Aikido is actually a pretty solid martial art. It is indeed not a streetfight or very competitive art, but then it never pretended to be.
Aikido is more about finding balance, discipline and a philosophy (and in some ways a lifestyle). Which is not to say some techniques and principles don't work. Wristlocks and the throws that are taught are very effective, and would do damage.
The only thing that prevents Aikido from being 'more realistic' is that it simply lacks the competitive nature and thus sparring, preventing any 'hands-on'-experience. Which doesn't detract from Aikido as a martial art, or its value to for example help kids in gaining discipline.
If it doesn't teach how to become a better street fighter it's not a martial art.
Aikido can teach you discipline, concentration and focus. Like Tai Chi it is a discipline that will improve you as a person and improve you quality of life. And like Tai Chi, it will not make you a better fighter. Therefore, it is not a martial art, or at least not an effective martial art. You'd be better off with no Aikido training at all and just do whatever you naturally do when angry and want to hurt someone. Punch, kick, pull hair, bite, grab, tackle....