American Takes on United Airlines with Service to Shanghai

SHANGHAI - While American Airlines kicked off its first nonstop service to China with dancers, dragons and an Asian buffet at Chicago O'Hare Airport, things were much quieter at the United Airlines gate.

United has had its own nonstop flight from Chicago to Shanghai since 2004. But on Sunday morning, United officials were no doubt painfully aware of American's presence, facing a competitor on that route for the first time.

And United, which emerged from bankruptcy protection early this year, is likely to bump up against Fort Worth, Texas-based American even more in the future, as American expands further into Asia.

"American and United are always going to be big rivals, and China is no different," said Alan Sbarra, an airline analyst with Roach and Sbarra. "I expect them to compete really hard."

American fired its first shot in the battle for Shanghai this week, launching nonstop service amid the thunder of drummers, costumed dancers and, most importantly to the airline, enough passengers to nearly fill a Boeing 777 airplane.

The airline spent 14 years lobbying for nonstop flights to China. The inaugural flight was an important moment for American executives who see expanded international service as a cornerstone of their turnaround strategy.

"We hope this is only the beginning of our expansion into China," said Henry Joyner, American's senior vice president of planning, who flew on the first trip.

Until recently, only United and Northwest Airlines were allowed to fly nonstop from the United States to China. United gained its China routes in the 1980s, when it bought them from ailing Pan Am, which was then in bankruptcy.

American won permission to launch its Shanghai flight last year, when it beat a competing proposal from Delta Air Lines. Continental Airlines was also granted permission to fly to China, and began service to Beijing from Newark Airport last year.

American hopes to boost revenues by expanding service in Asia, one of the few remaining markets with little or no competition from low-fare competitors. The growing business market in China also attracts business travelers who are willing to pay a stiff price tag for premium service on the 14-hour flight.

But it isn't alone. United has also shifted more of a focus to international travel, and enhanced many perks as it tries to lure business travelers.

United hopes to leverage its long history of flying to China to prevent as many passengers as possible from defecting to American.

"This is a great market for U.S. passengers because there's a predisposition among many American travelers to fly a U.S. airline, rather than one of the Chinese carriers," Sbarra said. "That's one of the reasons the routes are so attractive."

In addition to United, American could see some competition from Delta Air Lines, which has requested a route to Shanghai from Atlanta.

Additional routes are expected to be approved by the U.S. Department of Transportation over the next four years.

But while the airlines are expected to be competitive, the rivalry isn't likely to translate into dirt-cheap fares to China, said Terry Trippler, an analyst with Cheapfares.com, an Internet travel site that monitors airline ticket prices.

"Don't expect a fare war on that route," he said. More likely is a battle over service, as each airline attempts to outdo the others and lure well-heeled business travelers, he said.

He pointed out that several airlines serve Tokyo nonstop from New York, and "we've never seen a fare war there."

American tried hard to make a good first impression with travelers.

When passengers deplaned in Shanghai, they were greeted by scores of Chinese dignitaries. Officials with China's aviation commission praised American executives and said the flight was a significant advance for business in both countries.

Grace McDermott of Arlington said she was "thrilled" to be on the first flight.

"This is a really big deal," said McDermott, who is president of the Southwest branch of the U.S. Pan Asian American Chamber of Commerce. She was traveling to Shanghai to promote business relationships with North Texas companies.

"There is a real hunger among Asian-owned businesses to do business in China," she said. "It's an ideal market for many of them, because of its growth and their Asian background."

One Wall Street analyst who was on the flight called it a "no-brainer" for American.

"The trans-Pacific is one of the few markets where the business travelers are still really willing to pay for first class service," said the analyst, who asked not to be identified because he hasn't yet issued any financial reports on American's new service.

In Chicago, passengers heard speeches by representatives of the Chinese consulate and the mayor's office before they boarded.

"It is of great significance to businesses in both countries for American to begin flights between these two cities," said Ying Tun, deputy counsel general of the Chicago Chinese consulate.

The flight was made possible, in part, because of thousands of letters and e-mails submitted to the Department of Transportation by American employees, requesting the airline be granted the service.

The airline also enlisted Asian employees as it planned the flight, taking advantage of their knowledge of Asian culture, customs and food.

Attendant Mary Ng, a native of Singapore, was selected to work the flight because she speaks Mandarin.

"This is a great opportunity for me, and an opportunity to use my language skill," she said.

Caroline Womack, a veteran flight attendant, said she was proud to be on the flight crew of the inaugural trip. In her 40 years as an American attendant, she has worked many inaugural flights, including the airline's first nonstop service to Rome and Dublin.

She values the chance to explore foreign cities between flights.

"I'm going to retire one day and I want to see it all," she said.

The plane's first- and business-class cabins were full, and the coach section was nearly 90 percent full. Takeoff was delayed for a short time in Chicago because the heavy aircraft, loaded down with fuel, passengers and cargo, was required to take off from the airport's longest runway.

David Weinstein of the Chicagoland Entrepreneurial Center was traveling to Shanghai to help explore business opportunities.

"From a business standpoint, most emerging businesses see enormous market opportunities in China," he said. "If you're not there, your competitors are certainly going to beat you to it."

But not everyone was traveling with business on their minds. John and Cindy Brunelli of Mansfield, Mass., were flying to Shanghai to watch the world swimming championship, which the city is hosting.

Their son, Nicholas, is competing for the United States team.

"This is the trip of a lifetime," John Brunelli said. "The fact that it's this special flight, with American making their first trip, well, that makes it even more special."

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