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American drops 2 key routes


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Sep 12, 2006
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American to drop 2 key routes

Discounters spur changes at Logan

By Peter J. Howe, Globe Staff | November 28, 2006
A one-two punch from scrappy discount carrier AirTran Airways and bankrupt-but-strengthening Delta Air Lines is chasing American Airlines off two key routes from Boston.
American, the world's biggest airline and the top carrier at Logan International Airport by passenger volume, will abandon nonstop service on Dec. 13 from Logan to Baltimore Washington International Thurgood Marshall Airport and to Orlando International Airport in Florida.
The move comes just eight days before AirTran is set to begin offering its first non stop service from Logan to Orlando. AirTran will replace American as the third carrier serving the route non stop, alongside Delta and JetBlue Airways.
American's retreat from two of the top ten destinations for Logan passengers is the latest indication of how the Logan market is being roiled by fast-growing discount carriers including AirTran, JetBlue, and Spirit Airlines. AirTran, which began service between Boston and BWI in December 2001, now dominates the route, carrying 77 percent of all nonstop passengers, according to FareReport.com, a travel website that analyzes Transportation Department market data.
Delta, which in recent months has begun posting operating profits as it works through bankruptcy reorganization, last December began offering a half-dozen daily flights from Logan to BWI, using 40-seat regional jets. Baltimore is one of nine destinations to which Delta has begun operating nonstop service from Logan in the last year.
On the Boston-Orlando route, American has become a distant third, with less than 20 percent of the market, the website shows. Delta has 47 percent of the passengers and JetBlue 35 percent. American offers a daily afternoon flight from Logan to Orlando on a 188-seat Boeing 757.
"My guess is that the impending entry of AirTran was the straw that broke the camel's back for American," aviation consultant Daniel Kasper , managing director of LECG LLC in Cambridge, said in an interview.
On both Boston-Baltimore and Boston-Orlando, Kasper added, "The market is too competitive with low-cost carriers," especially factoring in frequent Southwest Airlines Co. service to Baltimore from Manchester Boston Regional Airport in New Hampshire and T.F. Green State Airport in Warwick, R.I.
Charlie Schewe, Boston district sales manager for American Airlines, acknowledged that competition was a factor. "There are just markets where we feel like we've got better options for our aircraft. It's a constant battle that we have as a company, to review our markets and not just keep our aircraft in a market because it's so important for us."
Still, Schewe added that, "we remain very committed to Boston, and it's an important market for us."
American, which including its American Eagle regional jet affiliate, served 20 percent of Logan passengers last year, will continue to serve 23 non stop destinations from Logan, including multiple daily flights to its Chicago, Dallas, and Miami hubs and extensive service to London, Los Angeles, Raleigh/Durham, N.C., San Francisco, and Toronto.
American is also working with the Massachusetts Port Authority , which runs Logan, and airport concessionaire BAA Boston Inc. on a $50 million-plus upgrade of its Terminal B facilities that includes a new food court and retail shops set to open next year.
AirTran president and chief operating officer Bob Fornaro , in an interview, said American's moves struck him as good business judgment. Both routes will remain intensely competitive, Fornaro predicted.
"When you look at the whole Boston-Baltimore-Washington market and consider JetBlue coming in to Dulles" International Airport outside Washington, D.C., in January, "it's really a lot more competitive than it was a year ago," Fornaro said.
American, which offers six or seven daily flights to Reagan National Airport in Washington, D.C., is "saying they're not a factor in the BWI market, and they're backing away."
Fornaro added that "with three airlines flying from Boston to Orlando, who needs a fourth? It is a highly competitive route, and it's going to be a tough one for anybody but a low-cost carrier to be on that route." AirTran's Dec. 21 launch of daily direct service to Orlando follows its start-up earlier this month of new flights to Fort Lauderdale and Fort Myers.
One of the reasons why American is pulling out of Boston-Baltimore is that the airline has been using 40-seat regional jets, which are far more expensive measured per available seat than AirTran's full-sized Boeing 717 and 737 jets, said Kasper, the aviation consultant.
From Boston, American has been able to successfully use those same small planes to compete with the Delta and US Airways shuttles serving LaGuardia Airport in New York and Reagan National. But on the run to Baltimore, "There's probably not enough business traffic" to create enough extra profits from top-fare last-minute travelers to overcome the cost differential, Kasper said.
Peter J. Howe can be reached at howe@globe.com.

© Copyright 2006 Globe Newspaper Company.

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