Re: 747s and American Airlines

From:         kls@ohare.Chicago.COM (Karl Swartz)
Organization: Chicago Software Works
Date:         20 May 93 02:59:57 PDT
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>I have noticed that American Airlines does not have any 747s. This
>is surprising for one of the largest airlines in the world. Do they
>know something that the rest of the airlines do not know?

Difficult as it may be to believe now, the 747 had some fairly rocky
beginnings.  Besides early technical problems, it was simply too big,
especially for U.S. domestic-only carriers.  In the early 1970s the
market was not sufficient to profitably operate such a large aircraft
on most routes, though many carriers bought them to keep up with the
competition.  (The airline industry has often put image ahead of any
rationality, as last year's fare wars clearly exhibit.)

If anything, American was slower to recognize this than several other
airlines.  Eastern ordered four 747s very early on but quickly sold
the delivery positions to TWA, believing the L-1011 would be better
suited to Eastern's routes.  Eastern did end up operating three leased
Pan Am 747s in the 1970-1972 timeframe due to delivery delays with the
L-1011, but that was it.  Delta was only a little slower, accepting
five in 1970 and 1971 but selling them all off by 1977.

American had a sizeable fleet of 747s with a total of 16 -100 models
delivered in 1970 and 1971.  American quickly realized, as had Eastern
and Delta, that the 747 was simply too big and expensive for domestic
operations, though of course American focussed on the DC-10 instead of
the L-1011 as the backbone of their fleet.  Several were sold in 1974
after less than four years of service, including one sold to NASA as
the first Space Shuttle transporter; the last ones left American in
1984.  Today, in addition to the one NASA has, one of these aircraft
belongs to Virgin Atlantic, five fly for United, and the remaining
nine all haul cargo for UPS.

In 1986, American rejoined the ranks of 747 operators, though this
time with a solid reason -- two 747SP-31s were acquired from TWA to
operate the new Dallas-Tokyo non-stops.  With the arrival of the MD-11
these aircraft moved to the U.S.-London routes before being sold off
last year.

American had one other near-fling with the 747.  Several years ago
they and United were battling for the right to join Northwest on the
Chicago-Tokyo non-stop route.  American was willing to spend whatever
it took to get two early 747-400 delivery positions, ending up with a
deal to buy Canadian's first two for $330 million.  ("List" price was
roughly $125 million each.)  The deal was conditional on American
receiving the route authority, which ended up going to United.

United was unique amongst the U.S. carriers with no overseas service
in maintaining a 747 fleet.  Along with their competitors, United got
their first 747-100 in 1970, amassing a fleet of 18 by 1973.  These
were mostly operated from the U.S. mainland to Hawaii, including some
transcontinental continuations.  Perhaps United's dominance of this
market was sufficient to make the 747 profitable prior to 1983, when
United obtained a route that really made effective use of the 747:
Seattle/Portland-Tokyo.  Whatever the reason United kept their 747
fleet intact until 1985, when the oldest five were sold to Pan Am.
The remaining 13 still fly for United today.

United's 1986 acquisition of Pan Am's Pacific Division included 11
747SPs, which were supplemented in 1987 by the five ex-American
747-100s and two new 747-200s for New York-Tokyo service.  Another
seven 747-200s (ex-QANTAS) arrived in 1991 for the new U.S.-London
service, and 747-400s began arriving in 1989.  I believe United now
has the third largest 747 fleet, after Japan Air Lines and British
Airways.

American and Delta were expanding into international carriers at the
same time as United, of course.  The major difference was that their
primary emphasis was across the Atlantic rather than the Pacific at
first.  By this time the ETOPS 767 (and other twins) had made the 747
unnecessary for most trans-Atlantic service; heavier routes could be
handled by the DC-10-30 or L-1011-500.  Only recently has either of
these airlines gained much of a beachhead across the Pacific, and the
smaller MD-11 now offers them a more appealing aircraft than the 747
for this service considering their niche markets.  (American also got
a good deal and early delivery when one of the initial MD-11 buyers
backed out.)

No, American has no special knowledge with regard to the 747 that
other airlines are unaware of.  They simply don't have a route
structure that justifies operating the 747.

--
Karl Swartz	|INet	kls@ditka.chicago.com		
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