What it means for routes – American plans to cut domestic capacity by over 10%

On Wednesday, American Airlines announced its plans to ‘remain viable’ in light of recent oil price rises. These include charging for checked bags, cutting domestic services and major job losses.

Just over a month ago American Airlines was forecasting a capacity cutback of less than 5% in its domestic network for the last quarter of 2008, but the recent oil price rises have resulted in the airline now predicting an 11-12% reduction in its mainline domestic flying coupled with a 10% reduction in its regional domestic capacity. How many routes will be axed and how many will see significant capacity reductions has not yet been made clear. International capacity, which had been projected to grow at around 3% in the last quarter of 2008, is now forecast to remain unchanged.

Between 75 and 85 older and less fuel efficient aircraft (lots of MD80s) will be retired and there will be major job losses. Maybe not surprisingly, the airline’s share price fell 24% on Wednesday after these announcements were made at its annual meeting of stockholders.

Source: AA website

In 2007, the number of passengers boarded remained virtually unchanged at 98.2 million. Annual revenue passenger miles (RPMs) fell 0.7%, while available seat miles (ASMs) fell 2.3% as systemwide load factor increased 1.4 points to a healthy 81.5%. The spike in February 2008 is explained by the extra ‘leap’ day this year. Passenger numbers in the first four months of 2008 are down almost 3%, though systemwide load factor is up 0.3 points to 79.4%.

American serves twice as many US airports as Southwest

According to OAG schedule data for May 2008, American (mainline and regional combined) serves 149 airports across the US, more than twice as many as Southwest.

Source: OAG Max Online for w/c 19 May 2008

The airline’s biggest US bases remain Dallas/Fort Worth, Chicago O’Hare and Miami. Every airport served by American has at least two daily departures with the exception of Sarasota/Brandenton in Florida which has just a single daily service to Miami. On average each airport served by American offers just over six destinations and each route has an average frequency of around 26 weekly flights.

Plenty of new routes still being started in 2008

Despite the apparent stagnation in capacity and demand American and its affiliates have been busy starting and planning a number of new routes for 2008.

New Nonstop Routes Within the United States
Origin City	Destination City	Start Date
Chicago O’Hare, IL	Dallas Love Field, TX	02 Jul 08
Chicago O’Hare, IL	Portland, OR	07 Apr 08
Dallas/Fort Worth, TX	Grand Junction, CO	07 Apr 08
New York Kennedy, NY	Tampa, FL	07 Apr 08
New York LaGuardia, NY	Cedar Rapids, IA	02 Jul 08
New Nonstop Seasonal Routes Within the United States
Origin City	Destination City	Dates*
Austin, TX	Seattle, WA	07 Apr 08
Chicago O’Hare, IL	Jackson Hole, WY	18 Dec 08 – 06 Apr 09
Chicago O’Hare, IL	Steamboat Springs, CO	18 Dec 08 – 06 Apr 09
Dallas/Fort Worth, TX	Anchorage, AK	01 May 08 – 30 Sep 08
Dallas/Fort Worth, TX	Buffalo, NY	01 Jun 08 – 02 Sep 08
Dallas/Fort Worth, TX	Eagle/Vail, CO	12 Jun 08 – 06 Apr 09
Dallas/Fort Worth, TX	Greensboro, NC	07 Apr 08
Dallas/Fort Worth, TX	Gunnison/Crested Butte, CO	18 Dec 08 – 06 Apr 09
Dallas/Fort Worth, TX	Jackson Hole, WY	12 Jun 08 – 30 Sep 08
Dallas/Fort Worth, TX	Montrose, CO	12 Jun 08
Dallas/Fort Worth, TX	Steamboat Springs, CO	18 Dec 08 – 06 Apr 09
Los Angeles, CA	Eagle/Vail, CO	18 Dec 08 – 06 Apr 09
Miami, FL	Eagle/Vail, CO	20 Dec 08 – 05 Apr 09
New York LaGuardia, NY	Eagle/Vail, CO	20 Dec 08 – 05 Apr 09
New York LaGuardia, NY	West Palm Beach, FL	02 Oct 08 – 06 Apr 09
New Nonstop International Routes
Origin City	Destination City	Start Date
Chicago O’Hare, IL	Beijing, China	07 Apr 09
Chicago O’Hare, IL	Moscow Domodedovo, Russia	02 Jun 08
Dallas/Fort Worth, TX	London Heathrow, U.K.	30 Mar 08
Dallas/Fort Worth, TX	San Salvador, El Salvador	07 Apr 08
Dallas/Fort Worth, TX	Tampico, Mexico	07 Apr 08
Fort Lauderdale, FL	Kingston, Jamaica	01 Jun 08
Miami, FL	Antigua, Antigua	20 Nov 08
Miami, FL	Grenada, Grenada	20 Nov 08
New York Kennedy, NY	Barcelona, Spain	24 Apr 08
New York Kennedy, NY	Milan, Italy	01 May 08
Raleigh/Durham, NC	London Heathrow, U.K.	29 Mar 08
New Nonstop Seasonal International Routes
Origin City	Destination City	Dates*
Boston Logan, MA	Anguilla, Anguilla	02 Oct 08 – 30 Mar 09
Boston Logan, MA	Paris CDG, France	01 May 08
Boston Logan, MA	St. Thomas, USVI	22 Nov 08 – 30 Apr 09
Chicago O’Hare, IL	Rome, Italy	25 Oct 08 – 07 Apr 09
Dallas/Fort Worth, TX	Acapulco, Mexico	20 Nov 08
Dallas/Fort Worth, TX	Nassau, Bahamas	11 Dec 08
* End dates for seasonal routes may be announced at a later date Source: American Airlines website

Much of the new route activity is focused at the major hubs with Europe and the Caribbean proving fertile ground for new destinations.