Fort Worth, Texas-based American Airlines reported earnings for the third quarter on Thursday morning, announcing a net loss of $2.4…
DOT Tentatively Approves American for Los Angeles to Beijing Route
On March 14, Delta began petitioning the DOT for a daily flight from Los Angeles to Beijing. A mere two weeks later, American requested the same seven weekly slots. Both carriers said in their applications that the route would be operated by a Boeing 777-200 aircraft. They both said their services would begin the same day: Dec. 16. Following the proposals, each airline filed responses with the DOT, touting the advantages of them winning the route, and the disadvantages of their competitor gaining the slots.
Following the proposals, each airline filed responses with the DOT, touting the advantages of them winning the route, and the disadvantages of their competitor gaining the slots.
American currently operates 35 weekly flights from the U.S. to China, serving Beijing from Chicago and Dallas/Fort Worth and Shanghai from Los Angeles, Chicago, and Dallas/Fort Worth. Delta, on the other hand, holds 42 weekly slots into China, flying to Beijing from Detroit and Seattle and Shanghai from Detroit, Los Angeles, Seattle, and Tokyo. The Los Angeles to Beijing market is served three times daily by Air China, a flight which United currently codeshares, but no U.S. carriers currently operate with their own aircraft.
Throughout all the responses and dissents, American relied on a few key points to argue they should receive the route. First, the airline stressed the fact that Delta already has a west coast route to Beijing from Seattle. In addition, they said Delta’s SkyTeam Alliance partners, China Eastern and China Southern, already dominate China’s skies, and the airline added this decision would help “rectify the competitive imbalance in service and promote competition in the U.S.-China and U.S.-Northeast Asia markets.” They also stressed the fact that less than 30 percent of Delta’s load on its flights between the U.S. and China consists of U.S. origin and destination passengers, while they utilize their frequencies “exclusively for nonstop service between the United States and China.”
Delta also stressed a few details in their lobbying to the DOT. Among them, the airline emphasized their codeshare partners in China would allow for many more connections to other Chinese cities, while American’s codesharing with Hainan, only utilized on their Beijing-Seattle route, would not allow for this revenue stream. In dissent to American’s point that the SkyTeam already has great share on China’s skies, Delta said American’s partnership with Cathay Pacific, which runs a mega-hub out of Hong Kong, more than compensates for Delta’s alliance members’ strength. The Atlanta-based airline also argued American already dominates transpacific travel from Los Angeles with six daily routes to Sydney, Auckland, Tokyo Haneda and Narita, Hong Kong, and Shanghai. However, Delta only operates five, to Tokyo Narita, Shanghai, Brisbane, Sydney and Tahiti.
The DOT announced Monday that they have chosen American to operate the route because their operation would better serve the public owing to “the greater level of public benefits that American would offer.” The prepared statement added that many of Delta’s key points were not pertinent to the argument, which further strengthened American’s case. American must begin operating the route within 90 days of the final decision, and they must not stop operating the route for any 90-day period after operation begins. If the route begins as expected, travelers to Beijing will have yet another option from the U.S. on Dec. 16.
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