How Much Of American Airlines’ Revenue Comes From Domestic Passenger Travel?

American Airlines (NASDAQ: AAL) is the largest airline in the world in terms of fleet size, revenues generated as well as passengers carried. In 2018, it operated 956 mainline aircraft and 595 regional aircraft in its fleet. American carries out its regional operations under the banner of American Eagle, which includes wholly-owned subsidiaries of American Airlines and certain other third-party carriers.

Trefis captures trends in American Airlines Revenues over recent years along with our forecast for the next 2 in an interactive dashboard along-with the trends in key operational parameters. We note that despite the airline’s sizable presence outside the U.S., domestic passenger revenues account for roughly 73% of American Airlines’ total passenger revenues, which in turn represents just over two-thirds of the company’s total revenues.

A Quick Look at American Airlines’ Revenues

American Airlines’ reported $44.5 billion in Total Operating Revenues for full-year 2018. This includes three revenue streams:

• Passenger Revenue: $40 billion in FY2018 (91% of Total Revenues). It represents income from the sale of air tickets and other ancillary offerings for the company’s mainline and affiliate carriers. If a ticket is sold and travel is yet to happen, the company recognizes income from such tickets as air traffic liability. Due to the complex structure of ticket pricing, cancellation and rescheduling, a certain portion of the liability is recognized as passenger revenues based on recognized historical patterns.
• Cargo Revenue: $1 billion in FY2018 (2% of Total Revenues). It represents income freight and mail services.
• Other Revenue: $3 billion in FY2018 (7% of Total Revenues). It comprises of the sale of loyalty points to credit card companies.

Despite Strong Global Presence, Domestic Operations Contribute The Highest By Far

• Despite a presence in more than 50 countries, the company’s domestic operations contribute a majority of its passenger revenues.
• In 2018, $29.6 billion of $40.6 billion in passenger revenues came from domestic operations, representing nearly 70% of the total passenger revenues.
• The share of other prominent geographies: Latin America, Atlantic, and Pacific in American Airlines’ passenger revenues, is elaborated in our interactive dashboard.

Notably, the company currently faces capacity constraints from the grounding of its 24 Boeing 737 MAX aircraft. With American Airlines looking to add 40 of these aircraft to its fleet over coming years (nearly 20% of new aircraft additions by 2022), the expected delay in delivery of these aircrafts will negatively impact growth in capacity in the near future. This is expected to weigh on Passenger revenues for American Airlines over several quarters.

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