How American Airlines Is Thinking About Its International Network

American Airlines spent much of 2018 through early 2020 plotting a bigger and better international long-haul route network.…

How American Airlines Is Thinking About Its International Network

American Airlines spent much of 2018 through early 2020 plotting a bigger and better international long-haul route network. While it was already very strong in South America and short- and medium-haul flying in Mexico, Central America, and the Caribbean, it had a lot of work to do in Asia, Australia, and Europe. When the pandemic hit, American Airlines decided to “reset” its international network. On the carrier’s second-quarter earnings call, Chief Revenue Officer Vasu Raja discussed how American was looking at its international long-haul flying.

American Airlines is bringing back a long-haul international network, but one that is better for the carrier’s financials. Photo: Vincenzo Pace | Simple Flying

The pandemic as a reset

When the crisis hit, American’s international long-haul network essentially shut down. Flights to Asia, Australia, Europe, and South America saw demand plummet to near non-existent levels, and American pulled down its schedules and parked its planes as it turned to survival mode.

Mr. Raja started his discussion on international flying on the call by looking at where American Airlines was heading into the pandemic:

“This pandemic was a big reset for us, and prior to the pandemic, our margins internationally certainly trailed our competitors and struggled a lot, especially outside of the time we got to peak summer. A big part of it was that we had a lot of widebodies that, though they were put to really good use in the summer, really could not earn their carrying costs as we got in the trough season.”

This is why American Airlines decided to shed some of its long-haul international fleet. This included the Airbus A330s and Boeing 767-300ERs. In addition, though not a widebody, American also decided to retire its Boeing 757-200s, which were also primarily pointed abroad.

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American Airlines retired its Boeing 767-300ERs in 2020. Photo: Vincenzo Pace | Simple Flying

American had a strong seasonal network. The carrier flew some leisure-oriented routes in the summer months but then sat on more widebodies than it could fly profitably in the winter months. For example, in the summer, American added new long-haul flying to cities like Bologna, Dubrovnik, and Berlin.

New opportunities in a post-pandemic world

Mr. Raja discussed where American Airlines is now on its international front:

“We have some 80 fewer wide body-capable – or long-haul capable airplanes – in the fleet as we enter the fourth quarter. And, as we start to go and build it back, the things that we’re focused on [are] things that can produce real annual returns ≠ much as we do with our short haul and narrowbody fleet.”

While American has cut back in other markets, Mexico, the Caribbean, and Latin America (MCLA) are going strong. As he continued:

“If you look out at our published schedules, we’ve never been larger in Mexico, Caribbean and Latin America. Indeed, we are almost twice as large as any of our traditional network competitors in the area, and we see more opportunities to be able to grow. Indeed, were it not for restrictions on customer entry, we’d be a lot bigger in just about every one of the countries in South America than what we are today.”

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The Boeing 787 is a far more efficient aircraft than the 767s or A330s. Photo: Jay Singh | Simple Flying

MCLA is a very strong market for American Airlines. The carrier has an enviable amount of brand loyalty and recognition in the region as well, and it certainly beats its competitors on its flying in the region.

After Delta and LATAM announced a partnership, there was a concern about how American Airlines would be able to retain its position in Latin America. However, the carrier has thus far held its own in this market and is poised for growth.

Partnerships are going to be key

Mr. Raja emphasized the importance of the new partnerships American Airlines has:

“Similarly, we see a lot of opportunities through partnerships that we’ve envisioned and created since the pandemic — not just with JetBlue and Alaska, which create really great jump-off points for international – but also with Qatar Airways, who’ve very quickly become our largest long-haul codeshare partner. We think that will continue beyond and through that partnership, it will open up new markets for us that wouldn’t have been viable for our customers or for us financially prior to this.”

Qatar Airways and American Airlines announced plans for a new codeshare partnership in early 2020 – right before the crisis hit. The two carriers had some disagreements in the past, but there are more benefits for the airlines to cooperate with a partnership.

Both American and Qatar are part of the same alliance. Photo: Vincenzo Pace | Simple Flying

American Airlines has historically been incredibly weak on both coasts. While it has strong hubs in Dallas, Charlotte, Phoenix, and Miami, its presence in New York was seemingly ever-changing and too small to be relevant to the customers it needed and wanted to be relevant to.

This is where the Alaska and JetBlue partnerships come into play. This gives American Airlines relevance on both coasts and the opportunity to be relevant to more customers.

In competitive environments, there are two ways that airlines can grow their market share or customer bases. The first is by adding more flying on their own metal to places where people want to go. This may include flying some insanely competitive routes where an airline can incur significant losses but has to fly in order to be relevant in the marketplace.

The second is by making partners with existing carriers in a given market and filling in the gaps that the existing airline has. For example, neither Alaska nor JetBlue (at least not yet) flies long-haul international routes. American has come into both of those carriers’ markets and grown out a long-haul international network that complements what Alaska and JetBlue fly.

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The opportunities that both Seattle and New York now have for American Airlines resulting from the partnerships are immense. Photo: Boeing

The recently announced partnership with JetSMART could be rewarding. American does not need a large number of connecting passengers in South America, but offering customers an opportunity to fly some short-haul hops in the region to secondary destinations American does not, and likely would not fly to is a push from American to stay relevant to customers, especially those in Chile and Argentina.

Good tailwinds for American Airlines

American Airlines has a lot of strong tailwinds in this strategy. First and foremost, there are fewer seats in the key long-haul markets, most notably in the transatlantic market. This means less competition and an opportunity to be able to get higher yields as a result.

The second tailwind is that American has a much better long-haul international fleet. Comprised of both the Boeing 787 and 777, these planes have excellent operating economics and are flexible in the missions they can accomplish.

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American can still grow its long-haul flying, but now it will focus heavily on ensuring it can do so profitably. Photo: Vincenzo Pace | Simple Flying

The third is the fact that American has deeper and better partnerships. As a result, it has less of a need to fly into every major market. For example, instead of flying its own planes to markets like Croatia or Poland, it can funnel those passengers via a partner, like British Airways or Qatar Airways.

International long-haul travel is showing signs of coming back. As markets reopen, bookings have trended in the right direction, and yields are starting to trend upwards. However, Asia and Oceania remain depressed, so a full international long-haul recovery will not come simultaneously in all markets. Recently, American has even pulled back flying to Australia in light of travel restrictions that make it all but impossible for travel.

Nevertheless, there is more than enough evidence that these markets will rebound when borders do reopen. With American’s order book for Boeing 787s, this could mean new long-haul routes that the airline could not make work previously, but can now due to excellent aircraft operating economics or access to more customers via a partnership.

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Airbus Is Using A350 Lighting To Help Passengers Social Distance

On each flight, there are passengers that are always eager to get up and make their way for…

Airbus Is Using A350 Lighting To Help Passengers Social Distance

On each flight, there are passengers that are always eager to get up and make their way for the exit after the plane arrives at the gate and the seatbelt sign is turned off. However, amid the pandemic, airlines have a responsibility to avoid this rush. Therefore, Airbus is assisting operators with safe disembarking with the use of lighting.

Airbus is putting its cabin lighting to good use. Photo: Airbus

Keeping order

Lighting has been put into great effect across the board since the rise of the global health crisis, with ultraviolet rays being deployed by many airlines to kill germs on their aircraft. However, lighting is also proving useful with other factors when it comes to the challenges of the pandemic.

Passengers don’t always pick up on verbal cues from flight attendants. So, to assist staff and avoid discomfort while maintaining social distancing, Airbus’ traffic light approach uses cabin illumination to indicate the rows that are designated to disembark.

“We’ve looked at how we can use lighting to ensure better onboarding and deboarding of passengers. Because that’s where social distancing is, of course, the most difficult to control as people are packed in the aisles,” Airbus EVP, Head of Region & Sales Europe Wouter Van Wersch shared in a presentation at MAKS-2021 last week.

“We’ve developed a certain lighting pattern that has now been applied on our A350s in line fit, and it’s also being completed for retrofits. We have assigned different colors. It’s sort of a traffic light. We’re using lighting to give clear indications to our passengers on what they should do in the disembarking of an aircraft. Of course, embarking is also very important, and we work very closely with airlines and airports on defining the right sequence of onboarding of passengers.”

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Crews on A350s may benefit well from this initiative. Photo: Airbus

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Lighting the way

Customizable illumination combines with verbal cues from flight attendants to guide passengers on board. Altogether, a single color or a combination of colors at a time can be spaced out in a specific manner and direction, either front to back or back to front.

Moreover, the patterns can be modified for each carrier. The airlines can adapt the colors to what works best for their operation.

The goal is to indicate which passengers are chosen to alight next, row by row. Ultimately, Airbus is keen to help airlines enable orderly and safe disembarking from the aircraft.

A350 Deboarding
On a full flight, social distancing can’t be avoided while seated, but airlines can still avoid crowding in the aisles and at the front of the plane. Photo: Airbus

Keeping proactive

Overall, Airbus is determined to highlight that the aircraft is a safe environment. If the right measures and precautions are taken, airlines can continue to conduct their operations efficiently.

Cabin innovations can prove to be valuable in the current climate. These lighting techniques combine well with other placements such as HEPA air filters to reduce the risk of transmission on board an aircraft. Altogether, airlines, passengers, and authorities need to keep working together to ensure that services can continue to run smoothly and safely.

What are your thoughts about the way Airbus is using lighting to help passengers social distance? What do you make of the initiatives in place throughout the aircraft? Let us know what you think in the comment section.

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