Routes and Networks
What's the Biggest Surprise of the Alaska-American News?
- It’s the biggest surprise from the surprising new American-Alaska alliance: American will launch Seattle flights to Bangalore this fall and London Heathrow next spring. Knowing it couldn’t possibly build a Seattle hub on its own — Delta already made that move — American is essentially outsourcing the traffic-feed function to Alaska.
As it happens, Alaska’s Seattle hub is roughly as big as American’s Miami hub, which supports lots of international flying. Why Bangalore? Because it’s one of the most requested routes among American’s passengers, many of them working for IT corporations with facilities in the Indian city.
As geography dictates, Seattle is the only U.S. hub within nonstop widebody range of Bangalore. Even San Francisco is a bit too far without taking weight penalties. Now travelers from the Bay Area and elsewhere can conveniently travel one-stop via Seattle, rather than one-stop via Europe or the Gulf. American and Alaska they’ll be able to easily connect some 100 U.S. cities to Bangalore via Seattle.
Interestingly, Air Canada operates a Delhi nonstop from Vancouver just north of Seattle, with the same sort of traffic in mind.
Vasu Raja, American’s top network executive, said on a company podcast that a new partnership with Gol has enabled the carrier to grow between Miami and South America for the first time in a long time, never mind the breakup with Latam. Its joint venture with IAG, more importantly, has enabled American to grow its transatlantic flying by about 20% in the past three years. One could make similar statements about the growth opportunities born from American’s joint ventures with Japan Airlines and Qantas.
Now, it’s using its new Alaska partnership as a platform to reenter the Indian market for the first time since 2012 (it previously flew Chicago-Delhi).
- As for American’s new Seattle-London Heathrow flights, they’ll hardly be a high-risk experiment. Joint venture Partner British Airways already flies the market, so think of this as just another frequency.
Delta flew the route for a while too before handing the responsibility to its own JV partner Virgin Atlantic. Unlike Bangalore, which American will serve with Dreamliners, the new Heathrow flights will operate with larger B777s. Seattle-London attracts lots of Indian connecting traffic too, as do American’s London flights from other hubs.
Raja told Bloomberg that as many as 15% of its DFW-Heathrow passenger are connecting to or from India. American, you can see, is starting to punch back at Delta, with moves in Miami, moves in Boston, and moves now on the west coast.
Recall that before its US Airways merger, American briefly flirted with an East Coast partnership that would have put JetBlue in a similar role as Alaska, providing New York and Boston hub feed. The two had a modest interline and loyalty plan agreement from 2010 to 2014.
Today, JetBlue, unlike Alaska, wants to go intercontinental on its own, something you can do from the east coast with the latest narrowbody technology (A321 LRs).
- Just as American partners with Alaska and adds new West Coast intercontinental service, American’s newest joint venture partner Qantas launched a new San Francisco flight from Brisbane last week. It won’t get a huge amount of traffic feed from American there. San Francisco is a United hub.
But Qantas partners with Alaska too, and besides American does have San Francisco flights to key hub markets like New York and Chicago. Of course, Qantas won’t need that much connecting traffic to fill its new Brisbane flights. That’s the beauty of the Dreamliner; just 236 seats to fill. Some LCCs are flying A321 NEOs with even more.
- Data is starting to trickle in about the coronavirus impact on Chinese airlines. Unfortunately, it looks really, really bad. Carriers are operating something like 30% of their flight schedules, and many of those flights that are still running probably have few passengers.
Air China has suspended all U.S. flights with the exception of Los Angeles and New York, in some cases flying onward to San Francisco from L.A. China Southern said it flew 51m passengers in January, down 5% y/y, with domestic traffic down 7%. February numbers will look far worse. For most foreign carriers, flights to China do poorly in the offpeak first quarter.
For Chinese airlines though, Q1 is the strongest quarter of the year earnings-wise thanks to the Spring Festival holiday. With respect to Chinese airlines, some are already calling the demand shock comparable to 9/11. And nobody knows how long it will last.
Nor can anyone know how bad foreign airlines will ultimately feel the repercussions. It’s already a concern for carriers heavily dependent on Chinese demand, like Thai Airways and perhaps AirAsia. But the impact could reach another level if Chinese factories, which are critical to global supply chains, don’t return to full production soon.
Keep in mind that the Chinese economy is vastly larger and more internationally systemic than it was when the SARS virus hit nearly 20 years ago.
- With new routes like Tokyo and Chicago, and San Francisco and Las Vegas before that, Israel’s El Al seems keen on using its new Dreamliners to expand. But it’s also adding new routes to Europe, including a just-announced return to London Stansted. For that it can use B737-800s. The airline last served Stansted more than a decade ago. Other recently-announced European routes include Dublin and Düsseldorf.
- Turkish Airlines, already a powerhouse in Africa, added to its menu of destinations with the launch last week of Malabo flights. That’s in Equatorial Guinea, a major oil market. Turkish can get there with B737-900s from Istanbul, with a stop in another oil city: Port Harcourt, Nigeria. Malabo becomes the airline’s 319th destination overall.
- WestJet is momentarily shrinking while it waits out the MAX grounding. But it’s still on the “strategic path of becoming a global network airline.” And it plans to grow this summer with more service from its hometown Calgary.
Its schedule includes new Rome and Boston routes that launch in May, supported by close ties to Delta. The two are applying for permission to form a joint venture. Another highlight from WestJet’s summer schedule is a new WestJet Link regional route to Dawson Creek, the airline’s 72nd city from Calgary.
From Canada’s Far East, recall, WestJet will start a new U.K. B737-700 route connecting Halifax to Manchester. It recently started a new once-weekly Toronto route to Roatan in Honduras.
- With Condor in the hands of LOT Polish and Lufthansa rethinking its Eurowings low-cost longhaul flying, TUI Fly will give the intercontinental market a shot. Currently, TUI’s German airline operates just narrowbodies.
But this winter, it will position 300-seat B787-8s in Düsseldorf, enabling low-frequency service to Puerto Plata, Punta Cana, and Cancun in the Caribbean. It says it’s currently engaged in negotiations with cruise lines, which are always looking for airline traffic to feed its ships.
Lufthansa, meanwhile, is developing a “new product line” for longhaul leisure flying, modeled on its successful Swiss subsidiary Edelweiss.
- Allegiant is on the warpath again, announcing nine more routes. San Diego features prominently in this latest round, getting new nonstops to Las Vegas, Tulsa, Billings, Medford, Sioux Falls, and Idaho Falls, the latter mentioned as a possible Breeze market. Fort Wayne, Indiana, and Tucson, Arizona get nonstops to Las Vegas.
- Avianca Express is the new brand for Avianca’s regional flights operated with ATR-72 turboprops. It connects the country’s small cities, and more importantly for Avianca, feeds small-city traffic to its expanding Bogota hub. Speaking of which, Bogota gets another new route in June, to Porto Alegre in Brazil.
- Europe’s Volotea, headquartered in Barcelona, plans to grow its fleet to 39 planes this year, after leasing six A319s. By the end of 2022, all of its B717s will be gone, making Volotea an all-Airbus airline.
France is one of its growth targets this year, as it opens a new base in Lyon and adds seats from Marseilles. In Italy, Naples will be a new base. In Germany, Hamburg will be a new base. New destinations this year include Varna (Bulgaria), Hanover (Germany), Marrakesh (Morocco) and Deauville (France).
- Mexico’s VivaAerobus has two new cross-border U.S. routes from Monterrey. One is to San Antonio and the other is to Orlando. Viva has a considerably smaller U.S. presence than rivals Volaris and Interjet. And speaking of Interjet, will rumors of a possible merger with Viva transpire?