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Slot constraints cans proposed LA-Beijing route of American Airlines

Slot constraints cans proposed LA-Beijing route of American Airlines

February 3, 2017 By Sebastien

American Airlines had originally proposed a December 16, 2016 start date for its new daily Los Angeles – Beijing flight, but a late DOT decision meant it had until this quarter, 90 days since the DOT’s final order to commence services. It now reveals that on January 18, 2017, the CAAC rejected American’s request for slots at Beijing Capital International Airport, putting its plans into disarray.
American Airlines has written to the US Department of Transportation (DOT) objecting to the application of Air China for renewal of its exemption authority to operate scheduled service between Beijing and Houston, after its own plans to launch flights between Los Angeles and Beijing were left in disarray after regulator China’s regulator Civil Aviation Administration of China (CAAC) failed to provide slots to the carrier.
The US major secured rights to launch the Los Angeles – Beijing route and bring competition to Air China’s existing service in November 2016, ahead of rival Delta Air Lines, but continuing what it describes as pattern of conduct that “obstructs US carriers from accessing Chinese airports on the same terms as their Chinese counterparts”, it has failed to get the necessary access to China’s largest airport to launch the flight.
American Airlines had originally proposed a December 16, 2016 start date for the daily flight, but the late DOT decision meant it had until this quarter, 90 days since the DOT’s final order to commence services. It now reveals that on January 18, 2017, the CAAC rejected American’s request for slots at Beijing Capital International Airport.
“The CAAC did not, as it had done in the past, even offer American slots at commercially non-viable times, such as between midnight and sunrise when few passengers want to take-off or land,” it adds, noting that it “cannot serve the route” without the slots. “To date, the CAAC has refused to provide any slots to allow American to exercise its bilaterally conferred rights,” it says.
The airline argues that US carriers are often unable to obtain commercially viable slots at airports in mainland China that are necessary to operate USA – China services. Chinese carriers, by contrast, hold large slot portfolios at Chinese airports that they use for their own USA – China services, without comparable limitations at US airports. “This disparity provides Chinese carriers with a significant competitive advantage in serving USA – China routes,” it says.
Air China currently operates up to three flights per day between Beijing and Los Angeles, and all three daily flights depart and arrive in Beijing at times that American describes as “optimal for passengers” with flights arriving in Beijing at 05:20, 11:30 and 14:20 and departing the Chinese capital at 12:00, 15:00 and 21:00.
American describes CAAC’s actions denying access to Beijing Capital International Airport has acted to “preserve” Air China’s non-stop monopoly on this route. It claims it was previously denied preferred slots in 2010 for its Chicago – Beijing flight that prevented it from launching daily services until three months later than planned and also cites issues United Airlines has faced with the CAAC gaining slots for its San Francisco – Shanghai and Guam – Shanghai flights.
The US major says the obstacles created by the CAAC to US carriers obtaining slots in China “violates the intent of the Civil Air Transport Agreement” and until US carriers are able to obtain slots in China for USA – China services with the same ease as Chinese carriers, there will never be an “equality of opportunity” between the carriers of both countries.
Air China has significantly grown its activities in the Los Angeles – Beijing market this decade to meet growing demand and support the rise in China’s outbound travel market. It introduced its second rotation onto the route in September 2011 and added a third from May 2015. These are flown using Boeing 777-300 equipment and from November 2016 its new 787-9 Dreamliner has been deployed on the third rotation.
Schedule data from intelligence provider OAG shows that Air China has boosted its summer inventory on the route by 2.2 per cent for the forthcoming 2017 schedule versus last year, a more modest year-on-year rise after growth of 35.7 per cent in 2015 and 6.7 per cent in 2016. This year it is expected to offer just over 385,000 two-way seats, based on published schedules.
Air China’s operation is underpinned by the strong connecting traffic flows, which accounted for 82.1 per cent of last year’s traffic, but local traffic still comprised the largest single O&D market of over 90,000 annual passengers. The largest behind, beyond and bridge markets were Manila, Bangkok, Seoul Incheon and the domestic markets of Shanghai and Guangzhou in Asia and San Francisco, Newark, Washington, Houston and Chicago in the United States. The flows are heavily biased via feed into Beijing, which accounts into one in every two passengers.
Just under 500,000 passengers flew on Air China’s services between Beijing and Los Angeles last year, according to the AirVision Market Intelligence tool from Sabre Airline Solutions, approximately 675 PPDEW (passengers per day each way), suggesting average loads of just over 81.5 per cent.
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