American Airlines Promises to Price Match Low-Cost Competitors
Joe Cortez September 21, 2017
Executives claim airline creates price parity with low-cost competitors.
If American Airlines’ airfares appear to have dropped, it may be because they price-match against low-cost carriers in select markets. In comments to Bloomberg, airline chief executive Doug Parker said his airline shops the competition to ensure their prices are competitive.
“We price our product to match the competition,” Parker said at a recent conference, according to Bloomberg. “We always have, we always will.”
While American joined fellow legacy carriers Delta Air Lines and United Airlines in launching “Basic Economy” fares over the last three years as an answer to the low-cost airlines, Parker claims price matching helps to create parity in the market. However, price matching may not extend to all cities across the United States, as they are often limited to hub airports and focus cities.
Although the “price wars” between the legacy and low-cost carriers may be friendly for flyers, investors are not as thrilled about the race to the bottom. American’s stock price has dropped nearly $10 from its summertime high in July 2017. Delta has seen similar drops, while United Continental Holdings – the parent company of United Airlines – has dropped by nearly $30 during the same amount of time.
Despite the lack of faith from Wall Street, Parker claims that the price wars could soon come to an end. While pricing equality is not yet achieved, the executive projects that they will come soon based on flyers’ demands and travel habits.
“There is a market for ultra-low-cost carriers and their product,” Parker told Bloomberg. “But we have an enormous advantage in and out of our hubs.”
[Photo: Shutterstock]
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As elitist and snobby as it sounds, my hope is that this doesn't end up having AA flights fill up with low-cost profile of passengers. I am fine flying in coach with a mixture of families, business travelers, etc, and I fly casual and comfortable, but when I pass a gate for Spirit, Allegient, and often (though not as bad) Southwest, I am horrified at the nearly complete proportion of families mostly wearing barely acceptable in public clothing (sweatpants/cut off shirts) plus the homeless looking college students, etc. I have never flown, but I imagine getting all that onto a plane must have the sound, smell, and visuals of a county carnival.
Well, they are already matching in service, might as well do it in price.
And the race to the bottom continues... Discount Dougie strikes again. Ridiculous.