American Airlines bowing out
p. 75 · Read in the full issue
American Airlines is about to hand over to PAA its unprofitable services from Hawaii to Australia and New Zealand, via American Samoa and Fiji. The airline applied to the US Civil Aeronautics Board before Christmas for authority to suspend the services.
American is a virtual newcomer to the South Pacific. It started the ser vice in August, 1970, after a five-year battle over Pacific rights with 20 other carriers. It was a political decision which gave it South Pacific rights. In fact, the whole business seemed to be typical American wheeler-dealing.
In April, 1968, the US CAB recom mended that the services to the South Pacific be given to Eastern Airlines.
In December, 1968, in one of his last acts as US President, President John son over-ruled the CAB and selected Continental Airlines. Then in July, 1969, President Nixon who was President-elect at the time of Presi dent Johnson’s decision, rejected Con tinental and gave the licence to American.
It seemed to be a foolish decision —it was obvious at the time that the South Pacific was over-serviced. Aus tralia took the attitude that the Qantas services, plus nine then operated by PAA, plus the new services, would cause serious losses to Qantas.
In the exchange of services, PAA
will take over from American in the South Pacific, and American will take over unprofitable PAA services in the Caribbean. It is unlikely that PAA will operate all the nine ser vices American ran from Hawaii south. American had earlier discon tinued a service to Melbourne because of the fuel crisis.
At the time the exchange was an nounced, an American Airlines spokes man in New York, said the airline lost about SUS2S million in the first 11 months of 1973. The long-haul South Pacific flights were unprofit able.
PAA is reported to have made money on the Pacific routes, but lost consistently on Caribbean routes.
American might have had the right idea—one of those marketing con cepts which did not turn out right in practice. It intended to tap a new mar ket for the South Pacific in the east ern states of the US, but the market obviously did not materialise.
American Airlines will suspend the South Pacific services 30 days after it receives permission from the US CAB—but it may be some months before the CAB gives its decision.
PAA said that employees of both companies “at foreign points over seas” involved in the exchange would be offered jobs of comparable salary and benefits bv the airline taking over the route.