American has been building an team of airline partners to fill the gaps in its network, even if it means aligning with budget carriers and startups

·4 min read
american airlines
American Airlines is expanding its international presence with new airline partners. Mike Blake / Reuters
  • American Airlines is taking on new airline partners to rebuild its global route network.

  • South America is of particular importance as American recently lost its larger partner in the region.

  • In the US, Alaska Airlines and JetBlue Airways help American expand its presence on both coasts.

  • See more stories on Insider's business page.

American Airlines is planning to get by with a little help from some new friends as the airline continues to build out one of its top products: a global route network.

Global carriers often rely on smaller airlines to connect passengers within destination countries, and American has some major gaps to fill despite being a leading member of the Oneworld airline alliance.

This summer saw three foreign airlines - Chile's JetSmart, Canada's Connect Airways, and Spain's Level - announce partnerships with America's largest carrier.

South America has been a top priority for American following the loss of a partner in LATAM Airlines to Delta Air Lines in 2019. Delta's $1.9 billion investment in LATAM bought a new ally in the region at American's expense.

"For more than 30 years, American has been serving Latin America and has been the leading US airline in South America," Henry Harteveldt, a travel analyst and president of Atmosphere Research Group, told Insider. "The loss of LATAM as a partner dealt American a severe blow."

The continent's other major carriers are already bound to carriers and alliances rival to American, including Star Alliance members Avianca and Copa Airlines. It's not impossible for those airlines to partner with American but any partnership requires investment and would have to be worthwhile for the South American carriers to go against their alliance.

American, instead, found a new partner in JetSmart, an ultra-low-cost carrier that boasts destinations in Chile, Argentina, Brazil, Peru, and Colombia. It's far from a match made in heaven but the move was necessary to build back in South America.

"American doesn't want to give up a three-plus decade history of being the leading US airline in South America without a fight," Harteveldt said.

American faces a similar problem closer to home in Canada, where it has no major airline partners. The Great White North's largest carriers are already spoken for as Air Canada is part of the Star Alliance while WestJet is a Delta partner.

One solution is a partnership with Connect Airlines, a startup that plans to fly between Toronto, Canada and the Midwestern US. It's another unlikely partner for American but will give customers a connecting option through Chicago and Philadelphia to Billy Bishop Toronto City Airport, according to Airline Weekly.

In Europe, American just reinstated a codeshare agreement with another ultra-low-cost carrier, Level, that can offer greater European connectivity through Barcelona, Spain. The partnership is ideal since Level is owned by the International Airlines Group, or IAG for short, which is a big American partner through its subsidiary airlines British Airways and Iberia.

Back home, US airlines are also helping American round out its domestic network on both coasts. Alaska Airlines moves passengers through Los Angeles, San Francisco, and Seattle while JetBlue Airways does the same in New York and Boston.

In New York, the new "Northeast Alliance" with JetBlue has given American the opportunity to launch additional long-haul flights to destinations like Athens, Greece and Tel Aviv, Israel.

JetBlue feeds American traffic through New York since the latter can't scale up on its own in the Big Apple.

"To grow in New York organically is almost impossible and even if they could do it, it would be exceptionally expensive," Harteveldt said of American.

But while American can control its network growth, it can't control the product being offered by its new partners. In the US, JetBlue and Alaska offer a comparable, if not better, passenger experience than American but JetSmart and Level are ultra-low-cost carriers with markedly different onboard offerings.

US-originating customers, especially premium travelers, booking a JetSmart flight might be surprised at the differences from American. South American-originating customers, however, are likely already familiar with the JetSmart offering, according to Harteveldt.

The hope, however, is that customers will value the greater connectivity that the partnerships offer and overlook the differences in products.

"The network is the product," Harteveldt said, adding that American may be able to offer suggestions on how the carriers can improve their offering as the partnerships continue.

Read the original article on Business Insider

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting