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American Airlines mulling direct Australian flights?

By John Walton     Filed under: qantas, American Airlines, USA, United States, Gerard Arpey

Analysis: Frequent travellers to the USA will be interested to hear what American Airlines CEO Gerard Arpey has to say about his airline's thoughts on the Australian market, including possible plans to fly to Australia, and updating the AA fleet.

Arpey, speaking to Executive Road Warrior, let slip several important pieces of information for Australian business travellers.

American thinking about flights to Australia

It's fairly clear to industry observers that Boeing has given American some cheap deals on 777s to make up for the delays to the 787 Dreamliner program.

American dropped some serious hints that American has aspirations for the very lucrative trans-Pacific route in the interview, saying: "we did just apply for the Joint Business Agreement with Qantas and they started flying into and out of DFW, which is great for both of us. We may want to put our ducks in Australia with the Qantas guys, but [the 777-300ER] certainly could do that route."

(Australian Business Traveller first reported that American's new 777-300ER aircraft had the capacity for Los Angeles-Sydney flights in January.)

When talking about delivery dates for the 777-300ER, American spokesman Tim Smith was very clear about the timeline: "All 8 are set for 2012 and 2013."

And there could be more to come: "We still have seven 777-200 deliveries for 2013 through 2016 that are on the books. Now, whether those might be changed to 300s, I don’t know," Smith hedged.

American could even be planning a Qantas-busting new first class product on flights to Australia. When asked about whether the existing American Flagship Suite first class seat will be put on the 777-300ER, American said: "We haven’t decided for sure how we’re going to configure that [aircraft]."

Since Qantas has eschewed the 777-300ER and is using its 747-400ER planes -- which have diverted twice to refuel just this week -- instead, is American losing patience with Qantas' trans-Pacific problems?

New aircraft: what does it mean for Australian connections?

Australians will be affected by the aircraft purchase as older planes are replaced with newer ones. The first set to go are clearly the old McDonnell-Douglas MD-80 fleet, which are ancient in aircraft terms.

But American's Tim Smith also mentions retiring the Boeing 767-200 domestic fleet. Those are the planes that American flies between New York JFK and Los Angeles or San Francisco with better seats and service as part of its "Flagship" transcontinental service.

American clearly hasn't made its mind up on the planes that will replace the 767-200s.

"We’re not saying that we’re going to fly a bunch of 737s or Airbus A321s on the transcons. We’re just saying it opens some new possibilities for those aircraft," Smith says, cagily, especially when probed on whether American's much-delayed Boeing 787 fleet will be deployed on those flights.

Qantas: not on American's radar?

An interesting aside from the interview is that American doesn't seem to see the Red Roo as a key part of "the best network for premium traffic", despite applying for a trans-Pacific joint venture with Qantas.

Arpey cited British Airways, Iberia, Japan Airlines and Cathay Pacific as parts of that network, yet pointedly failed to list Qantas.

That's an interesting omission, considering that Qantas is not only a founding member of oneworld but has been closely involved with American, especially in the high-profile shift of QF's Sydney flights from San Francisco to American's mega-hub in Dallas with the goal of feeding Qantas passengers into AA's domestic US network.

The airlines' membership of the oneworld alliance doesn't necessarily signify a meeting of minds between the two airlines either. Hong Kong-based Cathay Pacific and Qantas have famously not seen eye to eye in recent memory, with Qantas' decision to skip Cathay's Hong Kong base (the natural oneworld stopover location for Kangaroo Route flights to Europe) in favour of the existing Qantas-British Airways joint venture via Singapore.

Arpey could have some advice to offer Qantas CEO Alan Joyce with regards to Jetstar and its increasing role in the Qantas family -- to the point where it seems that  Jetstar could morph into "Qantas Lite".

From the perspective of the US airline industry, low-cost carriers affiliated with legacy airlines just don't work.

Delta Air Lines attempted a low-cost move with Song, moving 48 of its Boeing 757 planes into a subsidiary with a low-cost model to try to compete with new airlines like JetBlue. Song only lasted three years, from 2003 to 2006.

Similarly, United Airlines tried a low-cost subsidiary called Ted between 2004 and 2009. It failed, and its nearly 60 Airbus planes were folded back into the United fleet.

An earlier version of this story quoted AA CEO Gerard Arpey regarding American's flights to Australia. To clarify, some of these statements came from AA's official corporate communications spokesman Tim Smith.


About John Walton

Aviation journalist and travel columnist John took his first long-haul flight when he was eight weeks old and hasn't looked back since. Well, except when facing rearwards in business class.


Have something to say? Post a comment now!

1 on 22/7/11 by jonT

Although Arpey did not specifically say Qantas "was not a premium" carrier, it's somehow ironic that he feels AA, or for that matter Iberia, could be classed in the premium category.

2 on 22/7/11 by mworth

I wonder if anyone read the article in Executive Road Warrior magazine.  The editor Jonathan Spira interviewed several people at American including Tim Smith, a "spokesman" for the airline.  The comments attributed to Arpey were said by Smith.

1 on 22/7/11 by John

Hi mworth -- you're quite right that the attribution was unclear in the original version of the story. I've now made changes to reflect exactly who said what to avoid any confusion.

3 on 22/7/11 by WTF

If AA got 777 planes cheap then why didnt Qantas do the same? Most people know its a good time to buy when items are discounted or on sale!

4 on 22/7/11 by am

I usually quite like the articles on this website - informative, sharp and not filled with the spin of the newspapers...

There are numerous ways that the original article could have been interpeted. You've included a few careful quotes, deliberately left out stuff and added things that the article doesn't even mention (like the Jetstar jab). The quotes you use are often out of context to try to prove a point.

The title is incredibly misleading, and frankly false. Nowhere does anyone say in the article anything about QF not being premium - AA just don't see Sydney as one of the world's major business centres, which it isn't when you start looking at the cities he does list - London, Hong Kong, Madrid, Tokyo.

This article was written with such an agenda!! The whole thing is written to discredit QF... I don't understand it - feel free to dislike QF, but don't make falsified accusations and report on pure garbage.

1 on 22/7/11 by John

Thanks am, always good to hear from you.

If the CEO of an airline (and one that's a Qantas JV partner currently seeking approval) is talking premium traffic, and names all the founding oneworld airlines still flying except for Qantas (plus some others), you have to wonder why the CEO didn't name Qantas as part of the premium list.

You'll note that I've added some clarity on precisely who said what; I hope this assuages your concerns at least somewhat.

1 on 22/7/11 by Globehopper

Arpey is discussing premium business traffic "markets" at which oneworld has a hub presence, not which oneworld airlines are premium carriers. As much as we'd like to think it, Sydney does not rate with London, New York or Hong Kong as a premium business traffic "market". To have drawn the long bow which the title of the article makes is completely unfounded.

1 on 22/7/11 by John

London, New York and Hong Kong I'll cede the point on. But Madrid?

1 on 22/7/11 by Globehopper

That still doesn't mean he said "Qantas is not a premium airline". The headline is just plain wrong.

2 on 23/7/11 by am

Madrid should not be underestimated. It is one of the biggest banking centres in the world - you'll find that not only is the biggest bank in Europe headquartered there along with a number of other banks in the top 10, but it's the construction capital of Europe. It's the third biggest centre in the EU and is a major economic centre.

Australia is not a major business hotspot for the United States. We may end up higher on an economics list than Spain, but that's because of our Asian links. Most of the premium traffic flying between Australia and the United States is Australian in origin. There is a massive amount of American money in Spain and Madrid, evident through the enormous levels of foreign investment that has influxed from across the Atlantic over the past 15 years.

For AA, Spain and Madrid are far more prominent and important business markets than Australia is. It makes sense when put on the spot for an answer in an interview that these big and important markets that actually get talked about in AA come to mind. 

BTW thanks for making some of the small amendments, though it's still a pretty radical article tbh.

5 on 22/7/11 by jbarutha

I don't understand why so many people are trying to convince Qantas that JetStar is a bad idea. It is successful and profitable. People want cheap flights and Qantas needs to be in that market. They have separated their operations from JetStar. It works.

6 on 22/7/11 by radiC00l

I agree with a lot of the comments. And for the credibility of this site, I'd probably remove the article, as it's clearly misleading.  Really suprised to read that AUSBT is presuming what AA thinks about Qantas' strategy etc ("Sitting in US headquarters, Gerard Arpey has to be wondering what Qantas' CEO Alan Joyce is up to with Jetstar"). Where's the AA comment to back this up. Also agree with the comments that AA is presumably talking about capturing premium traffic through alliances and not commening on the quality of its partner airlines. 

7 on 22/7/11 by whitehorse

Maybe the comments made by AA are in response the the Jetstar CEO's article in the Sun Herald this week, stating that Jetstar is going to be larger than the parent company. He also made statements about the codesharing arrangements, indicating that Qantas needed this arrangement more than Jetstar did and if the current pilot industrial dispute continued that they, 'could,' drop the current codesharing arrangements between the two airlines.

From that article I could be forgiven for assuming that the CEO of Jetstar is the person actually running the Qantas show right now. Maybe the 'premium,' market is distancing itself from the Qantas bun fight. 

1 on 23/7/11 by am

The funny thing is that there is no AA comment on JQ at all... It is something thrown into the article for no apparent reason at all and firmly plants words in AA's mouth. JQ is a success here, and their domestic service is certainly far superior to that I've experienced in the US on AA.

8 on 22/7/11 by AusFlyer

Definitely misleading since there is no actual statement quoted to say that Qantas is not a premium airline. However, it would have been laughable if that had been the view of American Airlines given they are far from being "premium"!

9 on 23/7/11 by JDiver

In my opinion, there is much misleading about this article - including making something somebody did not say into something he supposedly said. Kind of like writing "President Medvedev, in discussing relations with the USA and China, clearly implied Australia was a third rate nation by not mentioning her." 

AA is seeking a JBA with QF, and for good reason. The implication in this arrangement far supercedes any implied hint QF "is not a premium airline". We expect better!

1 on 23/7/11 by David

We appreciate reader feedback for all our articles – and after taking feedback on board, and dicussing this article among ourselves, we've amended the original heading to be a more direct reflection of the original interview's content rather than the CEO's omission of Qantas from his roster of airlines which would comprise "the best network for premium traffic".

Please also note that this is an analysis piece, and one we've tagged as such.

And the oddity of Arpey's omission of Qantas still stands, as we've clearly noted in the article. It's like John Lennon forgetting to list George Harrison as part of The Beatles, and instead citing Stu Sutcliffe as part of "the best band for rock'n'roll" (or mentioning Jimmie Nicol instead of Ringo Starr). It's hard to attribute this to somebody 'just forgetting'.

David Flynn, editor, AusBT

1 on 23/7/11 by am

Please also note that this is an analysis piece, and one we've tagged as such.

Sorry to be rude, but it should really be tagged as an Opinion piece. There are few facts actually in this article being analysed, just ideas that the author has and is expressing making uncontextual reference to a second hand interview that covered a far broader number of topics. It's trying to convince readers of a perspective, so tagging it as an Analysis piece is just as misleading as most of what is actually said.

1 on 23/7/11 by Globehopper

Totally agree with am's comments, this reads more like a blog post where the blogger has used a loosely connected article to vent some personal opinions which bear little or no connection to the article.

I am amazed that the editorial board of AusBT can't see the distinction between Arpey listing premium business markets and "Arpey saying Qantas isn't a premium airline". For me, it does not bode well for the quality of the journalism on the rest of the site.

10 on 25/7/11 by am


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