American Airlines Puts Focus on U.S. Growth, Using Partners for Global Expansion
Post-pandemic American Airlines will get travelers everywhere they need to go around the world, as it did before the crisis. But the carrier will do so more and more with the aid of its global partners — and loyalty program — as it emphasizes North American growth for the foreseeable future.
“Increasingly, where we choose to go and fly our flights, will realistically be probably a lot more heavily in the domestic system,” American Chief Commercial Officer Vasu Raja said at the Skift Global Forum on Tuesday. “[It] probably will be for a while due to nothing other than the fact that right now the North American demand base has recovered at a far greater rate than the rest of the world.”
That shift is part of a larger trend where travelers are increasingly blurring of the lines between leisure and business trips, Raja said. Revenues from these so-called “blended trips” — also known as the great merging — have doubled since before the pandemic to nearly half of American’s take, and are powering the “real revenue growth” at the carrier.
During the first nine months of the year, American’s U.S. domestic capacity had recovered to 94 percent of 2019 levels, according to Diio by Cirium schedules. International capacity, excluding Canada and Mexico, had recovered to just 81 percent. There were similar splits at both Delta Air Lines and United Airlines, though neither flew as close to 2019 levels as American did.
The difference is the outlook. While Delta and United also see U.S. domestic strength, they are also eager to resume — and add new — international points. Both carriers have expanded to Africa while the latter is also adding new destinations in places U.S. carriers have historically had little or no presence, like Amman, Jordan, and Tenerife in the Canary Islands.
American has doubled down on rebuilding and expanding its domestic footprint, particularly by adding depth in lucrative — in other words, higher fare — smaller markets. Executives argue that the airline can more profitably offer better, multi-direction connectivity to travelers than either Delta or United. This is one of the reasons that American signed Air Wisconsin, and its fleet of Bombardier CRJ200 regional jets, as its newest regional partner beginning in March 2023. But this does not mean American is out of the international game. The airline continues to offer extensive schedules to places like London, São Paulo, and Tokyo; it is just that its future growth looks more like Bozeman, Mont., than the Canary Islands.
Case in point: American’s seats to Bozeman — a market Raja cited repeatedly as popular for blended trips — were up 40 percent year-over-three-years in the first nine months of 2022, Diio shows. Seats to Kalispell, Mont., were up 102 percent, Austin 97 percent, and Sarasota-Bradenton, Fla., 56 percent. These are all U.S. destinations that benefitted from the pandemic surge in travel to leisure spots where people could get outdoors and, in some cases, live and work remotely.
“If you’re a member of the AAdvantage [loyalty] program, you’re a member of the world’s largest and best travel rewards program,” Raja said. He added that members can get anywhere they need to go around the globe across American’s network of partners, including British Airways, Japan Airlines, and Qatar Airways.
But focusing future growth on domestic, or at least North America, markets is still a big change for American. Prior to the pandemic, executives billed the carrier as the “largest global network airline in the world.” A fair label for the carrier that, while maybe not as large as its competitors in some longhaul markets, certainly measured up in its offerings. Fast forward to this week and Raja made the same statement but with a key difference, saying the carrier offered the “largest global network in the world.” The omission of that one word — “airline” — suggests a potential change in identity for the airline to something more akin to a travel company that includes an airline.
“American Airlines does everything,” he said referring to the company in the broadest sense. “But American Airlines also runs an airline, that happens to be called American Airlines too.”Subscribe Now to Airline Weekly