Skip to content

American Airlines has flown more than its competitors during the pandemic, and it's paying off

July 24, 2020
9 min read
American Airlines has flown more than its competitors during the pandemic, and it's paying off
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

American Airlines has borne the brunt of many traveler and analyst complaints in recent years, falling behind competitors on both passenger experience and financial metrics used to measure success.

The Fort Worth, Texas-based carrier's passenger service lagged competitors both operationally and onboard. Issues ranged from catering mishaps to complaints over its decision to add seats to hundreds of Airbus A321 and Boeing 737-800 jets, reducing space for flyers in the name of efficiency.

J.P. Morgan analyst Jamie Baker called out this fall from grace in July 2018. During a quarterly earnings call, he suggested to American management that the airline's lagging performance behind Delta Air Lines and a then-newly aggressive United Airlines had created a new industry "construct" with American "inevitably" in last place.

Sign up for the free daily TPG newsletter for more airline news!

The coronavirus pandemic turned that playbook upside down in 2020. Faced with the worst crisis in airline history, American cut less of its schedule and did so at a slower pace than either Delta or United in March. But by April, it had decided to fly a more robust schedule for the upcoming summer, providing connectivity across the country that presumed "some recovery in demand," as American vice president of network planning Brian Znotins put it.

Soon, American's hubs in Charlotte (CLT) and Dallas/Fort Worth (DFW) were hopping once again. So much so that DFW was the busiest airport in the U.S. in May. There were even traveler complaints about crowded flights despite the airline never promising to block middle seats — even in the early days of the pandemic.

Then, in a clear signal that America was ready to move again, more and more people kept buying plane tickets and flights filled up. So many people were buying seats that the carrier lifted what caps it had bookings even as competitors extended seat blocking measures saying they were needed to assure customers.

Delta and United's deep schedule cuts, it should be noted, were what most expected from airlines during the crisis. It's basic economics: cut supply, or seats on flights, until it matches demand, in this case the number of people flying.

Related: American Airlines’ summer schedule rebounds in some hubs, but not all

Sign up for our daily newsletter

American's strategy "absolutely worked in June… our revenue per [available seat miles] in June was six times what it was in April," airline CEO Doug Parker said during a second quarter earnings call on July 23. "That would not have been the case if we flew only 20% of our capacity."

Looking at just the "Big 3" carriers — Delta and United are the others — passenger revenue at American was at least 61% higher than its two competitors in the second quarter, their respective financial statements show. At the same time, the airline flew at least 61% more capacity than either Delta and United.

"American did what made sense for it," Cowen analyst Helane Becker told TPG. "They were seeing strong demand in May and June so they added capacity to handle that demand... the strategy worked fine."

Related: American, Southwest now overtake Delta for the strictest mask policy in the US

Every airline did what they needed to do to get through a very tough quarter. While Delta and United flew less than American, Delta was able to command higher fares than its competitors and United drove strong cargo revenue growth across its broad global network, minimizing their respective losses.

But one thing is clear, American took an aggressive approach to the crisis and it produced results. It zigged when competitors zagged and remained the largest of the "Big 3" when the standard playbook called for deep cuts.

The strategy "taught us a lot about how our customer base is evolving and those are all things we're putting into practice," American chief revenue officer Vasu Raja said on July 23. "It was a one-time thing we did knowing that June and July -- if there were discretionary leisure travelers -- [was] the time to get them.”

Related: Airlines prepare for an 'autumn of discontent' after summer travel uptick

Looking ahead, U.S. airlines are preparing for a tough fall and winter. The number of people buying tickets for future trips fell at the end June as COVID-19 infections rose across parts of the South and West, and new travel restrictions began spreading across the country.

“We were on a really nice clip thru the July 4 weekend… but as the narrative changed and the headlines changed, I think every airline has seen softness in bookings for future travel," Alaska Airlines CEO Brad Tilden said on July 23. The Seattle-based carrier is now adjusting its map as it prepares to be at least 20% smaller next summer than in 2019.

Every carrier is scaling back schedules for the rest of the summer and into the fall. American plans to fly about 40% of what it flew a year ago during the three months ending in September, and Southwest anticipates being a quarter smaller at the end of the year than it was in 2019.

However in a report on July 23, Becker at Cowen said she still thinks there is "too much capacity in the market" and that more schedule cuts are likely.

Related: Southwest backtracks on a full schedule by year-end as recovery stalls

“Next year we will be a materially smaller carrier, and an extremely smaller carrier internationally," Raja said Thursday. And Parker added that what the airline did in May and June is "not going to make a big difference six months from now."

Most airlines expect a two- to three-year recovery from COVID-19, dependent on when a vaccine or effective treatment becomes widely available.

Travelers have some idea what a smaller American will look like. There will be less international flying until at least 2021, with 19 routes gone from its map. As part of these reductions, the carrier has retired or put in long-term storage four aircraft types used largely on international flights: the Airbus A330-200 and A330-300, and the Boeing 757 and 767.

In addition, American has partnered with Alaska and JetBlue Airways to boost its competitive position along the West Coast and in the Northeast. These tie-ups will allow American to focus on more long-haul international flying from coastal gateways, including Alaska's Seattle (SEA) hub — something Raja called "our Seattle hub" in reference to Alaska's operation — and JetBlue's New York John F. Kennedy (JFK) hub. It has also suggested that it could cede some shorter routes to its new partners.

Related: American drops 19 long-haul routes; cuts in LAX, adds in Seattle

An Alaska Airlines 737-800 is seen at Los Angeles International Airport in March 2019. (Photo by Alberto Riva/The Points Guy)
Alaska, American and JetBlue jets at Los Angeles International Airport in 2019. (Photo by Alberto Riva/The Points Guy)

In 2021, American plans to add new service from Seattle to both Bangalore (BLR) in India and Shanghai Pudong (PVG) in China; and from JFK to Athens (ATH), Rio de Janeiro (GIG) and Tel Aviv (TLV). As for shifting routes to its partners, Raja said that American plans "slot moves" with JetBlue at New York area airports, where it will stop flying regional jets with 50 seats.

American's new partnerships will give travelers and frequent flyers more alternatives once the crisis subsides. The Alaska partnership already includes reciprocal mileage earning on both airlines' flights, as well as the ability to earn AAdvantage elite credits on Alaska flights. Similar reciprocal benefits are expected under the JetBlue pact, though no firm details have been revealed.

However, American still faces challenges like its excessive $40 billion in debt and aircraft leases at the end of June. The amount is at least $10 billion more than at its competitors Delta and United, and could limit its ability to make future investments in aircraft and onboard product improvements.

"The current environment is more unpredictable and more volatile than anything we ever could have imagined," Parker and American president Robert Isom said in a joint letter to staff on July 23. "But we know adversity creates opportunity, and we remain confident we will emerge from this crisis in a strong competitive position."

Related: American, JetBlue plan ‘slot moves’ at New York JFK and LaGuardia

Featured image by (Photo by Zach Griff/The Points Guy)

Top offers from our partners

How we chose these cards

Our points-obsessed staff uses a plethora of credit cards on a daily basis. If anyone on our team wouldn’t recommend it to a friend or a family member, we wouldn’t recommend it on The Points Guy either. Our opinions are our own, and have not been reviewed, approved, or endorsed by our advertising partners.
See all best card offers

TPG featured card

Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 10X points
10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases

Intro offer

80,000 bonus points
Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

Annual Fee

$550

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases
  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

    80,000 bonus points
  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more