American is promoting the addition of 100 peak daily departures from Chicago O’Hare this spring, boosting service in over 75 markets and taking Chicago to 500+ daily departures.
They say this restores prepandemic spring-break flying levels. They’re also extending summer seasonal Chicago O’Hare service to Dublin and Paris and framing the whole push as part of a broader investment-and-growth rebuild of the Chicago hub.
American Airlines Boeing 787-8, Chicago O’Hare
United Airlines CEO (and former American Airlines President) Scott Kirby has publicly predicted that he would push American Airlines out of Chicago O’Hare, forcing them to pull down their hub. Kirby makes bold claims, which is a lot of fun, but they’re often unsupported.
American lost four gates at Chicago O’Hare, and United gained five, as part of a re-allocation process based on flight volumes at the airport. American Airlines sued to stop the re-allocation, and has a strong argument that it was done two years earlier than permitted under the airport’s use and lease agreement based on construction timing. However, a court refused to grant an injunction suggesting – as expected – that money damages are calculable and sufficient if the airline prevails.
However, American Airlines clearly has fight left in them.
- They’re leaning into premium, to provide products for customers to buy up into. They have new, gorgeous aircraft interiors (even on regional jets), fast wifi (that’s about to be free on 90% of planes), and they’re adding premium seats to planes after having spent too long and having gone too far in removing them.
- They’re making schedule changes to improve their reliability.
- They’re dropping customer-unfriendly policies such as how hard they made it for most passengers to stand by for an earlier flight.
And at Chicago O’Hare specifically, earlier this month I was first to break the news that American was acquiring two Spirit gates at O’Hare for $30 million.
What’s more American is highlighting the clear fight they’re picking with United. They’re flagging this as a competitive move against the other hub carrier (United) and highlighting flights to two of United’s hubs (San Francisco, Denver) and to an ex-hub (Cleveland):
As the nation’s largest dual-hub airport, ORD has long thrived on strong competition among hub carriers, which keeps fares lower and doubles options for travelers. With three new peak daily flights to SFO and Cleveland (CLE) and two to Denver (DEN), customers now have even more ways to travel to, from and through Chicago, and, importantly, they have more choice.
American had failed to restore its capacity at Chicago O’Hare coming out of the pandemic, focusing on other airports. And it’s not clear that they would have had the aircraft to do so, in any case, having retired too many (Boeing 757s, 767s, Airbus A330s and Embraer E190s) during Covid and having grounded regional jets in part due to a pilot shortage.
United built back its schedule and gained an even greater durable advantage. American Airlines Vice Chair Steve Johnson acknowledged in the spring that American will “probably always be second place in Chicago.”
However, this has the makings of a real fight. On December 18th, American added 3 new Chicago Routes: Erie (once daily, year-round on a CR7 regional jet); Tri-Cities (once-daily, year-round on an E170 regional jet); and Lincoln (once-daily, year-round on a CR7 regional jet).
Within 24 hours, United responded in all 3 markets:
- Returning to Erie with 3 times daily summer seasonal United Express service
- Tri-Cities with 3 times daily summer seasonal United Express service
- Lincon, where they added a 5th daily frequency to existing service.
United framed this as part of growing to 650 daily departures at O’Hare for peak summer, but what they did was respond to American’s once-daily service with three-times daily (summer) which is likely to drive down fares in these markets. If they force American to pull out of some, you can expect United to respond with fewer flights as well, driving fares back up.
American, though, frames O’Hare as its third-largest hub (behind DFW and Charlotte) and says it’s growing faster than United there. That’s not surprising – they’re coming off a lower base – and growth for both carriers is capped by United is positioned with gates there to be larger. With their smaller operation, they also claim to have had better on-time performance at the airport than United this year.
However, they also say that AAdvantage enrollments grew 20% in the Chicago market during the third quarter, versus 7% systemwide. It’s a city with a lot of money, and they need it for co-brand credit card business which is the profit engine at the airline.
With ORD doling out gates based on utilization, AA is going to gate squat. Expect them to ramp up RJ flights to build the volume to keep the gates they have and try to grab some from UA. Returning ORD-ERI service is not the same as returning daily ORD-CDG service year round. This is no different than airlines slot squatting at LGA and JFK.
AA needs to figure itself at ORD. They have focused almost solely on CLT and DFW, while dittling around at JFK and SEA. While AA can tread water in single hub cities like PHL, DCA and MIA, that dog won’t hunt in ORD, PHX or LAX where they actually have to compete.
Come this time next year, AA will juggle routes around to see what sticks, while running money-losing routes to hold the gates.
AA took its foot off the gas and UA pounced but AA is not out of the game at ORD and can and will rebuild its operation in order to retain a position in Chicago, which it has to have.
AA will “allocate” some of its losses to defend its Chicago position but UA is engaged in battles with other airlines all over its system.
While AA and UA battle it out in Chicago, DL has DTW and MSP locked up to make it the largest carrier in the Midwest; NK is cutting back at DTW while SY is pulling down flights at MSP.
and let’s not forget that AA, like DL and WN, have raised salaries and settle contracts post covid while UA has failed to do so.
Are the Teamsters/UA billboards still up in Chicago, Denver and Newark touting UA’s maintenance outsourcing?
Really Citi v Chase. The service in and out of Erie is really going to prove if AA has the chops to lose money for relevance. Excess capacity is a weapon. You need to actually fly to get your natural share. Good luck to AA.
This move sounds like something Bob Crandall had done in the past. Finally American is showing some backbone and not be bullied.