American Airlines Says It Will Pare Back International Flying To What Makes Money
As American Airlines rebuilds after the pandemic, it will look different than it did before, with less international flying and more concentration on interior domestic hubs.
That shouldn’t surprise anyone, since American has focused intensely on growth at its Charlotte and Dallas strongholds since mid-2019, but on Wednesday Chief Revenue Officer Vasu Raja articulated the new approach to international flying with unprecedented emphasis.
“We’re going to be really cautious how we build back international,” said Raja, speaking at an investor conference. He noted that profit margins in Dallas and Charlotte have long been higher than the airline’s overall average profit margins. Now, he said, “When we bring back international, we will be bringing back international that can do margins in line with domestic.
“The international that will be there will be way different than the international that went away in 2019,” Raja said.
In part, diminished international flying will reflect the reduction of American’s fleet during the pandemic. The carrier has retired about 150 aircraft, including 24 widebody Airbus A330s and 16 widebody Boeing BA +0.8% 767s, as well as 34 Boeing 757s, some of which were used for international flying. “We’re 50 to 60 long-haul airplanes lighter than we (were),” Raja said, noting that in the future more 787s will fly on international routes.
American has given plenty of clues which international flying will restart quickly and which won’t. Raja said “India and London will absorb widebodies” – again no surprise since London flying, in a joint venture with British Airways and others, is a profit center, while Seattle-Bangalore is a much-heralded planned new American route and JFK-New Delhi is scheduled to begin in October. Additionally, Raja said JFK-Tel Aviv, which began in May, has done well, although it is currently suspended.
International departures from LAX are a different matter. In September 2020, American said it would move much of its trans-Pacific traffic from LAX to Dallas-Fort Worth. At that time, Brian Znotins, vice president of network and schedule planning, declared, “Even going into the pandemic, we were losing money on those L.A. flights,” so it is no surprise that American will not rush to restart them.
On Wednesday, Raja said, “We have struggled in New York and on the West Coast.
“We don’t have a big coastal international network,” he said. “We took out 150 jets; more than a third were widebody airplanes. We don’t have the ability to fly 20 widebodies a day to China. The best thing to do is orient the airline to where we can win it.”
American has already restarted London service from Charlotte and Philadelphia. On Thursday, Henning Greiser, American director for international networking planning, told The Philadelphia Inquirer that the carrier plans Athens service for August and that it is “currently set up to bring back service” to France, Spain and Italy in mid-August, though he noted, “Whether or not we can hold that date will very much depend on what the opening actually looks like.”
In Charlotte, American is flying 660 daily departures, close to the 700 daily departures in the summer of 2019. Charlotte routes to Dublin, Madrid and Frankfurt are scheduled to return in August, with Charlotte-Munich restarting in October.
During the pandemic, American has stepped up partnerships with JetBlue and Alaska, providing it with more feed for its international flights on both coasts. “In the places where have struggled the most, we have partnerships, which (are) greater than what we can do organically,” Rasu said. Going forward, he said, “You will see an airline a lot more concentrated around Dallas and Charlotte, connecting all the small cities of North America to the global marketplace.”
Raja noted that American is not coordinating with JetBlue’s planned London service, while indicating that some passengers are flying JetBlue to JFK in order to connect with American’s Tel Aviv flight.
Still, Dennis Tajer, spokesman for the Allied Pilots Association, which represents American’s pilots, said pilots are keeping a close eye on the American-JetBlue alliance.
“Coming out of a pandemic, or anything that has disrupted the airline business so much, the first move is to create a business scheme with another carrier,” Tajer said. “So we are very attentive to every move American makes with these partnerships. Talking about American being less of an international carrier is not the brand model that’s going to lead the industry.
“’Come fly on American, we go to some places,’ is not the model we want,” Tajer said.
This article originally appeared on Forbes