this case since it is against the law (To be a part of the Arab Boycott!)

    And to J Dee: Malaysia is not in the Middle East but it is the largest Muslim country in the world…needles to say not too much love there for Israel….”

    Shame on you AA!!!

  25. In the Israeli media it was reported that American Airlines have a judjment against them in regards to the TWA (Israeli) personnel which was never paid after AA took over TWA. AA was notified that if it would not pay the millions it owes it risks the confiscation of the first plane landing in Israel after the name USAirways will be no more, and it will be American Airlines. Apparently the report is by a person involved in this issue.

  26. There’s more then meets the eye to this story, AA and US have bragged plenty in recent months that this was one of their most profitable routes. Don’t believe for a minute it had any pressure fm Jordanian & Qatar Airways. Think it has a lot to do with AA’s old dispute with the TWA TLV staff. AA should have settled this years ago when they took over TWA and they should have continued TWA’s JFTK-TLV route which operated since the early sixties. Too bad for AA. UA is running a double daily flight fm EWR. If i was DL, I would ad a second JFK-TLV flight or even a MIA-TLV. By the way, anyone know why DL discontinued their ATL-TLV ?

  27. US Airways provided extremely convenient, devoted and quality-service flights to TLV. It is a shame that American changes all this in a blow. The AA excuses appear to be very far from the truth. These flights were mostly full. Maybe American plans new flights to airports in safe and peacefull locations e.g. Iraq, Syria or Yemen.

  28. It has to do with the money AA still owes the ex-TWA workers. In Israel when an employer is late paying his workers, he incurs a 20% monthly interest (240% in a year)! So the original amount is now into the hundreds of millions.

    When I was still in law school we studied the TWA/AA case, since there is a ruling, AA will not be able to not pay the money and continue flying uninterrupted…

    Loosing 20M a year? complete BS, the route is almost always has 90%-95% load at off-peak season and almost 100% at peak times and prices are always high. someone is cooking the books at AA to make it look like a lose..

  29. This continues the reductions in service/amenities to those of us who were loyal US Dividend Miles members flying out of the DC market. We had to make the switch from Star to One World and the requirement to wrap our noggins around the 500 mile upgrades process. We lost the direct flight from DCA to San Diego. Now the TLV connection from Philly goes as well to what I think is at best a dubious comment about a mostly full flight costing an airline $20 million in losses.

    I’m scheduled to fly this flight RT in October and would have continued to go with it, even for a bit more money for years to come to avoid having to connect through EWR or LHR to get there. As it was, this was the least expensive option for me to get there this time around, so there was clearly room for them to charge more I would think. The other thing that this shows is the lack of real international non-stop options from the DC area as a whole pass a few places in Europe. The Saudi and Emirati national carriers have a non-stop option, but if you need to fly an American Flagged carrier/code share you are out of luck without connecting somewhere painful.

  30. I have never flown to Tel Aviv from Philadelphia but I have flown from Europe with several other airlines, 2 of which have discontinued flights to Tel Aviv. Allow me to elucidate.Boarding is always a problem with the Orthodox Jews trying to change seats so that they do not sit next to a woman and thus causing slots to be missed. Immediately the seat belt sign goes off, the Aisles become like a flea market with knots of people blocking access for travellers and aircrew. Then, the toilets. I have never travelled to Tel Aviv without several of the toilets becoming blocked. My research indicates that it is to do with gathering wads of wet toilet tissue to complete their ritual ablutions.(Maybe somebody could explain that to me?). Then comes the problem of carry on baggage. I have never seen people so reluctant to check in their baggage. Now this pantomime is repeated on the flights coming out of Tel Aviv which causes knock on schedule delays. I suspect that my above experiences may have something to do with the withdrawal of Tel Aviv flights.
    The answer for ladies who are asked to change seats is easy. They just have to say that they are having their periods and their seats become forbidden.

  31. Joe – A good old racist comment is always welcomed. We should know our place. And yet, despite the horrible experience, air traffic from/to Israel increases every year, (14.2M passengers in 2014, vs. 12.2M in 2011) so I guess the business is there.

  32. I live near DC, but STILL drove to Philadelphia for the USAIR flight to Tel Aviv. All around wonderful experience! I have flown on the Jewish Sabbath returning from Tel Aviv… with a very empty plane. I never understood WHY that flight was on the schedule, given the usual Tel-Aviv Philly customer…. Sabbath observant Jews!

    I will miss this flight SO MUCH. Just lean back and sleep for 6 hours and VOILA… you are in Tel Aviv… rested and ready to go!

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