The CEO of the world's largest airline is trying to exert leadership in his notoriously undisciplined industry.
In fact, Gerard Arpey, CEO of American Airlines parent
"There is still a lot of destructive competition, particularly in the U.S. markets today, and particularly with flow traffic," Arpey said, on a conference call. "That's why we remain very cautious in terms of our own capacity, and I think macroeconomics suggest that the industry should feel the same way."
Experts are divided on whether Arpey can succeed in influencing other airlines. "It's impossible," says consultant Scott Hamilton, who publishes an online newsletter about Airbus and Boeing. "The other airlines are going to do what they can in their own best interest, not what is in the best interest of the industry as a whole."
But consultant Dan Kasper of LECG in Cambridge, Mass., said Arpey's words may have an impact. "This will make it a little bit easier for carriers sitting on the fence to say that 'If I am more cautious about adding capacity, I don't have to worry about losing market share to American,'" Kasper says.
American has often assumed a role as the industry's leader, even before it became the biggest carrier upon acquiring TWA in 2001. Former CEO Robert Crandall was an outspoken chieftain in the mid-1990s. Now Arpey is speaking out, not only as American CEO since 2003 but also as chairman of the board of the Air Transport Association, the industry's principal trade group.
Arpey has an ally in Doug Parker, CEO of
The other legacies' CEOs are busy doing their own thing.
Then there is
Airlines sometimes have a double standard, notes Kasper: "They say, 'The capacity that other people add is bad, but mine is justified.'"
Of course, while most legacy carriers have been shrinking capacity, low-cost carriers have been growing. At
CreditSights analyst Roger King says that even if legacy carriers wanted to order new aircraft, they can't because of backlogs at
To an extent, Arpey's advocacy is born of necessity, adds Hamlton. "If American turned around tomorrow and said 'we want 300 (narrow body) airplanes,' neither Boeing nor Airbus could deliver before 2010," he says. "American could bring in airplanes from the desert, but they are taking the position that for their own financial recovery, keeping control on capacity is the best way to achieve that."
News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.