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U.S. Airlines’ Unique Strategy For Growing West Coast Flights
For the past few years, there was a lot of talk by U.S. carriers that the three large Middle Eastern airlines had an unfair advantage in the global market due to government subsidizes they were receiving. Outside of complaints about fifth freedom flights one major complaint was that Middle Eastern airlines were dominating business from the United States to India.
This claim wasn’t entirely false. The large Gulf Carriers were the preferred carriers for many traveling to India and other places within the region but this really wasn’t an area that U.S. carriers were strongly competing in. United Airlines operated flights to Mumbai and New Delhi from their hub in Newark but American Airlines and Delta Air Lines didn’t. Ironically it was Delta that was the most vocal about this.
The airline finally put its money where it’s mouth is and launched flights to Mumbai from New York. It became the second U.S. airline to offer nonstop flights to India. This seems to have sparked a desire to grow flights from the U.S. to India.
American Airlines has been strengthening its partnership with Alaska Airlines and a while back announced a flight from Seattle to Bangalore. Seattle isn’t a hub for American, it doesn’t even have a strong presence there. However, it is a market that its partner Alaska has a strong presence and is currently duking it out against Delta for dominance in Seattle.
United Airlines, not to be one-upped by American, also recently announced a series of new routes by adding two new routes to its map. The first is Chicago to New Delhi and the second is San Francisco to Bangalore.
As Gary Leff of View From the Wing points out, the two airlines have very different strategies, though one airline’s strategy is significantly better than the other’s.
American Airlines doesn’t really have a presence in Seattle, their traffic will primarily be connecting traffic fed by Alaska Airlines, and of course, there will be traffic from the large tech companies in the area like Microsoft and Amazon. There isn’t much more than though. It really doesn’t make that much sense strategically beyond just being a point to point route unless American is planning to somehow make Seattle some sort of gateway for international flights over the long term fed primarily by its partner Alaska.
Even then though it doesn’t make that much sense. Delta is already entrenched in the area with several international destinations and motivation for market dominance. American generally doesn’t grow markets where it already has dominance. Its growth recently has been in areas they already have leading hubs. Its strategy in New York has been to drawback operations and essentially concede defeat to JetBlue and Delta.
United Airlines, on the other hand, is taking a more strategic approach. Their flight to New Delhi from Chicago takes advantage of a strong Indian population in the area and Chicago is already a major hub for United. There is a strong connecting feed, an established international gateway, and strong demand originating in Chicago.
Looking at San Francisco it’s a similar story, except there is a strategic advantage for United. The more established tech industry in the area. United already is a strong player in San Francisco with it being a hub on the West Coast and the primary international gateway for the airline. It has already established contracts with the tech industry for a significant amount of flying to China. The airline adding the route to Bangalore, another global technology center, is another nonstop offering for it’s established clientele to fly to. The customer base is already there for United when compared to American Airlines which will have to build it in Seattle.
While it is nice to see growth among U.S. airlines to new destinations American’s strategy doesn’t seem to make that much long-term sense. It is planning on adding flights to Heathrow and Shanghai from Seattle in the next year but beyond some Microsoft and Amazon employees flying to China what really is the point? Delta Air Lines already flies to Shanghai and 3 other Asian destinations from Seattle.
There will be some traffic for sure but it may just end up being a question of will these routes last and will Alaska be able to support these flights?
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