American to slow growth to Asia as new routes mature

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American Airlines will slow its growth to Asia during the next two years, as it focuses on the profitability of its existing new routes to the region.

“We believe there’s a lot of growth in [Asia in] the future but there’s not going to be a tremendous amount of growth in the very near term,” says Doug Parker, chairman and chief executive of the Fort Worth, Texas-based Oneworld alliance carrier. “There will be growth in that period but nothing to announce yet.”

He defines “near term” as over the next one to two years, while speaking with Flightglobal at the Global Business Travel Association’s (GBTA) annual convention in Los Angeles on 29 July.

Parker and other executives at American have repeatedly emphasised a need to grow in Asia, where it is a distant third in terms of traffic and capacity to competitors Delta Air Lines and United Airlines.

The airline has launched three new routes to region including Dallas/Fort Worth to both Hong Kong and Shanghai Pudong in June, and Dallas/Fort Worth to Seoul Incheon in May 2013. It discontinued its New York JFK-Tokyo Haneda flight in December 2013.

American’s capacity to Asia will be up 13.6% to 838 million available seat kilometres (ASKs) following these additions in August compared to a year earlier, Innovata FlightMaps Analytics shows.

“Our growth will be predicated on making the existing flying we have and the new routes that we've added profitable,” said Parker in response to questions on American’s Asian growth during an earnings call on 24 July. “We're going to be focused on making what we currently have successful, and once that's successful I think that gives you the ability to grow.”

Los Angeles International airport (LAX) remains at the centre of American’s plans to grow in Asia, says Parker. He met with some of the airline’s employees at the airport to discuss these plans before delivering a keynote address at GBTA, he adds.

However, American has not added a new route to Asia from the airport since it launched Los Angeles-Shanghai in April 2011.

“There are capacity constraints in Los Angeles and we don’t have as much feed there as we do to Dallas,” says Parker when asked why recent additions to Asia have been from Dallas/Fort Worth and not Los Angeles. He is mum on when or where any new routes from LAX might be added.

“We have a lot of airplanes coming, a lot of widebody airplanes – they’re not all replacement – and they’re going to be deployed into new growth markets,” says Parker.

American’s primary facilities in terminal 4 at LAX are constrained by on-going construction work on the adjacent Tom Bradley International terminal, including blocking one of the widebody-capable gates in T4. Demolition of the old Tom Bradley south concourse and reopening of the apron is expected in October.

The carrier will add four gates for domestic flights in terminal 6 to its existing 14 in terminals 3 and 4 at LAX during the third quarter under a recent deal with United.