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Carving up the sky:American Airlines

  • Author:The economist
  • Source:The economist
  • Release on :2018-01-26
Carving up the sky:American Airlines

Investors in American carriers have prospered in recent years as low fuel prices and consolidation at home raised profits to record levels. 

The world’s biggest airline is likely to produce another pleasing set of results when it reports quarterly earnings today. Joint ventures with foreign airlines such as British Airways and Japan Airlines are one way American is keeping income aloft. It, like its big domestic rivals, Delta and United, is also helped by protective aviation regulations, which shield it from foreign competition and rule out cross-border mergers. 

However, regulators allow American and foreign airlines in a JV to collude on timetabling and fares as if they were a single carrier. While an open market would be preferable, airline trade groups claim JVs lower costs, which leads to reduced fares. But not always: one recent academic study found that BA raised its transatlantic fares in economy after signing a JV with American in 2010.

The potential earning may also stimulate American Airlines to build the airport, with lightweight partition panels will be the best product to build the airport quickly.