— ‘We Serve Knoxville Not Remote Islands’

More and more, during the pandemic and now as it recedes, American Airlines has come to see itself as primarily a domestic airline.

While the buildup of the Charlotte and Dallas hubs began before March 2020, it has been heightened since then. On Tuesday, Vasu Raja, American chief commercial officer, made that focus even more clear.

“We have competitors who can fly to islands off the coast of Africa and, presumably, they do great at it,” he continued, apparently referring to United’s service to Tenerife in the Canary Islands this summer. “It’s not a thing that American Airlines historically made money doing. But we have the biggest and best domestic short-haul network, and we’ll always preserve that.

“We make a lot of unique markets for people in Knoxville and Tyler, Texas,” Raja said during an investor conference.

American’s interest in domestic markets, served primarily by narrowbody jets and regional jets, has become a factor in contract negotiations with its 14,600 pilots, who are represented by the Allied Pilots Association.

In a recent message to members, APA said that in an August 9^th meeting with its board of directors, “American Airlines CEO Robert Isom has professed a desire to reach a tentative agreement with APA within the next 30 days in order to ensure a measure of certainty regarding widebody flying, indicating that he will ‘pull back’ if the two parties can’t agree.”

A pullback in widebody flying would likely lead to less international flying, said APA spokesman Dennis Tajer. “The question is what will American be coming out of the pandemic, a large domestic carrier with a little bit of international spice or will they be a truly global network carrier not a poseur with partnerships,” Tajer said.

In emphasizing American’s commitment to domestic markets, Raja referred three times to Knoxville’s McGhee Tyson Airport (TYS), the third largest airport in Tennessee. It has non-stop service to six American hubs. Knoxville, Raja said, is an example of a city where “We create more unique markets than other people do.

“Even the most price sensitive customer in a unique (origin and destination market) can produce 90% to 100% (of the yield) of the typical business customer,” Raja said. Later, he noted that American “can’t go west enough” from DFW, which makes upgauging aircraft the carrier’s best shot to add seats to Los Angeles. “Being able to give Knoxville the best connections to Los Angeles” is a priority for the carrier, he said. “Upgauging the fleet you have is really valuable.”

Knoxville Airport spokeswoman Becky Huckaby said American officials have spoken to the airport about using larger aircraft. “We were in larger planes prior to Covid,” she said. Currently, American offers five to six daily departures to Charlotte on regional jets and three to Dallas on Airbus A319s. American and Allegiant, which has a base in Knoxville, compete each month to lead the airport in market share, each with about one third of the passengers. Delta, which has the third largest market share, operates seven daily departures to Atlanta and also serves three other hubs.

Besides emphasizing Knoxville, Raja offered several observations regarding American’s diminishing interest in international flying when it isn’t profitable

Even before the pandemic, he said, American ceased flying Chicago to China. The carrier saw the pandemic as “a chance to really go and remake the airline” so that it can one day lead the industry in profitability. “We leaned way hard into the connecting power (of the hubs)” and the highest “number of unique O&Ds of anybody in the western hemisphere,” he said.

In New York, before implementation of the Northeast Alliance codeshare relationship with JetBlue, “for 20 years of trying, we were only getting worse,” Raja said. “The only reason you flew us was to Heathrow, Los Angeles or Dallas.” Now, he said, the carrier realizes that internationally, it should focus on “the things that American is really good at doing, which is South America and Heathrow.”