Posted on: Friday, February 6, 2004
American's offer to counter low-fare deals gets big response
By Trebor Banstetter
Knight Ridder News Service
FORT WORTH, Texas — A free ticket promotion aimed at rival JetBlue Airways has proven wildly popular with travelers in Boston and New York, American Airlines officials said yesterday, adding they continue to intensify efforts to ward off low-fare competitors.
To date, more than 150,000 passengers have signed up for a program that awards a free round-trip ticket anywhere in the world to travelers who take two nonstop flights — at any price — from Boston or New York to California or Florida.
Nearly 13,000 of those passengers were new to American's frequent-flier program, airline officials said.
At a speech Thursday before Wall Street analysts, Gerard Arpey, American's chief executive, renewed his vow to fight encroachment from low-fare carriers. He said the airline will use "every tool available to us" to defend its turf against discounters like Southwest Airlines and JetBlue that are increasingly targeting American's markets.
Speaking at a Goldman, Sachs & Co. conference in New York, Arpey pointed out that American's financial condition had improved substantially since the Sept. 11, 2001, terror attacks and flights are now generating cash, on an operating basis, instead of losing money.
That gives the carrier leverage to compete, Arpey said.
American has stepped up an effort to leverage the company's core strengths — including its global route network, partnerships with international carriers and frequent-flier program — in the contest against carriers that don't have the same reach.
The free ticket promotion was launched on the day JetBlue began service in Boston, and was also aimed at that airline's hub at John F. Kennedy International Airport in New York.
American won't disclose, however, the final price tag of the promotion. It could be substantial, given the number of free tickets the carrier will give away.
If people continue signing up at the present rate, it means American could ultimately give away more than 350,000 free tickets by the promotion's April 15 deadline, many of them to far-flung destinations.
Arpey wouldn't say whether American would extend the free-ticket program beyond April 15, when it is scheduled to end.
American has also increased domestic service at JetBlue's JFK hub, including two new daily nonstop flights to Phoenix that were announced Thursday, with introductory fares of $180 for a round-trip ticket.
Several discount carriers, including Southwest, JetBlue and AirTran Airways have announced aggressive growth plans for the next several years.
That growth means the discounters will clash more and more with major carriers like American.
