American Won’t Add More Dallas – Asia Routes, Signifying a Shift in Airline Strategy

Since American reports success selling premium tickets Dallas – Hong Kong and since Dallas is getting a first class lounge one might imagine that in addition to Hong Kong, Beijing, Shanghai, Tokyo and Seoul it could be that Dallas would see another Asia route in the future. One could imagine a third Chinese city.

However in yesterday’s earnings call it was made clear this wasn’t on the table.

Answering a question about whether Boeing 787s and Airbus A350s would ever mean a Philadelphia – Asia flight,

I don’t know what the long term answer is, but for the foreseeable future Asia growth will be growing our Los Angeles Gateway to Asia.

This was re-emphasized,

For the foreseeable future the Asia growth will if be focused on growing our Los Angeles Gateway. That is a question that we will readdress and evaluate at some point in the future.

And that makes sense.

First, Los Angeles – though highly competitive – is also more of local market (rather than connecting market) for Asia traffic.

Second, of the largest cities in Asia unserved by American are:

  • Karachi. No US flag carrier will serve that market directly for the foreseeable future.
  • Mumbai and Delhi. Amply served by American’s partners Qatar and Etihad (though it’s possible to imagine American service to Abu Dhabi from Dallas), American only recently eliminated direct Delhi service. It would be an interesting move for American to return to India, though not obviously from Dallas.
  • Jakarta. This would be 20% longer than the current longest flight in the world.
  • Manila. The route is too thin, it will be left to one-stop connections.
  • Osaka. American’s codeshare partner JAL serves it from Los Angeles and United from San Francisco, these routes only support Boeing 787’s from cities with substantial connections to Osaka. Outside of the local market a Dallas connection isn’t going to be superior for most compared to a Los Angeles one-stop connection.

While the third Chinese city notion is plausible at some point in the future, the Chinese economy is unstable and existing expansion – new Shanghai and Beijing flights – could look questionable for some time.

And while American’s Asia route network is limited compared to those of United and Delta, their opportunities for growth there are also somewhat limited, most likely to added connectivity with their Pacific partners.

That said, the stated focus on Los Angeles is a big shift in strategy for American’s leadership.

When Doug Parker and Scott Kirby were driving US Airways, they ran from competition. They flew very few, and fewer and fewer, non-hub routes. They focused on cities without competition rather than going head-to-head in saturated markets.

They’ve brought that strategy to American with their JFK hub. They aren’t trying to serve the New York business market as much as being the airline that brings passengers from other cities to New York. They don’t serve Detroit, Minneapolis, Atlanta, Denver, or Houston from JFK, for instance (although they do serve Atlanta and Detroit from LaGuardia). And their JFK hub had the most improved performance during the second quarter.

And yet they’re increasingly going head-to-head with low cost carriers at DFW and also against Southwest’s expansion at Love Field, filling planes at lower prices. And by talking up transpacific expansion at LAX they’re going head to head against United and Delta and also Asian carriers as well.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. American should add 1 non stop flight a day LAX-HKG. That would really tick off United who used to offer a non-stop flight and then stopped it. The former UA LAX-HKG flight was always packed and I never could understand why they stopped flying it. Some people will argue that Cathay already services the route but the same could be argued about AA’s new Sydney flight and Quantas. They should have one flight of their own and then connect to Cathay in HK for the rest of S.E Asia.

  2. 1) Karachi. Who wants to even go here? Not even worth a mention for Asia analysis.
    2) Mumbai and Delhi. All pollution.
    3) Jakarta. Indonesia is listed as one of the most corrupt countries.
    4) Manila. The government holds back what could be good investments
    5) Osaka. Although a terrific city, it’s practically impossible to do business with Japan anymore. Nagoya is a great example. Even the Japanese can’t get any cash from expanding into their own cities.

    Bangkok is where everyone should be flying to.

  3. @mark The Qantas flight made sense because of their joint venture (revenue sharing) with Qantas. American has 777s which meant that the second LAX-SYD flight could be downsized from a 747.

  4. @bobby – You think American should fly non-stop to Bangkok? From Dallas it would be the longest flights in the world. What would the economics of that look like?

  5. I guess LAX is better than DFW, but I read somewhere, maybe here, that LAX is at a disadvantage for Asian routes compared to DL and UA hubs at SEA and SFO due to distance. Also, shouldn’t BKK be on the list of largest Asian cities unserved by AA?

  6. Notice they aren’t talking about these routes out of PHX. I don’t expect it to be a hub all that much longer.

    I’d like to see a premium offering from DFW to Hawaii. Say a refurbed 777-200.

    I’d also vote for some sort of flight connecting through to Singapore on AA metal.

    I guess they have that SEA-HND route to build up since Delta pulled out.

  7. @Bobby: Brilliant analysis. Everyone should fly to Bangkok and only Bangkok. Because it alone doesn’t have traffic, pollution, corruption, or any of the other problems.

  8. @DaninMCI They’re going to run Delta’s SEA-HND Haneda route authority as LAX-HND. And lose money doing it.

    They aren’t talking about these routes out of Phoenix because there’s truly no O/D market with Asia out of Phoenix. I think I’ve written about the Q&A Doug Parker did with LAX-based AA pilots shortly after the merger. He was with Tom Horton and took questions about Asia route expansion. At first he said “no” (not what you tell pilots, they aren’t getting more flying) and Horton corrected him that they had just added a bunch of flying and needed to evaluate that first before growing more. Then Parker came back to it and said they might do Asia flying from Phoenix. That was downright silly (and unstrategic because it’s not what you tell legacy American LAX-based pilots, that the US Airways hub will get the flying they want).

    I’d love to see a premium offering to Hawaii. I don’t know that the market supports it with premium fares.

    Personally I do think they 777-300ER that they have sitting on the ground in Hong Kong for 19.5 hours. Maybe a 9pm departure somewhere and a morning return, using a nearby city that’s cheaper to park a plane overnight at than Hong Kong. They’d need more crew though and Hong Kong is such an open market that it’s difficult to make money on nearby cities. There are at LEAST seven airlines flying Hong Kong – Bangkok, for instance.

  9. Bangkok and Singapore are too far. There are no non-stops from the U.S. In reality there are no other cities they can serve.

  10. I agree with Karachi- what a random city to say has potential. If PIA isn’t flying it then it’s obvious a U.S. Carrier won’t.

    LAX-BKK makes way more sense especially when Thai terminates their LAX-ICN route. Same with a one-stop SIN.

  11. The Bangkok route makes sense. It is in the top ten most popular tourist destinations and now TG is out now. If not American then who?

  12. Due to distance limitations and practically, I’d guess Taipei or Kuala Lumpur via one stop in Ho Chi Minh City would be leagues better use of an aircraft than the idea of Karachi or anywhere in India.

  13. LAX/TPE makes a lot more sense. Only China Airlines (Taiwan-based SkyTeam carrier) and EVA Air (Taiwan-based Star Alliance carrier) offer LAX/TPE daily non-stop. UA now offers SFO/TPE again. Oneworld has no presence in Taipei besides JAL and CX. And TPE is still a large and commercial center of Far East Asia.

  14. @ Gary, I didn’t know your list was of only the 10 largest cities in Asia since Jakarta isn’t. Nevertheless BKK seems to make sense as one stop service to one of the largest and most popular Asian destinations unserved by AA. DL appears to be cutting back at least at its NRT hub. Perhaps leaving an opening. On the other hand US carriers don’t like competing against airlines that provide superior service.

  15. I don’t know why BKK keeps coming up. They can’t do it from DFW, end of conversation. If AA wants to have service there, it has to be from Asia but that is a whole different story.

  16. @John, Actually, per WIKI, Jakarta is the 7th largest city in Asia with a population over 18 million.

  17. @Fathiss, It depends on which WIKI or other source you use and how that source defines a city or metropolis. Some put Jakarta out of the top 10 Asian cities by population. But the 10 largest cities in Asia is not what the list was about originally. The whole discussion is academic because the chance of AA adding non-stop service from LAX to any of the Asian cities mentioned in the post or comments is remote.

  18. @Robert Centurion is accessible by anyone with a Platinum card or Centurion card and same day boarding pass for free. The Flagship lounge will be accessible only by American first class passengers and oneworld emeralds (AA EXPs only when flying internationally). So restrictive access. And of course we haven’t seen it yet!

  19. @Robert – based on the other flagship lounges i’ve been to, my bet is that the centurion lounge will be better.. but the flagship lounge may be less crowded (though flagship lounges do get crowded)

  20. Re: AA reviving direct service to India – it actually makes more sense than you might think. DFW metro has the 7th largest Indian-American population in the US. If you combine Houston, you’d end up with a combined Indian-American population larger than Chicago metro, and between Austin/DFW/Houston, there are a ton of large employers with operations in India. Plus, Deloitte has their national training facility just outside DFW, and my guess is you’ll see traffic back and forth to their BPO operations in Delhi/Hyderabad/Mumbai increase as time goes on and the workforces mature. If AA were to reconsider launching nonstop service to DEL, I don’t necessarily think doing it from DFW would be a bad idea.

    That being said, crappy yields are the big problem on routes to India, and that isn’t changing any time soon. Folks really will put up with 3 stops and a 36-hour travel time just to save $50.

  21. Well, as long as my AA miles can get CX first or business seats I’m happy.

    going via DFW and not LAX just wastes time for those of us on so. cal.

  22. With Emirates, Etihad, CX all offering one stop service to major Indian metros and SQ offering two stop I doubt AA can make India work financially. An all business class non stop might make sense but don’t know whether it works operationally

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