American Airlines has slowly but consistently seen its margins and market shares diminish in major business markets, including New York, Los Angeles, and Chicago. As industry expert Brian Sumers put it best, American is “sun-belt obsessed” as a decision that has come at the detriment of its strategic position in major business markets.
In no place is this trend more visible than the Northeast, where, despite having four major operational hubs, American Airlines fails to secure a dominant market position in all except one. The airline has major operations at John F. Kennedy International Airport (JFK) and LaGuardia Airport (LGA) in the New York City area, at both of which Delta Air Lines has consistently managed to push the Dallas-based carrier downwards.
At Ronald Reagan Washington National Airport (DCA), the carrier remains the largest individual player but fails to maintain a dominant local market share. As a result, Philadelphia International Airport (PHL) remains the last remaining fortress hub for American in the Northeast, through which an increasingly important portion of premium traffic flows.
Market shares are dwindling
Unexpectedly, the most valuable business travel market in the United States is New York City. Over the past two decades, Delta and United Airlines have slowly consolidated their positions in the area, squeezing American out of the market. Delta maintains an impressive market share of nearly 30% at JFK, more than double the 12% controlled by American at the massive facility.
Across the Hudson River, no carrier comes close to matching the 70% market dominance wielded by United. A similar story is true at the domestic-oriented LGA, where American’s market share has again diminished to 22%, lagging far behind the 40% commanded by Delta, according to data from the Port Authority of New York and New Jersey (PANYNJ).
In Philadelphia, however, the trend is not the same, with American Airlines managing to maintain a strong position within the Mid-Atlantic market. With American commanding more than 60% of the passenger market at PHL, as per statistics from the airport itself, it becomes the only true remaining fortress hub operated by the carrier in the Northeast.
When one recalls that American’s market share at Chicago O’Hare International Airport (ORD) has continued to fall behind United’s and that the carrier has failed to achieve a 50% market share at DCA, the importance of Philadelphia has become even more important. As a result, the airline has sought to continue expanding its offerings from the facility, including seven long-haul routes that cover more than 4,000 miles.
The unique exception
Out of American’s remaining fortress hubs, almost all are located within the South and Southwest, making them slightly less-than-ideal for capturing high-value business travel demand. That is, with one noteworthy exception: Miami International Airport (MIA).
The state of Florida continues to grow as a business hub, and MIA is undoubtedly the most important facility in the state. With major businesses and financial institutions expanding their footprint in the city, now will be a more important time than ever for American to capitalize on this unique opportunity.