The heads of joint business partners American Airlines and British Airways continue to see strong and growing demand for transatlantic service, allowing them to continue considering expansion in the market.
“Our assessment of the capacity in the transatlantic is that it is well matched to the demand but there has been some minor overcapacity that’s been trimmed,” says Willie Walsh, chief executive of BA parent International Airlines Group (IAG), at a media event in Washington DC today. “We have no concerns with the situation we are operating in today.”
Lufthansa was the airline expressing the most concerns with capacity between Europe and North America earlier this summer, he says, adding that this was primarily “capacity they were moving into the market”.
The comments come a day after BA upgauged one of its daily London Heathrow-Washington Dulles frequencies to an Airbus A380 from a Boeing 747-400. This will drive a roughly 10% increase in seat capacity on the route for the airline once all of its schedule changes are in place later this year.
“More [capacity] has been added in the last year or two years than demand has grown but demand has grown, and we foresee demand continuing to grow,” says Doug Parker, chairman and chief executive of American, on the transatlantic market at the event.
American and BA are tapering capacity growth, despite their bullish comments on demand. Available seat miles (ASMs) between Europe and the USA on the carriers, along with their codeshare partners Iberia and Air Berlin, is scheduled to increase 1.1% in the fourth quarter and decrease 3.9% in the first quarter of 2015, an Evercore report this week shows.
The airlines had scheduled a 2.1% increase in the fourth quarter and a 2.1% decrease in the first quarter in the market as recently as the week of 18 August.
Market capacity growth has decreased 1.5 percentage points for a 4.5% increase in the fourth quarter, and 2.1 points for a 3.2% increase in the first quarter, Evercore shows.
Walsh sees opportunity to expand even as the partners manage their Atlantic capacity.
“Together we are considering additional gateways, additional cities that we can serve,” he says, citing a significant benefit from the addition of US Airways to the American network. “The combination of our networks gives us opportunities to add more capacity but that will be profitable capacity.”
Walsh cites Austin, which BA launched service to with a Boeing 787 earlier in 2014, as a successful new market that was only possible by leveraging the joint business and American’s strong presence in the market.
Speculation on what cities BA could add in the USA is centred on cities with a large combined American-US Airways presence. These include Columbus (Ohio), New Orleans, Pittsburgh and St. Louis.
Source: Cirium Dashboard
