In November 2017 American Airlines announced Dallas Fort-Worth – Reykjavik service. At the time I wrote that they were clearly,
- Countering Wow Air and Icelandair who were planning to fly the route. (There’s no universe in which it makes sense for three different operators to fly DFW-Iceland.)
- If American really wanted to fly to Reykjavik they’d be adding the service from Philadelphia, which they view as their transatlantic gateway and the city from which they test new European routes with inexpensive equipment.
This was the kind of airline competitive response we used to see prior to consolidation and ‘capacity discipline’. And it’s the kind of uneconomic capacity that United, Delta, and American claimed that Emirates, Etihad, and Qatar do. But it’s exactly what American was doing.
Last summer American’s CEO Doug Parker explained their approach to competition,
Somebody starts flying a flight from Dallas to anywhere and American either is already there or we’re gonna be there. Because we’re not going to let customers have another option other than American in and out of here.
Back in October, before Wow Air collapsed, American’s Vice President of Planning Vasu Raja told employees they were considering making Dallas Fort Worth – Reykjavik year round.
- American ostensibly believed there was a market for Iceland service when they had to compete against two other airlines
- Now that there’s no competition at all on the route they’d decided the route doesn’t make sense after all.
American is moving their Reykjavik flight to Philadelphia this summer, effective June 4 using the same flight numbers. It’s daily service operated by a Boeing 757.
- Philadelphia – Keflavik, 10:15 pm – 8:00 am, Flight AA232
Keflavik – Philadelphia, 11:00 am – 1:30 pm, Flight AA231
That’s classic airline anti-competitive behavior. It reminds me of Legend Airlines starting premium Dallas Love Field service, so American Airlines did as well. In 2000 they began flying to Los Angeles four times daily and Chicago O’Hare 5 times daily with Fokker 100s configured with 56 premium seats.
When Legend failed, in part driven out of business by American Airlines lawsuits and in part by low prices that resulted from this new capacity, American withdrew from the Love market.
None of this is illegal. If an airline could make money filling a plane at the prices it sells tickets at, whether or not it fills that plane, it’s not capacity dumping — just bad business judgment. The US airlines fought hard for that interpretation, but they forget it when it’s convenient and they’re lobbying the government for protectionism from foreign airlines.