Profits may not meet expectations on international routes

[a320av8r]

The nation’s legacy carriers have been rushing to add international service to boost revenue and avoid pesky low-cost rivals at home, but now that overseas push may not deliver the financial punch that the airlines once hoped for. On trans-Atlantic routes, for example, so many airlines are planning new service that experts say profit margins will likely worsen. “It didn't take a mental giant to see that this was going to happen," Cheapseats.com travel analyst Terry Trippler tells the Fort Worth Star-Telegram (free registration). "When there are more flights and more seats, prices are going to go down and revenues follow."

Already, the trans-Atlantic rush has already led one airline to cancel one of its planned new routes. American says it will scrub its New York JFK-Newcastle, England, service –- partially as a result of increasing competition for trans-Atlantic passengers. Though AA spokesman Tim Smith still said his airline had high hopes for other overseas routes, he admitted that “there is certainly some question going forward about what will happen to [average fares] in the Atlantic." As for AA’s canceled attempt to start JFK-Newcastle service, some think the airline made a wise decision. "Some airlines would have stayed in anyway just to get the market share, and I think American was wise to pull it," Trippler says. "There's no point in throwing money away."

 

[hula-flyguy]

Doug was right about what?

 

[flyingcat]

Doug was right about not jumping onto the international bandwagon. First thing that must be done is to fix the domestic system to the point that it makes money. Something not even continental or delta has done. Next summer it will be a bloodbath with delta and conti duking it out. :mf_boff:
Delta will throw tons of money on the routes to chase marketshare which is what they do best . Continental's party is now over . After next summer 3rd quarter release both sides will wonder where they went wrong.
Delta will announce that 767 will fly between LGA and BOS to utilize the low cost per seats on the domestic network.
:wacko:
Continental will reduce capacity and preserve yield by installing business first in a Beechcraft 1900 and sending it across the pond. :blink: