New | American Airlines sees strong growth in China market
American Airlines, the world's largest airline caught in a heated subsidy row with Gulf carriers, is open to giving more latitude to its rivals in China, where the airline is expecting the most growth and is deploying its newest aircraft.
In Hong Kong to mark the first anniversary of the US airline's daily service to Dallas, chairman and chief executive Doug Parker said in an exclusive interview with the he "doesn't know" if China's state-owned airlines receive government subsidies, nor is he "particularly alarmed" by the way they are overtaking US carriers in the transpacific market.
Yet Parker has been more vocal along with two other US carriers, United Airlines and Delta Air Lines, in accusing Emirates, Etihad Airways and Qatar Airways of receiving US$42 billion in "unfair" subsidies, and urged Washington to limit their traffic rights to the US.
While China's four listed state-owned airlines did not shy away from reporting receiving government grants of 6.98 billion yuan (HK$8.83 billion) in their annual reports for last year, Parker did. "I don't know if they are subsidised or not. What I do know is the dynamic that we are seeing with the Gulf carriers is unlike anything we see anywhere else in the world."
Parker said that with the US population 20 times that of the United Arab Emirates and Qatar combined, Gulf carriers had more than 20 daily flights into the US compared with only two for US carriers to the Gulf. "They are subsidised to such a degree that they don't need to worry about profitability," he said.
The flight balance between the US and China, the world's most populous country, however, was different, Parker said.
That was why Chinese carriers' aggressive expansion in the transpacific market - overtaking US carriers in seat numbers this year - "doesn't seem alarming", he said.
American, which boasts a fleet of more than 1,500 planes and reported an annual profit of US$4.2 billion after its merger with US Airways in 2013, added three routes to China over the past year - from Dallas to Hong Kong, Shanghai and Beijing.
With six daily flights to three Chinese cities, American's China capacity now surpasses that for Japan for the first time and is nearing rival United, according to the Centre for Aviation.
While Parker denied a shift of emphasis, saying "all markets are important", he added "more growth would be coming out of China" given its smaller base compared with Japan, where the airline has a longer history and a partnership with Japan Airlines.
Parker said American had chosen to deploy "absolutely our newest widebodies" for its Asian routes, including putting the B787 it had just received on the newly opened Beijing-Dallas route, its first international route with the Boeing Dreamliner.
American currently relies on oneworld alliance partner Cathay Pacific Airways for connection in the greater China region. None of China's airlines is a oneworld member.
"We need to continue to expand our relationships [with local airlines] so that we can participate in the inevitable growth of traffic between China and the US," Parker said.
