A major focus of American Airlines during 2017 was closing gaps in corporate traveller share with its rivals, and the company delivered on its pledge to expand its roster of corporate clients.
American executives have admitted the airline was at a competitive disadvantage to its peers in attracting corporate clients, and has beefed up its corporate sales structure in order to level the playing field.
Previously, American has concluded it can generate USD175 million in incremental revenue by 2021 by focusing on improving corporate sales.
Those efforts appear to be paying off. American estimates it added 24,000 new small to medium-sized corporate accounts in 2017. Earlier in the year, American calculated it had added 16,000 new small and medium accounts, so the airline ended the year with a strong finish in meeting its corporate sales targets.
The company also stated changes in revenue management and a renewed focus on the premium cabin delivered a full two points in its system revenue improvement in 2017. American’s total unit revenue grew nearly 4% year-on-year in 2017.
Both American and its rival Delta cited premium cabin strength as a driver in favourable unit revenue performances in trans-Atlantic and trans-Pacific markets during 4Q2017. American in particular stated its strong performance in premium product sales “made the material difference” in its trans-Pacific performance. Its trans-Pacific unit revenues grew 1.2% year-on-year in the last quarter f 2017 on a 7.5% rise in capacity driven by the introduction of flights from Los Angeles to Beijing. During 3Q2017, American’s passenger unit revenues in the trans-Pacific fell 1.6%.
Delta also enjoyed momentum in its premium product upsells during 4Q2017. First class upsells and its Comfort Plus revenues grew 25% to 30% year-on-year during the final three months of 2017. During 1Q2018, Delta is introducing new Airbus A350 widebodies on additional trans-Pacific routes including Detroit-Beijing and Atlanta-Seoul. Those aircraft feature the airline’s Delta One Suite and Premium Select products, which the airline believes will further increase its premium revenues.
American and Delta remain bullish in their respective outlooks for corporate travel spend in 2017. Delta recently concluded business travel spend during 2018 could reach its highest level in three years. Its executives recently concluded not only is there traction in business fares on international routes, but demand was rising as well.