Aviation is one of the most exciting industries right now, with demand for air transport expected to increase by 4.3% per annum over the next twenty years. And which organization is at the forefront of this growth? The airline with the biggest fleet in the world: American Airlines.
I’ve flown hundreds of thousands of miles in my lifetime, and if you ask me, American is one of the best airlines. But that got me thinking about the competitive landscape of the aviation industry – is American Airlines the undisputed market leader, or are rivals hot on its heels? And how did the global pandemic affect American’s overall position?
According to McKinsey, airlines suffered $168 billion in economic losses in 2020. Passenger traffic was 96% lower in April that year compared to 2019.
Costly flight disruptions threaten the industry’s recovery, to make things even worse, and American Airlines isn’t immune. Robert Isom, the company’s CEO, announced flight capacity would be down by 9.5% for 2022.
The question is whether these factors will ultimately change American’s status as one of the leading airlines worldwide.
This American Airlines competitors analysis answers all the above questions and more.
The Bottom Line Up Front
American Airlines is the world’s biggest airline based on fleet size and passengers, but in 2021, Delta took the top spot regarding annual revenue. This is only a small problem for American; I think it has more than enough expertise and manpower to wrestle back the undisputed title of the industry leader.
However, if you ask me, the issue that’s a real cause for concern for American is its reputation. When frequent flyers and industry experts compare Delta and American based on customer experience, there is a clear winner – and it isn’t American.
List of American Airlines Main Competitors
- Delta Air Lines
- United Airlines
- Southwest Airlines
- JetBlue
American Airlines Business Strategy
American Airlines is a major airline operating just under 7,000 flights per day to 350 destinations in more than 50 countries. Founded in 1926 as American Airways, Inc. and headquartered in Fort Worth, Texas, it is the world’s largest airline based on scheduled passengers carried and fleet size.
Subsidiary and independent carriers operate American’s regional services using the brand name American Eagle. There are ten hubs that American Airlines and American Eagle operate out of, including Charlotte Douglas International Airport, LAX, JFK, Chicago O’Hara, and LaGuardia.
American is part of the Oneworld Alliance, the world’s third largest alliance of its kind. It was created in 1999 to be the first choice for the world’s frequent international travellers.
The airline’s business strategy involves selling tickets to passengers for short-haul and long-haul flights while maintaining an extensive fleet of planes. It uses a transactional revenue model to achieve this, but American also deploys cross-selling tactics to boost revenue per seat.
Different ticket tiers are available depending on the luxury you want as a passenger, and these also vary depending on the type of plane in use. For features like fully reclining seats, extra legroom, and lounge access, passengers have to pay considerably more.
One strategy American Airlines uses to expand its international network is to embark on joint ventures with other airlines. The first venture (excluding American’s early partnership with British Airways, which operated through the Oneworld Alliance) occurred in 2002 with Finnair.
Other joint ventures have been created with:
- Iberia
- Japan Airlines
- Qantas
- British Airways
The strategy mentioned above has been largely successful, though some have raised concerns that the ‘budget’ status of many partner airlines could ultimately weaken the reputation of American.
Environmental concerns are one of the biggest threats to the ongoing success of the aviation industry. Some activists question whether allowing people to travel by air is ethical when it causes so much damage.
In response, American Airlines has developed a sustainability strategy called “Destination Net Zero”, which aims to reach net zero emissions by 2050. This strategy involves:
- Investing over $24 billion in 600 new aircraft that are more fuel-efficient
- Partnering with Breakthrough Energy Catalyst and investing $100 million to accelerate clean energy technologies
- Supporting the Clean Skies for Tomorrow Coalition, created by the World Economic Forum (WEF)
- Committing to using sustainable aviation fuel
Like most airlines, American suffered during the global pandemic due to decreased air travel and ongoing restrictions on movement between countries. However, results from the first quarter of 2022 showed an impressive recovery, with revenue of $8.9 billion, an 84% increase compared to the same period in 2019.
In 2021, American Airlines’ total annual revenue was $29.882 billion, a 72.36% increase year-on-year.
American Airlines Competitors Analysis
American Airlines competes against rivals like Delta Airlines and Southwest Airlines in the aviation industry.
1. Delta Air Lines
Delta Air Lines, Inc., usually referred to simply as Delta, is a major US airline and one of the oldest in the world. It was founded in 1925, so it has been operating for almost a century, with headquarters in Atlanta, Georgia.
Delta has several subsidiaries and affiliates, such as Delta Connection. Together, they operate over 5,400 flights a day to 325 destinations in 52 countries. Delta is also a founding member of the SkyTeam airline alliance, with an annual passenger count of over 630 million.
In 2020, Delta was the largest airline in the world based on revenue and brand value, but it came second to American in the passengers carried category and third in the fleet size category.
Delta has nine hubs compared to American’s ten, including Hartsfield-Jackson in Atlanta, LAX, JFK, Salt Lake City, and Minneapolis-Saint Paul.
As is standard in the aviation industry, Delta predominantly uses a transactional revenue model, selling flight tickets to various destinations. Different tickets can also be purchased for passengers who want to travel business class (known as Delta One), premium economy (known as Premium Select), or first class.
Another critical aspect of Delta’s business strategy comes from codeshare agreements. A codeshare is a standard business practice whereby multiple airlines publish and market the same flight under their flight number and designator. Delta has codeshare agreements with Air France, China Airlines, Hawaiian Airlines, Sky Express, and many more.
Delta’s frequent flyer program loyalty scheme helps boost customer retention. Passengers can collect Sky Miles, which can be used toward future flights or other purchases. For example, you can use your miles to pay for a Delta Sky Club membership, giving you access to the airline’s private lounges.
In 2021, Delta’s annual revenue was $29.899 billion, an increase of 74.9% compared to 2020.
2. United Airlines
United Airlines, Inc. is a US airline operating an extensive domestic and international route network. It was founded in 1926, and its headquarters are in Willis Tower, Illinois. Thanks to its $8.5 billion merger with Continental Airlines in 2010, it is the third-largest airline in the world, measured by fleet size and routes.
United is a founding member of Star Alliance, which is the world’s largest global airline alliance by passenger count, with 762.27 million. The other founding members are Scandinavian Airlines, Thai Airways International, Air Canada, and Lufthansa.
There are eight United hubs, including Chicago-O’Hara, Denver, Newark, and San Francisco, to name a few. Independent carriers run regional flights under the name United Express.
The airline uses a transactional revenue model, making money primarily by selling tickets for flights. Certain premium tickets are also available to upgrade the flight experience, such as:
- United Polaris Business – an international business class seat
- United Premium Plus – a premium economy seat
- Transcontinental – a premium service offered on certain transcontinental flights
- United First – offered on all domestically figured aircraft
- Economy Plus – seats with extra leg room, available on all aircraft
Like any successful airline, United has various reward services for regular customers. The airline’s frequent flyer scheme is called MileagePlus, and its airport lounges belong to the United Club.
United Airlines, Inc. is publicly traded on the New York Stock Exchange through United Airlines Holdings, Inc., which is a Delaware corporation. It has an $11.26 billion market cap.
Almost all global airlines have had to develop an environmental strategy to maintain customer and government support, and United is no different. Unsurprisingly, 96% of its greenhouse gas emissions come from jet fuel, so its strategy focuses on operational efficiency initiatives and investing in sustainable, low-carbon alternatives.
Competition in the aviation industry is fierce, so United’s business strategy emphasizes differentiation, offering customers more benefits, comfort, and destinations than rival airlines.
In 2021, United declared a five-year plan to grow its capacity by more than 40% compared to 2019 levels by 2026. In line with this, the airline also announced a large aircraft order of 70 A321 Neos from Airbus, 50 more 737 Max 8s and 150 more 737 Max 10s from Boeing.
United Airlines’ annual revenue in 2021 was $24.634 billion, a 60.43% increase year-on-year.
3. Southwest Airlines
Southwest Airlines Co., often referred to as Southwest, is a major US airline and the world’s largest low-cost carrier. It was founded in 1967, and its headquarters are in Dallas, Texas. During peak travel season, Southwest operates around 4,000 departures a day to over 100 locations in 42 states, Mexico, Puerto Rico, the Caribbean, and Central America.
The other airlines I’ve discussed share a similar business model. Still, Southwest is unique because it uses a rolling hub and point-to-point network, which means flight arrivals and departures happen throughout the day. Flights travel directly to their destinations without going through a central hub, no matter how far away it is.
Furthermore, while many other airlines use cross-selling tactics to increase the ticket price (for example, the ticket itself is cheap, but you have to pay extra for luggage), Southwest does not use this approach in its business strategy. Checked baggage is always free, and because it is a low-cost airline, there are no first-class tickets.
Southwest offers “Business Select” tickets, with early check-in, priority boarding, a complimentary premium drink, and reward points for flying. However, this differs from the kind of business class most airlines offer.
In the world of low-cost airlines, Southwest’s business strategy – which combines a high level of employee and aircraft productivity with low unit costs due to reduced turnaround time – has been revolutionary, inspiring several other carriers like EasyJet and RyanAir.
Regarding marketing, Southwest opts for a humorous approach, in line with its friendly, low-cost status. Previous slogans include “Just plane smart” and “love is still our field.”
In 2022, Southwest announced a $2 billion plan to transform the customer experience by:
- Introducing enhanced WiFi connectivity
- Installing power ports at every seat
- Launching a new fare category with extra value and flexibility
- Enabling self-service capabilities
Southwest’s revenue for 2021 was $15.79 billion, a 74.51% increase compared to 2020. Check out this Southwest Airlines SWOT analysis for a complete analysis of the airline’s strengths, weaknesses, opportunities, and threats.
See also:Â Southwest Business History
4. JetBlue
JetBlue Airways is a major US low-cost airline operating over 1,000 flights daily to domestic and international destinations in the United States, Mexico, Canada, Central America, the Caribbean, Europe, and South America. It was founded in 1998 with headquarters in Long Island City, Queens, New York.
Based on passengers carried, JetBlue is the seventh largest airline in North America; it ranked 394th on the Fortune 500 list of the largest US corporations by total revenue in 2020.
JetBlue isn’t a member of any of the major alliances, unlike the other airlines I’ve discussed so far. However, it has 21 codeshare agreements, some of which are OneWorld, Star Alliance, and SkyTeam members.
JetBlue has a low-cost carrier (LCC) business strategy with the following features:
- A fleet of new and efficient aircraft, most of the same model
- Point-to-point routes
- Fairly low distribution costs
- High aircraft utilization
Unusually for an LCC, JetBlue also offers more than one class of cabin and complimentary in-flight refreshments and entertainment.
In addition to its main airline business, JetBlue has two principal subsidiaries, JetBlue Technology Ventures (JVT) and JetBlue Travel Products. JVT was founded in 2016 to invest in and partner with early-stage startups in relevant industries. Its mission is to improve the experience of travellers everywhere.
JetBlue Travel Products was created in 2018. It consists of the JetBlue Vacations brand and other products, including cruises, travel insurance, car rentals, and more.
The airline has also made various environmental investments. For example, in 2021, it became the first airline to invest in practical hydrogen-powered flight via a partnership with Universal Hydrogen.
JetBlue’s revenue in 2021 was $5.61 billion.
American Airlines SWOT Analysis
This SWOT analysis explores American Airlines’ strengths, weaknesses, opportunities, and threats.
Strengths
- World’s largest airline based on revenue per passenger
- Excellent network of subsidiary and independent carriers for regional services
- Strong brand image and recognition
- The airline possesses many hubs
- Founding member of OneWorld Alliance, the third largest airline alliance
- Broad reach with many destinations and a large fleet
- Effective customer loyalty program
- Popular on-board entertainment
- Majority market share in the US
- A relatively young fleet of aircraft
Weaknesses
- Assets are extremely costly
- Higher prices could result in customers choosing low-cost competitors
- Vulnerable to supply issues and backlogs from companies making planes
- The aviation industry is highly susceptible to damaging travel restrictions during pandemics
- Increases in the price of jet fuel could have a massive impact on the airline’s financial stability
- Safety concerns
Opportunities
- Investment in green fuels and new technologies
- Improve passenger safety for post-pandemic travel and prepare for future virus outbreaks
- More international destinations on popular routes
- New technology could be used to reduce operational costs
Threats
- Increased competition from low-cost airlines
- Future pandemics
- Environmental concerns could change consumer behavior, making people fly less
- Government regulations could restrict the airline’s operational abilities/capacity
- Environmental laws
FAQs – American Airlines Competitors Analysis
Question: Which is better, Delta or American?
Answer: The answer is dependent on what you’re looking for. American Airlines offers more flight routes, but Delta has a better customer experience reputation. However, American offers a first-class experience on some international flights; when you fly with Delta, the highest product is business class.
Question: Who is American Airlines’ biggest competitor?
Answer: Based on annual revenue, Delta is American’s biggest competitor. In 2021, Delta reported $29.899 billion, whereas American reported $29.882 billion.
Question: What is American Airlines known for?
Answer: American Airlines is famous for being the largest airline in the world, operating 6,700 flights on average daily. It also arguably has the best transcontinental product of the “big three” US airlines, including three classes of service.
Conclusion
American Airlines is an aviation behemoth, and despite industry-wide issues caused by the global pandemic, this airline shows no signs of slowing down yet. Its recovery has been highly positive, with more than a 70% increase in revenue in 2021.
However, while Delta might lag behind American regarding the number of passengers it carries, annual revenue is another story. Delta is leading the way, and its national and international reputation is also solid.
As a result, American will have to work hard to overtake its rival. The difference in revenue is only slight; the difference in public opinion is vast.
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There’s nothing that David’s spent more time doing than learning about the digital industry. While most of his experience comes with working as an SEO specialist, he wants to spend his time inspiring others to get involved with affiliate marketing. He knows how a company can blossom overnight with the power of affiliate marketing and he wants to help you turn into a success story. So no matter where you’re at with your business journey, all of David’s content on Business Chronicler will help you to grow into becoming the business person you’ve always dreamt of becoming.
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