AA Looks at Plan B to Get Travelers to Beijing

Unable to deliver passengers directly to Beijing, American will rely more on its airline partners in Asia.

It was a big disappointment for American Airlines Inc. last week when it missed out on a new route to China.

But a top American executive says that the inability to get the Dallas/Fort Worth-to-Beijing route doesn't mean that American is giving up on delivering passengers and cargo to China. It just won't be as convenient as the airline had hoped.

"While the addition of D/FW-Beijing to our network would have been a great positive in 2007, I think our Asian strategy has a lot more breadth than just a single route," said Henry Joyner, American's senior vice president of planning.

Unable to deliver passengers directly to Beijing, American will rely more on its airline partners Japan Airlines, Cathay Pacific Airways and China Eastern Airlines.

It will look to strengthen those relationships, which will help American compete with Northwest Airlines Inc. and United Airlines Inc.

"Asia is more than China," Mr. Joyner said. "That's one thing for all of us to remember, even though China obviously is the fastest-growing piece of that. Japan is still one of the biggest air travel markets in the world for U.S. passengers. A lot of our traffic wants to go not only to Japan and China, but parts of Asia beyond that that are growing pretty fast as well."

Fort Worth-based American had hoped to fly nonstop into Beijing. But the U.S. Department of Transportation picked a rival bid by United, which beginning March 25 will fly between Washington, D.C., and Beijing.

American was unable to reach an agreement with its pilot union to permit the ultra-long flights between D/FW and Beijing. Transportation officials rejected its effort to amend its application to include a stop in Chicago to avoid exceeding duty time limits in the union contract.

Airline consultant Darryl Jenkins, who presented a report supporting American's application, said there is no way to minimize the loss for American and its hopes for its Asia network.

"It was your chance to get a route that would yield you nothing but money, and you lost because of internal strife," Mr. Jenkins said. "Those are the ones that, for a long time, you'll wake up at 3 in the morning and you hurt."

The world's largest carrier now operates a single nonstop into China, a Chicago-to-Shanghai route launched nine months ago.

The air treaty between the United States and China allows the start of another route between the two nations in 2008, and American has indicated it will bid, under the presumption that it will have worked out an agreement with its pilots.

However, Mr. Jenkins said Delta Air Lines Inc. will likely be the frontrunner because it is the largest U.S. carrier with no routes to China.

Delta will "go in with a stacked deck in their favor," he said. "I think it'll be a long time down the road before American gets another shot like this."

Getting there

Until American can win another route, it will have to rely on a three-prong approach to feeding traffic to China and other parts of Asia:

*Through Tokyo and code-sharing partner Japan Airlines, which offers connections to Beijing, Shanghai, Hong Kong, and other large cities in China and throughout Asia.

*Through Hong Kong and code-sharing partner Cathay Pacific Airways Ltd., which flies to Shanghai, Beijing, Xiamen and elsewhere in Asia. Subsidiary Dragonair flies to more than 20 Chinese cities from Hong Kong.

*Through U.S. and Chinese gateways with alliance partner China Eastern Airlines Corp.

Mr. Joyner said a top priority is "cementing our competitive position in Tokyo."

"If you take a long-term perspective, today vs. where we were 10 years ago, we've been able to add new services into Tokyo from key places across our route network in the U.S.," he said.

American now offers two daily nonstop flights from Dallas/Fort Worth International Airport to Tokyo's Narita International Airport, plus single nonstops from Los Angeles, Chicago and New York.

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