American Airlines is adding flights to and from New York, raising the stakes in a showdown pitting the nation's largest carrier against Continental Airlines and storm-battered JetBlue Airways.
American said Thursday that it will begin nonstop service between New York and Las Vegas -- a JetBlue stronghold -- in September, and add a few flights to other cities, including San Francisco.
The appeal of New York is obvious. It is the nation's largest city, a major tourist destination and a hub for international flights.
Perhaps even more important to American, New York is the nation's financial center and home to a large chunk of the Fortune 500. That creates a large number of first- and business-class travelers.
"They buy the premium seats and they fly the premium business routes -- L.A., Heathrow (in London), Asia. It's of particular interest to us because it's a lucrative corporate market," said David Cush, senior vice president for global sales at American's parent, AMR Corp .
American is putting $1.1 billion into a new terminal at New York's John F. Kennedy International Airport. It is also spending about $20 million to add amenities such as lie-flat seats and flat-screen televisions in first class on its Boeing 767 fleet, which will be used heavily in New York service, Cush said.
With that type of investment, the additional flights that Fort Worth-based American was announcing Thursday appear very modest.
It will add a sixth daily flight from JFK to San Francisco in August, a fourth flight from LaGuardia Airport to Atlanta in April, new American Eagle service to Cincinnati (four daily flights) and Louisville, Ky. (two flights), and a few other additions to places such as Haiti and Venezuela.
Cush conceded that the new service "is probably not huge in the number of departures or seats, but it's critical in the number of additional markets we're covering. Cincinnati and Louisville are growing as corporate markets." He predicted the Las Vegas flights will be loaded with Europeans using New York as a stepping stone to the gambling mecca.
American executives believe they can increase their share of the New York market. But Ray Neidl, an airline analyst at Calyon Securities in New York, said American faces tough obstacles, including Continental's hub just across the Hudson River in Newark, N.J., and JetBlue's dominance at JFK, where it accounts for more than one-fourth of all departures.
American expects to operate the additional New York flights with planes shifted from hubs in Dallas-Fort Worth and Chicago. Neidl said that was a wise approach, because it means American won't be increasing its overall supply of seats for sale -- just moving some of them to a richer market.
Continental offers about 50% more daily seats in the New York area than American, and it has added flights from Newark to additional cities in Europe in the past year. Dave Messing, a spokesman for Houston-based Continental, predicted that American's additional flights at LaGuardia and JFK would mostly compete with JetBlue and Delta Air Lines Inc.
Cush said it was coincidence that American is announcing its New York plans a week after JetBlue stranded hundreds of passengers on local runways for up to 10 hours during a storm.
Jenny Dervin, a spokeswoman for New York-based JetBlue, was confident a new terminal will help prevent a repeat, and that customers won't stay mad forever.
She added that by the time American begins service with a single daily nonstop to Las Vegas, JetBlue will be operating six daily nonstops on the route. JetBlue also announced last month it would begin service to San Francisco in May.
Of the new competition in New York, Dervin said, "That's life in the big city."