American Begins Direct Flights to China

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


SHANGHAI, China -- While American Airlines began 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 nonstop flights from Chicago to Shanghai since 2004. But Sunday morning, United officials, facing a competitor on that route for the first time, may have been painfully aware of American's presence.

And United, which emerged from bankruptcy protection early this year, is likely to bump up against Fort Worth-based American even more 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 important 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 say expanded international service is 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.

In good company

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

American won permission last year for its Shanghai route, beating a competing proposal from Delta Air Lines. Houston-based Continental Airlines was also granted permission to fly to China and began service to Beijing from Newark Airport in New Jersey last year.

American says it hopes to boost revenue by expanding service in Asia, one of the few remaining markets with little or no competition from low-fare airlines. Growing markets in China also attract business travelers willing to pay stiff prices for premium service on the 14-hour flight.

United, also focusing more on international flights, has enhanced many perks as it tries to lure business travelers.

United says it 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 competition from Delta, which has requested a route to Shanghai from Atlanta.

The U.S. Transportation Department is expected to approve additional routes over the next four years.

But the airlines' probable competition isn't likely to translate into dirt-cheap tickets 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."

'A really big deal'

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

When passengers disembarked in Shanghai, they were greeted by scores of Chinese dignitaries. Chinese aviation officials 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, 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.

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