American’s Problem: Management is Out of Touch With Customers

The most successful businesses try to understand their customers, figure out how to add more value, sometimes even before customers themselves know what they need. Executives work to understand a product, how it’s experienced by customers, even before it’s introduced to customers. That’s the very opposite of doing the least amount possible for customers.

Doug Parker spoke with employees American Airlines ‘Crew News’ this past week, and he seemed to reveal which approach they take at American Airlines.

American Airlines Thought They Could Live Without Offering Seat Power

US Airways was late to add internet to its planes. They didn’t think they would make more money offering internet, so why should they do it? Doug Parker explained at the Phoenix Sky Harbor International Aviation Symposium in 2012 that they only decided to move forward when they saw they were losing ticket sales from customers who wouldn’t fly an airline without being able to stay connected.

It seems he admits to not learning his lesson. When America West took over US Airways, they actually took power out of planes that offered it because that would reduce weight and save fuel. Parker suggests he doesn’t remember why the legacy US Airways fleet mostly doesn’t offer seat power (“for.. some reason.. cost, I’m sure”) and says “in retrospect, we should’ve started earlier [installing seat power], we thought we could live with this, probably shouldn’t have tried so at any rate we’re going as fast as we can now.”

Parker liked that when US Airways consistently offered no power, customers knew that and had to have their devices charged. Now he thinks the problem isn’t lack of power per se but the inconsistent product so customers don’t know not to expect power. (!)

It’s really a problem when some do and some don’t. People can’t even know with confidence. One thing when they used to know I’m on US Airways I need to be charged before I get on. You don’t want to have people thinking that but at least people knew that, now it’s I’m on American I was going to be powered, I don’t have enough power, and they get upset.

One year ago they announced that they had a plan to add power. They’ll finish adding power to planes in 2021, eight years into the merger.

And since as of September they had no maintenance program in place for existing seat power outlets but were ‘working on’ developing one, I bring a UK power adapter to use even on planes I expect to offer plugs.

American’s CEO Has Never Flown the Plane With Tiny Lavatories and More Seats Than Ever

At the end of November I flew American’s inaugural Boeing 737 MAX flight. That’s the plane which reduced legroom in first class and main cabin extra, and which has just 30 inches of pitch (the distance from seat back to seat back) in the rest of economy.

The seats don’t recline as much as before, and they don’t have seat back video screens either. They do have power and Viasat satellite internet which didn’t work well when I flew, and that I’ve heard many complaints about since, though it’s likely I only hear about the complaints and not the successes.

However the biggest problem with this planes, in my opinion, is the tiny lavatories with even smaller sinks.

In Q&A with Parker a flight attendant asked about the lavatories.

    Flight attendant: “The doors open in the lavs and nobody can get in or out. i don’t know if you’ve been on it”

    Doug Parker: “I have not been on the MAX.”

    Flight attendant: “If you gain an ounce you’re not coming down the aisle i assure you.” (laughter) “but what are they revamping anything on it or is this something that it is what it is?”

    Doug Parker: “tell me what the issue is again, it’s the bathrooms?”

    Flight attendant: “In the aft of the aircraft the two bathroom doors open up and they lock into each other. so now you got people coming out of the bathroom into the galley and then we have to shut the doors, let them out, and let the next two people to use the restroom… and the sink you get soaking wet because it’s so small you can’t get your hands in there, so it really has some design flaws”

Doug Parker, the CEO of American Airlines, has never been on their new plane with their new standard interior which generated a flurry of controversy since April causing the airline to back off a plan to offer even less seat pitch.

The executive team talked about possibly changing the doors on the lav going forward (a ‘cutover’ not a ‘retrofit’), but that they chose the ones they did for customers.

Parker joked (!) about how customers were having water splashed up on them when turning the water on because the sinks were so small. They’ve reduced water pressure to compensate. And they claim that customers like the 737 MAX more than other aircraft which doesn’t say much about their other aircraft.

Failing to Put Yourself in Your Customers’ Shoes Explains a Lot of the Airline’s Problems

American puts a single-minded premium on on-time departures, believing those are highly controllable and the major determinant of on-time arrivals. However the pressure they put on employees to get there means that other service elements fall by the wayside. D0 is considered an excuse for almost any other decision, D0 trumps any customer concern. Yet they don’t even do a good job with D0.

It’s why we sometimes see first class seats go empty when passengers remain on the upgrade list. Or why some gate agents won’t process upgrades for customers unless they’re waiting at the gate.

American investments heavily in its lounges. Customers spend for those lounges. But instead of being able to wait in the club and work before a flight they need to be at the gate or risk losing an upgrade, or find the flight is boarding prior to the time posted on their boarding pass (risking not having overhead bin space for their bags).

Boarding early is frequently thought of as a D0 issue but for larger narrowbodies the issue is IT. They board 35 minutes prior to departure on Airbus A321s and 757s for instance, but haven’t ever updated the IT to tell their customers that. It wasn’t a priority — compared to doing the tech updates for basic economy, revenue-based mileage earning, devaluing award charts or myriad other cost savers and revenue raisers. Communicating smoothly with customers didn’t make the cut.

Wasting my time by the way is the number one thing American has done to kill my loyalty more than basic economy or changes to the loyalty program.

In Order to Generate a Revenue Premium, Put Your Customers at the Forefront of Everything You Do

American to their credit has tried to put employees front and center, believing that well treated employees will treat customers well and earn their loyalty. However it was clear at Media and Investor Day that there isn’t an overall mission or purpose being communicated to employees, just better pay and benefits.

Relying on second order effects for employees to be nice isn’t enough in any case, products and systems decisions need to be made with customers in mind, understanding how they interact with the airline — how they want to interact with an airline — and more importantly understanding what customers value most and finding ways to continually deliver that better and better.

Do that and seat power would have seemed an imperative years ago. And actually experiencing the product would seem a must.

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, 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 »

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  1. Gary, I couldn’t agree more with everything you said, except for one key exception in your opening line: As an alternative to optimizing the customer experience, many successful businesses do their best to minimize their customers’ alternatives by reducing competition. That’s partly what the legacy airlines’ mergers have been about and, as you’ve repeatedly and persuasively written, that’s certainly what their opposition to the ME airlines has been about. And to a considerable extent, that strategy has unfortunately worked all too well. Any airline that was seriously worried about competition would not take many of the steps that AA, UA and DL have taken, with AA’s mini-lavatories being but one example.

  2. you, Mr Leff need to Do American A BIG Favor….. Stay off their Airplanes. I have never seen such a pathetic, Whiney,condescending Critic. I would have told You Long Ago “take a f’n Hike youWhiner…..we Do not need or want Your Business or Your Worthless Two Cents”.

  3. Except: Every word he wrote is a legitimate observation on American’s consumer-last myopia in managing the airline. AA has fallen from the US leader to just another deplorable airline, with no particular reason to be loyal. If you don’t agree with this truth, which most of us do, feel free not to waste your time reading Gary’s articles. I find Gary to be spot-on most of the time, and I appreciate his writing.

  4. AA seems to think the customer comes last.

    AA pads their flight schedules such that planes generally arrive at their hubs well in advance of their scheduled arrival times resulting in gates unavailable.

    How many times have we heard the pilots advise that we’ll be arriving early, only then to wait on the ground beyond the scheduled arrival time to disembark?

    The commuter gates in Los Angeles are a sad joke and a lie, with the transport times to and from the remote terminal longer than the flight itself. The flight arrives “at the gate” long before the passenger can actually disembark from the terminal.

    ps: Me thinks Reese may be AA customer service rep.

  5. Reese you clearly live in some kind of alternative universe where all is well,up is down and good is bad.
    Oh and you clearly have a character disorder.

  6. “I bring a UK power adapter to use even on planes I expect to offer plugs.” Why do you need to use an adapter on planes? All the outlet I’ve seen on planes are universal

  7. The list of incompetent airline managers (CEO’s, etc.) is a long one. Doug Parker is the latest and one of the worst. I watched him take down American West and US Air, and knew that his control of American would result in AA’s passenger experience becoming his absolute lowest priority. As I repeat to anyone who will listen, traveling on the 737 MAX and other similarly squeezed-pitch configured aircraft is akin to “voluntary waterboarding.” And yet we still keep climbing aboard and accepting the discomfort… Why?

  8. @anon – The lack of a maintenance program for power outlets means that at many seats, the fit for U.S. prong plugs is loose (because the plastic has worn or the metal has bent), and so a U.S. plug receives no power. But because the rest of the outlet is rarely used, a secure fit (and power) is often achievable with a foreign adapter.

  9. @anon – the UK adapter fits snugly into the outlet while US 2 and 3 prongs fall out because the outlet has been used so much they fall out.

  10. The D0 issue also affects those of us who travel with a disabled passenger. AA is easily the worst of the four main U.S. carriers but I live in PHX so we deal with it. The lack of boarding consistency makes it so much worse. Board us first. Board us last. Board us in the middle but let us let the line clear ahead of us. Whatever. Just be consistent and manage your other customers’ expectations so they don’t get angry at US.

    If you want us to board after zone 4 (even though we are always at least zone 3), fine. Just don’t make us stand in the way or tell us it’s “company policy,” when we have hundreds of segments that say it isn’t. And protect us a bit from the zone 5s who somehow think we’re responsible for holding them up and seem not shy about saying so on occasion. And if you want us to preboard can you please make a freaking decision whether Concierge Key go first or not? We. Don’t. Care. What we care about is not having to deal with a pissed off C.K. Who got to go before preboards in DFW who doesn’t understand why we are before him in SAN or worse who tries to shove past us because of where you made us stand.

    United, Delta, and SW have this down to a science. Everyone knows what to expect, everyone is happy. And, interestingly, AA international stations have it down too. With AA in the U.S., at least half the boardings are fire drills.

  11. Gary I do not always agree with you but you hit the nail on the head with this one. I have had EXP/PLT status with AA for 11 years with lifetime status and I have only 1 paid AA flight since April 2017 and that was a one way ticket.

    AA Advantage called me last August and asked why I was not flying with them any more and why my Admirals Club membership was lapsing. I gave all of what you posted above and more. They just don’t care about loyalty to me but they want it from me.

    In the past 13 months I have burned up more than 400k miles with AA and I am now a free agent when it comes to flying. I try to stay away from AA because of the changes made in the past few years. Now AA has to loses a little something for treating this FF like this. I know it is a drop in the bucket to them but they will not get my 40-45 trips per year anymore. Loyalty goes both ways.

  12. Problem is Doug Parker, look at where he came from and how he got there. Much like Anderson at DL real changes won’t happen until there is new management at AA. IMO the density/pitch/bathroom issue will and is backfiring in Parker’s face. It is unacceptable that a CEO of an airline has not been on one of their planes let along flown on. He should have taken the time to fly on each version throughout the year but maybe he feels he knows more. That can lead to very bad decisions.

    Oh well, I don’t fit AA metal anyway

  13. I flew AA extensively like many other UA refugees in the few years after the disastrous UA/CO merger, and it was such a breath of fresh air. I loved the Tom Horton AA…Doug Parker, not so much. It’s now a backup choice for when I don’t want to deal w/EWR, and main benefit for me is being able to redeem on CX.

  14. I’m about to become a lapsed ExecPlat after five years of flying AA regularly. My last set of flights partially explains my decision not to go for anything but Gold (while putting my AA and other OW flights into BA to get their top tier Gold). As has happened on too many occasions, my first flight suffered from having no plane at the gate (quite frequent with AA) at the scheduled boarding time even though it had arrived the night before and for some reason (being the last plane in and first out) was towed to a parking spot overnight. After a half-hour wait we were directed to another gate halfway across the terminal. By the time we were boarded we had missed our flight flow window and had to wait another 45-minutes…which of course meant my 2-hour connection was now less than an hour. At ORD this meant a sprint from L gates to H/K gates to get to my next flight by boarding time. Though should have expected that inbound only arrived at our designated boarding time, so this flight departed a half hour late.

    On the return we once more played find the plane at the gate, no plane at the designated boarding time, then change the gate. This time it was at LAX and the original gate was in T5 and the new gate was back in T4, from which I had already made the trek having spent some time in the new (underwhelming compared to the one at JFK) Flagship lounge. Suffice to say we finally took off an hour late, making my PHL connection of about 2-hours tight given the need to get from a B gate to an F gate! To add insult to the late LAX flight was an ex-US A321 so no power even though we had new seats in F.

    I used to love flying AA and my ExecPlat treatment and benefits but since the takeover that love has waned considerably by incidents such as these (which are not isolated). To add to my frustration, I’ve been trying to get an IB flight segment credited to my AAdvantage account since September to no avail after numerous emails and resubmission through the web site. (Phone calls are useless with no dedicated ExecPlat agents any longer.)

    The only thing I can say I like about “the new AA” is the fact that I bought the stock at $22 and it’s more than doubled over two years!

  15. You’ve hit the nail on the head once again Gary!! I find out more information from you than I get from AA!!
    Mr. Parker doesn’t seem to get the “take care of your employees” as witnessed by the lack of a contract for Fleet Service and our Mechanics. He has promised an “Industry Leading Contract” two years ago and we have got nothing but the run around!!
    With the BILLIONS of dollars AA is making, it’s past time to give US what we deserve!!
    The pilots and flight attendants have gone to the well twice for increases yet we have not seen anything!!

  16. How pathetic that the head of the company has no real life experience with his product. That’s why they’re dropping.

  17. Most of these airline execs are complete morons. It has been that way for decades. Schmucks.

    There is a reason Warren Buffett has called Jeff Bezos by far the greatest businessperson of our age. Amazon keeps offering its customers more and more and more and more for their patronage. It’s amazing how great it is dealing with Amazon.

    Maybe someday Amazon will start an airline and obliterate these stupid incompetent jokers.

    Please, Jeff.

  18. I expect Doug Parker will tell us that the sinks in the aircraft lavatories were designed to be used as a urinal for tall passengers.

  19. I have to agree with you Gary, but I think you are late to the party. For those of us that were and are not Exec Plats, American was a disaster long before the last couple of years. Early boarding, ridiculous 3 and 4 hours delays rolling 20 minutes at a time and basically 0 award availability (again, if you are not exec plat). I was in Dallas sitting at my gate looking at the aircraft that I was supposed to be boarding and their app which had been showing on time suddenly switched to late due to unavailability of aircraft! How can that be, I thought, the aircraft is right there. Nope, that aircraft was reassigned to Jackson Hole! Ended up with a 3 and a half hour delay (in 20 minute increments) due to unavailability of aircraft. And the aircraft we were reassigned was not expected to arrive for nearly two hours, but the 20 minute increments for our departure just kept rolling.

  20. Those quotes were not given to me off the record. I didn’t violate any journalistic practice, sorry. And sorry but if you broadcast comments to over 100,000 employees they aren’t going to stay secret.

  21. Since everyone seems to be bashing Doug Parker let me add mine. How does a CEO have three (3) DWI s and still run a major company. If this was a active employee or crew member they would have been long gone!

  22. Thank you for this article, it simply confirms my decision to never ever fly AA. I’ve not flown AA since the mid 90’s ever since they bought out Reno Air, a little niche airline primarily on the West Coast. And last November I had a choice to fly either AA or CX to HKG. Though AA was a bit cheaper, I went with CX. Absolutely no regrets.

  23. AA: “as fast as we can” = 8 years.
    Doug Parker is a joke. He has turned AA into a joke. He should be forced to only fly in the 737MAX, last row.

  24. Backing Gary up regarding “journalistic integrity” here. Perhaps the comments were made confidentially, but someone that heard them decided to report that information to the press. It is that person’s account that was “on the record” to Gary, not the comments themselves. This is how press leaks work. An informant will tell the press what was said in a meeting, usually with the agreement to remain anonymous.

    Regarding the actual subject matter, while I occasionally tire of Gary’s AA bashing (read: whining), everything he says here is true of the declining customer experience. Just two days ago I was on a flight LAS>LAX and the flight went out w/two empty seats in F w/an upgrade list more than 30 deep. There is some truth that inconsistencies negatively contribute to poor customer experience (for instance, my flight to LAS was a new A321 w/MCE and IFE, whereas my return flight was an old 321 w/o MCE or IFE) but the root of that problem is not the inconsistency itself but rather that 50% of their hard product is total trash. I.E. the problem isn’t that some of the planes have dark blue seats, and some have new thinline seats… the problem is that half of their mainline fleet doesn’t even have screens in F.

    I really want to jump on the “I’m leaving AA” bandwagon, but would my experience as a mid-level elite really be much different on UA or DL?

  25. @DUI Doug Parker: Off the record = not recorded; in private; spousal/family confidentiality; attorney client privilege; or doctor/patient conversation. In this case, for a public company, shareholders have a right to know what the CEO says to employees in a public setting.
    If I held stock, I would vote no to every director on the board for hiring this Chief Executive if he wasn’t familiar with the accommodations that affects 100’s of thousands of ticket sales, as well as possibly impacting customer loyalty. The fact that an argument against the 737Max seating arrangement and lavatory design can be stated so simply on a blog and by a crew member means that the problem should not come as a surprise to the CEO.
    The CEO needs to spend about 30 days straight flying on other airlines and airplanes, and then fly on his, and in no case in a seat better than premium economy. And he won’t need to miss work, because he will have to do his job and function just like his customers, whether they are traveling for work or pleasure.
    This guy may think he is important, but in fact, his shareholders and customers don’t care about his problems when his decisions and operations ruin their travel plans.
    If he cannot do this, he needs to get out of the CEO chair and ask to join the Board of Directors where the shareholders can decide whether or not to keep him.

  26. Airlines wouldn’t need sinks, or at least nit as many and not as much water, if they used hand sanitizer.

    Also there ain’t no such thing as off the record. It was said or done or not.

  27. Oh, sure, there will be some who claim otherwise in order to justify ever higher profits to line their pockets with than they’re already doing.

    But unless and until we see frequently recurring posts and more importantly pics on social media by road warriors documenting Doug Parker, Oscar Munoz, et al, and their families, or those Wall Street analysts who comment from “on high” in their Ivory Towers, sitting in the teensy weensy seats they demand nearly everyone else sit in, in the horribly overcrowded, densified, no legroom, no IFE rows they insist are perfectly fine for everyone else but them to sit in when they fly, I’ll take what they, and those who suck up to them, say with a grain of salt.

    Fact is, in an era of government sanctioned airline Oligopolies (bad enough) with an Administration that has made clear that its priorities lie with enhancing the wealth of a very few at the expense of a great many by methods including turning a blind eye to enforcement of consumer protections, health, safety and even hygiene aboard aircraft in terms of cabin configurations, size and ratios of lavatories to passengers is getting short shrift, and very soon, if it hasn’t already, reached the point where the few remaining airlines in the absence of competition or effective regulatory oversight, will cross the line where flyers’ are endangered, and ultimately, some form of regulatory pressure, if not outright intervention, will be required to deal with the already abusive, and increasingly sadistic, seating and cabin configuration manipulations that when we’re being honest, we all know are not just unethical or immoral, are dangerous, irresponsible, and unhealthy in a variety of ways.

    Like it or not, if we’re not already there…we will be soon.

    If we still had meaningful competition, like we used to, and as we were promised would result from deregulation, perhaps regulation of seat sizes, row pitch or the size and number of lavatories aboard aircraft might not be necessary.

    Alas, now we have companies that are exhibiting many, and increasingly more, of the classical symptoms of an industry trapped in/hostage to (with consumers being abused) an OLIGOPOLY.

    Does not matter if it’s airlines, cable tv/internet, or even a utility…an OLIGOPOLY behaves a certain way, acts a certain way, and calibrates its business models a certain way that maximizes its profits a certain way because it can get away with things that in competitive industries/markets it otherwise CANNOT get away with.

    And when “winning” is defined by who can get away with offering less and charging more, as our airlines now know they can do with virtual impunity, or EXACTLY what happens for companies that need not fear meaningful competition or the threat of government regulatory intervention is EXACTLY what we have: a race to the bottom where the competive dynamics are predominantly, or even solely, focused on who can suck more (because sucking more means investing less in the product and value offered for the price) and get away with it INSTEAD of who offers something better or or more value for the same (or a lower) price like Jetblue, and many other airlines, used to do when the type of competition Alfred Kahn (the “father” of airline deregulation) envisioned would result once our airlines were freed from the “heavy hand” of government regulation under the Civil Aeronautics Board (or CAB) pre 1978.

    Oligopolies are a tax by the wealthy on everyone else. Those who claim to worship at the alter of low taxes and meaningful, functioning, deregulation would be wise to move heaven and earth to eliminate the airline industry OLIGOPOLY we now have – or accept a future when reregulation will be required to address the already obvious flagrant (even sadistic) abuses of market and pricing power disguised as “fees”, “choices”, “options” or only “paying for the things you ‘want’” (when by the stroke of a pen [or code in a computer] basic necessities are arbitrarily redefined into “perks” or [hilariously] “luxuries” simply to articificially a menu or category of fees to generate excess/windfall profits that otherwise would NOT be possible in an industry where the barriers to new entrants and competition were normal, and the threat of a competitor offering something better or offering more value for the fare paid actually existed).

    What we have now is NOT a competive airline industry under deregulation. It is an industry that seeks to intentionally worsen its products to artifically inflate its profits to fund obscenely large stock buybacks. To wit, it has done so using government provided tools such as: bankruptcy protections to break contracts with employees, cut wages, change work rules, dump (underfunded) pension obligations on the tax payer, exploit tax code “preferences”, state and local government subsidies, and more recently, enhanced corporate welfare (“tax cuts”).

    It’s business/pricing models are now oriented towards debasing and degrading products instead of improving them to drive profits – something virtually every industry expert, most consumers, even the airlines themselves, calls a “Race to the Bottom”.

    And it’s a business that knows the threat of new entrants seeking to compete by offering a better product (as Jetblue did successfully and Virgin America was seeking to do before being bought out by a much larger, old line, legacy airline whose profits would be threatened if it had to compete against the upstart as it expanded in the older airline’s markets in addition to the gates/slots widely reported as being the purpose of the acquisition…) is virtually nil given the high, if not now insurmountable, hurdles that must be overcome to launch a new airline.

    Fares have gone up. Fees have exploded, not to mention increased significantly after being introduced for most things. Seats have gotten smaller (and harder). Rows have gotten narrower and narrower in EVERY CABIN (except, of course, for international long hauls and a handful of domestic transcons where competition actually exists [see how competition when it exists actually works!!!]. Lavatories have become fewer and smaller. “Service” (that is, if one can still even call it that) has all the charm of a trip to the DMV or doing anything with ones’ cable tv/internet, or even cell phone provider.

    Yet, despite the illusion of lower fares made possible by low base fares falling into a different category for government statistical purposes than ancillary fees, once fees and other punishments/penalties are tallied up, the actual TOTAL COST for most flyers has gone up significantly with each passing year since Doug Parker and his team took over American Airlines and completed Wall Street’s long sought wish list to eliminate competition in this vital transportation industry that we, and our nation’s economy, depends on and cannot do without (just like a utility) so it can make our airlines the dependable cash cows they have now become.

    Make no mistake. Oligopolies are toxic, and longer term, are destructive to the economies they exist in.

    And they serve only those who stand to profit from the windfall profits that results when one can charge a lot and offer little value in return.

    Very profitable for the few who actually reap these windfall profits, but essentially a tax on everyone else by those who reap these windfall profits who then cannot rush to take the money out of the company and into their pockets fast enough as they have been, and continue to do, with “ginourmous” stock buybacks that leave flyers with little else in return – other than, for example, American’s awful and depressing no legroom, no seatback IFE, rock hard, knee crushing seats, teeny-tiny loo 737-8 MAXes…THE PERFECT EXAMPLE, or one might even say, “Poster Child”, for just how deep into OLIGOPOLY our airline industry has indeed already become.

    Back in the day, airlines THIS BAD as American surely now is (think Eastern, Pan Am, TWA, Braniff, Tower Air, PeopleExpress, just to name a few) were shunned and deservedly, failed – as should happen in an industry where competition thrives.

    Now, unfortunately, airlines know they can get away with being as awful as American is, and the even worse American of the future once those despicable, stripped down, overly densified 737-8 MAXes expand from the handful now, to the mainstay of its narrowbody domestic fleet – or exactly as basic, entry level Econ 101 textbooks say happens on the very first page or the Chapter discussing what OLIGOPOLIES ARE and how the BEHAVE…

    Worse still, where once airlines as bad as American now is usually failed, Doug Parker recently had the temerity to say the era of his CRAPPY airline never losing money again was upon us.

    If that alone doesn’t make clear how dangerously un-competitive – or OLIGOPOLIZED – our airline industry has become, nothing will.

    Fact is, airlines in the past that were as bad as most of our airlines now are, and whose business models now are predicated on offering a product as bad, or even worse, as those airlines of yesteryear, FAILED for a reason – because they were bad, and their existing COMPETITORS, or an upstart, offered something BETTER.

    If our current crop of AWFUL, hate-selling, passenger abusing, sadistic airlines actually had meaningful competition now, they too, just as many others in the past, would fail.

    But they don’t have to compete on anything other than who can screw passengers more and actually get away with it.

    In fact, to the airlines and the exceptionally small group of people and entities that can both afford to completely avoid the conditions most of us are expected to endure while reaping the windfalls that can only result from an Oligopoly, this “new paradigm” is considered “winning”.

    However, what’s been missing from this discussion is who’s losing? And by how much?

    Sure, stock buybacks are sweet for the privileged few who benefit from them in an era of limited, if any, meaningful competition in terms of high fares, deeply debased/degraded product quality, and no-choice “choices” for an additional fee, of course, replacing basic necessities for most flyers.

    But these handsome profits for a priviledged few have to come from somewhere. And they do. From consumers who are paying ever more each year once fees are included out of their pockets directly when they fly, or through the added expense virtually every corporation is forced to pay for its travel expenses to our Oligopolist airlines that gets passed on to the consumer of higher prices for the goods and services they purchase.

    An Oligopoly is a parasite that sucks the life out of economies. Our airlines are now exactly that.

    The symptoms definining this OLIGOPOLY abound, if only we’re willing to open our eyes and accept it.

    Bad airlines used to fail as they rightfully should. Now the leader of one of our very worst airlines crows that his airline will never lose money again.

    That alone should tell everyone just how wrong things now are with our airline industry.

    That alone.

  28. Two things I do not understand at all from reading all these comments.
    1. Why would anyone protect or defend Doug Parker? He has totally trashed three airlines: AmericaWest, USAir, American, each of low quality that tested the limits of what a customer would bear. While I’m sure that many people made lots of money in the process, it seems obvious that all of this trickery is really sophisticated gambling. In essence it has nothing to do with flying, customers, comfort, safety, except as incidental to the money manipulations. David B is right when he points out the stock gain as the only benefit to these maneuvers — and then only if you own the stock and don’t have to actually fly.
    2. Why blame Gary and call him whiney when he reliably points out that the Emperor has no clothes? Seems to me that is his job and he is doing it in a way for which we can be grateful. We have no one on our side (“our” being travelers) in this game of three-card monte we are forced to endure, except Gary and a few others. He and they provide their services honestly at a quite amazing price.
    The sad thing is that don’t I foresee much change in the misery unless perhaps we have a gigantic airline disaster where people are trapped in their tiny cell-seats. Even then we will need oceans of proof to catch the bad guys.

  29. I used to be loyal to AA, even connecting on AA when a competitor had a nonstop. A few years ago I stopped being loyal to AA and now am a free agent. I now fly whoever has the best schedule for the best price.

    As for my opinion of Doug Parker, I’ll just say I’d rather have Jeff Smisek as airline CEO.

  30. I’m sorry, but if the lack of seat power on some aircraft, small sinks in MAX lavs and a focus on on-time punctuality are too much for you, fly a different airline or start your own. No airline or business will ever be perfect, and I’m pretty sure these “issues” are not the ones management is most concerned about.

    Your attempt (and that of some of your readers) to paint Parker as an unsuccessful CEO is beyond laughable. The guy only single-handedly rationalized the US airline industry, saved at least 100,000 high paying aviation jobs, created the world’s largest airline and made his shareholders tens of billions of dollars. Considering his company’s stock hit another record this week and the company is leading the industry in unit revenue gain, it would seem like his airline is doing OK. If the rest of us in our lifetimes could accomplish 1/100th of what Parker has, we’d be pretty freakin’ successful.

  31. On testing the limits of what customers will put up with …

    JUST got off HKG-DFW flying in AA econ … yikes, what a cattle car experience. And FA’s wore latex gloves during service adding to the sincerity and warmth of the friendly atmosphere (not).

    After flying Singapore Air in days prior – wow – what a shocking, sad comparison.

  32. Geez, I waited too long to comment on this terrific point; and now, I find myself at the tail end…

    First, for those whining critics of Gary, take a hike, as 98% of his blogs are consumed and great to read! This one really stands out! And as “the Mooch” found out, nothing is really ever “off the record…”

    Second, I come from a generation that that as young “Baby Boomers” we were the first to start flying on a regular basis. My first flight was on an American 707 Astrojet from the new ORD to IDL, in F for a breakfast of fresh blueberries and eggs! (My dad was a regular since the Tri-Motors!). Importantly, as the airlines flourished in the 1960s under “MadMen” advertising, we learned how to classify them: American was the business carrier; TWA was for the stars and actors; United was for the families. In the 1970s living in Houston, as you could not even go to Hell without transferring in ATL, we studiously focused on Delta to avoid Eastern.

    Today, thanks to the so-called finance wiz boys taking over from marketing and operating types, the end result is not surprising. To define the current head of American, just look at how pathetically United was run and gave up its market position over the decades. Remember how UA was going to combine with Hertz and Western International; remember the last occupant of the executive suite of UA before merger with Continental; who can forget Continental’s wiz bang team? And of course, there was always Allegheny; despite being dressed up pre-merger as USAIR, we always knew it to be, “You Still Are Allegheny In Reality!”

    As American suffers from an arrogant team of tone-deaf management incapable of listening to, let alone, supporting, the actual on site operational people–FAs, pilots, etc, it is obviously first in line headed towards a fracture when the economy dips again. What is the purpose of being loyal to such an Orwellian company that has no, absolutely zero interest, in the physical comfort of its customers–seats, bathrooms, quality of food, etc? We will never change them; they will never miss us. As it is, notice how United flounders along, with its reservations outsourced somewhere in South Asia, with very bad accents.

    Rather than just “laying dead cats at the door,” I would suggest obtaining a list of the Board of Directors of AA and directly contacting them to inform of their failure of stewardship–to understand the outrageous physical constraints of new aircraft-seats, bathrooms, aisles; the crap served for meals in all classes, and the fact that we can go elsewhere! Be sure to contact Congress, despite their enjoying the upgraded benefits. Sadly, it will take at least one major accident to evidence how people could not timely escape due to the rigid configuration of the equipment.

    As well, I would emphasize to the Board that as much as we may detest the configuration of politics in the Middle East, we no longer are concerned if it impacts revenues for AA. Indeed, we will screen candidates for Congress on their basis of knowledge re aviation-for giving away the tax-funded FAA; encouraging cabotage rights of foreign carriers, etc.

    Obviously, we must turn our backs on the rewards program and embrace Alaska and Jet Blue. Indeed, we should push against the local control of airports that have so slyly prevented expansion of Jet Blue and Alaska, e.g., ORD. Frankly, as i have found Lufthansa’s B Class to be far superior to AA’s F Class, I have no reason to be interested in flying AA!

    Finally, I would point out for those in business to appreciate the ability to understand the detrimental issues created by such deleterious actions by benchmarking to other industries to learn the problems of your own. Consulting in the passenger rail industry, I have persisted to evidence how pathetic Amtrak management is re: quality of food, lack of bartender training to increase revenues; the horrific contraption that has replaced the berth in sleepers, the inconsistent customer service concept by on-board staff, etc.

    When given a choice, people will indeed move on. In the case of Parker and his perverted vision of flying, nothing will change until the dollars fly out the window. Guys like him, and his band of hombres, have depreciated air travel to its lowest dimension. What a joke!

  33. “AA seems to think the customer comes last.”
    I disagree. Instead, I think Doug Parker’s mindset is to find new ways to F the customer. For example: keeping obsolete dirty planes is a great way to do it. It shows pure contempt of the paying customer. He can gleefully enjoy the fact that large numbers of AA customers are getting flown in flying trash cans day after day. And with the new planes… he will squeeze their space as much as possible and install the smallest toilets that he can. This way, whether an AA customer is flying in a new or an old plane, they get screwed either way which makes Doug a very happy man.

  34. I am a permanent gold customer of American which means I have flown over a million miles. Yet people who are platinum for only one year are given priority over someone who has been steadfastly loyal to American for decades.
    Let’s not blame the crwes, they still do their jobs with the consumer in mind. And often having to quell bad tempers and bad behavior due to the horrible seating, food, etc. It makes passengers angry and uncomfortable and that leads to tempers and acting out.
    if American isn’t loyal to me, constantly changing the rules of what you receive for your millions of miles of loyalty, than I’m not loyal to American. Not that they care.

  35. Agree with all of Gary’s points. Of course Doug Parker hasn’t flown on a MAX yet, he’s an overweight alcoholic who would never fit in a seat with 30″ pitch.

    Also, they need to stop with the credit card pitch. It’s very annoying.

  36. Thanks to Howard Miller and Rail Prov… For the extensive analysis and feedback.
    Air travel is definitely where bus travel was and still is even though bus technology and seating has improved. Airlines must cater to their bread and butter customers, namely coach, because that pays the high fixed costs. First, business, and fees generate the profits.
    From the middle of the US, I am about 13 driving hours from 90% of places I want to go. By air, I am 6 to 8 hours from most places, including TSA times, transferring at hubs, and commute to or from the airport or rental car counter.
    Given the tremendous advances in self driving vehicles, ride sharing services, bus technology, internet and cell phone access, ear buds or iPods, etc, I think airlines may find new competition from ground travel that replicates or is better than coach service air travel.
    The low cost airlines would be significant competition to ground transportation, and this transportation model is pretty far away, but if it does catch on, having 12 more seats on a half full plane in 8 years won’t increase executive bonuses. And alienating repeat customers may accelerate the process.
    Personally, I can’t bear the thought of not being able to push a button and having a crew member appear to help me, or using the “facility” on a bus, which is worse than the one described on the 737max. But if a bus puts a good toilet on board, I may be convinced.

  37. @iahphx i have also written the mistake i made, i did not predict falling oil prices. i believed us airways was substantially overpaying for American, but the deal turned out to be a massive put on oil. They bought at high oil, oil fell, and low oil prices made them look good. However I wrote that the higher costs that would come with the merger would become a problem for the airline, it’s precisely a criticism of Wall Street today. And what actual merger-related elements do you think have driven profits? They are still running separate businesses because they haven’t gotten their flight crew onto a single system yet. Their profits are driven by the delta in oil.

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