US: Cheap airfares to Europe put price squeeze on American and Delta

Already under pressure from discounters at home, major US airlines are facing a tighter squeeze abroad as low-cost rivals ramp up service across the Atlantic. At American Airlines Group, a measure of trans-Atlantic fares just plunged 9.1%, the most since right after the recession ended in 2009, as European budget carriers such as Norwegian Air Shuttle ASA added more flights. Delta also recorded a sharp drop in the same yardstick. United Continental eked out a tiny gain. While that’s great news for bargain-hunting travellers, it’s a blow for traditional airlines. The increased seat supply is dragging down fares in a lucrative overseas market just as a rebound in domestic pricing is starting to look shaky. American and United rattled investors last month when they forecast tepid revenue growth and signaled that an already tenuous grip on ticket prices was slipping. European discounters can hurt revenue at big US airlines “by taking incremental bookings and forcing them to lower their own fares,” said Michael Bentley of consulting firm Revenue Analytics. “I don’t see any reason why they can’t cause trouble with the major carriers.” American cited the low-cost competitors as it reported a second-quarter drop in the average fare per mile for Atlantic flights, while Delta blamed discounted leisure fares for its 7.1% decline. Trans-Atlantic yields have slumped at the two biggest US carriers since Q2 2015. United’s yield rose just 0.7%.<br/>