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American, United Battle for Los Angeles

Stocks in this article: AMR UAL

LOS ANGELES ( TheStreet) -- Every trend line in U.S. aviation seems to lead to Los Angeles International Airport, now a key battleground as the country's Big Three airlines grapple for transpacific superiority.

The trends include growth in transpacific travel (particularly to China), growth in the importance of international alliances, growth in commitment to hub flying and increasingly confrontational relations between these carriers.


At the start of the year, the same battle was being fought in Tokyo, as Delta (DAL) sought to undo American's (AMR) decade-old partnership with Japan Air Lines.

That didn't work , meaning that American, Delta and United (UAL) all continue to operate hubs at Tokyo's Narita Airport, the most important airport in Asia because of its broad range of connections.

The focus shifted to Los Angeles this month. On October 1, American filed for a Los Angeles-Shanghai route. On October 7, regulators approved. On October 6, American partner Iberia said it would start Madrid-Los Angeles service next April.

On October 12, United applied for Los Angeles-Shanghai. On October 13, regulators approved. . And on October 20, American announced plans to boost Los Angeles service by 28% in April, with service to 10 new destinations.

Also on October 6, regulators tentatively granted transpacific antitrust immunity to American and JAL as well as to United, Continental and ANA.

American has said LAX expansion is part of a strategy to focus, with its Oneworld partners, on the global hubs most preferred by high-premium business travelers. "Los Angeles is the third most important travel market in the world," said American President Tom Horton, in an October 6 interview with TheStreet. "So we're looking hard at LAX -- there may be more to come."

American needs to expand in Los Angeles, said CRT Capital Group analyst Mike Derchin. "I don't think they have a choice," he said. "They have to grow Asia-Pacific organically. They need a jumping off point. They are stronger in Los Angeles than they are in San Francisco, and they are not big enough in Seattle." Moreover, United has a hub in San Francisco.

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