American Airlines Will Prioritise Yield Improvement Over Capacity Growth, Claims OAG

“American Airlines and US Airways have started work on integrating their schedules and operations. Consolidation of network overlaps and slot reductions suggest that the new merged carrier will demand a cautious approach to growth over the next two years, rather than the pursuit of rapid expansion,” said John Grant, executive vice president, OAG.

“Following the United Airlines and Continental merger in 2010, United saw domestic capacity fall by four per cent, perhaps inevitable as their networks combined and the carrier began to focus on achieving the most profitable combined network. American Airlines reports a relatively low average domestic yield compared to other carriers in 2013, so there may also be some yield improvement still to come,” he added.

OAG’s analysis of the merger (a deal officially completed on December 9, 2013) is outlined in OAG’s FACTS (Frequency and Capacity Trend Statistics) report for February 2014. The report also analyses capacity for each carrier over the last year.

Before schedules adjustments associated with the merger are taken into account, in February 2014 the new American Airlines has become the largest domestic carrier with 26 per cent of all seats, reports OAG, ahead of Delta which has 21 per cent of domestic seats. Internationally, American Airlines would also become the largest carrier with 19 per cent of all seats, according to the analysis.

“The new American Airlines is less likely to reduce capacity on routes where there is already competition. Whilst having their own distinct hubs and bases, American Airlines and US Airways overlap on 12 domestic routes. On five of these, they are the sole operator. On the largest route, Phoenix (PHX)-Los Angeles (LAX), there are three other carriers but the new American Airlines has 42 per cent of seats, the dominant share,” said Grant.

In terms of capacity at the carriers’ main hubs, combined capacity at Charlotte (CLT) is up by four per cent whilst their Washington DC (DCA) capacity will fall by three per cent. Overall, the OGA report shows that their capacity is up by two per cent across their nine main US hubs. Of the top 10 domestic routes in the US, American Airlines operates on six while US Airways operates on only one, Phoenix (PHX) -Denver (DEN), with a 23 per cent share of that market. The only top ten route where American Airlines dominates is Los Angeles (LAX) - Dallas (DFW) where the airline operates 82 per cent of all seats, according to the report.

The largest airport in the US is Atlanta (ATL) which has 8.2 million seats to and from the airport in February 2014. American Airlines and US Airways between them have a 3.6 per cent share of the seats. While this is small, there are four of the top 10 US airports where the two airlines operate more than half of all seats: Dallas (DFW), 86.5 per cent; Charlotte (CLT), 92.3 per cent; Phoenix (PHX), 50.3 per cent and Miami (MIA), 71.4 per cent.

Some adjustments to American Airlines’ schedules have already been announced, including the withdrawal from 17 routes at Washington DC (DCA) and from three of American’s services from La Guardia (LGA) to Atlanta (ATL), Cleveland (CLE) and Minneapolis (MSP). The intention is to replace these three services with 10 smaller routes with less legacy competition. You can find out more on these stories here and here.