When Given The Choice, American Airlines Says They Prefer Domestic Over International

When Given The Choice, American Airlines Says They Prefer Domestic Over International

American Airlines has increasingly become a domestic airline. Even though it’s the largest airline, it’s less of a global airline even than it was prior to the pandemic. They don’t fly as much to Europe and they haven’t built back much of their flying to Asia.

In fact they no longer consider Los Angeles to be their gateway to Asia, and a lot of their flying to secondary cities in Europe has been halted. That’s meant a real reduction in activity in Philadelphia, where those Europe flights were based, since domestic connections were optimized to support those transatlantic trips as well.

Following American’s fourth quarter earnings call, Vice President of Network Planning Brian Znotins explained the choice to focus on new domestic routes over new international ones during an employee meeting, a recording of which was reviewed by View From The Wing.

At American, given our history and our results, the next new destination – that sexy dot on the map isn’t sexy to us unless it’s going to make a lot of money. Sexy for us is profitability. And so for us, in our network, we have a lot of strength in our domestic network.

…There are 200 cities where we have a schedule advantage versus the competition. And ultimately that’s what many customers are willing to pay a little extra for, not have to take a connection on American when on the competitors they would, or being able to get to their business meeting the morning of the meeting instead of having to go the night before.

…Our biggest strength is in domestic. So just like any company, if you’re making a lot of money on product line A, and you’re not making as much money on product line B, what are you going to make more of? ..For us, product line A is our domestic and short haul international network, that’s where we make the most money in our network right now.

So in a constrained world where we don’t have enough resources to fly everything we’d like to fly. …For us, when we have to make tough choices about where we’re growing we’re going to choose the domestic and short haul international network…and you’re seeing it in our results, hundreds of millions of dollars that we’re improving just by not flying some of the loss-making routes we flew prior to the pandemic and instead investing those airplanes in the domestic network.

American’s Asia Pacific flying focuses on transpacific joint venture hubs – Tokyo (Japan Airlines) and Sydney (Qantas) and limited additional service from Dallas – Fort Worth. For flights to Europe their main destination is London Heathrow, and they’ve added slots from Etihad to grow Heathrow flying even more. But they haven’t brought back European river cruise markets they used to fly to in the summer.

Znotins offered, “The airline bloggers…won’t be as excited about that sixth trip from DFW to Indy, that sixth trip from DFW to Indy is what we’re going to be earning a profit on instead of going to some speculative destination in Europe or Asia where you don’t have as many people wanting to go there and we’re not as successful on those routes.”

Indeed, American really isn’t in a position to experiment with new European routes since they retired their Boeing 757 and Boeing 767 aircraft. Instead, they have a limited number of more expensive Boeing 787s to deploy. And those have to be deployed on denser leisure routes, unaided by large business class cabins, because American made the strategic error to equip their 787-8 aircraft with just 20 business class seats.

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Written by jepayneiv

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