Foreign Airlines Seeking A Bigger Piece of American Pie

by Josh Lew
Last updated: 3:00 PM ET, Wed June 15, 2016

Overseas airlines arehoping to offer flights to relatively wealthy and mobile passengers based in the United States, in efforts to carve out a bigger piece of the American market. Even with growing markets in East Asia and the Middle East, America remains a desired destination for foreign airlines seeking to establish profitable routes.

KLM and British Airways base a large part of their overseas strategies on flights between America and Amsterdam and London, respectively. These long-established routes are now a model for other airlines that want to fly between the US and their hubs. Emirates is adding flight to Dubai and Qatar Air is building up routes between the US and Doha, for example. On the other side of the world, Hainan Airlines is building up its menu of China-to-America routes.

Budget airlines like Norwegian Air and WOW, meanwhile, are entering the transatlantic market as well, promising to shake up the current pricing model and challenge US-based airlines when it comes to overseas fares.

On one hand, this kind of expansion is good for fliers. The more airlines that fly to the US, the lower prices will be on competitive routes. At the same time, US airlines are finally starting to turn themselves around after years of lackluster profits. The added competition has already forced them to cancel some overseas flights and lodge complaints about what they see as an unfair advantage that overseas airlines get in the form of government support and favorable regulations at home.

Indeed, people who are tired of the extra fees and relatively poor service on U.S. carriers are starting to look into the possibility of flying on foreign airlines. International carriers are becoming aware of this, and using ad campaigns and enlisting celebrities to help promote their products. Jennifer Aniston has appeared in ads touting the luxuries available on Emirates, and Qatar recently invited Jennifer Lopez to perform at the launch celebration for its Atlanta-Doha route.

These foreign carriers are touting one of two things: luxury or low prices. Norwegian and WOW are hoping to compete with U.S. carriers when it comes to price, while Emirates, Qatar and Hainan want to win over Americans who want a better in-flight experience and are tired of what they are getting from U.S.-based airlines.

U.S. airlines are responding by adding new routes of their own. United has been very active adding transpacific routes to brand new destinations while Delta has moved into niche areas in Europe, adding flights to Scotland and other similar non-hub places.

United is in the process of revamping its business class on international aircraft. The new setup could help it compete with Asian carriers in terms of the overall quality of the in-flight experience. Delta, meanwhile, when announcing new routes to Edinburgh and Glasgow, pointed out that they were a full-service airline that can offer more than low-cost competitors like Norwegian can provide.

More and more foreign airlines will move into the U.S. market in the coming months and years. This will probably force prices down and, ideally, get U.S. airlines to upgrade their service so that they can compete.

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