American Airlines will introduce a no-frills fare “sometime
in 2016” to compete with low-cost carriers, executives said during the
carrier’s third-quarter earnings call Friday.
American president Scott Kirby hinted that the fare will be
similar to the Basic
Economy fare Delta Air Lines introduced in 2014, which includes no advance
seat selection and no changes or refunds.
“We will do more to disaggregate the product and try to have
a product that has less frills because of the cheap price,” Kirby said. “This
will allow us to compete with the ultra-low-cost carriers … and, for customers
who want a better product and better seats, give them a choice of not paying
that fare and getting a better product.”
Passengers who fly American only once a year account for
about half the carrier’s revenue, and the fare will offer the carrier a way to compete
for those passengers, who view air travel largely as a commodity, he said.
Reservations
Integration Accomplished
Kirby also addressed the Oct. 17 integration of American's
reservations system, which officially retired US Airways’ name, website and app.
He said it had been “largely seamless.” In the first five days after completing
the integration, the carrier reported an 89.4 percent on-time performance rate
and a 99.95 percent completion factor, he said.
For the third quarter, American reported a net income of
$1.7 billion, up from 941 million in the third quarter of 2014. Mainline
passenger revenue declined 5.2 percent year over year to $7.7 billion, and
regional passenger revenue rose 2 percent to $1.7 billion.
American increased capacity 2.6 percent during the quarter,
and traffic increased 5.3 percent. Load factor increased 2.2 percentage points
to 86.1 percent. Passenger revenue per available seat mile declined 7.8
percent, and yield declined 10.2 percent.