Commercial Airline Industry Analysis
Introduction
The airline industry has faced significant changes in recent years, from emerging markets to bankruptcies and travel disruptions. To stay competitive, airlines, airports, and other stakeholders must adapt quickly and seize opportunities.
Each airline employs unique strategies to gain an edge. The “Big Three” (Delta, United, and American) leverage expansive global networks, JetBlue focuses on in-flight customer experience, and Frontier appeals to budget-conscious travelers with no-frills travel. Amid fierce competition, airlines are striving to capture larger shares of the market by diversifying offerings and expanding into new segments.
In this analysis, I will look into the current and historical route data among these airlines and uncover any trends or opportunities for the future. Along with this, I will show insights into the consumer experience, both on the ground (airports) and in the air (flights).
Below is a data dictionary of key variables from the US Airline Flight Routes and Fares from 1993-2024 data set found on Kaggle:
| Variable | Description |
|---|---|
| Year | Year of the data record |
| quarter | Quarter of the year (1-4) |
| citymarketid_1 | Origin city market ID |
| citymarketid_2 | Destination city market ID |
| city1 | Origin city name |
| city2 | Destination city name |
| airport_1 | Origin airport code |
| airport_2 | Destination airport code |
| nsmiles | Distance between airports in miles |
| passengers | Number of passengers |
| fare | Average fare |
| carrier_lg | Code for the largest carrier by passengers |
| large_ms | Market share of the largest carrier |
| fare_lg | Average fare of the largest carrier |
| carrier_low | Code for the lowest fare carrier |
| lf_ms | Market share of the lowest fare carrier |
| fare_low | Lowest fare |
While this dataset does not capture every flight route during this period, it includes over 200,000 rows of data. Despite this limitation, it is still valuable for analyzing macro trends in the industry and offering insights into potential airline growth opportunities.
Flight Data Analysis
Through the following analysis, I will examine flight data to identify key trends within the airline industry and explore the factors that have contributed to individual success over time.
Average Domestic Flight Ticket Cost Through the Years
Analyzing pricing trends at the industry level provides valuable insights into the macroeconomic factors driving these changes over time.
The bar graph above illustrates several notable trends. It first shows a decline in prices in the years following the 9/11 attacks, likely due to reduced travel driven by safety concerns and public fear. This is followed by a consistent rise in prices throughout the 2010s, which stabilized during the recession recovery period. Finally, the graph reflects a sharp decrease in 2020 due to travel disruptions caused by the pandemic, followed by a robust recovery, with prices surpassing $250 in 2024, reaching record highs.
Understanding the significant impacts during these periods highlights the complexity of the airline industry, underscoring how external factors, in addition to high competition, can profoundly influence company success.
Airlines’ Average Market Share on Routes Through the Years
This dataset includes variables tracking the market share of the largest and lowest fare carriers for each flight route, quarterly since 1993. The following analysis will explore how these market shares have shifted over time as airlines compete for new and emerging markets.
This graphic highlights intriguing patterns in airline market dynamics over time. One significant trend is the rise and fall of Allegiant Airlines in terms of dominance on certain routes. In the mid-to-late 2000s, Allegiant capitalized on a unique strategy of serving underserved regional airports and targeting leisure travelers, allowing them to achieve significant route dominance with limited competition. However, as competitors recognized the potential of these markets, they moved in, highlighting the effectiveness of Allegiant’s strategy.
In contrast, “The Big Three” have displayed steady market shares over the years. Their success can largely be attributed to their hub-and-spoke networks and extensive global operations, providing them with a competitive advantage in retaining market share.
Finally, a notable decline in market share for Spirit Airlines since the early 2000s is worth mentioning. This trend may reflect their challenges in sustaining competitiveness, highlighted by their recent bankruptcy filing and failed merger negotiations with Frontier Airlines. These shifts illustrate the dynamic and competitive nature of the airline industry.
Comparing Long-Haul vs. Short-Haul Flights Across Airlines
Flights come in all shapes and sizes, whether it’s a quick 20-minute hop from Colorado Springs to Denver (just 72 miles) or an epic 5,000-mile journey from JFK to Honolulu that takes about 11 hours! Each airline tailors its strategy to serve both nearby and distant markets, adjusting operations to meet the demands of short and long-haul routes. In this analysis, I will compare the proportion of long-haul and short-haul flights for each major airline, evaluating them against the full range of routes they have offered over the years. I have defined “long-haul” flights as those greater than 2,000 miles and “short-haul” flights as those less than 1,000 miles in distance.
Looking at the long-haul flights of each airline, JetBlue and Alaska Airlines stand out, with over 30% of their flights being long-haul. JetBlue’s high proportion stems from its strategy of offering affordable long-haul options, while Alaska Airlines benefits from its proximity to the mainland and an increase in recent years of flights to and from Alaska. On the other hand, Allegiant Airlines has no long-haul flights, as it focuses on shorter, point-to-point routes. Most other airlines have a similar proportion of long-haul flights, averaging around 20%. These airlines primarily balance their long-haul offerings with short-haul and regional routes, reflecting their broader strategies to serve a variety of customer needs across different market segments.
In analyzing the proportion of short-haul flights, we find some interesting trends. Unsurprisingly, Allegiant offers the highest proportion of short-haul flights, aligning with its focus on point-to-point routes rather than long-haul options. Most other airlines have around 40% of their flights as short-haul, compared to about 20% for long-haul. This makes sense, as short-haul routes require less capital investment and allow airlines to expand their networks more efficiently compared to long-haul flights.
Identifying Revenue-Generative Route Opportunities
Earlier, I discussed how the airline industry, like many others, is influenced by the “copycat” effect, where airlines mimic successful strategies. In this context, I will examine airlines that dominate lucrative routes. To do this, I’ve identified 10 potentially attractive routes where airlines could challenge incumbents. To quantify success, I’ve created a variable, “avg_flight_rev,” which calculates the average revenue per flight based on fare and passenger data.
| carrier | city1 | airport_1 | city2 | airport_2 | avg_flight_rev |
|---|---|---|---|---|---|
| Southwest Airlines | Albuquerque, NM | ABQ | Dallas/Fort Worth, TX | DAL | 63606.40 |
| Spirit Airlines | Atlantic City, NJ | ACY | Miami, FL (Metropolitan Area) | FLL | 41314.84 |
| Southwest Airlines | Colorado Springs, CO | COS | Dallas/Fort Worth, TX | DAL | 39627.50 |
| Allegiant Air | Allentown/Bethlehem/Easton, PA | ABE | Tampa, FL (Metropolitan Area) | PIE | 26311.77 |
| Southwest Airlines | Dallas/Fort Worth, TX | DAL | Houston, TX | IAH | 25265.32 |
| United Airlines | Austin, TX | AUS | Houston, TX | IAH | 24739.32 |
| JetBlue Airways | Nantucket, MA | ACK | New York City, NY (Metropolitan Area) | HPN | 23566.20 |
| Allegiant Air | Cincinnati, OH | CVG | Tampa, FL (Metropolitan Area) | PIE | 20967.80 |
| Allegiant Air | Cedar Rapids/Iowa City, IA | CID | Phoenix, AZ | AZA | 15425.40 |
| United Airlines | Pittsburgh, PA | PIT | Washington, DC (Metropolitan Area) | IAD | 14742.44 |
A few key insights emerge when reviewing this table. First, Southwest Airlines and Allegiant Air appear most frequently. Southwest’s dominance in these routes can largely be attributed to its strong historical presence at Dallas Love Field (DAL), which has allowed it to establish a robust network from the airport. This position has contributed significantly to Southwest’s ongoing success with routes in and out of DAL. On the other hand, Allegiant’s frequent appearance highlights its ability to identify high-potential routes. Allegiant has made a name for itself by focusing on underserved markets and vacation destinations. This success is part of their broader expansion strategy, which includes the launch of 44 new nonstop routes starting in 2025, signaling that their growth trajectory shows no signs of slowing down.
Growth Analysis of Austin (AUS) and Cincinnati (CVG) Airports
Airports play a crucial role in the success of the airline industry. Their performance is influenced by both the markets they serve and the larger strategies of airlines, including optimizing operational levels that help drive success on a broader scale. In the following, I will examine the success of two airports, Austin-Bergstrom (AUS) in Texas and Cincinnati/NKY (CVG) in Ohio, both of which have experienced varying periods of growth and contraction over the years.
This graphic reveals several key trends in the evolution of CVG and AUS airports. Both experienced significant growth in the late 1990s. CVG was a major hub for Delta Airlines, offering an extensive connecting flight network, while Austin gained popularity as an emerging hub for both domestic and international flights.
However, the mid to late 2000s brought significant changes. Delta reduced its operations at CVG after merging with Northwest Airlines, with Minneapolis-St. Paul International Airport (MSP) becoming the primary Midwest hub. Austin, on the other hand, faced increased competition from nearby airports and struggled with lacking infrastructure.
In recent years, Austin has experienced a remarkable resurgence, driven by population growth, increased demand, and substantial infrastructure investment. Conversely, CVG has stabilized but shifted its focus toward cargo operations, hosting major logistics companies like Amazon and DHL. This comparison highlights how success in the airline industry can be influenced by a complex set of factors, and how airports must adapt to shifting market dynamics.
Analysis of Traveler Sentiment at AUS & CVG
Next, I will compare these two airports by analyzing the sentiments of travelers who have experienced them. To do this, I have scraped 250 Yelp reviews from both Austin and Cincinnati airports to gauge public sentiment, focusing on what travelers appreciate and dislike about each airport.
Comparing Positive and Negative Sentiment in Reviews of Each Airport
First, I will compare what positive and negative words flyers use to describe both airports.
Here we can grasp an initial understanding of sentiment among travelers at each airport. A notable sentiment surrounding CVG is its perceived high costs, possibly driven by a reduction in airline options and fewer direct flight destinations. This issue does not appear to be as prominent at AUS, where the sentiment leans more toward accessibility and convenience. Both airports are frequently praised for their cleanliness and overall accessibility.
However, CVG travelers specifically highlight the efficiency of TSA and navigation, which may be a result of the airport’s smaller scale due to terminal and route reductions. In contrast, Austin’s expanding facilities and routes may contribute to different experiences, as passengers at AUS may encounter more crowded or complex navigation, though this trend is likely to shift as the airport continues its expansion efforts.
Traveler Sentiment Through the Week Days
This analysis will examine how positivity levels vary from day to day at each airport and uncover patterns in how the general mood shifts over time.
Here we observe interesting differences in sentiment positivity across the days of the week for both airports. At AUS, positive sentiment is higher on Tuesday, Wednesday, Thursday, and Saturday, while CVG experiences greater positivity on Sunday and Monday. Friday shows similar sentiment for both airports.
While it’s challenging to attribute these differences directly to airport business, given that reviews are not always written on the travel day itself, a key takeaway from this analysis is the unique nature of each airport’s traveler experience across the week. This suggests that the timing of review writing, either during travel or shortly after, might reflect broader patterns in traveler satisfaction.
I believe the airlines operating at each airport could play a significant role. Many budget airlines have specific days for flights, which can contribute to congestion and potentially more negative experiences on certain days. In contrast, airports with more consistent daily routes might exhibit more stable sentiment across the week. This dynamic highlights how the operational structure and scheduling of airlines can shape the traveler experience and influence sentiments on different days.
Review Sentiment Comparison Across Airports by Emotion
Lastly, I will break this sentiment analysis down to the level of different emotions.
When examining the specific emotions reflected in traveler reviews at Austin-Bergstrom (AUS) and Cincinnati/Northern Kentucky International Airport (CVG), it’s interesting to note that the emotional landscape at both airports is quite similar. Both airports show high levels of anticipation, a common emotion for travelers. Interestingly, this emotion appears slightly more pronounced in reviews of CVG, possibly indicating a heightened sense of excitement among travelers departing from Ohio.
Looking at the overall emotional trend, AUS tends to slightly outperform CVG in positive emotions attached to reviews, while CVG sees a slightly higher prevalence of negative sentiments. Despite this, both airports are generally well-regarded by travelers, with most expressing satisfaction. These patterns may be influenced by factors such as airport size, the efficiency of services, and the types of passengers that each airport serves, with AUS benefiting from its growth and expanding services and CVG experiencing sentiment shaped by its evolving hub status.
Overall, both airports appear to offer a positive experience, with variations in sentiment driven by individual travel experiences and the specific dynamics of each airport.
Key Takeaways
Unique Airline Strategies: Every airline takes a distinct approach to its business model, whether it’s through route innovation, customer experience, or focusing on long vs. short-haul flights. This strategic differentiation is what sets each airline apart and drives its success in different segments of the market.
Allegiant’s Leadership in Short-Haul and New Markets: Allegiant Air excels not only in the low-fare space but across the broader airline industry. Their success in short-haul flights, combined with their trailblazing expansion into underserved markets, positions them as a leader in route innovation.
Key Drivers of Airport Success: Airport performance is shaped by a range of factors, including traveler satisfaction, market growth, and the ability to expand airline operations. Adapting to new trends and innovating in both infrastructure and services is essential for maintaining long-term success.
In conclusion, the airline industry’s dynamic nature requires constant adaptation. Airlines and airports that stay ahead of the curve by understanding these fundamental principles and incorporating them into their strategies will continue to thrive, ensuring a future of growth and innovation in air travel.