On any given day, there are up to 33 daily flights operating between New York City and London. In an earlier post (refer to our coverage here), we examined the players and their product mix. In this post, we will discuss how American Airlines (AA)’s aircraft change in mid December 2015 will impact the market in both economy and premium cabins.
Currently, AA operates three non-stop flights from its hub at New York JFK International Airport (JFK) to London Heathrow Airport (LHR) using their biggest aircraft – Boeing 777-300ER.
The Boeing 777-300ER is one of AA’s newest delivered aircrafts along with the Boeing 787-8. The airline configured it with 310 seats across four classes (first, business, main cabin extra (economy plus), and main cabin (economy). Note that its main cabin extra seats are not sold as a separate cabin and is available for elite status and high fare passengers.
On a weekly basis, AA supplies 13,020 seats to the pond and back with this arrangement. Premium cabin (First + Business) currently occupies 19.4% of total capacity. There are Boeing 777-300ER in AA’s fleet with 3 more on order.
777-200ER (New Configuration)
The 777-200ER has been AA’s international workhorse since its introduction in January 1999. There are currently 47 in the fleet and the average age of these aircrafts is about 15.5 years. Four already refurbished with the new interior (FIN number: N788AN, N785AN, N756AM and N761AJ). They have been used most recently to serve the following routes:
- Miami International Airport (MIA) to Rio de Janeiro/Galeao International Airport (GIG)(AA904/905)
- Miami International Airport (MIA) to Sao Paulo Ministro Pistarini International Airport (EZE) (AA908/909)
- Chicago O’hare International Airport (ORD) to Miami International Airport (MIA) (AA1168/1287)
- Dallas Fort-Worth International Airport (DFW) to Miami International Airport (MIA) (AA27/969)
The new 777-200ER is modified with 260 seats in a three class configuration. First class is eliminated completely and replaced by 45 main cabin extra seats.
In addition, business class features a backward and forward lie flat seat design (same as the one used for its Boeing 787-8/9 aircrafts) with direct aisle access for all passengers.
All classes will enjoy a high definition audio video on demand in flight entertainment system with access to both USB and AC power ports. For connectivity, WiFi is available at a cost for all passengers. It can be purchased during the flight.
The following is the new schedule to be implemented on December 17, 2015:
With this change, there is a big significant dip (16.7%) in premium cabin capacity being offered by American Airlines as indicated by the following infographic:
Dissecting the numbers further, first class capacity will make up only 0.96% and 5.33% of overall weekly and premium cabin capacity by December 2015. This is down from 2.58% and 13.33% currently.
Variance in multiples between economy to business to first class using lowest prices:
Last minute (Economy = 1X, Business = 2.7X, First Class = 5.8X)
21 Day Advance Purchase (Economy = 1X, Business = 3.4X, First = 4.6X)
Checking December 17, 2015 prices, economy is about 30% lower while business is about the same as today.
If American Airlines is able to fill first class capacity on this high yield route, there should be no reason for it to significantly reduce availability. Perhaps this is a sign that loads have not been as robust as forecasted by revenue management even though AA is only completing with anti-trust partner British Airways (BA) at JFK and United Airlines (UA) from Newark Liberty International Airport (EWR) on first class service. This could be caused by prices being too high for such a short flight.
The reduction continues in business class as overall premium cabin inventory is down 16.7% and AA faces additional competition from Delta Air Lines (DL) and Virgin Atlantic (VS) among others. A decrease in capacity may increase yields if overall system capacity remains constant. However, there is fierce competition between these two markets from both high and low ends of the travel spectrum. It is expected that a capacity reduction from American Airlines would easily be filled by others adding new seats. This will continue to put pressure on yields across the board.
Retrofit and Future of American Airline’s First Class Product
As American Airlines continue to retrofit its Boeing 777-200ERs with newer business class seats, first class availability would be reduced on internationally routes. Assuming full utilization, first class international seats would go down from a maximum of 17×8+43×16=824 of today to 20×8 =160 once the retrofit is completed in 2016/2017 and all the 777-300ERs are delivered by 2016. This will put the no.1 airline of the world by capacity behind the likes of many international counterparts in offering a first class product.
Is American Airlines on the collusion course to eliminate this product completely in the future?
While others are expanding its capacity from New York to London, American Airlines focuses on providing a consistent passenger experience while reducing first class availability starting in December 2015. Refer to our coverage of where the Boeing 777-300ERs will be operated to here.