American Airlines’s top boss says the company is right to focus on underserved U.S. small cities and key international markets through its airline alliance. The airline is also considering enhancements to its frequent flyer program.
American Airlines is adjusting its course during the pandemic recovery to boost its profitability – it is focusing on under-served routes in the U.S. and wants to make its frequent flyer program an even bigger revenue generator.
“Our plan for next year is utilization flying, which is really efficient,” said CEO Robert Isom on Wednesday. “It’s going to go to places that have actually been underserved.”
Isom also discussed the airline’s plans to surpass 2019 levels, its approach to route networks, and potential changes to its loyalty program, while speaking with Airline Weekly editor Edward Russell in Fort Worth at the Skift Aviation Forum.
Route Map Changes Eye Smaller Cities
Isom highlighted the Fort Worth, Texas-based carrier’s recent strategic focus on underserved U.S. small cities.
“It’s Roanoke and Lubbock,” Isom said. “You know, a lot of small cities, like Kalamazoo and Grand Rapids and other small cities throughout the United States.”
The carrier plans to serve key international markets by leaning on its Oneworld carriers, such as IHG, Iberia, and British Airways.
Changes to Loyalty Program?
The CEO also noted potential upcoming enhancements to the carrier’s frequent flyer program that would aim to “touch more points in the travel ecosystem” so that the program drives more revenue.
Isom noted that despite American Airlines having one of the largest loyalty programs and co-branded credit cards, the airline lags behind competitors in revenue generation because “it doesn’t really touch all the points of the eco, the travel ecosystem.”
He called it an “untapped opportunity at American” to elevate its broad customer base and “take it to another level.” He said industry suppliers were eager to partner.
The strategy for enhancing revenue through loyalty is integrated with the airline’s overall operations, according to Isom.
Isom acknowledged that performance at American isn’t at 2019 levels.
Isom stated that American Airlines took time to rebound from the pandemic and that volumes in some markets, like Philadelphia, hadn’t yet fully recovered.
“We had some difficulties in getting our fleet back up because of pilot constraints,” Isom said. “We had to train a lot of pilots coming out of the pandemic.”
Still, American Airlines had recently been better than its peers on many operational metrics, he said.
American Airlines lagged behind its peers Delta Air Lines and United Airlines in profitability in the third quarter, reporting a loss while they generated profits. Record revenues of $13.5 billion were also chiseled down due to one-time payments to pilots under the new contract they ratified in August.
Selective Approach to Asia
American Airlines has returned to Asian destinations, including Tokyo and Shanghai. However, it has been slower to increase capacity in Hong Kong than its main competitors. Isom again pegged it down to profitability.
“We’re going to fly where we can make money,” Isom said. “We know what our hubs are capable of doing. We’re not necessarily big in some of the coastal hubs where those have been points of distribution throughout the rest of the country for some of the longer haul markets. We’re cognizant of that.”
“But we have a network of One World partners that help fill out the rest of the system,” Isom said. “We have a fantastic relationship with Qatar with JAL. We have joint businesses with Qantas and B.A. It’s a really solid network. If there are holes in it, we’ll figure out how to plug them.”
An Eye on Experiences
In 2024, the demand for air travel would be hinged on travelers’ desire for experiences over things, Isom predicted.
“There’s a change of taste from buying goods to more services and experiences,” Isom said. “That is not just a trend. Whether it was the pandemic or how we’re evolving as a society, it’s here to stay.”
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