What The Big Three US Carriers’ 2020 Revenue Streams Reveal About 2021 Capacity

International travel was absolutely devastated in 2020. Airlines moved around their capacity accordingly and pulled down in markets where they were historically weak. Combined, these results show that airlines saw significantly reduced revenue in all international markets. However, Latin America brought each of the big three US airlines over $1 billion in revenue for the year, while demand for transpacific travel remained weak.

Latin America proves strong

Latin America and the US have some strong ties, and airlines reap a lot of financial benefits as a result. In 2019, US airlines made over $11 billion in the region. For 2019, the breakdown was as follows:

1. American Airlines: $5.047 billion
2. United Airlines: $3.78 billion
3. Delta Air Lines: $2.985 billion

Historically strong American ran off with Latin American revenue. The carrier flies to more cities in South America and Latin America than United and Delta. However, 2020 was supposed to be a year when these results changed as Delta found a joint venture partner in LATAM and immediately saw openings to grow stronger in the region.

However, once the pandemic hit, it was clear that revenue for this market would not be as strong as expected in 2020. For the year, here’s where airlines came out:

1. American Airlines: $1.852 billion
2. United Airlines: $1.512 billion
3. Delta Air Lines: $1.113 billion

All three airlines appeared pretty similar in terms of revenue, though it is not surprising to see American and United get a few hundred million extra dollars compared to Delta. Delta has historically taken a very conservative stance on restoring capacity. Its new joint venture with LATAM has left some of the North America-South America traffic intact, though not necessarily on Delta metal.

The cratering of transatlantic revenue

The importance of the transatlantic corridor is something that cannot be overstated. Airlines fiercely compete for a slice of this pie, and 2020 was no exception.

Here is how much airlines earned in 2020:

1. United Airlines: $2.226 billion
2. Delta Air Lines: $1.171 billion
3. American Airlines: $654 million

The spread here is a little more shocking. However, the results do make some sense. American has strong transatlantic joint ventures with partner airlines that, like Delta and LATAM, allow it to offer service on partner metal. However, American did draw down transatlantic capacity pretty significantly.

For comparison, here is what those airlines earned in this market in 2019:

1. United Airlines: $7.387 billion
2. Delta Air Lines: $6.326 billion
3. American Airlines: $4.624 billion

American Airlines has lower transatlantic revenue than its competitors, but it is working on closing the gap. This included announcements for new flights to Israel and growing its transatlantic portfolio to include new flights to London, Hungary, Poland, Czech Republic, and Morocco, amongst some others.

Not all of these routes flew in 2020, and most of them have been postponed until the market conditions improve. However, American is getting there, and the next few years will prove pivotal, especially as American grows out of Seattle and finally gets into Israel.

Transpacific revenue

Transpacific markets were some of the first hit and hardest hit. Revenues especially cratered in China, then South Korea, and as markets around the world shut down, Australia and New Zealand followed.

Here is how airlines turned out in the transpacific market in 2020:

1. United Airlines: $1.706 billion
2. Delta Air Lines: $558 million
3. American Airlines: $247 million

The stark change in revenue from 2019 to 2020 is evident. In 2019, airlines earned far more in these markets:

1. United Airlines: $5.132 billion
2. Delta Air Lines: $2.501 billion
3. American Airlines: $1.458 billion

United Airlines has historically been the strongest in the transpacific market. The airline flies to more destinations in China than any other US airline, and it also has a base in Guam– the only US carrier to serve the island.

Delta Air Lines has done well in certain markets in Asia. This includes Japan and, thanks to its partners, Korean Air and China Eastern Airlines, a strong presence in South Korea and China.

American Airlines has struggled in mainland China and other parts of East Asia. Thanks to its partnership with JAL, it has done well in Japan, but the airline previously lacked a mainland China partner. Even now, with China Southern Airlines, American Airlines has some work to do to expand this partnership. Once China Southern’s Beijing Daxing base is fully up and running, American Airlines could start to claw its way to much better revenue in the region.

Australia is a great market for all three airlines, or at least was. United’s closest partner in the region is Air New Zealand, but it has an extensive presence in Australia, as well, and does well without a large Australian partner.

American Airlines has a jackpot partnership with Qantas, the largest international airline in Australia. That partnership was enhanced just before the end of 2019 with major plans for 2020, though some of those plans are on hold for now.

Lastly, Delta had a partnership with Virgin Australia, but given Virgin’s restructuring, Delta and Virgin have paused that partnership, and depending on how market conditions are, it might be some time before that partnership resumes.

Domestic was the strongest

Unsurprisingly, domestic revenue was the strongest for all three airlines in 2020:

1. American Airlines: $11.765 billion
2. Delta Air Lines: $10.041 billion
3. United Airlines (including Canada): $9.911 billion

In 2019, these three US airlines combined made over $80 billion in domestic revenue:

1. American Airlines: $30.881 billion
2. Delta Air Lines: $30.465 billion
3. United Airlines: $26.960 billion

With domestic travel one of the only options for most travelers, the airlines quickly pivoted to expanding domestic capacity as much as possible. United has fallen behind its peers domestically, but it is working on closing those gaps as much as possible.

This is one reason why more and more widebodies have started making their way onto domestic flights. All three airlines have operated widebodies on some domestic routes in the past, though the frequency has increased.

This is also one reason why airlines continue to beef up domestic capacity. Airlines are seeing passengers willing to fly domestically, and this is expected to increase as vaccinations continue to roll out, and more states outline plans to accept vaccinated travelers. Expect big boosts again this summer to mountain destinations in Colorado or  Montana, beach destinations in Florida and Hawaii, and warm-weather destinations in Arizona and California.

United Airlines has historically had a large amount of international exposure, especially in comparison to Delta and American. While it was a bit conservative to start, the airline has continued to fly a large plethora of international routes, catering to the few passengers who need to and are willing to fly on a long-haul international journey while also running a robust cargo operation.

What do you make of revenue streams for US airlines in 2020? Let us know in the comments!