American’s Europe Fares Can’t Keep Pace

American, Delta, United

One of the best things about the coming Cranky Network Awards on Feb 22 in Oakland is that we sift through a ton of data to help craft the full slate of nominees. And during that process, sometimes we stumble on something surprising that may have nothing to do with the awards themselves, but it sure makes for an interesting post. That’s what I’m writing about today with American’s European fare problem.

After looking over the ARC/BSP data (via Cirium), it seems clear that American is struggling to keep its fares up with Delta and United over the Atlantic. Before we talk about why things might be trending this way, let’s walk through what I found.

It doesn’t really do any good to just look at American, Delta, and United in a vacuum. After all, they are members of joint ventures of the Atlantic that include joint planning and pricing. So we have to at the joint ventures overall.

I went ahead and used current joint venture members in these numbers, so that means Delta excludes Alitalia (but includes Air France-KLM and Virgin Atlantic) and American includes Aer Lingus (along with British Airways, Iberia, and Finnair) even in historical numbers. United hasn’t changed partners, so Lufthansa Group and Air Canada remain constant in the data. Here’s how fares look:

Transatlantic Joint Venture Average Fare US-Europe By Month

Data via Cirium

United’s JV has long held a fare premium, but Delta and American were neck and neck pre-pandemic. Starting toward the end of COVID, Delta began to separate itself from American, and that has continued for a couple years now.

Normally, the assumption would be that fares lagged because a lot more capacity was added and American and partners had to lower fares to fill a lot more seats. But that’s not the case. Let’s look at capacity.

Transatlantic Joint Venture Seat Capacity US/Canada – Europe By Month

Data via Cirium

Here, I looked at US and Canada capacity to Europe. I included Canada, because plenty of US-based travelers fly on Air Canada’s ample European network. The United JV wouldn’t be complete without that. United is again light years ahead, but the positions of the carriers relative to each other has remained relatively stable. 

If capacity doesn’t show anything, would passenger numbers? I went back to ARC/BSP data and pulled US – Europe passengers. Here are the daily passengers each way (PDEW) by joint venture.

Transatlantic Joint Venture PDEW US – Europe By Month

Data via Cirium

Before examining this, I have to say that I find it fascinating to see such relative parity between the joint ventures. You have three joint ventures that are all carrying about the same number of passengers over the Atlantic (roughly). It’s remarkable how that has shaken out.

This doesn’t suggest any big surge by American thanks to lower fares. In fact, it shows the opposite.

Prior to the pandemic, Delta was well ahead of the rest in terms of passenger numbers during the summer, and if anything United was the biggest laggard. My how times have changed. United’s big push has seen it surge to often being bigger than Delta, or at least near parity. Meanwhile, American stands at the back of the pack.

Since the pandemic, when American retired all those old widebodies and 757s, it has just lagged, even with its partners being counted here. 

What is notable though is that you can see that during the winter, American actually surges into first place while the others fall back, especially United. I assume this is because of American’s absolutely massive presence at London/Heathrow with its joint venture partners. Heathrow is one of the biggest business markets around. Just look at how many premium seats BA puts on its airplanes. So Heathrow probably demands more winter flying than other markets would.

This has a real impact, because of just how much of the American JV’s Transatlantic capacity touches Heathrow.

% AA Transatlantic Joint Venture Seat Capacity in London/Heathrow vs All Europe

Data via Cirium

It is incredible how much it varies, but the number is always large. This month has AA and friends with 57.6 percent of US/Canada – Europe capacity in Heathrow while summer sees it in the 46-47 percent range. This is actually a reduction over it would have been before Aer Lingus entered the joint venture.

Compare this to the other airlines, and American really does stand alone.

% Transatlantic Joint Venture Seat Capacity in Largest European Hub

It’s no contest at all. The other airlines have much more diversity of flying. Delta and friends have far less seasonal variation in the largest hub in Paris, but Amsterdam actually does have good variation between the seasons. And as you can see, Frankfurt certainly varies. The airlines do tend to lean on their hubs more during weaker times.

American’s lagging performance has been an issue for some time now, but it’s a hard hole to dig out of. While this began before American’s move to gut its sales functions, the airline has spent most of 2023 angering travel agents and corporate partners alike. Those are the high dollar spenders that can really help a lot during those cold winter months. They can help in the summer too, but they’re just a lot easier to replace then. 

I’ll be particularly curious to see if the gap widens further this winter once the numbers roll in. In this case, just keeping pace would be a victory, and that’s… not ideal.

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46 comments on “American’s Europe Fares Can’t Keep Pace

  1. Is that one-way or return fares, Brett? Since I moved over to the US two years ago, the cheapest return fare I’ve scored (in 14 return trips) was $1200 (DTW-LHR) in regular economy – fares of $700 return would mean I could actually see my wife and kids more regularly.

      1. Thanks Brett, thought I’d been conned – I probably still have been (we all have!), but me none more than others!

    1. Then you are not a savvy fare shopper. There are tons of $500 round trips to LHR, and plenty of $1200 rtn in PE.

      Use Google flights to shop.

      Go via ARN or OSL for cheaper tickets

      1. Not on UA, Henry. I’m guilty of being wedded to Star Alliance, and Delta’s presence at DTW keeps fares higher than elsewhere. No desire to spend precious additional hours connecting via ARN or OSL, especially when I have so few days I can spend each year with my family in the UK. Thanks for your concern, though – I think I remain savvy enough for my current needs.

        1. When the airline dominates de airport, that “monopoly” ruins the fares for us price concious normal people… only JFK, MIA, and LAX seems to have some competition everyone else has to travl to panama city by car.

    2. Bobber, you can expect to pay a premium when only a single carrier (Delta) offers a non-stop route from your airport.

      There are plenty of one-stop flights available at the market rate of $500-$700.

      If a carrier from another alliance started serving DTW (say British Airways) the non-stop fares from your airport would drop.

      1. I’m sure, George – don’t think it’s gonna happen for a long time, unless Detroit gets its’ act together some more. I did game the system a few times last year – booking separate flights to UA hubs (either EWR or ORD) and then on to LHR – that saved over $800 a ticket. Also, flying out of GRR can be significantly cheaper than DTW, but it’s pain for me to get to.

  2. There’s also a product factor involved. I know the stereotype of those who fly in the back of the Airbus (or Boeing) buy tickets only based on price, the products being essentially the same across airlines. Maybe true on domestic US flights, but I was shocked at the difference in my two most recent trips across the pond. A rattling, tired, noisy 777 with surly (at best) cabin crew on AA, a much quieter, fresher A330 with a pleasant, friendly cabin crew on KLM.

    I get the feeling AA has decided sales reps and travel agents are unnecessary burdens, and is working on getting rid of customers next to make their lives easier.

  3. Cue the incoming rant about how Delta being number two is either actually a good thing….or a misinterpretation of the data.

      1. Now, now – be kind! It’s a new year and we have to do better! Everyone has a point of view – and some present it better than others!
        So – bring it on! (Once EVERYONE is respectful!)

  4. Is it possible that at least part of this is Aer Lingus bringing down the fare average for their JV? At least from what I’ve seen they’re consistently cheaper than AA/BA.

    1. CraigTPA – While Aer Lingus may bring down the overall number, I’ve included Aer Lingus in all the historical data as well for AA, so it’s the relative change over time that’s the issue, not comparing to the concrete fare levels.

      1. CF – does the EI/UA association, which predates the IAG acquisition and the EI/AA alignment influence those numbers?

        1. Anonymous – No. Aer Lingus was never in a joint venture with United. As mentioned, I have included Aer Lingus in all historical AA joint venture numbers even though it wasn’t in there the whole time.

  5. You have a typo. “ This doesn’t suggest any big surge by American thanks to lower fars.?In fact, it shows the opposite.”. I assume you meant fares.

  6. Your analysis leaves me a bit unsatisfied :
    – is the average fare difference for one class of service or for all combined ?
    – if combined, is there a difference in product mix (first / business / premium eco / economy ) ?
    – if routes for AA are shorter (and London is probably closer to most of the US than Germany), isn’t the price difference just normal ?

    1. I was thinking about some of these factors also. Good news is the analysis could probably be adjusted based on class of service mix and total distance.

    2. Chris – The point is not about actual fare levels. It’s about relative fare levels over time. If anything, I’d think American now has a more premium offering since it retired the more coach-heavy A330s/767s pre-pandemic, so fares should be higher. And whether AA’s routes or shorter or not doesn’t matter. The issue is that AA and Delta used to be at parity and now they’re not.

  7. I wonder if AA has less stage length (or length of haul)? AA’s hubs are in the east, and UA’s hubs are more in the west than AA’s hubs. Also, the distance to LHR is less than the distance to FRA. I doubt that accounts for the entire transatlantic fare difference, but probably accounts for at least some of it.

    1. Bobby – These are not based on routes. These are full origin to destination. So it doesn’t matter where the hubs are.

      1. The hub location doesn’t matter if the origin and destination set is the same between the two carriers. But it’s likely that AA feeds in passengers from spokes close to their hubs, and UA feeds in passengers for its flights from spokes close to their own hubs. Therefore, the length of haul would be different, leading to yield differences.

        1. Bobby – That doesn’t really matter unless there’s been some drastic change in the length of haul over time, which is unlikely. This is about comparing between airlines over time, not the fixed dollar amount. The spread widens.

          1. There could have been a change in the length of haul over time. For example, certain airlines have cut European flights from LAX and added them to the east coast.

            1. The data doesn’t show that to be the case. Even if it did, it’s all about where people originate and go to, not the segment length. I can’t get perfect on this without a deep dive, but the average distance on the Delta JV’s US – Europe flights in 2019 was 4205. In 2023 it was 4233 (+0.7%).
              United JV’s went from 4353 to 4342 (-0.3%). American JV went from 4167 to 4176 (+0.2%).

  8. I’m curious what the “largest hub” stats would look like if LHR was compared to AMS+CDG and FRA+MUC. That’s a warped comparison too of course, but BA having a single connecting hub for all intents and purposes, compared to 2 for each of LH and AF/KL, means…well, there’s quite a difference in how each alliance handles TATL (e.g. there are destinations like AUS that have AMS but not CDG, and there isn’t an equivalent to AC for AA or DL JVs).

    1. Ian – Oooh, I have that info. Let’s start with Delta and friends. For Jul 2023 as a proxy for summer, Paris is 31.4% and Amsterdam is 22.6% while London is 19.6%. In Jan 2024, it’s 32.4%, 28.6%, and 24.8% respectively.
      For United and friends, believe it or not, London is bigger than Munich.
      For Jul 2023, Frankfurt is 22.1%, London is 13.8%, and Munich is 11.4%.
      And for Jan 2024, Frankfurst is 28.5%, London 17.6%, and Munich 13.8%.

      1. This is awesome calculating and shows how important LHR is to UA. I’m surprised at the difference over Munich, which everyone says is such a nice place to transit/connect. LHR is such a powerhouse. Thank you for pulling that data!

    2. Considering IAG also has MAD for IB you’d likely need to factor that into your calculations as well. AF/KL have a single owner but are two different airlines and the mess of airlines that make up Lufthansa Group means connections are flowing over ZRH/VIE (albeit on a smaller scale).

      If you want to compare just based on the airline, you’d need to look at AMS for KL, CDG for AF, LHR for BA, and FRA/MUC for LH.

  9. I’ve always assumed the issue with AA was with their premium cabin pricing model.

    Doesn’t AA tend to price their premium cabins higher than competitors, resulting in less sold seats and more “free” upgrades to FF? Versus a DL or UA who price those premium cabins lower than AA, but selling more of those premium seats resulting in an overall fare premium to AA.

  10. Definitely a lot of factoring at play, it seems like the reliance on LHR has lead to less experimentation with long thin routes exacerbated by the 757 retirement?

  11. CF:

    Thanks for the analysis.

    Now comes my question(s):
    Why can’t American charge on par (or do they even need to)?

    Isn’t that the real issue at hand?

    1. David C – It’s probably a lot of things. American has been aggressive at adding back capacity, so that could be part of it. Further, the London market has lagged, so fares have probably been more challenged there. This isn’t a simple answer, I’m sure.

      1. I think there’s a component here where London is a hugely important business market with business class customers and AA’s planes have low business class density, so they are forced to fill a ton of coach seats in order to offer business class in the market.

        UA has their “High J” 763 which allows them to get the higher paying business demand without having to fill ~7+ coach seats for every 1 business class. Two opposite ends of the spectrum, though unclear how well UA’s strategy works.

  12. So lemme get this straight:

    AA and its JV partner dominate NYLON, the most lucrative transatlantic route (and possibly the most lucrative route in the world), a route that has business and premium demand out the yazoo (technical term) as well as year round demand compared to the seasonality of most other transatlantic routes… and they are still getting pantsed on fares to Europe!

    Only American! The one thing they do appear to be leading (and by quite a margin these days) is the race to the bottom.

    1. AA/IAG may accept a lower fare to move more passangers and generate greater overall profits. It maybe more lucrative to deploy aircraft on the LHR route, rather than domestically with greater profit potential, even though it reduces the price charged to each individual seat. It is similar to car companies determining the cost and production levels to maximize profits. The flipside is AA/BA may have to fly the routes regardless to keep its slots.

  13. I’m curious about average fare to partner hubs in Europe. Is the average fare to London and Madrid (for AA/BA) lower than CDG/AMS for DL/KL/AF, or FRA/MUC/ZRH/BRU for UA/LH/LX/SN. London and Madrid could have more competition than other European routes which drives down fares versus other European hubs (think Norse Atlantic.) What is the average seats per flight per alliance across the Atlantic? UA and DL fly smaller 757s and DL flies a ton of smaller 767-300s (while UA does have some high J 763s), which could drive up the RASM (revenue per available seat mile)/(or average fare), given their smaller planes versus AA’s larger planes which would probably dilute its fares. If AA deploys more larger 777-300ERs and 787-9s into European markets versus 763 and 757 competitors, this could could go a long way to explaining the difference in “average” fares between alliances.

    1. For the 12 months ending Oct 2023, average fares:
      American/BA US to London – $623
      American/Iberia US to Madrid – $551
      Delta/Air France US to Paris – $716
      Delta/KLM US to Amsterdam – $646
      United/Lufthansa US to Frankfurt – $697
      United/Lufthansa US to Munich – $726
      United/SWISS US to Zurich – $904
      United/Brussels US to Brussels – $618

      FY 2023 average seats US/Canada to Europe
      AA JV – 279
      DL JV – 278
      UA JV – 276

  14. One other thought on AA’s average fare over time is that their average fare across the Atlantic has fallen over time because they retired smaller 757-200 and A330 aircraft, leaving larger aircraft with lower average fares per passenger flying to this day. This seems to be reflected in your data. What is the average seats per departure per alliance over the years? This could be informative. Average fare per passenger can be influenced by many more factors than you point out, but there could be many more ways to drill into this data to provide a better measure of pricing strength across the Atlantic. Just some thoughts from a former Big 3 network planner.

    1. Rhys – Average seats per US/Canada – Europe departure in 2019 for comparison
      AA JV – 271
      DL JV – 284
      UA JV – 280

  15. One other thought, you should compare RASM versus CASM between alliances to arrive at profitability across the Atlantic if possible. Average fare is not an indicator of profitability. Profitability is more important than average fare.

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