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American Buckles Down Amid Growing South American Competition

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Competition is heating up between North and South America, and American Airlines is buckled down and ready to win. The airline’s Chief Revenue Officer, Vasu Raja, expressed confidence at the virtual Aviation Americas conference, stating that the airline was in a strong position, even as its rivals grow even closer.

American Airlines, Boeing 777, Grounded
American Airlines is confident about its position in South America and does not plan to cede any ground. Photo: Getty Images

Mr. Raja’s comments

Vasu Raja stated the following at the Aviation America’s conference in relation to South America:

“We will always be the biggest and the best in as we call it, MCLA (Mexico, Caribbean, Latin America). That is the DNA of this company. And, through several years, whether it was the merger, the integration, things like that, we’ve had a lot of priorities, but that in any form of the future is one of our most central priorities, because it is so much of what we do, there’s so much of what we do uniquely well. And so as far as we’re concerned, it’s kind of like people entering into our hubs. We’ll welcome the competition whenever, wherever, but we are more than adequately prepared to deal with it.”

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As the crisis wears on, American has brought back a lot of capacity in South America. Photo: Getty Images

South America has historically been a crucial market for American Airlines. In large part, this was due to the long-haul strength of American’s Miami hub with flights to cities like São Paulo, Santiago, Buenos Aires, Manaus, and others.

Why American Airlines has a competitive advantage

It might be peculiar to think a US-based airline would have a competitive advantage in South America. However, Mr. Raja provided some additional color on this:

‘What we have found is that for so much of South America, American Airlines is a South American brand. We’re a Brazilian brand, Argentinian brand, what have you and indeed, the strongest part of our long haul network right now, at a time when, admittedly, all of it is relatively weak, is is South America.”

Mr. Raja also cited American’s partnership with GOL as a means for the airline to continue to succeed in South America. GOL itself does not have a significant presence in the United States. It is still one of Brazil’s largest airlines, and American can offer its customers onward connections from Rio de Janeiro and Sao Paulo on GOL.

American Airlines reduces international capacity with 10% due to coronavirus
Miami is American’s primary gateway to South America. Photo: Getty Images

American has held its own thus far

After losing LATAM to Delta Air Lines, the airline continued to reaffirm confidence in South America. Just last year, in an interview with Mr. Raja, he reaffirmed the same.

Back then, he stated that American was providing feed to LATAM’s network out of Miami. While there was some origin and destination demand, a good amount of connections were coming from American Airlines. So, in response, the airline added more flights to South America.

American Airlines further reduces schedule due to coronavirus
While American has cut back some routes to South America, it still has a robust schedule planned to the continent. Photo: Getty Images

Then, of course, the crisis hit. Since then, the carrier has had to cut back on most of its long-haul flying. With border closures still in effect, though some markets like Colombia and Brazil reopening, the airline is restoring its long-haul network. By the end of the year, the airline anticipates having almost all of its South American long-haul network back online.

In the Caribbean and Central America, American has already resumed a fair bit of flying, especially out of core hubs like Dallas, Charlotte, and Miami. These markets are some of the most hotly-desired international destinations for Americans these days.

However, the crisis is far from over. And, with Aeromexico and LATAM growing closer with a new codeshare agreement and Delta and LATAM moving forward with a joint venture, there are still plenty of challenges American will face. But, for now, the airline is confident it will make it through it and remain strong in MCLA.

What do you make of Mr. Raja’s assessment? Let us know in the comments!

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