American Airlines is looking forward to a post-crisis world where international flying comes back strong. Already thinking to 2022, it appears that pent-up demand could lead to a great summer next year. But, long-term, American Airlines wants to fly a more stable international route network that operates to more destinations year-round rather than a highly seasonal network. This is where the Airbus A321XLR will be key. Vasu Raja, American’s Chief Revenue Officer, discussed this in an exclusive webinar interview with Simple Flying.
American wants to serve its route network year-round
Mr. Raja stated the following on the webinar:
“So the way we really envision our international system coming back, is we want to have wide bodies that can go work hard through the year. We can offer a really, really stable product to our customers through the course of the year, much like what we do in markets such as Heathrow or Tokyo or things like that…If we offer something great to our customers through the course of the year, that should be able to translate itself into earning really great returns through the course of the year.”
One of American’s goals for the coming out of the crisis is to fly an international network with margins that better resemble domestic margins. While the airline can rely on some business routes, like London or Tokyo, to support those margins, it becomes more challenging when it comes to other destinations that have a more seasonal bent.
A key aircraft for this goal: the A321XLR
One of the best ways American Airlines can do this is by ensuring it has the right aircraft in the future, and the airline will get there soon. As Mr. Raja explained:
“In the not very distant future, we’ll have the 777, the 787 and the 321, and each of those have different amounts of gauge, but they have different amounts of range. Now that we can go and launch off of places like New York, Seattle, Boston, things like that, we see ways that we can fly heavy gauge airplanes out of New York into some markets, fly 321XLRs out of Boston, Philadelphia – fly Philadelphia summertime routes in maybe a leisure market such as a Croatia type of thing in a widebody, but then come around in the winter and redeploy widebodies into South America when that’s strong but operated a 321XLR, a lower gauge airplane, into Europe when it gets weaker.”
Gauge is a critical part of network planning. American has to fly the right seat capacity into the markets it serves – especially in international long-haul markets. If American is flying an aircraft that is too big into an international market, it would need to offer some level of fare stimulation to get its seats filled, potentially leading to unnecessary losses.
While American has not yet released the configuration for its A321XLRs, it will likely be in the neighborhood of 160 to 180 seats. Given the range of the aircraft, this could be the right aircraft for some of the winter markets that still have some demand but not enough to warrant a widebody.
American’s pre-crisis international route network
Pre-crisis, American Airlines was set for some interesting new routes. It was the first of the big three US airlines to connect Croatia in the last decade – before it became a top tourist destination this year. It also had plans to add Krakow, Budapest, and Prague to its network from Chicago. Meanwhile, Casablanca was coming online as American’s first foray into Africa to support Royal Air Maroc, which was preparing to join the oneworld alliance then. None of these routes launched due to the crisis.
However, these were the latest routes to join American’s network alongside some other niche routes. This included flights to Dubrovnik and Bologna in Europe and Cordoba in South America. While some were planned on the Boeing 787, the availability of the Dreamliner came as other niche routes were flown using the 767, 757, and even the Airbus A330. Most of the flights, especially out of Philadelphia, were on the 767.
As Mr. Raja explained, those aircraft came at a low enough cost to make those routes work, but only for a few months of the year. The extra 40-50 seats the 767 offered compared to what the A321XLR is likely to offer makes a huge difference in revenue and yield on flights.
While there is comparatively less demand for flights to a city like Venice or Dubrovnik in December than there is in July or August, if American is the only US airline flying nonstop into the market, it could have just the right amount of capacity with a daily or even peak-day flying, A321XLR to make the route work. All this while offering its customers a better, more stable international network that lasts through the year.
While this answers the question of some routes in Europe and Latin America, it leaves room in Asia, Australia, and Africa. For example, a destination like Christchurch cannot be served with an Airbus A321XLR from Los Angeles. However, Christchurch is a largely seasonal market. Americans will likely stick with a seasonal schedule for destinations like this because there is no other alternative to serve such routes. Alternatively, Americans could decide it does not want to serve any of these routes entirely and instead fly to a larger city like Auckland to keep New Zealand connected, or fly to Sydney and funnel passengers to Christchurch with a connection on Qantas.
Ultimately, travel restrictions will determine when and how American brings that network back. But, with Europe gearing up for a strong summer 2022, it could be the start of American putting out this new strategy while waiting for the Airbus A321XLR.