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AA looking to expand in Asia

6 Aug 2014 by Clement Huang

American Airlines (AA) is looking to expand its growth in Asia following a record breaking quarterly profit in Q2 2014.

The airline has already made considerable investments to the region earlier this year by launching its new Boeing 777-300ER on daily services to both Hong Kong and Shanghai (see here), thereby complementing its existing services to Tokyo-Narita, Seoul and Beijing.

AA did serve Tokyo-Haneda until December last year, when it was forced to cancel the service due to time-slot restrictions, which made the route unprofitable. Attempts to get both the US and Japanese governments to reach an agreement regarding schedule constraints proved unsuccessful.

The B777-300ER – serving Hong Kong and Shanghai

In an interview with the University of Pennsylvania, AA’s chief executive William Douglas Parker identified Asia-Pacific as a crucial market for the airline.

“We think that the Asia-Pacific market will grow the fastest in the future, as the economic growth here is the fastest in the world,” said Parker.

First class seat on the B777-300ER

In particular, AA is looking to expand in China. At the moment the airline is only serving Beijing and Shanghai.

To that end, AA has initiated talks with the Civil Aviation Authority of China (CAAC) to discuss possible future traffic rights and schedules.

First class bed configuration

“In the short term, we will focus on China’s Tier 1 cities. As the economy grows further, we will look at Tier 2 and Tier 3 cities”, Parker continued.

AA currently offers a fairly small Asian network as compared to US rivals Delta Air Lines and United Airlines. In addition, the carrier does not offer services to Australia (though it once did many years ago), but both Delta and United do.

However, Delta is looking to restructure its Pacific operations by shifting flying from Intra-Asia routes (the majority being through Tokyo-Narita), towards its hub in Seattle. In doing so, the carrier will be axing its Hong Kong–Tokyo Narita and Manila–Nagoya services later this year, and downgrading capacity on several other routes.  

Business class cabin in the B777-300ER

At present, AA’s US-based hubs include Chicago, Dallas, Los Angeles (LA), Miami and New York. Unfortunately, Miami, Chicago and Dallas are not ideally located for flights to and from Asia, whilst the airline’s hubs in LA and New York are both ‘underdeveloped’ due to expansion caps.

Of its existing hubs, Dallas is presumably the best bet for AA due to high passenger traffic and the fact that it is already flying from Fort Worth International to Tokyo. With that in mind, this still lags behind both United and Delta, which operate out of San Francisco and Seattle respectively, and are thus located closer to Asia.

Premium cabin bar

Another option is to develop its Los Angeles hub. AA recently obtained a sublease from United Continental for four contact gates at LAX, which should provide the airline with more flexibility and room for growth there.

Both AA and United currently control about 20 per cent of market share at LAX, and by continuing to develop its base here, AA could begin expanding its transpacific services to complement their strong Dallas Fort/Worth presence.

For more information, visit aa.com

Clement Huang

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