MIAMI – Avelo (XP) started a new route from its base in Burbank (BUR) to Phoenix-Mesa (AZA) but American Airlines (AA) did not appreciate the move and responded strongly.
Immediately after the XP announcement made on April 8, AA announced an increase in flights on the BUR to PHX run in a move that is contrary to what is normally done when capacity exceeds traffic expectations.
To counter XP’s 1,295-seat offer, AA upped the stakes by changing aircraft from four CRJ-900, expected to fly from July to five Airbus A319 to start flying next fall.
A Tit for Tat Response
The response from AA is strong since the change in equipment and schedule means an increase from 1,764 to 4,480 seats per week, a staggering increase of 154%, doubling up on the XP offers.
Avelo, much smaller than AA and with significantly lower costs, might be able to swallow the increase in costs but it would be more difficult for a bigger airline, bearing higher costs and already burdened by a debt ranging to approximately US$50m.
As a matter of fact, AA is not new to this particular policy. According to Viewfromthewing, back in time, when Icelandair (FI) and now-defunct Wow Air (WW) started services from Keflavik (KEF) to Dallas-Fort Worth (DFW), AA reacted by starting its own service to the same destination although expected traffic could not support the presence of three airlines.
The action from AA finally drove FI and WW out from the market, compelling the two airlines to stop flying the destination, followed by AA, which, once the competitors were out, had no reasons to continue the run on which no money was ever made.
Featured image: American Airlines A319-100 N821AW – Photo : Tony Bordelais/Airways