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AA talks tough on discount competition, sees change ahead

American Airlines, the world's largest air carrier, isn't planning to let any Davids mess with its Goliath market share. CEO Doug Parker says that if smaller rivals take advantage of fuel price drops to add seats and then discount them to take market share, he will "compete aggressively."


In an interview with Bloomberg Business News, Parker said “We’re not going to lose customers on price. We’re not going to give anyone else an advantage and allow them to expand at a rate that takes away customers and is not good for our shareholders.” Meeting that competition might cut into American's healthy current profits, but AA can probably hold longer than some shallow-pocketed "upstarts."


AA is planning other moves as well, not directly related to fare wars. As the merger with USAir moves into its final stages (reservations this summer, tech teams and more later) it will also make changes in fleet assignments and maybe in its frequent flyer program, AAdvantage. Company president Scott Kirby told a symposium this week that changes might include swapping some smaller A319s from USAir hubs to American, and some larger 737-800s to USAir hubs.


Kirby gave no details about what changes he might be thinking about in the AAdvantage program, the only one of the big three that hasn't switched from issuing points per mile flown as opposed to points for dollars spent on tickets. Depending on how much or little (a)advantage that system is giving them, that could be the change.


Above: AA Management team receiving certificate to operate AA and USAir as a single airline. (Photo: American Airlines)


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