On American Airlines and foreign currencies

American Airlines must protect itself from foreign currency swings. Photo: American. 

American Airlines must protect itself from foreign currency swings. Photo: American. 

Ever wonder where American Airlines sells the bulk of its international tickets?

Perhaps not. But this is a daily blog and there's only so much airline information out there. So for today's content, I thought we would have a short lesson in airline economics. 

American actually sells a good number of tickets to passengers residing outside of the United States. According to American president Scott Kirby, here are how some key international markets break down, in rough numbers:

Europe

About a 50/50 split between Americans and Europeans.

China 

More Americans than Chinese. (But that could eventually change, given how much easier it is now for Chinese nationals to enter the United States.)

Brazil and Argentina 

More than 70% of American's revenue actually comes from South American passengers. 

Mexico and the Caribbean

Mostly U.S. passengers in both markets, but that's especially true with Caribbean. 

What's interesting is that in some countries American sells the tickets in dollars and in others it sells them in foreign currency. You can buy a ticket in Euros, for example, but you cannot buy one with the Brazilian real, according to Kirby. American, of course, wants to insulate itself from wild swings in the currency markets. (Airlines are particularly wary of pricing tickets in Venezuelan bolivars.)

In a story on American's fourth quarter earnings, Reuters noted foreign currency issues have been a slight drag on the airline's financial results:

The depreciation of foreign currencies has lowered revenue in countries where American sells tickets in the local tender, [Kirby] said, adding that where its prices are listed in U.S. dollars, such as in Brazil, the cost of travel to the United States becomes more prohibitive to foreigners.

"A 25 percent depreciation in the Brazilian currency is obviously going to have an elasticity effect," Kirby said. "The currency impact is probably something a little less than 1 percent on (unit revenue)."