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United States of America
- Main hub
- Dallas/Fort Worth International Airport
- United States of America
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- Full Service Carrier
- Domestic | International
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- Part of American Airlines Group Inc.
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American Airlines is a wholly-owned airline subsidiary of American Airlines Group Incorporated. With hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, Washington DC and Tokyo, American Airlines operate an extensive network including domestic and regional services within North America and international services to Europe, Asia Pacific, Central America and South America. The carrier was incorporated from The Aviation Corporation, formed into American Airlines in 1934. The carrier was the founding member of the oneworld Alliance, and introduced SABRE in 1959.
Following the merger of AMR Corporation and US Airways Group in 2013, US Airways integrated with American Airlines under a single Air Operators Certificate (AOC). The companies have already been using a single booking system and operating as a single brand since 17-Oct-2015. US Airways Group and US Airways ceased to exist as a separate entity effective 30-Dec-2015. As a result of the merger, all property, rights, privileges, powers and franchises of US Airways became American's, as well as all of US Airways' debts, liabilities and duties.
Location of American Airlines main hub (Dallas/Fort Worth International Airport)
American Airlines Group Inc. share price
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Nearly two years ago jetBlue debuted its Mint premium product, which was a bold move for a low cost, hybrid-like North American airline. The company is the only low cost airline in the Americas that offers a dedicated premium product, and the success of Mint has even surprised jetBlue’s senior management.
In an increasingly vanilla US marketplace, largely driven by Wall Street analysyt demands for short term profits, Mint’s success has beaten jetBlue’s own expectations, and now the airline is planning a massive expansion of Mint routes from its three largest bases – New York, Boston and Fort Lauderdale. jetBlue is undertaking the spread of Mint as Alaska and Virgin America work to gain approval for their merger, then to embark on a years-long integration process of the two. During that time jetBlue will leverage its strengths to inject a premium product into some of Alaska and Virgin America’s important transcontinental markets.
There is much for jetBlue to digest as it works to roll out Mint in several additional markets. But with Mint’s current track record, jetBlue is not surprisingly remaining open-minded about its scope.
Compared with many other regions in Central and Latin America, Mexico’s stable economy is benefiting the country’s two publicly traded airlines Aeromexico and Volaris. There are apparent opportunities for both companies to stimulate traffic, but their business models are completely different. Volaris characterises itself as an ultra-low cost airline while Aeromexico is Mexico’s only full service airline, leveraging its position at Mexico City Juarez international airport to build what it considers to be a major connecting hub and gateway in Latin America.
Ratification of a revised bilateral with the US by the Mexican Senate, and tentative Mexican government approval of a joint venture between Aeromexico and its fellow SkyTeam partner Delta Air Lines, are major steps in Aeromexico’s strategy to distinguish itself as Mexico’s only global, full service airline.
Volaris continues to strengthen its business foundations of VFR (visiting friends and relatives) traffic, and diversifying its network into more US transborder routes. Although Volaris is planning healthy capacity growth in 2016, the company believes that there is enough demand to absorb its projected expansion.
Tentative approval was finally granted by the Us DoT for Norwegian Air International to introduce long haul, low cost service from Europe to the US. Even though the opponents have successfully lobbied legislators to introduce prohibiting legislation, this was a milestone in the contentious debate about open skies agreements, as well as the intricacies of labour law and foreign ownership requirements. There was a lively debate on this topic at CAPA's Americas Aviation Summit, under the guidance of CNN anchor, Richard Quest.
However, in the larger scheme of liberalisation Norwegian’s victory is a small step in what appears to be a long journey for a mindset change: to create new paradigms in the rapidly changing global aviation industry. In the US aviation landscape the easing of foreign ownership restrictions remains a non-starter, which means that joint ventures will continue to serve as stand-ins for cross-border ownership. As the status quo remains, and members of large global alliances holding anti-trust immunity dominate markets such as the trans-Atlantic, Norwegian’s ability to inject low cost competition is welcome, and a logical development.
At CAPA's Americas Aviation Summit in Las Vegas in Apr-2015, American Airlines CEO Doug Parker gave a candid interview with CNN's Richard Quest, covering a range of issues from ATC privatisation, through staff bonuses, domestic market strategy, US airlines' competitiveness and international partnerships.
Some extracts below are taken from the video replay embedded in this report.
There are many interesting insights in the video - for example, in managing employee expectations: "You act instead of talk. You do actions that back up your statements", and on international routes to Asia, "we need a strong (Chinese) partner.”
Spirit Airlines continues to make adjustments in the face of lingering pricing softness in the US domestic market and selected international regions. In addition to pricing pressure on baseline fares, Spirit is also starting to experience trickle-down effects on its non-ticket revenue, from lower average fares in its markets.
The airline's position is that pricing levels are in line with softness that became more pronounced in Oct-2015, and it is predicting that its 2Q2016 total unit revenue should fall in line with the 13.8% drop recorded in 1Q2016. However, for a couple of quarters Spirit’s performance in that metric, although still negative, has been better than the company’s initial predictions.
Assessing the overall pricing environment in the US market, Spirit believes that the pressure is not entirely attributed to ULCCs. Legacy airlines are initiating deeper discounts on connecting fares in particular, and there is also what Spirit deems as excess capacity in some of the larger legacy US hubs.
The US Big 3 airlines ramp up efforts to improve PRASM. Anxious investors hold back for real results
The three large US global network airlines – American, Delta and United – are stressing to investors that they recognise the importance of attaining a flat-to-positive passenger unit revenue performance, while market place anxiety lingers over a continued negative performance by those companies in that metric.
Two of the drivers for contracting passenger unit revenues continue to be an imbalance of supply and demand, and pressure on close-in bookings. Those airlines are working to remedy those pressures, but it will take some time for a pricing reset in an industry that has been through deep discounting throughout the past year. A buzzword for American and Delta is a move away from product commoditisation, but that is a more slow-moving evolutionary process from which the rewards are further off on the horizon.
Perhaps the overriding concern of investors is whether the historical inverse relationship between fares and oil prices will fail to materialise when energy costs inevitably rise. That is what has occurred historically, but that has done little to ease investor concern during the last year as PRASM has suffered. As a result, American, Delta and United are pledging to return to a flat-to-positive PRASM trajectory, with varying timeframes.