Sky-high hopes: American Airlines expects its revenue in China to grow 67 percent
Feb 14, 2014
BEIJING, China - American Airlines Group Inc, the world's largest carrier, will expand its presence in China, where it expects to see revenue grow 67 percent this year.
The rapid rate of growth will result from adding flights, as the airline, which completed a merger with US Airways Group Inc in December, will launch two new nonstop services from Shanghai and Hong Kong to Dallas this summer, said Scott Kirby, president of the new American Airlines.
Growth beyond this year will depend on gaining slots and flight rights, he said, but the carrier hopes to grow by at least double digits - in line with China's air travel market in recent years. With the new flights, AA will have five daily flights between China and the United States. AA only has a small share of the China-US air traffic market, because the former US Airways didn't have any trans-Pacific routes.
Asia, especially China, will be one of the carrier's most important markets.
According to the International Air Transport Association, the region's air travel grew 7.1 percent in 2013, almost 5 percentage points faster than North America.
Although AA is the world's largest airline, it isn't the biggest in Asia, said Chief Executive Officer Doug Parker.
The carrier is talking with Chinese aviation authorities about slots and flight rights, though it wouldn't disclose details.
"There is a lot of room for growth in the trans-Pacific market, as we are small here," Parker said.
The competition in this market is certainly getting tougher.
On Tuesday, Air China Ltd finished the upgrading of its fleet to all US destinations, and it will now use more advanced Boeing 777-300ER aircraft.
Hainan Airlines Co Ltd also plans to put its entire Boeing 787 Dreamliner fleet onto its North American routes this year. The 213-seat Dreamliner is the newest passenger aircraft in the world.
AA is also using its new fleet as an advantage to compete with other players in the market. The carrier has 567 aircraft on order, and it will use Boeing 777 family aircraft on its two new China-US routes.
Strong profitability is prompting carriers to invest in the market, experts said.
"The China-US route is the most profitable route in the world, which is attractive for the carriers, especially when business is weak in other markets," said Li Xiaojin, a professor at the China Aviation University
US-based airlines have a 35 percent share in the market, and Chinese airlines have 25 percent, Li said.