How did American Airlines get so big?

How Was American Airlines Able to Grow So Large?

American Airlines is one of the biggest airlines today in the world based on the number of passengers it offers service to, which stands at over 200 million passengers per year and operates in over 300 destinations. However, the company had a simple start from the 1920s and 1930s, as it was only a mail delivery company. How did the company evolve from a small business to the giant it is today?

Birth and Growth of American Airlines

American Airlines is an established airline that began in the 1920s as a small airmail carrier in the midwestern US after the passage of the Airmail Act of 1925. Of these, one was American Airways, which was established in 1930. As for the mail service, American Airways obtained several contracts with the United States Postal Service and started forming Airtel mail lines across the Midwestern and Southern regions.

The second airline to be established was Southern Air Transport in 1929, which was owned by the Aviation Corporation (AVCO) conglomerate and intended to carry out airmail delivery in the southern part of the United States. Two of the companies merged in 1934 to better coordinate their airmail services and the new network came to be known as the American Airways system with the leadership of AVCO. Mail operation were initially a core business for the new airline to undertake.

Need For Expansion Before The Second World War

This was because of the Airmail Act of 1934, which brought about change for American Airways. It necessitated the dissolution of the massive aviation corporations that used to own both airlines and airmail companies under one roof. When AVCO was compelled to divest, a group of investors led by E. L. Cord purchased it in 1934, prompting the renaming of American Airways to American Airlines. The investor group also changed the name of the company to American Airlines with the hope of its intent to diversify out of airmail into passenger transport.

The company began receiving its first Douglas DC-3 in 1936 and this started its effective realization of passenger services along its main line. The late 1930s saw a particularly dramatic stake American Airlines claimed in Midwest and Eastern Seaboard routes: Its fleet totaled over 50 DC-3s by 1941. The company was on a fast path to becoming one of the largest passenger airlines in the United States before the United States’ involvement in the Second World War.

Supporting the War Effort

As with most American companies, the attack on Pearl Harbor and America’s entry into World War II fundamentally altered the company. America ceased all its scheduled international and many domestic flights for over three years between 1942 and late 1945 to focus on military transport during the Second World War.

Some of the activities of American Airlines during the war entailed transporting of equipment, people, and other materials to different military stations across the United States and in the Caribbean region. It also provided transport services through contracted routes for American soldiers across Europe and Asia. Some facts include the fact that American Airlines’ crews and planes participated in the famous D-Day Normandy invasion as paratrooper transport and air support.

These high levels of service and operational efficiency during the war ensured that this airline was considered one of the best airlines in the United States of America. It ensured that by the end of the war years, there were Americans ready to construct the required commercial networks.

Post-War Growth

This brought American Airlines’ network back into perspective by the end of 1945, although some of the international relays were only restored in 1946 or 1947 due to the damage incurred in Europe and Asia during the war. However, getting back to the topic, with post-war travel demands rising due to the availability of cheap airfares for tourists, America saw its traffic go up at a very fast pace. It asserted its place among the “Big Four” of the U. S. commercial air carriers and principally vied with United, TWA, and Eastern Air Lines in the late 1940s and 1950s.

One of the most significant milestones was reached in 1953, when American Airways developed the first computerized seat reservation system known as Sabre. While barely recognizable compared to the standards of today, Sabre automated the reservation process and brought American’s inventory online. It enabled easy management for distant routes and significantly improved operating capability in contrast to the traditional approach.

After the Second World War through the 1950s and 1960s, American Airlines expanded its domestic network to include most East Coast and West Coast cities as well as many of the Midwest hubs. They also started significant international services to Europe, South America, and important business destinations in Asia, including Tokyo. During the early 1960s, it transitioned to the jet age in 1959 when it bought Boeing 707 aircraft that could transport more people at higher speeds and further distances.

Deregulation Spurs More Growth

However, until 1978, both the growth and competition among the fellows of American Airlines remained controlled by the regulations of the Civil Aeronautics Board (CAB). The CAB controlled fare levels, routes, time, and number of flights, thus significantly restraining the competitive options open to airlines. However, the Airline Deregulation Act of 1978 dismantled CAB and brought radical changes in the flight regulation system.

Free from the restraints of the old system, American Airlines could now follow through on plans to add new domestic routes to better compete with low-cost entrants like Southwest. It started opening new hubs in places like the Midwest, Chicago, and Dallas-Fort Worth as it went to war with United Airlines, now under the leadership of Frank Lorenzo. With competitive counterpressure from Bob Crandall, American was able to match Lorenzo’s aggression but do so strategically with better customer service.

It also utilized the deregulation for further services internationally in association with international airlines across Europe, Japan, Latin America, and Australia. The horizon of global connectivity was the next major step, making America more than just a domestic line of the United States. Due to the freeing up of open skies regulation in the 1980s, America expanded its operations to become an international airline.

The Modern Global Carrier

The growth and mergers throughout the 1990s and 2000s cemented its position as the largest airline in the world for several years. Mergers with TWA starting in 2001 and U. S. Airways in 2014 added new hubs, planes, routes, and customers to the American airlines. The company has been acquired by American Airlines Group and directly confronts United and Delta at the uppermost tier of the world aviation industry.

The history of American Airlines can be traced back to the early days of air transport in the mid-western United States in the early part of the twentieth century and was able to grow through ambition, innovation, and deregulation into the colossal organization for air travel today. It links together numerous places, operates and preserves about 1,500 aircraft, and ensures nearly 130 million passengers reach their destinations every year. The growth has been monumental, and the airline industry is growing at a pace even today. Thus, the fate of this aviation legend is also uncertain, with far more history yet to be penned during the second hundred years of the Company’s existence.

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