What I Learned About the Future of American Airlines at Media Day

Three years ago American was talking about “Going for Great.” That’s still in the safety video but otherwise it isn’t something we’ve heard about from American Airlines in quite some time. There was no new slogan articulating a broad vision for the company offered this year in its place.

There wasn’t a lot of news broken at American’s Media Day — just lots of small piece of information learned. What was hard to take away was a broader narrative for the company, other than that Doug Parker thinks they’ll always be profitable (and he calls it taking a leap of faith, which suggests to me lack of evidence).

  • American plans to add more seats to planes. They don’t plan to go below 30 inches of pitch (the tightest configuration of any legacy US airline has ever offered) while Delta says they’ll never go below 31. They think with less comfortable slimline seats and no seat back video customers won’t notice less legroom.

  • American doesn’t have plans to offer a native booking experience through their mobile app. They think pushing people to a mobile website is good enough. That seems crazy to me when some other travel providers report 30% of direct bookings through their app, and the mobile site seems to me so non-functional.

  • They know award availability and upgrades are an issue and promise they’re on track to improve. They’re offering fast wireless internet and adding seat power even to the legacy US Airways ‘basket of deplorables’ fleet.

  • They’re losing fewer bags, adding inflight free texting, new inflight bedding. Main Cabin Extra (extra legroom coach) will be getting new amenities (presumably free drink, maybe a snack on longer flights). American seems more focused on Delta as a competitor than United.

  • Boeing 737MAX and A321neo won’t fly transatlantic, but the A321s could fly Phoenix – Hawaii. Philadelphia is their transatlantic gateway, New York airports serve boutique business markets.

What surprised me was that for an event American put together to showcase their best foot forward to media and investors they didn’t offer a bigger narrative. I did see some reports suggesting that the day’s stock bounce was investor reaction to what American was saying, but the stock’s performance mirrored Delta’s gain on the day so that seems unlikely.

We did get a sense of what they believe is important. American says it’s difficult to offer a better product than competitors, because competitors will match. So ultimately it’s corporate culture and employees that will differentiate an airline.

  • They realize that more compensation isn’t enough to get employees taking better care of customers.

  • But what was missing from the presentation was the vision of where they want to go, other than Doug Parker’s refrain that they will never lose money again and will always earn $3 billion to $7 billion a year. What will motivate employees?

In order to have happy and motivated employees you do need to pay them enough (an amount they feel is fair). But what employees need is to feel they’re part of something larger than themselves, that they’re working towards a goal or mission and they need to like and respect their colleagues.

I left without understanding what the mission or purpose of the airline would be. Employees are being given nicer facilities, help using their benefits packages (and employees have lost a lot of weight), but at the end of the day there’s a percentage of employees who don’t deliver for customers or the airline.

And other employees see those colleagues not working, and not suffering consequences. Which makes it tough to maintain their own morale and go above and beyond when employees around them don’t have to. In other words a small portion of employees bring down the median employee.

There are still great frontline staff who excel in spite of their colleagues and the incentives they face. We love those employees at American! But they’re always notable as the exception. And it’s unclear whether the airline has a strategy to moves from their being the exception to becoming the norm.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

More articles by Gary Leff »

Comments

  1. What does this mean:

    Employees are being given nicer facilities, help using their benefits packages (and employees have lost a lot of weight)

    Honestly can’t figure out what you are saying or implying about employee’s weight.

  2. Didn’t American recently introduce native in-app booking back on September 20? Or am I missing something in your terminology? It’s at least markedly improved.

  3. I also don’t understand the weight remark. All I can think is there is a weight loss program as part of their employee benefit. It would be an odd remark to mark at a media day.

    Gary, when you say “They know award availability and upgrades are an issue and promise they’re on track to improve.” – Well, what is taking so long. This problem is entirely within their control. It’s a pretty simple matter for them to “improve” if that’s what they want to do; all they have to do is offer more award space.

  4. Gary,

    It so sad to see what has happened to the airline. A real case of “past results isn’t a guarantee of future performance”. I’ve been an EXP since 2004, CK for a bunch of those years, MM and lifetime etc, and K barely recognize the airline anymore. I certainly don’t wish it on my friends or family the way I used to.

    Any CEO who promulgates a VISION for the company that starts with profits isn’t someone who should be working at the company, much less it’s CEO. Profits are important and necessary, but are far from sufficient to creating a vision. Okay so you have one stakeholder taken care of (shareholder), but what about the other stakeholders like your customers, employees, partners, etc

    I’ve never been impressed with Parker, but American still has some great legacy execs there- Maya, Bev and a few others. I’m wondering if they’re playing along with this for the sake of placating him or if they’re planning their exits, too.

    Compare all this to the Jerblue culture, and combine that ethos with potential hiring of fantastic legacy execs like Maya and Bev, and you have to wonder how big the golden handcuffs are.

    RIP happy AA times!

  5. I think most customers would be happy if they had more Saaver Availability, remove the 3 connections currently on Saaver awards and fix their fleetmap. There are 5 versions of 777 AA is flying and I never know what to expect.

  6. It would have been much more impressive if they actually opened up award availability instead of talking about opening it up.

    Words ring hollow for airlines.

  7. DC Joe

    My apologies if wrong but English is a third language for me; in the context of the sentence and the nature of the topic, the “weight” is the amount of influence that the employees (unions, pilots, FA, etc..) have within the AA company.

  8. As soon as it was announced that Parker would be CEO, I knew nothing good would happen at AA. Until he is gone, AA will remain a ghost of its former self. Parker ruined each airline he took over and hopefully AA will his last!

  9. They’ll earn $3-$7 billion a year…. until the next round of union contract negotiations where they’ll have to pay the pilots, flight attendants, and maintenance people more.

    Maybe they’ll even use pay as a motivator for customer service (or simply fire the old flight attendants who don’t seem to want to be there…). (Sarcasm, folks…)

  10. Honestly, in the USA airline industry, promising that you’ll never lose money again IS a vision! If I were an airline employee, that’s pretty much all I’d want, because the career uncertainty in the airline industry due to failing business models has been horrific the past several decades. Remember, that due to the (antiquated) seniority system, you can’t just pack your bags and go to another company. A stable employer is definitely the number one priority of any unionized employee at an airline.

    As far as a larger business vision goes, there isn’t really one to develop. They aim to be the largest (and most profitable) airline in the world. That seems good enough to me. Executing that is vision is very hard work. It’s not like there’s something new under the sun here. The current strategy (which has taken the USA industry into a fairly cozy oligopoly) has produced phenomenal success for shareholders and employees. Nobody is doing better anywhere else.

  11. I have yet to meet an AA employee who seems to love his/her job. Everyone I meet seems to be doing enough to scrape by, from gate agents and flight crews to phone and email agents. AA is sliding fast to the bottom and it seems that employees know this. Everyone seems overworked and unwilling to go the extra mile to help the customer. Very few have ever been rude but none have been exceptional. But then I’m not an elite flyer, nor have I ever been, with AA so maybe you’ve just seen the premium cabin experience…

  12. This is news to hear them say it out loud:

    “Philadelphia is their transatlantic gateway, New York airports serve boutique business markets.”

  13. @Robert — I’d be shocked if that group of employees is representative of most. Look, most front line employees in any business do not LOVE their jobs. Job LOVERS are unusual. But if your employer just raised your pay by a freakin’ unbelievable amount (and all AA front line employees have received unprecedented pay raises the past couple years), you’d probably like your job — at least a little. If you don’t, I would submit there would be NOTHING management could do to motivate that employee. Pay isn’t everything, but if you’re not a zillionaire, it’s usually the most important thing.

  14. How can they improve upgrade availability when it seems they are decreasing the number of first class seats on domestic routes? They have already decreased the amount of MCE seats and it appears they will decrease MCE even further on some of the new planes.

    I’m currently EP and will qualify again for next year. Would love to switch, but DL is not convenient due to flight options and UA is the only other practical choice. It would be interesting to see a comparison of the number of extra legroom seats, the number of first class seats and the number of top level elites to get a sense of which of the Big 3 will provide the best chance of getting upgrades – or at least a good shot at an extended legroom seat when having to book late.

    Perhaps they are all equally as bad (or will be soon by copying American), but it appears AA is driving to the bottom the fastest.

  15. “They know award availability and upgrades are an issue and promise they’re on track to improve.”
    Based on past performance, this is an empty promise.
    Why even pass this information on to your readers? If anything specific was offered I can understand it. When should we see an improvement? 2017? 2018? 2019? or never?

  16. I think they will go revenue based for awards in the near future. They will sell this something like “pick any seat, no blackout dates, any flight” problem is it will cost you a ton of miles and there will be no award chart. I hate to be negative but earn and burn AA miles.

  17. “They know award availability and upgrades are an issue and promise they’re on track to improve.”

    This is BS. They already promised this multiple times but it’s getting worse and worse. They are on track? Shameless. Even hub to hub now you can only find Saver awards either on first fight in the morning or none. I closed all my Citi Aadvantage cards and stated to them I am closing because Advantage mileage program is a scam. Even if I live in DFW and my choice is limited, I switched all my domestic flying to SWA and international to Delta. I am not giving them a single dollar business. I can’t wait for Alaska to start more destinations in DFW.

  18. Granted, happy employees do a better job for customers but there will still be employees who do not provide good customer service. I have no doubt that Doug and his senior leadership team have a clear vision of the people culture he wants. The problem is that ideal is lost between him and the front line employees. There are way too many low and mid level managers-of-people who don’t know the ‘message’ or do not have an interest in cultivating it.

  19. “Boeing 737MAX and A321neo won’t fly transatlantic, but the A321s could fly Phoenix – Hawaii. Philadelphia is their transatlantic gateway, New York airports serve boutique business markets.” I hope A321s fly PHX-OGG. We flew that route (first class) on one of their older planes and I felt it was the biggest disappointment for a First Class product that I have ever experienced!

  20. @iahphx – I’ve worked at crappy jobs that I’ve hated and that have had great pay…the only thing the good pay did was make it tougher to leave. But believe me I kept looking, and once something came along that was similar pay I jumped on it. So now AA just has a lot of well paid, disgruntled, employees. I’ll also say that your point may lead to better job satisfaction for a few but throwing money at a problem only makes the company poorer. Better for AA would have been to put that money into actually improving work conditions and customer experience (which would improve the employee experience as well)…shoving smaller seats onto planes only makes customers more mad at front line staff…

  21. I love how AA markets First Class when they attempt to upsell you…nothing like undercutting your own coach product with a statement like this:

    Best way to travel
    Our largest, most comfortable seat

    ie don’t get stuck in the back, you’re headed for a miserable coach experience!

  22. If American really wanted to “rise above the sky’s” then they would be interested in getting a contract with the ground crews and the mechanics!! Do you realize that they have been in negotiations for 18 months!! The members are getting tired of the run around the company is employing while the pilots and flight attendants have been to the well twice for better wages!!
    Doug has repeatedly told the unions that he wants to give them “an industry leading contract “. Well it’s past time to put up!!
    And why is American sending their aircrafts down south to South America for “maintenance” when they return to the United States, the same work has to redone the correct way??!!
    Sounds like a waste of time and money!! Money that the mechanics should be getting!!
    So next time you “visit” with Doug Parker, please ask him why the delays in the contract negotiations? I’m sure he’ll spin a tale for you!

  23. RE: “American says it’s difficult to offer a better product than competitors, because competitors will match.”

    This “excuse” is so lame!

    Now, is is laughably lame, pathetically lame, or both…IDK…still working on that…but for sure LAME as can be!!!

    What a cop out!!!

    I could go on and on about why this lame-o, LOSER of an excuse, is so totally untrue, oh, you know, about how Jetblue under the former, much better managment instead of the new toadies/slaves to Wall Street who seek nothing more than to strip down to nothing all of our airlines become they become so awful someone else, or even taxpayers via future bankruptcies, has to step in an replace everything being stripped out of our airlines by Wall Street, say the way, lesser, petty thieves strip bare automobiles on city streets, or those who “harvest” the copper pipes or anything else of value that can be stripped out of an abandoned building, or even a new construction site simply to profit from and then further ruin what’s left, or must be replaced on someone else’s dime.

    But the fact remains, examples abound of successful, well managed, quality airlines in the recent past before the current Wall Street engineered OLIGOPOLY came about over the past decade that now allows for the “race to the bottom” business models adopted by, or in JetBlue’s case, crammed down its throat, our airlines by, and at, the specific marching orders dictated by Wall Street.

    Just ask Dave Barger, since the price paid for refusing to kowtow to Wall Street and its demand to destroy JetBlue, was his job as that formerly great airline.

    The fact is, JetBlue was already very profitable BEFORE Wall Street demanded Barger’s removal.

    And JetBlue’s success was originally built on the VISION created by Barger’s boss at JetBlue, David Neeleman, who recruited Barger from ANOTHER airline that made its mark by offering a superior product after nearly being on the brink of collapse barely seven years before Neeleman began assembling his team to launch JetBlue…

    …and that’s right, that other airline that turned itself around and was rewarded with flocks of high yield, business travelers once it proved its turnaround was real, and had indeed become the cornerstone of a VISION articulated and implemented by Gordon Bethune, was Continental, where Dave Barger was in charge of the Newark hub Continental had after that airline, when it was being (mis)managed by (the barred for life from the industry, and notorious pariah of many a labor group) Frank Lorenzo, bought a budget airline (or what Spirit, Frontier or Allegiant would be called back in the day…) called PeopleExpress as that airline was failing, which allowed for Continental to become a truly national airline instead of a brand far better known west of the Mississippi River…

    …of course, by buying PeopleExpress as it was in its final death spiral, this not only allowed for Continental to establish a beachhead/hub/trans-Atlantic gateway at New York City’s doorstep (and the
    East Coast, which it lacked on all counts), it also allowed Lorenzo an opportunity to ultimately backfill everything lost when Eastern was dying, and finally, died, as Eastern once upon a time was the Big Kahuna in NYC, BOS, PHL, BWI and DCA, all of which Continental, and with Eastern’s demise, Lorenzo’s then biggest in the world airline empire, lacked/lost.

    So, when Lorenzo, and his pattern of laying waste to multiples of airlines (Texas International, NY Air, Eastern and finally, Continental) was finally forced out during Continental’s early 1990s bankruptcy, and Gordon Bethune was tasked with what many believed to be the impossible resurrection of an airline many presumed damaged beyond repair, Continental, Dave Barger was the person who whipped the Newark hub into shape as part of Gordon Bethune’s VISION that achieved the feat many thought was impossible, which was simply salvaging Continental as a viable airline, not making it great as he actually did!

    So, let’s see, that’s now TWO examples of airlines that SUCCEEDED under the direction of VISIONARY LEADERS WHO ROLLED UP THEIR SLEEVES, ARTICULATED A VISION, and either built from scratch, or rebuilt a badly broken, bankrupt airline that was teetering on the edge of total collapse – both of which made QUALITY the cornerstone of their business models, and the DNA of their corporate philosophies and cultures.

    Yeah, I could recount how Bob Crandall also took a rudderless airline that easily could’ve gone the route of Pan Am or Braniff, two great airlines in their day that for reasons that this limited space cannot be broken down for their airline specific aspects, were completely unprepared to transition from the days of government regulations under the Civil Aeronautics Board (or the “CAB” as it was called when it existed) to standing — or falling as they both did — on their own as the industry was deregulated.

    American easily could’ve gone the route of Braniff, or later, Pan Am, because it was “lost” and lacking a VISION of what it wanted to be “when it grew up” under deregulation…and but for Bob Crandall, it’s odds of actually being among the last legacy carriers standing now, probably would’ve been even longer than they actually were when Crandall stepped in at a postion a little lower before he rose in the managment ranks there.

    But make no mistake, Crandall’s talent as a new hire at American (he was at Bloomingdale’s before moving to AA), and later his VISION as his responsibilites expanded there, which very much were focused on (truly) making American Airlines great, is yet another example, as to why Parker’s “excuse” is so LAME!!!

    Great airlines, even great American (both the brand and other domestic) airlines, with visions and a passion for serving ALL CONSTITUENCIES, passengers, employees, vendors AND shareholders, have EXISTED, and still CAN EXIST.

    They have EXISTED many times over — and eventually, WILL…whenever the next visionary leader like David Neeleman, or who knows, maybe even David himself if he can get around the VC embargo/drought imposed by the financial interests that nominally escape/evade whatever their clever (and obscenely high paid) lawyers instruct them to do to stay below the legally defined thresholds are that would otherwise trigger anti-trust actions to eliminate and breakdown the stranglehold that is now facilitating and protecting obscenely profitable business models that are only possible if an OLIGOPOLY exists and everyone plays by substantially similar rules and business/selling/pricing practices and models as most of our airlines, and certainly American, Delta, United, and more recently, JetBlue, do.

    This nasty, despicable, immoral, unethical, and possibly “more wrong things” business model that is the glue holding the OLIGOPOLY together and making it so lucrative, is that everyone pretty much has to think and act the same.

    Oh, sure, they all have to put up appearances, or window dressing, that they’re not all in cahoots on the action (“wink, wink”), but this model conveniently doesn’t work if someone decides to build their own, and play in, a better sandbox.

    Something United may have found out when it rolled out sub-human class too soon and reportedly lost $100 million as flyers, even “lowly, unimportant” low margin ones, deserted that airline for others that offered something NOMINALLY better.

    So, once the OLIGOPOLY is busted apart, as it eventually and surely will, someone like, or possibly even the one and the same, David Neeleman, will come along and show these loser miscreants who lack any VISION because it pays for them to sit on their cushy duffs cashing in multi-millions in bribes…er stock options…paid to them to lack any vision and just take the most recent, and then the next, set of passenger hating, sadistic, product degradations (they laughably call “improvements”) dictated by Wall Street to better fund the next round of multi-billion dollar stock buybacks.

  24. Oops! Won’t elaborate here and now …

    But how can one possibly forget the greatness achieved when PM Margaret Thatcher (she had yet to become “Lady” at the time) tapped Lord King, who then hired Sir Colin Marshall, and this robust effort lead by people of considerable talent, substance, imagination, and, oh yeah, what’s the word…VISION!!!…took Bloody Awful, as it was called in its bad old days (before the wrecking ball being swung daily by Alex Cruz of late brought it back to somethng even worse than “Bloody Awful” – or “Bedbug Airways” [it’s all so terribly sad]) transformed that then reviled, and often mocked for its terribleness, airline from worst to its quite legitimately self-proclaimed motto as the “World’s Favourite Airline”…

    This notion that QUALITY airlines are doomed to fail is such utter nonsense it’s not even funny.

    All it is — is a self-serving LAME excuse for those who get paid very well to tell this lie.

    The graveyard of airlines as crappy as most of our current crop of airlines is filled with as many, or perhaps even more, that got there because they were bad airlines that consumers, when they actually had a choice overall, or as United’s recent disastrous too fast roll out of sub-human class also demonstrates, CAN AND WILL flock to those offering something better if given even half a chance to do so.

    Heck, if the reason United’s roll out of sub-human class was an epic, $100 million, fail was because AMERICAN WAS BETTER (wow!), THAT ALONE SHOULD BE INSTRUCTIVE AS TO JUST HOW HUNGRY (or is it DESPERATE?) FLYERS ARE FOR SOMETHING BETTER THAN SUB-HUMAN CLASS…

    …that alone.

  25. If JetBlue didn’t have that albatross around it’s neck forcing it to conform with the “Race to the Bottom” or the OLIGOPOLY won’t work anymore business plan demanded by Wall Street that’s behind the post-Neeleman/Barger eras at that airline, it would clean up…

    …i guess we should all get on our knees, bow and scrape, and kiss the hands with the rings that gave JetBlue permission to pretend it’s not beholden to the same greedy Oligpolists who have hijacked our nation’s airlines, and some others, like British Airways, and are intentionally running them into the ground while they destroy so many of these formerly great, quality airlines…

    …but really, if JetBlue upped its game now instead of going the route of “sucking a little less” than everyone else as it is now doing, wow…now that would be transformational…

    …of course, something like that requires visionary, transformational leaders like the ones JetBlue used to have…

    [ sigh ]

Leave a Reply

Your email address will not be published. Required fields are marked *