USA: American Airlines Opens New Routes

American Airlines launched 26 routes between 18 December and 6 January, with the airline’s Charlotte Douglas (CLT), Chicago O’Hare (ORD), Dallas/Forth Worth (DFW), Los Angeles (LAX), Miami (MIA), Phoenix (PHX) and New York LaGuardia (LGA) hubs all seeing new services.

The carrier has also begun a route from Las Vegas (LAS) to Tokyo Narita (NRT), although this route will only operate on a daily basis for the duration of the technology show CES 2019, taking place in Las Vegas between 8-12 January.

The route is also operated by Delta Air Lines during this period. Of the other 25 routes launched, six face direct competition. See how the FTWAs from Oaxaca and North Eleuthera compare to other entries from around the globe.

American Airlines launched a three times weekly service between Los Angeles and Buenos Aires Ezeiza on 19 December, with the first flight touching down in Argentina the following morning.

On arrival, a gift exchange took place, which was conducted by: Gonzalo Schames, Manager of Operations Argentina, Chile & Uruguay, American Airlines; Martin Eurnekian, President, Aeropuertos Argentina 2000; Guillermo Dietrich, Minister of Transport of Argentina; and Andrés Duncan Paterson, Sales Manager Argentina and Uruguay, American Airlines. No other airline operates the city pair.

American Airlines commenced flights between Dallas/Fort Worth and Oaxaca on 19 December, with a press conference being held at the Mexican airport on the day of the route launch.

Among those taking part in proceedings were: Juan Pablo García Luna Gutierrez, Administrator of the Airport of Oaxaca; Juan Carlos Rivera Castellanos, Secretary of Tourism of Oaxaca; Alejandro Ismael Murat Hinojosa, Governor of Oaxaca; and José María Giraldo, Director Mexico and Canada, American Airlines. The 1,765-kilometre route will operate daily.

American Airlines launched a daily service between Philadelphia and Mexico City on 5 July, with the US airport baking this fantastic cake to commemorate the new service, with the culinary masterpiece having been made by Night Kitchen bakery, a company with over 30 years baking expertise.

Seen posing with the route launch party showstopper are Olympia Colasante, VP Philadelphia Operations, American Airlines and Chellie Cameron, CEO of Philadelphia Airport.

American Airlines launched another international route from Philadelphia (PHL) on 5 July, beginning a daily service from the Pennsylvania hub to Mexico City (MEX).

The oneworld member will operate the 3,212-kilometre connection between Philadelphia and the Mexican capital daily utilising its fleet of A319s, with the carrier not expected to face any direct competition on the sector.

With this launch, American now serves two destinations in Mexico from Philadelphia, with it already operating to Cancun 15 times weekly this summer.

The USB3 carrier already serves Mexico City from Charlotte Douglas, Dallas/Fort Worth, Los Angeles, Phoenix and Miami. In total American will offer 97 weekly departures to Mexico City across its six routes from the US in S18.

American Airlines has commenced flights from three different hubs, all launched on 15 February. New A320 services from the carrier’s second-largest operation, at Charlotte Douglas (CLT) were started to Tucson (TUS).

Additionally, the oneworld airline kicked off a 2,403-kilometre link between Philadelphia (PHL), its fifth-biggest base in terms of weekly seats, and San Antonio (SAT), which is flown by its 128-seat A319 fleet.

Approximately 120,000 travellers fly between San Antonio and Philadelphia each year, so this new service answers the need for many travellers and is a highlight to our economic progress, said Russ Handy, Aviation Director for the City of San Antonio.

Finally, again on the same day, American began the airport pair from Washington Reagan (DCA) to Tallahassee (TLH), operated by its CRJ 900 aircraft. None of the new route trio has any direct route competition, and all will be operated on a daily basis.

American Airlines commenced six new US domestic connections on 3 April, with its bases at Dallas/Fort Worth (DFW), New York JFK (JFK), New York LaGuardia (LGA), Phoenix (PHX) and Washington Reagan (DCA) all gaining at least one new service.

Of the six airport pairs which launched, only two face no direct competition, namely the sectors between Phoenix and Amarillo (AMA) and Reagan to Little Rock (LIT).

The average sector length of the six services is 949 kilometres, with the distances ranging from the 150-kilometre hop between JFK and Philadelphia (PHL) to the 2,338-kilometre route from Dallas/Fort Worth to Oakland (OAK).

American Airlines over the past seven days has launched 27 new routes, of which 24 were domestic. The only international connections inaugurated included a weekly (Saturdays) service between Miami (MIA) and Bonaire (BON), an airport pair which began on 9 June.

The others were between Chicago O’Hare (ORD) and Calgary (YYC), plus Dallas/Fort Worth (DFW) to Rekyjavik/Keflavik (KEF), with the latter two having launched two days earlier.

Of the 27 routes commenced by the oneworld member this week, only 15 are presently not served by another carrier. Of those which do face competition, 11 will go head-to-head with Star Alliance carrier United Airlines, including all nine routes introduced to American’s network from Chicago O’Hare.

The average weekly frequency of American’s new routes is 7.5, while the mean sector length is 1,627 kilometres.


Tourism Observer

USA: Southwest Announces 22 New Routes

Southwest Airlines, which plans to grow capacity 3.5% in 2017, has released details on 22 new and seasonal routes, including four international routes originating from its forthcoming international concourse at Fort Lauderdale-Hollywood International Airport in Florida.

As of Nov. 30, 2016, the Dallas, Texas-based carrier had taken delivery of 131 of 155 Boeing 737-800s on order; 32 were delivered through Nov. 30, approximately three per month. At this rate, the remaining 737-800s should be delivered by July, in time for the planned entry-into-service of Boeing’s 737 MAX aircraft, for which Southwest is the launch customer. Southwest has 200 737 MAXs on order.

Southwest’s new five-gate international Concourse A at Fort Lauderdale’s Terminal 1 is scheduled to open June 4. On that date, Southwest will launch 1X-daily service to Grand Cayman. On June 6, the airline will begin new routes to Montego Bay (Jamaica), Belize and Cancun (Mexico). The new routes are pending government approvals and will bring to eight the total number of international routes Southwest will operate from Fort Lauderdale (along with Nassau, Bahamas, and Cuban cities Havana, Varadero and Santa Clara).

Additionally out of Fort Lauderdale, Southwest plans to launch new 1X-daily service to Washington Dulles, 1X-daily service to Philadelphia, and 1X-daily service to Orlando beginning June 4.

The airline will also launch a new 2X-daily Tampa-New York LaGuardia service, as well as a weekend Pensacola-Denver route.

The airline also announced new Ohio routes beginning June 4, concentrating on operations out of Cincinnati/Northern Kentucky International Airport and Cleveland International Airport. Southwest plans to end operations out of airports in both Akron-Canton and Dayton on June 3. The new Ohio routes include daily Cincinnati-Baltimore, Cincinnati-Chicago Midway, and Cleveland-Atlanta service. The airline will increase Cleveland-St Louis service to 2X-daily.

Also out of the US midwest, Southwest will introduce new Indianapolis-Newark and Nashville-Minneapolis service, starting June 4.

On the US west coast, Southwest is boosting service from San Diego with two new routes (San Diego-Boise, Idaho and San Diego-Salt Lake City, Utah) and three seasonal routes (San Diego-Newark; San Diego-Spokane, Washington; and San Diego-Indianapolis, Indiana). All routes will begin June 4.

Additional new west coast routes to launch on June 4 include Portland, Oregon-San Francisco; San Jose, California-Reno, Nevada; and a seasonal route between Oakland, California-Newark.

USA: Air Travel Market War Is In Dallas

The Dallas-Fort Worth air travel market has now surpassed that of Denver (DIA) as the most heated battleground for U.S. airlines. For nearly a decade, DIA was home to the most brutal airline competitive landscape in the country.

Hometown low-cost carrier Frontier Airlines (now transformed into an ultra low cost carrier) and full service network carrier United Airlines had been battling for dominant market share in Denver.

Those were the only contenders surviving in Denver after Continental shuttered its hub at Denver’s old Stapleton airport right after the move to DIA.

In 2006, Southwest Airlines decided to add service in Denver after pulling its service at Denver Stapleton back in 1985, and it quickly built up a massive hub there (now its fourth largest).

There are certainly parallels in the Dallas market, as once again a legacy carrier (American), an LCC (Southwest) and an ultra-low cost carrier (ULCC – Spirit) are duking it out for supremacy in a highly competitive market with a massive origin and destination (O&D) traffic base.

The script obviously has a few differing notes—in this case, both Southwest and American are the hometown carriers, one being low-cost while the other is the world’s largest airline, and Spirit is the newest entrant.

Additionally, the market consists of two airports: Dallas Fort Worth International (DFW), with five terminals and seven runways, and Dallas Love Field (DAL), gate-restricted to 20 jetways in a singular terminal.

The biggest shift in the Dallas market in the last three decades occurred in October 2014, when a 2006 deal to sunset the famed Wright Amendment took effect, allowing Southwest to instantaneously build a massive hub at Love Field nearly overnight.

Flights at Love Field had been restricted to destinations within Texas and to certain neighboring states for decades following the opening of DFW airport in 1974. But two years of lobbying efforts culminated in a 2006 deal that would eliminate Wright’s restrictions while capping Love Field’s capacity at 20 gates.

The restrictions were lifted in October 2014, and Southwest immediately capitalized, as it controlled 18 out of the 20 gates at DAL (16 of its own and 2 leased from United).

Southwest surged to 180 daily departures, redistributing capacity to new destinations outside the previous limits, while Delta Air Lines also grew its capacity on its flights to Atlanta, up-gauging from regional jets to mainline aircraft.

The third new entrant into the DAL market was low cost carrier (LCC) Virgin America, who quickly built up a focus city at DAL. That focus city initially included high-frequency nonstop service to nearby Austin, but today has retrenched to focus on point to point (p2p) flights nationwide, encompassing 16 daily departures to Las Vegas (2), San Francisco (3), Los Angeles (4), New York La Guardia (4), and Washington Reagan (3).

Both Virgin’s gates and the slots to serve LaGuardia and Reagan are the result of the American – U.S. Airways merger and the required divestitures.

Even as capacity exploded at Love Field thanks to the new legal structure, the macro-economy also contributed to traffic growth in the Metroplex.

Starting in late 2014 and continuing into the present, the price of oil plummeted from over $100/barrel to its present level of $40/barrel, dipping as low as $25/barrel during the course of 2015.

Predictably, this has helped to drive down fares and stimulate O&D traffic growth. In fact American CEO Doug Parker has noted that between the added competition (from both Southwest and Spirit) and the drop in fuel prices, American expects no meaningful changes in pricing or capacity for the Dallas market in 2016.

DFW captured a slice of that growth, with 2015 traffic increasing 1.0% year-over-year (YOY) to 64,174,163 from 63,523,489 in 2014.

But the real winner was DAL, which saw passenger traffic explode from 9,413,636 in 2014 to 14,497,498 in 2015, spectacular growth of 54.0% YOY. That growth came on the heels of 11.1% growth between 2013 and 2014, driven entirely by the fourth quarter of that year (when Southwest added its first tranche of service post Wright Amendment expiration).

When considered on an overall market basis, 2015 passenger traffic was up 14.2% from 68.91 million to 78.67 million, nestling Dallas comfortably inside the Top 15 city airport systems in the world (behind #12 Bangkok at 83.21 million and ahead of #14 Miami at 77.56 million).

In order to get a sense of how Southwest’s growth (and lowered fuel prices) have affected the Dallas/Ft. Worth pricing environment city market, we used US Department of Transportation (DOT) data to assess how air fares and O&D traffic changed between Q3 2014 and Q3 2015. The analysis was conducted for 32 city pairs (offered via 35 airports served by Southwest) that Southwest flew nonstop from DAL in Q3 2015 but did not serve in Q3 2014 during the pre-Wright Amendment era. The study also excludes markets that Southwest served at DAL prior to 2014 (in-state and neighboring state markets such as Austin, St. Louis, and Houston Hobby). The results of this analysis are summarized in the table above.

As the table indicates, Southwest’s entrance into these markets has had a substantial impact, both in terms of stimulating O&D traffic growth and in terms of bringing down average fares. Among the 32 US city pairs evaluated from Dallas, average fares are down approximately 15.8%. Average O&D traffic overall is up in the 32 markets by 22.6%.

The specific outlier markets are interesting to consider. Among the positive gains, Atlanta, Miami (Fort Lauderdale), Nashville, and Milwaukee are Southwest strongholds (creating market power for Southwest on both sides to boost demand). Washington D.C. (Reagan), New York City (La Guardia), and Charlotte were previously dominated by American (and in the case of the first two markets, are slot restricted) yet accordingly saw major gains thanks to Southwest.

The negative outliers are also interesting. San Francisco’s numbers are probably driven by the strength of the local economy there and the relative pricing power enjoyed by airlines in that market. Boston is a similar story in terms of the economic and demographic fundamentals with the added note that much of the stimulation had already been captured by Spirit.

Philadelphia is the oddest case—the market itself is mostly stagnant and Southwest’s influence there has been declining for years. At the same time, with lower fuel prices and added competition you would expect prices to go down, not up (the only market in the sample where this occurred.) Philadelphia is a outlier to the broader trend.

As a ULCC, Spirit predictably does not operate any true hubs (Fort Lauderdale comes closest thanks to flight connections to its Latin American network at the airport). But DFW is one of its largest stations, , with 24 peak day departures to 20 different destinations, as per the March 14, 2016 timetable. Spirit’s schedule at DFW basically mirrors its focus cities at the other major US airports (such as Las Vegas, Chicago O’Hare, and Houston Bush), with more or less daily nonstop service to several large O&D markets.

Despite the strength of the operation, Spirit has struggled to sustain more than daily service in most of its DFW markets (a common theme across its network) despite bottom of the barrel fares and little LCC competition.

Today it faces head to head competition from a revitalized Southwest and pricing power thanks to fuel prices. More worryingly, it will have to contend from pricing innovation by American, who has unveiled a new fare class to compete head to head with Spirit and has immediately found success.

American’s management team (by way of US Airways) has had success fending off attacks from ULCCs and LCCs in the past, and it would not be surprising to see them find similar success against Spirit in DFW.

Spirit’s focus city isn’t in danger of collapsing (it doesn’t quite have Frontier’s record for pulling out of markets), but there are some chinks in the armor.