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American Airlines, Eagle launch corner-stone upgrade at Los Angeles

22-Oct-2010

After rolling out its corner-stone strategy throughout the rest of its domestic network, American Airlines rounded out its service expansions and terminal upgrades by announcing 10 new destinations for its Los Angeles hub, from 05-Apr-2011. American estimates that its expanded service will add approximately USD600 million a year in local economic impact, increasing its total annual economic impact in Los Angeles to approximately USD6 billion. However, it did not quantify what the new service would do for the airline itself. American expects to add to its current 4,400 employee complement with the expansion.

The 10 new destinations adds 33 new daily flights from the airport bringing total daily departures there to 267 to 35 destinations worldwide. In addition to the already announced Shanghai service, the rest of the routes include Albuquerque, NM, El Paso, TX, Oklahoma City, OK, Sacramento, CA, Boise,ID, Houston (Bush), TX, Phoenix and Tucson, AZ and Salt Lake City, UT. 

This compares to what American did at New York when it bolstered service there with a partnership with JetBlue in addition to seven new destinations served by 23 additional flights to and from both JFK and LaGuardia where it has 92 and 102 flights, respectively. DFW is, of course, its largest hub at 765 flights, followed by O’Hare at 475 and Miami at 291.

Halting LAX's slide?

Just four North American airports are in the global Top 30 international passenger hubs, although none are in the Top 10. New York JFK is the busiest international airport on the continent, though it slipped two places to 14th in the global rankings between 2001 and 2009, despite growth of 32% over the period.

Toronto and Miami have seen slow growth, of 12.1% and 4.7%, respectively, since 2001, while Los Angeles’ international traffic has actually contracted by 5.3% over the decade, despite its seemingly favourable geographic positioning closer to burgeoning Asia Pacific gateways.

Toronto may be benefiting from Air Canada’s push to poach US-Asia/Europe passengers to connect over its hub there which the airline consistently reports is growing. Many traditional international US hubs have lost traffic to new international hubs launched in the 1980s and 1990s such as Salt Lake City, Washington Dulles and Atlanta as aircraft technologies and right-sized aircraft have been assigned to serve and grow these hubs.

Los Angeles, with its congested and outdated infrastructure, faces further challenges as new technology aircraft, such as the B787, raise the competitiveness of rival airports across the US for non-stop services to growth markets in Asia and elsewhere.

Miami, too, appears to have failed to capitalise on Latin America’s boom, with other Florida-area airports gaining ground. Traditional trans-Atlantic leisure markets have been affected by the global economic downturn and domestic US LCCs have largely eschewed the famous Florida gateway.

Interestingly, even as American is trying to the determine the fate of its loss-making regional operations, it is making it a key part of its strategy at its corner-stone hubs. For LAX, four of the new routes will be served by American Eagle's Bombardier CRJ-700 fleet, with their new first class cabin section that it rolled out in Chicago and New York last May. The CRJ 700 is being introduced to Los Angeles for the first time.

All four existing daily flights to Denver also will be upgraded, according to the airline to the CRJ-700. American will offer seven additional daily domestic flights from Los Angeles, including two flights each to Dallas/Fort Worth and Miami and one flight each to Chicago, Las Vegas and Orlando. By spring 2011, American and American Eagle will bump departures at LAX by a 28% increase from current departures. The two airlines also have flexibility to add more flights and destinations in the future.

"Today's announcement demonstrates our commitment to superior service and travel choices for our customers to and from Los Angeles," said COO Virasb Vahidi. "Los Angeles has long been an important market for American and American Eagle and is a critical international gateway for us as well as our oneworld Alliance partners."

The new service bolsters the feed for the 18 international destinations served by its oneworld partners at the hub. The hub is also getting new service springing from the debut of its joint business with British Airways and Iberia announced earlier this month. While Iberia is introducing new Madrid-LAX service, British Airways, which already serves the hub, opted to provide new service to San Diego, both beginning next Spring. 

The new service at LAX also complements American’s latest thrust into Mexico from the cornerstone gateway through a new codeshare with Alaska and Horizon Air. The move is pending regulatory approval, but plans include Mexico City; Guadalajara; La Paz (operated by Horizon Air); Loreto (operated by Horizon Air); Mazatlan; Puerto Vallarta; Ixtapa/Zihuatanejo and Manzanillo.

The new service comes on top of the opening of a new terminal for American Eagle last year. That terminal is now slated for a USD20 million expansion with construction set for completion by the end of 2011. The finished product will give Eagle 10 gates at LAX. American has 13 gates at Terminal 4 at LAX.

"We are proud to begin First Class service to this important cornerstone market," said Dan Garton, President and Chief Executive Officer of American Eagle. "We have served the Los Angeles community for nearly 25 years and are very proud to continue our service and support of the community in which we live and work."


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