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AMR Eyes a Tough New York Market

Entrenched competition means expansion won't be easy.

The world's biggest airline wants to be a bigger player in the world's busiest aviation market.

That sounds logical. But an effort by

American Airlines

to increase its presence in New York presents a challenge, because it's one of four airlines battling tooth and nail for market share. And recently, American's growth in the region has generally trailed its competitors.

Currently, with about 16 million passengers a year in the three-airport New York market, American, a unit of



, ranks second behind


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, which carries roughly 19 million area passengers.

American has a small hub at Kennedy International, with 89 daily departures to 36 destinations, including London Heathrow, Tokyo Narita and 23 other international locations. At LaGuardia, it has 129 departures to 30 destinations, and at Newark, it has 33 departures to nine points.

The airline has focused on business travel in New York, taking advantage of its position as the region's only U.S. carrier with flights to Heathrow, three-class transcontinental service, the Narita flights and its breadth as the world's largest passenger-jet company.

"Our strategy over the years has been to offer high frequencies to key business markets at the preferred domestic airport

La Guardia, international service from the preferred international airport

Kennedy, and complementary services at all three airports," said Chuck Imhof, vice president of passenger sales for New York.

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He said American has more preferred travel relationships with Fortune 100 companies than any other New York carrier, and has its largest concentration of frequent fliers in the metropolitan area. In fact, New York is American's biggest revenue market, in terms of point-of-origin revenue.

To increase its visibility, American plans to boost its regional advertising budget by as much as $7 million. The approximately 50% increase would make it one of the two biggest airline advertisers.

One goal is to raise American's New York identity. The carrier has 8,300 employees in the region, it operated the first commercial flight out of New York in 1936, and until 1979, had its headquarters there. American has even put its name on a Broadway theater through a marketing agreement, but it does lag in sports marketing, sponsoring only one local team, hockey's New York Islanders.

On Thursday, American announced a variety of new flights. From LaGuardia, it will add regional jet service to Cincinnati in April and to Louisville, Ky., in September. The company will replace regional jets with mainline planes on flights to Atlanta and Raleigh-Durham, N.C.

From Kennedy, it will boost service to Caracas, Venezuela, and Port-au-Prince, Haiti, in June. Additionally, it will add a sixth daily San Francisco flight in August and Las Vegas service in September.

In May, a federal immigration station will open at American's new Kennedy terminal, where the carrier has invested $1.1 billion over five years. Because American was the first carrier to contract with U.S. Helicopter, helicopters from midtown land at its terminal.

So the assets are significant, but the other major New York carriers have their own strengths.

With its Newark lock, Continental boasts the only major hub in the New York area. Continental has a 70% market share at Newark, where it operates 442 daily departures to 158 destinations, including 77 international locales. From the New York area, it leads all carriers in available capacity and destinations.


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has been in the news recently for its missteps during a recent ice storm, but in its brief seven-year history it has become a major player in the world's biggest market. At Kennedy, it has 173 daily departures to 46 markets, making it the airport's principal domestic carrier with a 27% market share.

JetBlue controls pricing in its markets, because what happens at Kennedy spills over to LaGuardia, and what happens at LaGuardia spills over to Newark.



has the most service from the two airports that are actually in New York. At LaGuardia, it operates 122 daily departures to 33 destinations, and at Kennedy, it has a hub with 179 daily flights to 75 destinations. Its 34 international destinations include Istanbul, Moscow and Mumbai.

During its bankruptcy, Delta has rapidly built its presence at Kennedy, adding 18 international destinations and 20 domestic destinations since 2005 -- and perhaps adding to the incentive for American to build its New York operation, as well.