The CEO of American Airlines Lays Out His Vision for Low Revenue Over a Quality Coach Product

Recently I saw someone’s comment on my Facebook feed that what you think about American Airlines corresponds directly to whether you fly mostly international business class and premium cabin transcon flights (New York – Los Angeles / San Francisco) or whether most of your travels are on their domestic network. That seems right to me.

American Airlines has made a huge investment in its product — but not where most people sit. Internationally we get good fully lie flat business class seats, better bedding, and better lounges while domestically even in their premium cabin we get less legroom and removal of seat back entertainment.


LAX Flagship Lounge

They’re moving seats closer together throughout their aircraft which they say they’re making up for with thinner, less comfortable seats that have less recline.

There is a difference of vision between American’s premium international product and their domestic product, and between an American that sees customers as demanding low revenue transportation and airlines seeking to earn a revenue premium by providing a better product.


American Airlines New Standard Domestic Seats

Delta incidentally just announced they wouldn’t squeeze more passengers into coach on their Boeing 777s, retaining 9-across seating in each aisle while American is 10-across.

This difference is visible from airline Chairman and CEO Doug Parker’s response to an employee asking a question about media criticisms of their 737 MAX (and really it is much broader than that just the one new aircraft type, since this is where American is going with their whole domestic product). The question was about more low revenue passengers versus higher revenue from a better product.

An employee asked Parker in a ‘crew news’ session last week, “Has accounting determined that offering more of an inferior product drives more revenue than perhaps offering a superior product that could command higher [revenue]?

Parker began acknowledging that of course it’s about the economics of the product,

I’ll answer your question without biting at the poor accounting team. You asked the right question. What we need to do is make sure we’re putting the right product out there for our customers and for all of our team who wants nothing more than to take care of our customers.

Then he makes the case that the 737 MAX interior is no worse than any other,

As it relates to this airplane, have you flown the airplane 737 max yet, it’s ok if you haven’t. I only ask because… I don’t want to sound defensive of something that… we’ve gone and intentionally done that we have the right aircraft for the future but also know that we can make changes over time as the competitive dynamics tell us that we should.

This aircraft, whatever we have in the fleet now.. 10, 15 of these airplanes now flying in the system. The feedback from the customers anyway, likely to recommend scores etc. look pretty similar to all of our other aircraft types That’s not to suggest we shouldn’t do even better with a new airplane. The main feedback we’ve gotten is, we’ve addressed the water pressure was too high for that shallow of a sink, it was splashing on people, the team fixed that. The doors opened into each other from the lavs, it made it hard for people to get through, that is being addressed. The ones that are flying around today still have it, but new ones are being delivered without It and we’ll get those fixed over time.

But some of this also has become, and this is where I’ll sound defensive, but some of what you just described, I should also mention it has the largest overheads in the industry which is great, which is one of our huge customer issues, satellite wifi allows everyone on the aircraft to stream Netflix at the same time, so those things are all positive.


American’s Boeing 737 MAX With Bins Open

Stop and think about his for a moment: they’ve engineered an aircraft that’s brand new, has bigger overhead bins so customers don’t have to gate check, and offers high speed internet. And indeed for several months they were offering high speed internet for free. And they’re still not getting happier customers than with the old legacy US Airways ‘basket of deplorables’ fleet that doesn’t even have seat power. That alone should tell them they’re doing something wrong, but Parker argues it means they’re doing something right.

Parker then makes the case that packing seats in tighter is fine, because customers have less padding in their seats.

On the seat itself we indeed have, we put in a new technology seat.. you’ve gotten to the point where the old seats that were an inch and a half wide now can be half inch wide, my math is probably off, two inches to one inch, whatever it is, they’re about an inch slimmer so when we have a 30 inch pitch on that airplane to the customer, and the customer space, is exactly the same as the 31 inch pitch on the wider seat. And that’s what we have on that airplane. So the 30 inch pitch on the new MAX is the exact same customer space as the 31 inch pitch that we have on a lot of our airplanes today. So that doesn’t seem to be an issue.

I’ve flown the seat. I don’t think it’s tighter than the worst configurations American offers in coach today. I can deal with it if I’ve got an aisle seat. But the biggest issue is that in order to get that space they’re using uncomfortable, less padded seats. It was fine, or close enough to fine, flying Miami – New York LaGuardia but the 737 MAX is designed for long range missions and they’ve scheduled it to fly Washington National – Los Angeles.

The 737 MAX also has less space in first class and in Main Cabin Extra, too, and it’s competing on that route against Delta which offers a lie flat seat up front.

A month ago American acknowledged that Parker still hadn’t even flown their new standard domestic product. This isn’t just about the 737 MAX. It’s the new standard experience in coach for their whole domestic fleet. They’re taking existing planes with more space, bigger lavatories, and retrofitting them to have less space and smaller lavatories. And you know the customer experience isn’t key to their domestic product when their CEO hasn’t even tried what they’re selling.

The American Airlines corporate communications team had been offering the excuse for the lavatories they’re using that when they purchased the MAX Boeing wasn’t offering other lavatories in their standard catalogue, implying that they had no choice in the matter. The Boeing standard catalogue certainly now includes different lavatories. No one is requiring American to retrofit their whole fleet with these lavatories. And Parker now admits that if the lavatories had been available earlier, he’d have wanted to use them which sort of undermines the ‘we had no choice but to accept them’ excuse.

Indeed he says they choose the smaller lavatory because that’s what customers want,

And the bathroom you mentioned you’re right, it’s two inches more narrow than what we have on other 737s. But that’s a new product that wasn’t available when we put the old 737s in place. My guess is that if it was that’s what people that chose to bathrooms who chose to put bathrooms on airplanes a long time ago would have put in, because that allows you two more inches of space in the main cabin, and that’s where customers would rather have it. You can’t get too narrow of course, but that two inches more narrow is sufficient. Indeed Delta’s been flying that same lav around on their airplanes for a couple of years now, and we’ve just introduced it.


American Airlines New Standard Domestic Coach Lavatory

Presumably the argument he wants to be making is that customers are still buying the product, not booking away from it, so their revealed preference is a willingness to put up with it. And to the extent customers choose on fare and schedule and not comfort it doesn’t make sense to invest in comfort.

In contrast Delta argued in its earnings call that passenger experience is driving a revenue premium in other words customers are willing to pay more to fly Delta because they believe they’ll get a better experience. So we have a difference in vision. And it isn’t primarily about lavatories.

What’s the alternative to going from 150 seats on a 737 to 160 under Parker’s leadership and now to 172? He offers this straw man,

Of course you could decide to have the airplane with 60 inch pitch and everyone’s gonna have lie flat seats, but that airplane won’t work. We’ve got to have one that works but also meets customer needs. And that’s what we think on the 737 MAX at this point.

Of course the issue isn’t a smaller lavatory and 30 inches between seats or 60 inch pitch and lie flat seats. The decision American Airlines is making is between 160 seats on the aircraft, 31 inches minimum between seats and a lavatory customers can turn around in along with a more premium first class experience and one that has 172 seats, 30 inches minimum, and that smaller lavatory — along with removal of seat back entertainment screens and less legroom up front too.

American Airlines international business class and premium cabin transcon is getting real investment. That’s not what most of their customers are flying. American relies more heavily on domestic for its revenue than United, for example. And the domestic product that isn’t flying between New York and Los Angeles/San Francisco is getting worse.

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 »

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Comments

  1. Gary,

    Perception is pretty much what matters in any financial transaction where there is any real choice.

    Its why AA has to up their international game, especially to Asia.

    It’s also why Delta is in the position they are in. Awhile back, you had some critiques about just how good their operational performance really is, but the reality is that they’ve created a perception of offering more space and better operational performance. I pay a revenue premium for that.

    Tighter squeeze and more delayed flights? I hope AA is selling tickets at lower prices to incentivize people to patronize their inferior product.

  2. Well hey, no one can say Doug isn’t consistent, he’ll defend this product until the day he dies (or gets fired).

  3. I would be interested in anyone has feedback on Delta’s 737-900. I read a lot of complaints on Seatguru that it also has very little padding, so I chose not to fly a flight I already had booked. I booked Delta for this very reason but then later realized I was on this plane SFO – ATL for a very long flight.

  4. Delta incidentally just announced they wouldn’t squeeze more passengers into coach on their Boeing 777s, retaining 9-across seating in each aisle while American is 10-across.

    ……interesting, yet Delta has more economy seats than AA. Less DL Comfort seats too.

  5. TLDR:

    Parker is acting like a CEO.

    Gary is acting like an armchair QB without any actual insight into the business.

  6. You always attack Parker’s business judgment — and that’s easy to do when you want more comfort but don’t want to pay for it — but not so easy to do when you’re running a business. Even a cursory observation of the US airline industry would explain the logic of what Parker is doing. All of the US airlines are spending lots of money upgrading their premium int’l service. I don’t think they’re being foolish for doing so. They’ve obviously determined that there’s good return on investment by having a good premium int’l product. On the other hand, it’s a Captain Obvious observation that the key to making money in the domestic market is to cram as many seats as possible into the tube (as long as your product is better than Spirit, and you can offer a somewhat better product for your premium customers). In this context, your crusade against AA’s smaller lavs is silly, especially since DL has been flying them for years. What is more interesting is the 9 vs 10 coach configuration on the 777. DL thinks that’s too tight and might actually actually result in a decrease in coach cabin revenue as some pax book away. AA and UA think they can make more money at 10 across. Maybe they’re both right. Those who care the most about comfort will pay DL a small premium and the rest will fly AA and UL, But that’s a real issue that merits discussion and further observation. The lav thing is just a rant. We’re all going to have smaller lavs on narrowbody aircraft. My guess is that 99%+ of pax will be able to deal with it.

  7. 21st century definition of “progress”: enhanced benefits for the minority (rich), a diminishment in quality for the majority (poor). Well, at least the masses of Kettles aren’t riding the Greyhound.

  8. All airline management should have to fly in coach at least once a month. Additionally they should have to wear a body suit that makes them 6’2″ tall and at least 225 pounds. This is becoming the size of the average western male. They should also ask the person in front of them to recline their seat.
    Male management will also find they can’t pee in the bathroom after navigating the door and the low ceiling but the lav sink does work as a reasonable replacement. Female management has less options. Perhaps they should no longer serve caffeinated drinks on flights to reduce the need to use a bathroom. Dehydrated freight also requires less fuel making for additional profit.

  9. What Parker understands, and apparently you don’t, is that economy domestic travel has become commoditized for the vast majority of consumers, thus the rise of budget carriers. Most fliers don’t care about anything but getting there the cheapest and with the best routing. So carrying on about lav sizes and thinner seats is pissing in the wind. AA is doing the smart thing in increasing the differentiation between economy, premium economy and biz/first, so they can compete on price on the low end and still compete on quality on the high end.

  10. +1 (2?) Kimmie and Paul says. You both nailed it.

    As for the idea that passengers will vote with their pocketbooks, most Americans don’t have much choice in how they get from A to B. We can choose to pay up for C+, biz, F (if offered), but usually can’t change airlines.

  11. Many of Parker’s rambling comments are unintelligible. Delta has been flying tiny bathrooms on the 737-900 only. What he didn’t say was people hate them, too, and delta has not put these horrible lavs on other planes. yet.

  12. Gary when are you going to sit down with Parker for a real interview?
    He’s not even truthfully answering his employees.

  13. @Gary: This tighter coach configuration is exactly what the customer wants — because it means lower fares and that is the overriding concern for 90% of passengers.

    That is why there isn’t a single route on which AA has introduced this product that a competitor has responded with more seat room, etc. There isn’t any demand.

    Ryanair is the end-state.

  14. And never mind that AA tried “more room throughout coach” several years ago, and on the whole, it was failed business model.

    As much as we like to hate on cramped coach seats, it’s quite obvious that the airlines are providing what the passengers are willing to pay for. ‘Economy Plus”, “Comfort” or whatever each airline is marketing as an extra legroom seat gives them great opportunities to experiment and gather data on what people are willing to pay for and how much they’re willing to pay for it. Rest assured, if more profit could be generated from those seats than seats in the back, those sections would be getting bigger.

  15. By and large, the people who buy airline tickets wouldn’t pay $1 more for more leg room, more padding, more width, more room to pee, or any other enhancement you name. Everyone says they will, but when it comes down to it, they don’t. I wish this weren’t true, but it is.

  16. “21st century definition of “progress”: enhanced benefits for the minority (rich), a diminishment in quality for the majority (poor). Well, at least the masses of Kettles aren’t riding the Greyhound.”

    Thanks for that 21st century Communist Manifesto. You do realize that more crowded cabins mean lower fares which actually ENABLE less affluent individuals to fly. Or maybe you don’t because you’re economically illiterate. Adjusted for inflation, the real cost of flying has decreased about 65% since 1995. The reason that air travel is more basic these days is that is what most consumers have voted for. And the folks who want to pay more — like the “idiots” who drop 5K for their slightly more comfortable 7 hour trip across the Atlantic — subsidize the folks in the back who choose to pay less. Economics aren’t that hard. They just require some common sense.

  17. I just status matched my AA gold to Delta.
    Doug Parker should be sentenced to 10 years in one of his new 737 Max’s toilets.
    I will fly AA when I literally have no other option.
    They make American capitalism look very bad and invite extended regulation.

  18. Sorry, Kool Aid drinkers, who defend the indefensible greed, callousness, arrogance and bald faced lying told by hypocritical CEOs who NEVER, EVER condescend to fly the crappy planes they buy – or of course, champion sand thieving CEOs who get to keep their jobs even after it is clear they commited a felony crime (ahem! When I last checked, $24,000 is grand theft – a felony):

    Stop insisting passengers won’t pay for better airline products, domestic or otherwise featuring seatback IFE, an inch or two more legroom, or nicely padded, leather seats.

    It’s a lie.

    Otherwise, as Gary noted, Delta wouldn’t be reporting a the unit revenue premium it has been reporting for some time now, but more importantly were the lies you’re swallowing hook, line and sinker, true, Jetblue’s original business model, as created by its visionary founder, David Neeleman, and the all-star team he assembled to launch that airline, would’ve been a hideous failure, and that airline would’ve meet the same fate as virtually every other startup since deregulation began being phased in back in 1978.

    In fact, how many “no frills” (nb: that’s what airlines like Spirit, Frontier and Allegiant used to be called, for example, PeoplExpress v.1) that packed passengers in cramped, high density (which used to be viewed as the product that it is, crappy and third rate/third class) seating configurations, and then charged for virtually everything else came and went, whereas Jetblue’s “Bringing Humanity Back to Flying” – aka offering VALUE for MONEY” is actually what allowed that airline to succeed – despite being launched barely 18-months before the 9/11 terror attacks, the deep recession in air travel that followed, and with far more competitors in our nation’s skies to contend with?

    And yet, Jetblue succeeded, despite the odds already having been proved as being long for startups plus 9/11 AND far more competitve skies than we have today or have had since Dougie P completed Wall Street’s takeover of our skies and implemented its long held “wish list” to hijack this next to impossible industry for new entrants to find sufficient capital, equipment, trained labor, distribution channels (res systems are not exactly something one can buy at Staple or Best Buy), and of course, airport terminal facilities, gates, slots, etc. and transform it into the oligopolist cartel we have today.

    You can continue to drink this bs Kool Aid and insist on perpetuating the myths and lies blaming cheap AF passengers as the villains all you want.

    But that won’t change the fact that when given a choice to fly on better airlines that offer better economy products, as Delta (alas, marginally, as it doesn’t take much to be better than American, United, Spirit, et al) clearly has been, and still is, doing…

    …or, of course, that if flyers didn’t value the upscale product offered by Jetblue (OG), given the circumstances it launched into barely more than a year after its first flight, plus the many other airlines thenflying that were very experienced at beating down interlopers when competition was still viewed as a GOOD THING by most people in our country, that airline would’ve long ago failed, too.

    It’s NOT beleaguered flyers who are at to blame for the crappy, densified products that are so bad the CEOs don’t bother flying the planes/seats they buy.

    It’s the lack of competition, and the greedy, arrogant and deplorable abusive airline industry cartel that’s to blame.

    Don’t take my word for it.

    Just take enough time to crack open an ECON 101 textbook, and under the chapters labeled “Oligopolies” and “Cartels” virtually every aspect of the problems plaguing our current airline industry that most flyers detest, and virtually everyone agrees as fitting into the description as a “Race to the Bottom” will be easily recognized as how our airlines behave, how their pricing and selling models are structured, and indeed, what our airline industry has become.

    But hey, if you wanna keep guzzling the Kool Aid, that’s on you.

    Like so many things these days, those who insist on being so proud of their ignorance instead of actually learning facts are entitled to their opinions, too – just like everyone else!

    Except, of course, facts will always be facts no matter how much bs and obfuscating the liars try to peddle to those who may not know history as well as they should.

    As the expression goes, knowledge is power!

    And the only reason most of our (few remaining) airlines now suck is because our industry has been hijacked by a small group of profiteers (and elitists) that arrogantly seeks to maintain an iron grip over a vital sector of our economy (to fund obscenely large stock buybacks which are nothing more than a huge redistribution of wealth) that is virtually impenetrable given the obstacles required to simply gain certification/fitness to fly, much less everything else it takes to inject competition into our shamefully non-competing cartelized airlines’ club.

    Nothing more. Nothing less.

    The American Airlines of today is much worse than airlines like Eastern, Pan Am or even TWA were at their worst.

    Much. Worse.

    The difference is, without any meaningful competition, airlines as horrible as American or United get away with being as bad/worse as failed airlines like Eastern, Pan Am or TWA because unlike the American or United of now, those three airlines had competitors that were better than they were.

    And guess what?

    Flyers chose the better airlines that existed, so the bad ones failed – just as those ECON 101 books you’re not reading would also state is the hallmark of a properly functioning, competitive market.

    Like I said, don’t take my word for it – there’s libraries around the corner, around the world filled or right here on the “interweb” stacked with books that will explain all of this in far greater detail, and which will take much longer to read than any of my “rants”! 😉

    PT Barnum is alleged to have said “there’s a sucker born every minute”.

    For those who are sick and tired of being lied to and fleeced when they fly, there’s no reason to keep believing the lies you’re being told about overcrowded planes, seats that are not just shamefully small, but are so horrible the people who take your money won’t even sit in them when they fly, and to allow this abuse to continue.

    It’s the lack of competition that’s to blame – NOT you/us.

    Take a few moments to explore any Introduction to Economics textbook under the chapters discussing Oligopolies and Cartels.

    Then ask yourself, how much of what ‘s discussed on those pages, is an exact, or near match for most of the things you experience from the very first moment you begin searching for fares/flights until the last credit card bill arrives and you total up the bill?

    The lies and abuse most of us experience when we fly will continue only if enough people allow it to.

  19. I flew economy in an American 787-800 (900?) to London in June, largely because I was using AA miles to fly my brother and sister-in-law with us and couldn’t book business, as is my practice.
    The Dreamliner? Don’t think so. You have to be able to sleep to dream, and I couldn’t doze for more than maybe 15-20 minutes.
    Crew was attentive, food and wine decent. But the hard product? Just dreadful. Going back to Europe Dec. 30, to Spain, on Iberia. In Premium Economy over, business class returning. NEVER again will I fly along haul economy, for sure not on American.

  20. Good to finally see others here, like Howard Miller, appreciate the vile negation of acceptable service and comfort as a direct correlation to the lack of competition. American never acted so degenerately when it flew in a competitive world, such as competing head-on with TWA, Continental, and United between ORD-LAX.

    I am waiting to see where I will live so I too can have my American status matched. What Parker does not understand is given the total crap experience flying domestic–in any class, who in their right mind would spend to fly international on his airline?

    The only thing that will shape-up American and give notice to the others is to allow the right of cabotage for foreign airlines. As well, why support Parker in his war to kill competition from the ME3, when we see the results of no competition thanks to the US3?

    For those who fly Delta, be happy CEO Anderson moved on, as he is busy destroying any semblance of why anybody would travel on long distance trains at Amtrak–devaluing first class, diminishing dining services, diluting lounge/bar services. Reaction? Just look at the drop in traffic across the board, including the vaunted Acela Express. Imposing the will of an apparatchik mentality does not work in transportation!

  21. I flew the 787-9 twice earlier this year, and not only are the 9-abreast economy seats at 31” pitch horribly uncomfortable, during long haul overnight flights, it was impossible to walk through the ridiculously narrow aisles with either kicking nearly every other person seated in an aisle seat; bumping into their arms or shoulders; or even bumping into a few heads.

    Utterly impossible, even when making every effort to avoid them by pivoting sideways and shuffling up/down the aisles.

    By contrast, no such problem was experienced on flights aboard the three Airbus A340s also taken this year with their 8-abreast economy cabins.

    Plus, when able to sit in an “extra legroom” 34” pitched row (for which the additional fee was paid) that long haul flight in Y was perfectly fine – even with the seats in front fully reclined!

    The aisles weren’t an obstacle course; and not a single person was even nicked.

    When one is aboard a Boeing 787, unless they’re flying Japan Airlines, it’s only a dream if they’re in a premium cabin – and a guaranteed nightmare if they’re not.

    Those whom have flown this plane know that…

    Dougie P (and others like him) know it, too…and that’s why they know better than to bother flying it 😉

    When we’re being honest, we all know that if the CEO of a company thinks the crap s/he sells is so bad they don’t even bother using it even when they can use it for free, then it must be every bit as horrible as critics and everyone one else with a functioning brain also knows it to be!

    It really isn’t anything more than simple common sense: if the person selling a product won’t dare use it, it must be really, really, really bad…

    …kinda like the same logic we use when we see a crowded restaurant and pick that one to eat at instead of the one nearby that’s so bad there’s more staff standing around doing nothing (or staring at their cell phones) than there are people sitting at tables and eating!

  22. Quick correction in the above:

    That’s “WITHOUT either kicking…” in the first paragraph, and not just “with” as written.

  23. Airlines will offer the bare minimum they can get away with. As long as people are willing to buy tickets they have no reason to improve service/product. American will continue to degrade services until it reaches a point where people opt to fly their competitors instead.It always kills me to hear this blowhard CEO talk about how much they care abut customers. No, they care about getting the money from customers and the profit line is ALL that matters to them. Not anyone else or anything else. Airlines won’t improve until customers wise up and hold them accountable.

  24. It’s been pretty obvious to me for years now that AA is running a two-tiered strategy: the legacy AA network (JFK/MIA/DFW/ORD/LAX, Boeing aircraft, premium international routes) is positioned as an upmarket product with lots of capital being put into making it attractive for business travelers, while the legacy US network (PHL/DCA/CLT/PHX, Airbus aircraft, LCC routes) is being positioned for high volume.

    What has always been surprising to me in light of this is that AA didn’t simply keep the two brands separate, making it a clean split and allowing them to truly position the brands independently. This would have prevented a lot of headaches, most of which come from higher-value, further-upmarket legacy AA customers who are feeling a watering-down or LCC-ification of their legacy brand.

  25. I’m amused by the attitude of “as long as they’re better than spirit” AA will be fine. I’m not sure such people have flown spirit lately. They certainly do not offer a premium service, but they are also substantially better at managing expectations. All the flights I’ve taken on them were perfectly fine. And ridiculously inexpensive. And here’s the thing: the Big Front Seat on one of spirit’s transcons is cheaper than one of those 30″ “ultra slimline” seats on AA. AA’s model is only sustainable to the extent they do not face competition.

  26. Thank you, @Howard Miller! Thank you for pointing out that it is consolidation, lack of competition, and “capacity discipline” that has created the perverse situation where AA races to be be as lousy as possible. Another aspect is cost: AA will never have the low cost structure of Spirit, so why chase their customers?

  27. @Randy: Fares are at or near a historical low point, so no evidence of system wide cartel pricing. I would look on specific routes for that.

    AA’s cost structure for Basic Economy is probably close enough to the ULCCs. It doesn’t have to be exact. They certainly want to sell you that empty middle seat at the back for whatever they can get. The marginal cost is the same fuel that ULCCs use.

  28. @L3,

    It makes sense for AA to extract whatever revenue they can for “that empty middle seat at the back.” However, AA is going well beyond that, to the extent where AA’s focus seems clearly to be on the Spirit customer rather than the frequent business flyer.

  29. @Randy: Business class is where they cater to the frequent business traveler. PE and ‘lieu-dit’ seats in coach are for those who want something better than the least-cost fare. Notice how few of them there are?

    Ryanair is the end state.

  30. @L3, the vast majority of frequent business travelers fly mostly domestic, and of those that do fly international, the majority are not permitted to buy business class.

  31. @Randy: Sources? If supported, logically you would agree with the soundness AA’s policy, in your words, “AA’s focus seems clearly to be on the Spirit customer rather than the frequent business flyer.”

    So you are saying there is no problem.

  32. @L3 —> Random thoughts…

    1) You wrote above, “This tighter coach configuration is exactly what the customer wants — because it means lower fares and that is the overriding concern for 90% of passengers. That is why there isn’t a single route on which AA has introduced this product that a competitor has responded with more seat room, etc. There isn’t any demand.” OK, ignoring the problem with speaking in absolutes (e.g.: “there isn’t a single route,” etc.), there are certainly competitors that DO offer more seat room. The question is which came first, the competitor with more seat room, or AA with less. The answer is *probably* AA with more legroom which then reduced it!

    2) Quick comparisons in Economy:
    — AA 737 MAX 8: pitch 30″, width 16.6-17.8″

    — AA 737-800: pitch 31″, width 16.9 – 17.3″
    — AA Airbus 320: pitch 31″, width 16.5 – 18″
    — Alaska 737-800 Slimline: pitch, 31-32″, width 17″
    — Delta A320: pitch 31-32″, width 18″
    — Delta 737-800: pitch 31-32″, width 17.2″
    — jetBlue A320: pitch 34″, width 17.8″
    — Southwest 737 Max 8: pitch 32-33″, width 17.8″
    — United Airbus 320: pitch 30″, width 17.7″
    — United 737 MAX 9: pitch 31″, width 18″
    — United 737-800: pitch 30″, width 17.3″
    — Virgin America¹ A320: pitch 32″, width 17.7″

    I’d much rather be on AS/VX, B6, or WN…and save money, too!

    _______________
    ¹ AS may have purchased VX, and they may be planning to re-vamp their A320s, but as of today, most VX planes have NOT been “re-vamped.”

  33. @Jason Brandt: “That is why there isn’t a single route on which AA has introduced this product that a competitor has responded with more seat room, etc. There isn’t any demand.” OK, ignoring the problem with speaking in absolutes (e.g.: “there isn’t a single route,” etc.),”

    There isn’t a single route… It is not an absolute. It’s a fact. An absolute fact.

    “The question is which came first, the competitor with more seat room, or AA with less…”

    Re-read Gary’s article. This is AA’s recent change. Whatever happened X years ago is colossally amusing — and utterly irrelevant to Gary’s point.

    Remember: Ryanair is the end-point.

  34. @L3,

    Assuming you’re being serious instead of sarcastic, the below was written as a reasoned rebuttal to your comments.

    Of course, if you’re comments are merely sarcastic, bravo!

    However, in the absence of knowing for sure, and just in case you are being serious, I went ahead and posted this since nothing could be worse for flyers than ever having Ryanair as our “end state”.

    Southwest in its present, and longtime profitable form is perfectly fine! 😉

    But Ryanair, *NO THANKS!*

    So without further ado…herewith is my rebuttal to your comments above:

    You’re so strident in demanding that we all accept the western world’s answer to the Aeroflot of Leonid Brehznev’s era, that either you’re Doug Parker himself, Scott Kirby, Frank Lorenzo, a Wall Street “Analyst” (although greedy bully is more apt than the title “Analyst” since the analysis is only geared toward demanding the scalps like the “Queen of Hearts” in Alice’s Wonderland of Senior Executives who dare to include anything remotely resembling “humanity” and the proper delivery of service to fare paying passengers…) or perhaps, worst of all, a heartless hedge fund manager in the mold of Gordon Gecko (nb: of “Wall Street” played by Michael Douglas) who’s pushing a service model that achieves nothing more than raping passengers for maximum profit on an airline/cabin you probably never fly yourself.

    However, your arguement is deeply flawed, since, of course, and as noted above, Jetblue’s success disproves your argument in terms of what passengers prefer, when given a choice.

    So, your insistence that all airlines rush to the end state, Ryanair, which itself exemplifies the epitome of the “bottom” itself in terms of customer service, that is the “Race to the Bottom” is clearly nothing more than a self-serving objective to make all airlines equally awful, so in an era of oligopolies, the airline cartel that fits your vision can reliably deliver Ryanair like profits that does nothing more than exploit an industry where one cannot simply set up shop in their garage (as it were) to offer something innovative and better than the Goliath’s who are simply taking advantage of their market dominance to extra windfall profits they’re really not entitled to, and otherwise wouldn’t be getting if they had meaningful competition.

    To wit, you’re not even willing to tell the world who you are, or what conflicts of interest belie your advocacy for a universe filled with crappy, oligopolist airlines – and your continued spreading of myths and falsehoods about how passengers don’t care about the crappy quality of the products they’re forced to buy in a non-existing marketplace that’s been deliberately engineered to exclude the threat of competition in order to embark on a business “plan” to strip out any value that would have to be added in order to win business in a properly functioning competitive market.

    Maybe I’d have more respect if you identified yourself, your professional work, and any conflicts that may reflect on the position you’re seeking to cram down everyone’s throats.

    However, until then, they’re just misleading words advocating that flyers all just bendover, and take the abuse you’re advocating that tilts the playing field in one direction only:

    To strip them of any respect and dignity simply to fatten the sums of the already obscenely large stock buybacks that are a cancer on our country already, and are very much a root cause behind the destruction of anything remotely resembling passenger service in our airlines, and at others like British Airways that is so bad now it practically makes the “Bloodly Awful” of yore in the late 1970s and early 1980s look like the Singapore Airlines of today.

    We’d all be wise to remember that core principle that COMPETITION IS A GOOD THING – instead of the claptrap defending cartels and oligopolies as some sort of “end state”.

  35. @L3 —>. In a world where Free Speech still exists (at least for the moment), there’s always room for sarcasm. In a world where Free Will and Thought still exists (though Groupthink *is* knocking at the door), let me first point out that, as of January 2018, Ryanair DROPPED to become the 2nd largest carrier based within the EU. The top spot was claimed by Lufthansa Group, with 130 million passengers in 2017. That said, it is only fair to point out that Ryanair still had 128.8M pax in 2017 and remained the single largest air carrier in Europe (Lufthansa Group has more than one airline under its umbrella). They were followed by IAG at 104.8M, AirFrance/KLM at 98.7M, and in 5th place, easyJet at 81.6M. In 6th, Turkish Airlines at 68.6M, followed by the Aeroflot Group (estimated to have flown 50M pax. 8, 9, and 10 were significantly lower in terms of pax, but were comprised of Norwegian, SAS, and Wizz. See (https://centreforaviation.com/analysis/reports/europes-top-20-airline-groups-by-passengers-2017-lufthansa-wrests-top-spot-from-ryanair-394211)

    So while you see Ryanair as the “end state,” I see the millions of passengers that opt for A DIFFERENT CARRIER. Pessimist/Optimist; simple as that.

    When it comes to the US, while American remains the largest airline with 199.6M pax in 2017, we all know that Southwest is by far the largest *domestic* carrier (and not only are the seats better, but they do not charge for checking 2 bags, thus saving pax $120 per r/t). So, AA is 1st, Delta is 2nd (183.7M), Southwest is 3rd with 157.7M, and United is 4th at148M. Now comes a significant drop: Alaska/Virgin is 5th with 44M, and jetBlue with 40M is in 6th place. Next are 3 ULCCs — Spirit, Frontier, and Allegiant, with 24.2M, 16M, and 12.1M respectively. In 10th place is Hawaiian with 11.5M.

    As far as *I* am concerned, the three ULCCs add up to 52.3M — enough to surpass AS, but not enough to break into the top 4 — if Ryanair is the “end state,” why aren’t more people flocking to the three ULCCs? I mean — $#|+ — Ryanair by itself is big enough to be #5 as far as the US is concerned. Add in easyJet, and their combined total would be larger than AA at 210.4 million!

    CLEARLY US-based ULCCs have a l-o-n-g way to go! Or is it possibly that most people are rejecting these ULCCs — their combined total wouldn’t even make WN twitch.

    American is certainly in a race to the bottom domestically. I don’t deny that; indeed the seating I listed above proves it! AA’s 737 MAX-8’s are so bad that a large number of employees and customers have complained, and not even Doug Parker has flown on one. But this is precisely why DL, WN, AS, and B6 are thriving. (UA has their own problems, too.). Indeed, while other carriers have introduced, or are thinking about introducing Basic Economy, others are not! So let AA continue sinking and eventually they’ll only fly overseas, leaving domestic pax to those other four airlines.

  36. @Howard Miller: Most of your long-winded diatribe is between you and your doctor. The rest is just irrelevant.

  37. Oh, well, @L3, too bad none other than industry legend, Mr. Bob Crandall, the former President, CEO and Chairman of AMR Corp., the parent company of American Airlines when that airline was at its very best, and was THE airline others only wished they could be, in an interview Dennis Schaal of Skift, pretty much agrees with…

    …wait for it…

    TAH-DAH: yep, that’s right…ME!!!

    I’ll post a link to that interview in a separate comment immediately below since in the past inclusion of links often delays posting until they’re reviewed and cleared for content – which can take hours or even days for the post to appear.

    Oh, and btw, so, too, does one of the foremost experts in anti-trust in the country, Tim Wu, Professor at the prestigeous Ivy League academic institution, Columbia, Opinion columnist at one of the best, and most widely acclaimed newspapers on the planet and in the history of humanity, The New York Times.

    But hey, these are facts.

    Meanwhile, you have yet to reveal who you are? What you do? Or what, if any, conflicts of interest you have in advocating your point of view (including if you own stock in any of the airlines, which dear readers, I do NOT).

    In fact, the best you can do as your “reasoned rebuttal” is take a cheap shot attempting to impugn or besmirch my reputation, even though unlike you, I post using my real name, and I have provided many times over (here and elsewhere) my long, and some have said, even distinguished (apart from five years’ as a regular, bylined author of columns and popular comprehensive airline industry financials and operational data reports that another industry legend, David Neeleman, founder of JetBlue, et al, told me personally were among his favorite reads when I was doing that work, you see, I just so happened to also have done brilliant research that vastly expanded the scope of tax exempted items for airlines and/or other entities that build multi-billion dollar terminals at NYC’s two leading airports on the NY State side of the Hudson River when they include what used to be called Industrial Development Agency, or IDA, financing, or something now called Transportation Development Agency…and that research since I introduced it to clients like British Airways, Terminal One Group Association, et al, has saved them, and others in the industry who went on to use that exceptional research long after I moved on from the work done for BA and TOGA something like HUNDREDS OF MILLIONS of dollars…heck, I think American Airlines has gone back three times since to expand and/or refinance its IDA/TDA tax exempt financing where a key component of my work is embedded)

    Oh, and by the way, since we’re talking about Bob Crandall here’s a big, big, big reveal never before disclosed:

    It was ME, yes, me, who contacted, and worked with, Agis Salpukas of The New York Times in April, 1992 with the research that led to the front page of the NYT Business Day section story that stole your thunder regarding the introduction of “Value Pricing”.

    I was working at very well known, and quite prestigeous brokerage firm at the time, and unaware that the story itself would result in a 38-mins delayed opening for AMR stock on the day the story was published due an order imbalance, could not claim any role in that story at the time (I did NOT own stock in ANY airlines, nor did ANYONE other than Agis know of this story during its development prior to its publication – then as now, I fervently believe stock ownership, or any direct investment financial instruments such as bonds, ETCs, etc., makes for a good mix with unbiased research and analysis…but hey, that’s what works for me), as obviously, that would’ve resulted in a hornet’s nest of problems, all of which would’ve proven that neither I, nor anyone else, made any investments, long or short, on AMR, or any others’ financial instruments.

    Anyhow, I know Mr. Crandall was upset that the NYT had this then fabulous scoop (as things like that used to be called anyway, which I guess now goes by “Breaking News”) because quite by accident he and I ended up riding the same elevator at the Marriott Marquis Hotel in Times Square for his press conference where he turned to his colleagues and barked “I still don’t know how the #&%$@ NY Times got this story!”

    Yes, it was me…I still have the orginal pay stub from the Times (it was olive and light green at the time), plus a photocopy of the check itself specifically stating the date and story that was published if there are any doubts to the veracity of this claim.

    And although most of my bylined published work was with an industry newsletter called PlaneBusiness Banter between 1999-2004, which is now celebrating its 20th year as one of the internet’s earliest paid subscription digital only success stories under the direction of industry expert and another ex-Wall Streeter, Holly Hegeman, my research has been featured in Dow Jones Newswires (where I’ve also been quoted), along with a huge, prominent cover story on the front page of the business section in the Fort Worth Star-Telegram that was written by Delta’s very own distinguished Corporate Communications Director, Trebor Banstetter, when he was a reporter for that newspaper that was based on a story, and data analysis originally published in PlaneBusiness Banter regarding the battle for supremacy at JFK Airport between American Airlines and Jetblue.

    Oh, there were a few “Intelligence” contributions to Aviation Daily (documented in its letterhead of course), along with not one, not two, but three unintended “gifted” stories to another newspaper that many a journalist has seen “loved” so well that their work becomes known as if others’ – but hey, no need to name WHICH well known financial broadsheet that was, or which reporter made my work, their work, for three very nice stories (one front page of the entire paper; the next front page of the B section; the last the back cover page of a section) on said airline industry.

    Oh, plus I also was a self taught SABRE proficient travel agent – among the earliest, in fact, since the two agencies I started at, were among the very few that had them back then when they were Raytheon green screens that had thick “Elephant Cables”.

    Heck, I’ve even chartered, and filled up, a World Airways DC-10 jumbo jet to a college football national championship game!

    All in all, prettay, prettay, prettay good, eh?

    Rrrrrrriiiight, L3?

  38. Before posting link to skift interview with Bob Crandall, a minor update/correction:

    Of course, in paragraph 11, it is meant that conflicts of interest arising from any kind of investments does NOT make for a good mix of research and unbiased analysis.

    Also, for the incomplete sentence in paragraph eight just before the long parentheses portion: that’s distinguished professional work

    With apologies for those two errors.

  39. As expected, the link to Dennis Schaal’s interview with Bob Crandall published by Skift is in purgatory…

    Hop on over to Skift’s web site if you’re interested in reading that before the link I posted here is cleared and/or featured in Gary’s summary of news of note seen elsewhere on the “interweb”

    Cheers!

    Oh, and do have a nice day, @L3…I do believe “crow” is on the menu for you, today…

    Bye, Felicia!

  40. @Howard Miller: So have pretty much shaped aviation as we know it today (you and Walter Mitty that is).

  41. [Note: ALL CAPS when used is NOT intended as “screaming” when seen in this post. In fact, unless specifically noted as being “screaming” what really is meant is the equivalent of italics and/or bold-facing, underlining, etc., in an “academic style” and as a form of adding emphasis. I understand that to many, “all caps” connotes screaming. However, while it is always meant in this context unless otherwise noted, in this instance, it seemed appropriate to add this notation so that when seen, it is clear, I’m not “screaming” at anyone in this post… 🙂 Howard]

    @L3,

    I say troll away to your little heart’s content!

    It won’t change the fact that the legendary Bob Crandall said in an interview published by Skift early this morning that industry concentration (aka cartel, oligopoly, etc., etc.) is very much a factor in the problems afflicting the airline industry…

    …which is pretty much what I’ve been saying here (and elsewhere) since I resumed writing and commenting about the airline industry in earnest about a year ago.

    And funny thing is, a great many of the things I wrote about during this time, have proven to be timely, well informed commentary, borne out by actual events:

    – I’m particularly proud of this one since, of course, few, if anyone else saw this coming – commentary regarding Bombardier shifting production to Airbus’s Huntsville, AL final assembly campus TEN DAYS BEFORE THAT NEWS WAS ANNOUNCED;

    – JetBlue’s near complete abandonment of its original mission to honestly Bring Humanity Back to Flying in favor of shifting to the Oligopolists’ product degrading, fee addled, model favored by Wall Street, something many will recall I described as being “Delta lite”;

    – the prediction that Alaska Airlines [originally made here in VFTW] would sell or lease its perimeter rule restricted slots at both LaGuardia and Washington Reagan National Airports a month or so before that actually happened;

    – or of course, news reported several times in recent months, that a leading academic institution, University of Virginia, followed a few weeks later by a widely acclaimed expert at Columbia University, and now, this morning, an expert who’s credibility cannot be besmirched by the “alternative facts” crowd as an Ivory Tower academician who writes Opinion columns for the (so NOT “failing”) NY Times, Mr. Bob Crandall himself, who, you know, just so happened to actually RUN for a decade or more a truly great airline [during his reign, that is] that was the very definition of best in class during his tenure [unlike, say, the truly awful crap show pretending to be an airline, but is really nothing more than a fleet of Greyhound buses with wings of now – which btw, got lumped together with Allegiant earlier this year for non-compliant maintenance practices…a dubious “honor” if ever there was one], all of whom agree with my long ago argued here and elsewhere POV that excessive industry concentration is a problem that can no longer be overlooked when discussing the imposition of more and more, and higher and higher bs fees and the despicable, immoral, and when the worst (unfortunately) inevitably happens, even criminal aircraft densifications that have taken place in our era of airline industry cartelization and the ensuing, and predatory, oligopolist business models and pricing practices that have been implemented, and have done nothing more than function as a huge redistribution of wealth to a very small group of people in our country – WHICH IS EXACTLY WHAT BOB CRANDALL SAYS IN THAT INTERVIEW.

    Finally, I’m damn proud of the exceptional research I did, that did, in fact, completely introduced valuable information that many others, including those with legal expertise who worked, or were then working, at ANY airline, law firm, or consulting firm, did not put together themselves. I know I can prove this with actual, documented facts.

    Unlike, say, anything your puerile trolling has yet to offer while hiding behind a screen name.

    So, like I said, troll away…

    …meanwhile, I’ll let my long list of accomplishments past, and now again, in the present, speak for themselves as a testament to the value of my contributions to topical discussions of things taking place in the airline industry…

    I KNOW who I am – and have shared my identity with readers along with a summary of noteworthy accomplishments I worked very hard to achieve (but until recently never really discussed publicly) in support of the POV I have, and write about here and elsewhere.

    Readers know who I am, and what drives my opinions.

    And readers know, when I make mistakes as we all do, or when they offer a reasoned rebuttal offering a different perspective, I’m not only down for that – I very much appreciate it as I NEVER claim to “know it all”, very much value constructive criticism, and most of all, love nothing more than learning from others who are brighter and/or much more accomplished than myself.

    And who knows? If you, @L3, step out from behind your mask, tell us who you are, and why your POV is sunstantive by offering a fact based, and compelling, reasoned rebuttal, maybe others, and myself, might be open to hearing you out, and seeing the underlying logic as being something more than the con job it otherwise is to fudge facts in support of further degradation of our airlines simply to fund the already obscenely large stock buybacks that truly are, just as Bob Crandall has now gone on record as saying, are a huge transfer of wealth at the expense of flyers who now lack choices when they need/want to fly, and on the backs of labor that gave up so much in the widespread bankrupticies that preceded excessive industry concentration that began in 2008 with the Delta-Northwest merger that Crandall says NEVER should’ve been approved by regulators, and for whom, the bounties in our era of oligopolies where windfall profits have been extracted from beleaguered flyers, have yet to be shared with.

    Peace out. This will be my final reply to any of your trolling.

    However, my offer does stand to engage in a reasoned, fact based discussion, with your real identity known, along with full disclosure of any professional industry-related experience and/or ALL other conflicts of interest that may otherwise influence the position you’re arguing in favor of.

    Til then…TTFN!

    Respectfully yours,

    Howard Miller

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