Coronavirus: American Airlines could drop ambition of Los Angeles gateway to Asia
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Planners at American Airlines, Delta Air Lines and United Airlines are all struggling with the question of what to do with the dozens of wide-body jets idled by fears of the coronavirus outbreak in China.
All three carriers have ended their flights to China, including Hong Kong, amid a global exodus of airline capacity from the country. Airlines have few options to redeploy their planes immediately, as everything from flight schedules to crew resources takes time to move around.
American, Delta and United, with little certainty around how long the impact of the coronavirus will last, are beginning to look at longer-term options for their aircraft. They face the increasingly likely reality that fewer people may want to travel to China for months to come.
Speaking at the Evercore Global Airlines Conference on Thursday, airline executives outlined similar struggles trying to find uses for the idled aircraft over the next month or two, according to a Friday report on the forum. Longer-term, the carriers are considering everything from ending some routes to China to shifting the aircraft to markets that could benefit from added seats.
American may take the most drastic step, its chief financial officer Derek Kerr and other executives told the audience at Evercore. The airline is considering ending its service to Beijing Capital (PEK) and Shanghai Pudong (PVG) from Los Angeles (LAX) and serving mainland China from just Dallas/Fort Worth (DFW) when flights resume.
The Oneworld alliance carrier is the smallest U.S. carrier to China with just four daily flights, or six if Hong Kong is included. American operated six daily flights until October 2018, when it ended service between Chicago O’Hare (ORD) and both Beijing and Shanghai.
Ending service to mainland China from Los Angeles, an airport executives have called American’s gateway to Asia, would leave the airline with nonstop flights to only Hong Kong and Tokyo Haneda (HND) — the smallest Asia gateway presence on the West Coast of the U.S. legacy carriers. The cuts would also reinforce American’s trailing third-place position behind Delta and United across the Pacific.
Dallas/Fort Worth, with five routes to Asia including Beijing and Shanghai, has become American’s de facto gateway to the region.
No decision is likely until there is more clarity on the coronavirus situation, American executives said. The airline may use its roughly 10 idled Boeing 777s and 787s on key hub-to-hub routes, for example between Dallas and Los Angeles, over the next several weeks. It could also use the larger 777-300ERs — the only wide-body aircraft featuring its Flagship First Class product — to replace Dreamliners on flights to Australia.
American just launched a new joint venture partnership with Qantas Airways in November. The pact gives the airline access to Qantas’ domestic network, and the passenger feed associated with those flights.
Both Delta and United are looking at using their idled China jets to replace older, smaller models on other long-haul routes. Delta’s vice president of investor relations Jill Greer told Evercore that the Airbus A330neos scheduled to fly to Shanghai could be used to replace Boeing 767s across the Atlantic.
The SkyTeam Alliance carrier, however, would not idle the 767s if it shifts the A330neos to the Atlantic. The older widebodies would likely be used on “high volume, high load factor” routes, like to Las Vegas (LAS), during the interim, Greer told Evercore.
United, the largest U.S. carrier to China, is similarly looking at short-term options to redeploy the 777s and 787s that were due to fly to China. Andrew Nocella, the airline’s commercial chief, told Evercore that they may shift the 777-300ERs that were due to fly to Shanghai to Europe flights flown with 777-200s, but the opportunities are limited.
The Star Alliance carrier is hoping travelers slowly return to China once coronavirus fears abate, said Nocella. A slow return would allow United to reschedule the jets through the summer and take advantage of peak demand to places like Europe.
After the SARS (Severe Acute Respiratory Syndrome) epidemic in 2003, it took United about a year to return capacity to pre-outbreak levels, as the preferred scenario, he said.
Airline plans, despite the comments, remain in flux due to the lack of clarity around the coronavirus outbreak. This view was expressed by multiple airline planners at the Routes Americas forum in Indianapolis this week, where the word “uncertainty” was frequently heard.
“This is going to cost the airlines a chunk of change,” Atmosphere Research travel industry analyst and president Henry Harteveldt told TPG — about the only certainty in the whole coronavirus saga to date.
Featured image by FG/Bauer-Griffin/GC Images.
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