JonNYC shares some interesting statistics about American Airlines.
- They generate $190 million in revenue overbooking flights
- The average overbooking level is 2.6%
American also believes that:
- 55% of their revenue comes from infrequent passengers who flew once a year and represent 62% of customers
- 45% of their revenue comes from frequent passengers who flew more than once a year and represent 38% of customers
also a riff on this stat that I’ve seen out there before:
Infrequent passengers -> 62% = 55% of revenue
Frequent passengers -> 38% = 45% of revenue(yes, this one surprises me a lot, personally.)
75% of total from US travel, 25% global
(if I’m reading that one right.)— JonNYC (@xJonNYC) March 10, 2020
Four years ago American shared on an earnings call that 50% of its revenue was coming from once a year flyers who made up 87% of its customers, with more frequent customers representing just 13% of flyers and the other half of revenue.
- Fewer infrequent customers now make up a greater percentage of revenue than in 2015
- Five years ago only 13% of customers flew more than once a year but now 38% of customers are ‘frequent’ but contributing a smaller percentage of revenue
It seems like frequent flyers make up a smaller percentage of revenue than they did four years ago, although more passengers are flying more than once a year.
- More than once a year flyers went from 13% of customers to 38% of customers, but fell from driving 50% of revenue down to 45%
- Only once a year flyers went from 87% of customers down to 62% of customers, but increased their revenue share to 55%
It certainly wouldn’t surprise me that a combination of award chart devaluation (higher prices for the best awards), product devaluations (less space per passenger on domestic narrowbody aircraft) and making status harder to earn (minimum spend requirement and taking away the ability to earn as much towards that via credit card) would combine to push frequent customer share of wallet towards competitors.
And perhaps while people are taking more trips overall that could mean moving from one trip to two and flying American Airlines, people taking the most trips are cutting back spend with the airline.
I reached out to American Airlines for comment but they did not respond.
Can’t wait to see the revenue declines from their Citi AAdvantage card partnership . . . those would be down as well except for the fact that you and TPG constantly shill their AAdvantage cards when they kick up the affiliate commissions.
Why am I not surprised….since not making it to ExecPlat (after close to 9 years non-stop) this year I dropped to Plat – and I have never seen so agressive marketing trying to get me to buy up to Plat Pro (for a rather ridiculous price).
Good luck to AA! Shooting itself after the takeover by US Airways….
Cheers!
Must be even worse for United, which has gutted MP faster than other two and hates its customers.
It has been many times before since Parker came to AA he has brought American from first to worst!
Apparently it takes once a year travellers exactly 364 days to forget how AA screwed them over on their last trip. Elites and frequent flyers are disgusted with AA and voting with their feet and their dollars. As long as AA is deaf to their customers those numbers are going to continue to be bleak for the airline and shareholders.
For many years, I maintained Exec Plat status by flying AA business class internationally several times per year and AA economy domestically many times per year, upgrading to domestic first at time of ticketing via miles and copay. With that upgrade availability mostly gone, the Aadvantage program in tatters, and AA itself deteriorating by the day, I’m mostly through with AA. And I never fly it internationally any more. The reason to fly AA was the FF program, not the airline itself.
In order to answer the question posed by this post’s title, wouldn’t one need to compare changes in numbers flying all U.S. (or at least the “big 3”) airlines? Also, do we know whether “infrequent” (2020 verbiage) and “once a year” (2016) are synonymous? If not, that could skew the comparison.
THE WORST AIRLINE IN THE US. ABSOLUTELY NO CUSTOMER SERVICE. AIRCRAFT ARE CONFIGURED FOR THE MAXIMUM DISCOMFORT.
I was a top tier 3 years ago, plat pro in 2019 but I’m moving to Delta, AA has awful on time performance, terrible customer service and seems to. It care about my loyalty. Hoping to make out better with Delta, made silver last year and moving most of my business there
My heart bleeds for AA….NOT! Reap what you sow.
@Jim F- yes, infrequent is defined as once a year in the documents underlying these numbers.
Not bad for an airline “that will never lose money again!” Ha!
I think this was posted a few days ago then retracted.
It astonishes me how little AA seems to value me as a customer — 100K BIS miles a year, 60-80 segments, and $25-$35K spend (never sniffed Concierge Key as far as I know). I’d dump them in a heartbeat if they didn’t have a monopoly on a route I have to fly all the time. I did dump my Citi card once they cut out travel insurance and other benefits. Why stack up more miles on an airline I don’t like, and where redemption has worse odds than the lottery? I look forward to when I retire in 4-5 years and can be a free agent.
Several years as Exec Plat and just hit 2M miles with AA, so am now lifetime Plat. I’ve done 38k miles this year and $5k in spend, but just cancelled one Transcon flight for next week and an Asia flight for early April.
I’ve been really happy with the flight attendant service this year and got a nice phone call from a live agent thanking me for my loyalty after hitting 2M miles.
But, for me the combination of Oasis planes, decline of upgrade availability (even as EP) and ridiculous mileage award prices (180k miles R/T LAX to Honolulu in COACH during Thanksgiving week on a plane with zero seats sold/occupied) has me considering a move to Delta.
Due to the current virus situation, I likely won’t travel for a while and won’t have a shot to hit EP this year. When I do travel (likely later in the year), I will status match to Delta and see if they are any better. If all other factors are the same, but they offer a more comfortable experience (and hopefully more upgrades out of Orange County – time will tell) then I’ll stick with Delta and only switch back to American if they offer a better experience than Delta, which is highly unlikely given the current management. But, they will have to EARN my business back. Something I would never have contemplated in the past.
Sad….
Doug Parker, CEO for American Airlines took away so much from us passengers its pathetic. Doug Parke should resign as CEO. This airline is terrible in every sense of the word. It use to be a great airline
Based on business decisions I’d guess that AA doesn’t employ statisticians. Certainly someone there can interpret the numbers like the rest of us can. Why does AA insist on driving product and service into the ground like this?
AA member since 1997 and Exec Plat for 10 years. Fed up after the SWUpgrades were reduced and also made harder to use. Switched to United as 1K in 2018 but can’t say MileagePlus is much better. Seems everyone is just doing the race to the bottom…
I have been Plat or Exec Plat for 21 years, the latter for all but one of the last 8 years. My spending and flying dropped a bit last year, resulting in 8,400 EQDs and 86,000 EQMs. I figured they’d just drop me one notch to Plat Pro. Nope, they dropped me down to Plat, even though with over 2.8 million program miles, I’ve been Plat for Life for 6+ years.
The offers to buy up status keep coming, while EQDs for change fees and cancelled trips are not offered because “that would be like buying status” one AAgent told me! I told them keeping me at Platinum incentivizes me to check out other airlines — I’ve flown Delta, United and Alaskan in the last 3 months, and yes, the grass is often greener on the other side of the tarmac.
Meanwhile, my 85-year-old mother, who has flown a grand total of one roundtrip on AA in the last 3 years, was gifted with comp Gold status at the beginning of the year, out of the blue. Does it seem like AA knows they can’t retain customers, so they’re scraping the bottom of the barrel (sorry mom), to find new ones?
I think y’all are reading way to much into this. 2016 was before basic economy was introduced which attracted alot of infrequent fliers that would normally fly Spirit and Frontier and the such. The stats could just mean the market has grown but most of the growth has been from infrequent fliers not that VFF’s have been fleeing AA.
If you bother to look at the numbers, you’ll see that frequent fliers spend FAR less money than infrequent flyers (as a total revenue percentage), but likely cost FAR more. Perhaps this is why Spirit and Southwest make so much profit and why all airlines are caring less and less about their elites. There’s just no profit in it anymore.
Doug Parker has made it pretty clear by his comments and his actions that he is targeting Spirit more than Delta. While AA likes to sell the illusion that they are a competitive full-service carrier at discount prices, in reality they are rapidly becoming a discount carrier with some legacy full-service aircraft and procedures. The entire AA system is built around selling miles; the airline would have gone bankrupt years ago without the massive infusions of cash from the sale of miles (primarily to Citi). But they certainly don’t want those miles redeemed by those who will be able to maximize value or receive upgrades. And with the focus on cost-cutting, those who are able to take their loyalty elsewhere will certainly do so. The comments above are similar to what is found on any discussion of AA- people fly them because they *have* to, not because they *want* to.
Mr. Parker is in the process of making one last push to show an (artificial) profit- once he collects his bonus for doing so he’ll gladly take his golden parachute and leave AA to bankruptcy. With the coronavirus related financial slowdown, he may not even get the chance- he’s purging high balance FF accounts as quickly as possible, but without new credit card signups Citi will not be pumping enough money into AA for the airline to stay afloat.
I can’t remember the last time I flew aa. Maybe 1980? The only reason I have an AA account is because usair merged my accounts and credit cards with AA when they sold out. I never fly domestically in the US and when I fly international I drive to a large city from where I can get an Asian based carrier such as Ana or sq. I use my AA points on their partners such as ba, Cathay, and Etihad on premium trips between Asia and Europe. And I let my ua accounts expire when they went to Dollar based points accumulation – they aren’t worth my effort to even check the balance and their junk mail goes right into the shredder.
When AA reduced ExecPlat SWU’s to 4, this was the first signal of killing the world’s leading FF program. Switching to revenue-based and milking out all other aspects took care of the last splash of loyaty
IAA was a great airline, loved -and now hated- by it’s frequent flyer. I predict AA to slowly deteriorate.
I am surprised that so much revenue comes from one-time fliers. No wonder frequent fliers don’t get much attention. I would change in a minute, too, and still may. It would mean more inconvenience, but might be worth it.
My biggest objection to American — and I fly 30-40 trips a year — is the change fee. I’m glad they make so much money on it, but it is a real turn-off for customers.
Charlie