In 2008, American Airlines (AAL 0.17%) became the first domestic airline to provide in-flight internet service. Now, nearly two decades later, it will be one of the leaders in adopting Starlink to its fleet.
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The internet services of Starlink — a subsidiary of SpaceX, which is soon to have its initial public offering — will be installed on more than 500 of American’s aircraft beginning in early 2027. This upgrade and modernization actually matters. Customers don’t just complain about sluggish internet; they actively choose airlines with the best Wi-Fi connections and consistent service.
United Airlines already has more than 300 planes equipped with Starlink and plans to add several hundred more. Southwest and Alaska Air Group are also adopting Starlink. The airlines that can roll it out the quickest will have a serious competitive advantage.
Image source: Getty Images.
American Airlines has struggled over the past five years, and its stock is down more than 37% in that time. Good internet service doesn’t fix all of the carrier’s problems, but it will help a fair amount as consumers become increasingly sensitive to the passenger experience.
The company has long battled business turbulence, with unionized employees going as far as to call for CEO Robert Isom to step down. This customer-friendly move could be the first important step in the carrier’s strategy to differentiate itself and build loyalty among higher-paying customers.
I’m not convinced that adding Starlink is enough. It’s definitely a step in the right direction, but it doesn’t put the airline on par with competitors Delta or United just yet. American needs to fully embrace modernization and invest in technology to keep pace with consumer demands.
Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends Alaska Air Group, Delta Air Lines, and Southwest Airlines. The Motley Fool has a disclosure policy.
