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American ups capacity at Fort Lauderdale by 30%

3-Aug-2011

In an interesting move that may smack of déjà vu, American Airlines announced it is adding flights from Fort Lauderdale to its DFW and Chicago O’Hare hubs, and in November will begin a non-stop flight from FLL to Los Angeles International.

While American dominates at nearby Miami, with virtually no low-cost competition, Fort Lauderdale has long been the South Florida airport of choice for that group of carriers. The airport’s biggest seat supplier is super-low-cost Spirit, which already operates a LAX nonstop. Also flying the route are JetBlue and Virgin America, two carriers with high marks for service.

Fort Lauderdale Airport seats by carrier (01-07 Aug, 2011)

The table displays the lowest fares available for travel 6-Dec-2011 to 13-Dec-2011 on the airlines offering non-stop flights. American’s fare is competitive with JetBlue and Virgin America, but all three are considerably more than the cost of a Spirit flight. However, given the mind-boggling number of extras and charges on NK, the final differential would likely be less.

Cost of flights Fort Lauderdale-LAX non-stop (6-Dec to 13-Dec-2011)

American

$364

JetBlue

$376

Virgin America

$368

Spirit

$270

MIA-LAX

 

American

$386

Though fares have stabilised (and increased) over the decade, American in the early 2000s chose to enter the Oakland-JFK market in order to counter the new challenge presented by JetBlue. American already flew non-stop to JFK from both San Francisco and San Jose, albeit at legacy fare levels.

By starting service at OAK with significantly lower fares, the airline quickly found that it was cannibalising its own service at the other two airports. With Oakland equally convenient for many passengers, they abandoned the higher-fared SFO and SJC flights, ultimately forcing AA to match its own lower OAK fares at the other two airports.  

The Oakland flights did not last long and American ceded that traffic to JetBlue, again increasing its fares at SFO and SJC, where its competitors were similarly priced.

While the current AA fare from FLL is competitive, should the others decide to offer “sale” fares on their LAX flights, American runs the risk of creating the same kind of disparity with Miami if it chooses to match.  Again, the airports are equidistant for many travelers and a lower AA price at FLL might hurt the higher-yield MIA service.

DFW and ORD make more sense

By increasing its service to DFW and ORD, it simply adds to the connections already offered via those hubs, similar to the patterns operated by the other legacies from FLL to their hubs.

However, it is noteworthy that American’s other hub city, New York, did not get more FLL service. As from late August, the airline will serve New York, with but one daily flight to JFK, timed to feed and defeed international flights.

It is clear that they are unwilling to jeopardize their multiple flights to JFK and LaGuardia  from Miami by entering a very price sensitive and highly competitive FLL market.  Once again, the “cornerstone” strategy may have the potential to backfire.


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