American Airlines is one of the world's
largest carriers. The Dallas-based airline has a robust domestic schedule
across the United States and a global network of destinations and airline
partnerships. Despite boasting an impressive scope and massive fleet, the
airline has struggled in the post-pandemic airline industry.
In recent years, rivals Delta Air Lines and
United Airlines have been outpacing the carrier and posting stronger profits.
While its competitors have continued to invest in their passenger experience to
position themselves as a premium brand, American has fallen behind, and its
financial performance confirms that it has picked a losing strategy.
Armed with strong hubs, a large fleet, and
supporting infrastructure, American is in the position to challenge Delta and
United. However, to do so, the carrier has to take several necessary steps to
win over premium travelers and the favor of the flying public- and it should
start with its aircraft cabins.
Revamp Aircraft Cabins
One of the most basic elements of being a
premium airline is to offer an elevated passenger experience onboard. Delta and
United both understand this and have invested significant money in upgrading
their aircraft cabins. For example, in addition to unveiling brand-new
first-class seats on their A321neos, United has committed to retrofitting its
entire narrowbody fleet with its "Next" cabin.
Meanwhile, the majority of American's
narrowbody fleet lacks seat back entertainment screens. Despite what its CEO
claims, this feature is something passengers prefer over streaming
entertainment to personal devices. Seat-back entertainment screens are becoming
increasingly popular at United, while for Delta, these have become standard for
almost its entire fleet. That said, even in its most basic cabin, American
lacks features its rivals have invested heavily in.
The importance of a competitive onboard
product increases for long-haul flights. United has retrofitted all its
long-haul aircraft with its modern Polaris business product, so all long-haul
business class travelers can enjoy the same elevated and consistent product on
any long-distance United flight. Meanwhile, Delta has continued to roll out its
Delta One suites, which are increasingly popular among the airline's long-haul
aircraft.
However, American's new Flagship Business
cabin has yet to enter commercial service. This is partially due to delivery
delays from Boeing, as the first aircraft with the latest cabin will be new
Boeing 787-9 Dreamliners. However, despite Boeing's delays, American has failed
to update its premium offering like its rivals.
Thus, offering a better onboard product is a
natural first step to becoming more competitive. American has positioned itself
as a premium brand but fails to provide an experience worth paying extra for
compared to Delta and United. By elevating the standard for its onboard
product, American can command higher fares and win over premium travelers and
their wallets. Thus, the carrier should retrofit its existing fleet to offer
amenities comparable to United and Delta's.
Deploy New Cabins On Competitive Routes
If American is eager to start progressing in
its competition against US (and foreign) rivals, the carrier should be very
intentional about where it deploys its new Flagship Business product. The
airline should introduce its latest product, which it faces the most
competition in, while leaving its near-monopolies with its older product for
now.
London Heathrow Airport is an excellent
example of where American should first launch its new Flagship Business class.
London is a notoriously competitive market, with United and Delta offering many
competing services and itineraries. Offering a better product on services to
this business center could encourage customers to return to American instead of
flying a different airline.
Other European markets could also be an
essential place to start. Unlike London, business centers like Paris and
Frankfurt are not dominated by one of Americans partners. Thus, American could
aim to connect these cities with its network through its newest product,
potentially gaining customer loyalty in a highly competitive market where
American does not already have an advantage.
Meanwhile, in the United States, American
should send its new Dreamliners and other aircraft retrofitted with new cabins
to contested hubs. American competes heavily against United in Chicago and
United and Delta in Los Angeles. The airline is also fighting a losing battle
in New York, so rolling out the product in the Big Apple could help it compete
against Delta. Dominating hubs is a crucial element of airline profitability,
so finding its most contested hubs for its new product should help American boost
its bottom line.
American Needs To Lean Into Premium Products
The challenges American faces are complex, and
not easily solved by any one action. However, the carrier is organized to be a
premium, full-service carrier. Though expensive, investing in its onboard
experience is the simplest way to command higher fares and re-establish itself
as a premium airline amidst intense competition.
American will have to look elsewhere too,
including key elements of its business like its loyalty program and network to
ensure they align with what business and premium travelers want. However,
improving its onboard experience lays a foundation for rebuilding the rest of
its policies and practices that define the airline.
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