American Airlines President Scott Kirby, speaking at the Wolfe Research 8th Annual Global Transportation Conference, in response to a question laid out what the upside will be for the airline once they complete the transition to a single reservation system.
He mentioned ‘full code sharing’ between American and US Airways, by which he means that there will no longer be separate US Airways and American miles and that should allow them to earn more revenue (and take care of instances where you can buy the same flight for less through one airline or the other, although this is much rarer than it used to be already).
Then he talked about assigning one airline’s aircraft to operate the other airline’s routes. Specifically he thinks there are more Airbus A319s at US Airways than there should be, and more ‘large gauge aircraft’ specifically 737-800s at American hubs. We can expect to see smaller planes on American routes, and larger planes on US Airways routes in many cases.
Finally he talked about all of the backlog of changes he’s wanted to make at American, but that have been on hold pending all the integration work. The ‘integrate before we innovate’ mantra has been repeated non-stop throughout the company for the past 18 months.
Here’s what struck me — “we would have loved to make some modifications to the frequent flyer program,” and then mentions opportunities for merchandising (unbundled services) and then says this includes shamelessly copying some of things competitors have done.
He doesn’t expand on this, but I suspect most frequent flyers will read this in a way that will not make them happy. Copying competitors, in context, could be just referring to ancillary fees.
However,US Airways was more or less in the can with a revenue-based program prior to the merger with American. There was speculation over whether they could go first, before Delta, rolling something like that out.
US Airways was early with three redemption levels rather than just two, something that American and Alaska both now have (Delta has five, plus all the routes they misprice, although that’s a secret since they do not publish award charts at all).
Of course the statement he’s made is also opaque without greater explanation. Reading into it resembles biblical exegesis or Kremlinology.
While one imagines it implies a greater revenue-based focus, even that wouldn’t tell us very much as there are three different areas where a program shifts to a more revenue-based model:
- Mileage-earning (e.g. earning miles based on the cost of a ticket)
- Mileage redemption (award costs are tied to the price of a ticket)
- Elite status (such as minimum-required spend for status)
An airline can do one or more without doing all of these. And they can move towards this in the way that United and Delta have — or something different entirely.
Hopefully whatever they’re planning for 2016 will be disclosed soon. It would be truly offensive to wait until integration is complete in October to lay out plans for, say, January 1. Even United gave 9 months’ notice for the move to their revenue-based mileage earning. Delta gave nearly a year’s notice for the move to their revenue-based earning and five tiered redemption.
Of course, completion of the integration will be the airline’s primary focus until complete in October. That would leave only a short window if they did want changes to start in January. My guess is that if there’s revenue-based earn and burn at least in the future that it won’t come January 1.
And he could just as easily be talking about major changes to the award chart. Time will tell.