American in New York; battles Delta and United as alliances and non-legacies influence strategy
American's moves this week are another puzzle piece in the legacy airlines' Big Apple strategies, after United wooed Continental to Star Alliance to strengthen the New York gateway over Newark and Delta set its sights to become the leading carrier in and out of New York. Meanwhile, the role of the non-legacy airlines moves into centre stage
This week's announcement of a slot swap and interline deal with JetBlue is one more part of a strategy to strengthen American Airlines’ presence in New York - and, in doing so, to support a stronger oneworld gateway, connecting with the torrent of British Airways services to London at both LaGuardia and JFK.
In addition to its partnership with JetBlue, American is enhancing its network, schedule, facilities and fleet at New York’s airports and signing a deal with NYC & Co., the city's official marketing, tourism and partnership organization. Efforts will include cross-promotional and sponsorship opportunities that highlight American's extensive domestic and global network, as well as its extended global network through the oneworld Alliance to help bring new visitors to New York City.
"Our announcements demonstrate our strong commitment to New York, and we look forward to expanding that commitment in the months and years to come," said American Chairman and CEO Gerard Arpey. "We have a long history in New York, and we're going to grow those roots with new routes, new partnerships, even deeper local relationships, and the kind of service that New Yorkers expect and that will attract more visitors and commerce to the city."
The moves also build on American’s six-month-old "cornerstone" network strategy to strengthen the carrier at New York, Dallas/Fort Worth, Chicago, Miami, and Los Angeles markets, its top international gateways. It plans to add seven new destinations served by 23 additional flights to and from JFK and LaGuardia.
American is both upgrading aircraft and investing in JFK and LGA terminal facilities. It also designated a new officer position appointing Art Torno as Vice President – New York, responsible for airport operations and broad oversight of all the company's activities in the New York market.
At its Wednesday press conference, Mr Arpey announced seven new destinations from JFK and La Guardia, "enhancing the travel experience with upgraded aircraft and new partnerships", and upgrading American's aircraft and terminal facilities.
Starting in summer 2010, American and American Eagle will grow significantly. Including previously announced additions, by year end at LaGuardia and JFK combined, American and American Eagle will add 31 total flights to and from 13 additional routes, bringing total NYC departures to 216 and unique destinations to 63.
When combined with new options for travel on JetBlue, American's New York customers will have access to 81 unique destinations on 271 nonstop flights by the end of 2010. In addition, American serves four destinations with 18 daily departures out of Newark (N.J.) Liberty International Airport.
Looked at from an airport position, this includes new routes from:
JFK: to Fort Lauderdale, Cincinnati, Indianapolis, and Norfolk, Virginia
Part of the new JFK network also includes previously announced service in Apr-2010 and May to San Jose, Costa Rica; Madrid, Spain; and Manchester, England. Previously announced non-stop service to Austin, Texas, will begin in Jul-2010. American also will add twice-daily, nonstop service to and from Fort Lauderdale, FL., in Nov-2010 and increase daily frequencies to Orlando, FL.; Las Vegas, NV.; and Miami effective in Nov-2010.
The new service also includes previously announced American Eagle daily round-trip service on regional jets to and from Columbus, OH, and St. Louis, MO. In addition, the regional subsidiary announced twice-daily service to and from both Indianapolis, IN., and Cincinnati, OH. American Eagle will begin one flight daily to and from Norfolk, VA. Those new flights will use Embraer regional jets and are slated to begin by year end. They will be assigned times so that customers can make easy connections to American's international flights. The airline will also assign the two-class CRJ-700s to upgrade existing routes from JFK, offering first class service to Washington National, Boston, and Toronto starting in early 2011.
LaGuardia: to Atlanta, Charlotte, and Minneapolis-St. Paul
American Eagle will be going longer haul, using Bombardier CRJ-700s, in a two-class configuration, to serve Delta’s hubs at Minneapolis/St. Paul, MN four times daily as well as seven flight daily to Atlanta, GA. It will also serve US Airway’s hub with five daily flights to Charlotte. AE will also fly existing routes to Toronto and Raleigh-Durham, NC.
Meanwhile, the mainline carrier will increase daily flights to and from Miami and Chicago.
America fights back against the New York invasion
Combatting an increasingly emboldened Delta in New York, American clearly intends to take the fight directly to other carriers' hubs too, with the new services to Atlanta, Cincinnati and Minneapolis; by moving into the US Airways franchise at Charlotte, American will also confront the Star Alliance partner. American's decision to fly from JFK to Fort Lauderdale, the home of low-cost service in South Florida, is also an interesting one.
The carrier believes the network initiatives will build passenger demand for its international network to Europe, Asia and South America, including its joint business with British Airways and Iberia between North America and Europe. That joint venture is still awaiting anti-trust immunity, but is expected to be approved by regulators and implemented later this year.
And, when it is able to consult with British Airways and Iberia following regulatory approval, American expects to announce further new international destinations from JFK for 2011.
New facilities: vital to support the expansion
American plans USD30 million in improvements to its facilities at LaGuardia in addition to the Concourse D checkpoint expansion it completed in 2008 and the current installation of escalators to the baggage claim area. This includes extensive refurbishment of its LaGuardia Admirals Club as well as renovation of the restrooms and expansion of the seating areas. The interior of Concourse D will be renovated over a two-year period with all new ceilings, lighting, terrazzo flooring, wall panels and flight information displays.
After the Concourse D renovations are completed, American anticipates undertaking similar renovations in its Concourse C gate areas. It is currently looking at various options to connect the two concourses on the secure side of the terminal to allow its passengers flying out of Concourse C to easily access the Concourse D Admirals Club location.
At JFK, American has put out to bid a 3,000 square foot expansion of its existing 11,000 square foot Concourse C Admirals Club, along with some reconfiguration and refurbishment of the club, which was opened in 2005.
American Airlines and British Airways are currently evaluating a proposal by the Port Authority of New York and New Jersey to develop an expansion of the new state-of-the-art USD1.3 billion international Terminal 8 to allow the airlines to co-locate their operations. Terminal 8 was designed by American on the expectations of its joint operation with British Airways. If agreeable financial terms can be reached with the Port, the potential co-location would benefit not only the airlines and their customers but the Port itself, which has been exploring various ways to expand JFK gate capacity.
The battle for East coast dominance works both for domestic networks and - increasingly important - global alliances
These developments spell an exciting time for New York City and its airports. The moves are undoubtedly designed to lock in domestic power, but they also imply the emerging importance of the global alliances in the US market. As ATI is extended to each of the groupings, New York is becoming a major beneficiary, helping restore some of its former glory as the European gateway to the US.
Delta and US Airways have, for some months now, been angling for a slot swap involving DCA and LGA with the intent to strengthen Delta in New York and US in Washington. By entering the fray, American has indicated that it is very willing to up the ante in order to stabilize its own presence in the market. With the pending approval of ATI for oneworld, an increased AA presence – especially at JFK – holds many benefits for BA and IB as well.
And, as a flow on of these wider strategies, JetBlue, already a dominant presence at both Boston and JFK, is seeking to further enhance its position in this very competitive region by building at Washington Reagan. This improved access will perhaps help allay some of the presumed negative thoughts that part owner, Lufthansa, will have about the American Airlines access to New York that JetBlue has handed it.
And the non-legacy airlines become a movable feast for the legacy alliances
In a week where Southwest Airlines is seeing some very threatening developments as the legacy airlines enhance their positions, along with Canada's WestJet quietly dumping Southwest as a codeshare partner in favour of Delta, the interplay between legacy and new(er) entrant, low cost airlines is becoming increasingly intriguing.
With addition of American to its stable of partners at Boston and JFK, JetBlue will now feature in the plans of both Star and oneworld carriers. A passenger headed from Syracuse to Prague might have a choice of Frankfurt or London as a connecting point, but with the journey for either choice beginning with JetBlue. The big winner: JetBlue.
Other non-legacy carriers will be watching in eager anticipation.