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American Airlines, the first U.S. carrier to revamp its first- and business-class service overseas, will spend $400 million to keep pace with international competition, but some observers wonder if it's worth it.

"This is not driven by price increases but by the competitive nature of the market," said Michael Gunn, American's senior VP-marketing.

The new service will be available to Asia, Europe and Latin America; the airline isn't planning to implement the changes domestically for now.

Print ads from Temerlin-McClain, Dallas, break this week in business publications, and direct mail will promote the service. Internationally, a four- to six-page insert from DDB Needham Worldwide, Dallas, will run in magazines and newspapers.


While American declined to disclose its budget, it surely will be outspent by British Airways, which introduced a spot TV and print campaign for its $185 million Club World service in January.

That campaign from M&C Saatchi, New York, runs in five U.S. markets as part of its $150 million global branding effort.

"Service on American and other U.S. carriers has not matched those of Europe and Asia," said Rudy Chen, director at aviation consultancy Simat, Helleson & Eichner. "American isn't doing anything others haven't already done before."

Even in Latin America, where there are few competitors for enhanced service, Mr. Chen pointed out that American already has leadership to the region and has little to gain.

Spending heavily to keep international business travelers, American is installing Sony Video Walkman VCRs, controlled individually at each seat; increasing seat space; offering more flexible food service; and adding priority baggage treatment.

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