American Airlines was behind United and Delta in devaluing its award chart and its elite program because it had bigger fish to fry. Finishing the US Airways merger came first. The internal mantra was “integrate before we innovate.”
But key elements of backend integration are slipping, there are huge gaps in American’s IT that drive customer service costs and limit revenue growth, while American focuses on reprogramming who gets upgrades.
Integration Went Too Smoothly — Customer Service Agents Hung Out With Nothing to Do
It was no surprise, then, when a month later American announced they’d be making big changes to the AAdvantage program.
But calling US Airways flights American Airlines flights didn’t mean the integration work was over. Getting pilots onto a single seniority list, and flight crew onto a single scheduling system, remained.
American still operates largely, though not exclusively, separate fleets operated by separate crews. There’s legacy American Airlines and legacy US Airways. They aren’t able to put the most appropriate aircraft on each route, they’re stuck flying one legacy carrier’s planes on its own routes for the most part until the work finishes.
Legacy American Airlines Airbus A319
At one point flight attendants were going to be integrated by the end of 2016 (a year later than the passenger service system become one). Then the target date apparently moved to Spring 2017. Now that’s been put off even further, with no new target date announced. (HT: Alan H..) Maintenance still remains separate as well.
Pilots, on the other hand, are “schedule[d] to [have] combine[d] systems by the end of September that will allow pilots to fly on either carrier’s planes and move aircraft to any base.”
This seems to suggest American has its IT priorities wrong.
- They invested in re-programming AAdvantage mileage-earning to move to revenue-based accrual rather than distance-based.
- They re-coded mileage-earning on partners to award up to 75% fewer miles.
- They reprogrammed award pricing to increase the pricing on most premium cabin awards.
- Changing the IT behind how AAnytime awards work
None of this really counts as ‘innovating’ since they’re more or less copying Delta (and United), so perhaps it doesn’t technically violate the mantra to integrate before they innovate.
But they’re also doing these things when there are clearly higher priorities beyond integration as well
- American boards flights earlier on large narrowbodies like 757s but hasn’t updated boarding passes to tell customers that
- American’s mobile app is severely deficient — it doesn’t let you change flights when your flight is cancelled, for instance (this costs American dearly in extra customer service labor expense). But more significantly you cannot even buy a ticket from inside the mobile app. Their mobile investments do not support actually giving the airline money.
Meanwhile, they’re investing in the IT to re-order upgrade priority based on a rolling 12 month average ticket spend.
It seems clear that:
- IT isn’t getting the resources it needs
- IT is getting priorities from management that are way off.
While they’re no doubt able to walk and chew gum at the same time over in American’s IT shop, integration is slipping and revenue is being lost while they re-order who gets moved around on an airplane when there are unsold seats.