How Airlines Work

By: Kevin Bonsor

Types of Airlines

Not all airlines are created equal. As in most businesses, there is a sort of stratification of airlines, at least within the United States. U.S. airlines are either publicly or privately owned -- however, in many countries, the government owns the airlines. A U.S. airline's rank is determined by the amount of revenue it generates. It is then classified by the U.S. federal government and placed in one of three categories: major, national or regional.

If you've flown before, it may be easy for you to tell the difference between the three categories. Each of the three types of airlines has distinguishable routes. Typically, the larger airlines offer more destinations and longer routes. Let's take a closer look at these airline categories.


  • Major airlines - These are the heavyweights of the airline industry, and you will often hear about them in the news. A major airline is defined as an airline that generates more than $1-billion in revenue annually. There were 12 major airlines as of 2000: Alaska, America West, American, American Eagle, American Trans Air, Continental, Delta, Northwest, Southwest, Trans World, United and US Airways. Typically, these are also the largest employers among airlines. For instance, United Airlines employed more than 97,000 people in 2000. American employed 93,000, and Delta employed more than 77,000. However, there are also some major airlines that don't employ large numbers, such as Alaska, which employs only 9,600 people.
  • National airlines - Just one step down from the major airlines, these are scheduled airlines with annual operating revenues between $100-million and $1-billion. These airlines might serve certain regions of the country, but may also provide long-distance routes and some international destinations. They operate medium- and large-sized jets. Examples of national airlines include Aloha, Atlas Air, Airtran, Emery Worldwide, Evergreen, Hawaiian and Midwest Express. Because these are smaller airlines, you can expect them to have a smaller number of employees. For example, Airtran employs just more than 3,700 people, and Midwest Express employs about 2,500.
  • Regional airlines - As the name suggests, these airlines service particular regions of the United States, filling the niche markets that the major and national airlines may overlook. This is the fastest growing segment of the airline industry, according to the Air Transport Association of America (ATA). Regionals are divided into three subgroups: Large regionals - These are scheduled carriers with $20-million to $100-million in annual revenue. They operate aircraft that can accommodate more than 60 passengers. Medium regionals - These airlines operate on a smaller scale, with operating revenues of under $20-million, and often use only small aircraft. Small regionals - These airlines don't have a set revenue definition, but are usually referred to as "commuter airlines." They use small aircraft with less than 61 seats.

The airline industry is just like any other business, meaning that there are numerous types of airlines because their customers have different needs. If you are going overseas, you're likely to use a major airline because it has more destinations overseas. A business person travelling between two small cities is likely to fly on a regional airline, because he doesn't want to have to stop at a major-airline hub for a layover. You'll learn more about hubs later.