American Airlines has very good international business class seats. They have new business class lounges and sit down dining for first class customers in some markets. They have gone to great lengths to improve the treatment of their ConciergeKey members.
I would argue that today they offer the best overall business class of any US or European airline, and their treatment of the customer they identify as most important is at least on par with United’s and possibly better than at Delta.
At the same time their domestic product is getting worse. American is cramming more seats into planes — their workhorse Boeing 737-800s went from 150 seats before US Airways management took over to 172 seats as the new standard — as well as removing seat back video screens and reducing the size of lavatories. Seats have less padding and less recline.
The reduction in seat pitch and less comfortable seating even extends to ‘Main Cabin Extra’ and first class. Where American is going is disjointed. They send mixed messages to employees with Basic Economy, going so far as to ban full-sized carry on bags for basic economy customers (even Spirit lets you pay for a carry on), before backing away from that restriction.
Employees don’t know whether they’re striving to offer a premium experience or a lowest common denominator one. In May American Airlines President Robert Isom explained in a closed session with employees that their domestic product aims to mirror Spirit and Frontier.
[T]oday there is a real drive within the industry and with the traveling public to want to have really at the end of the day low cost seats. And we’ve got to be cognizant of what’s out there in the marketplace and what people want to pay.
The fastest growing airlines in the United States Spirit and Frontier. Most profitable airlines in the United States Spirit. We have to be cognizant of the marketplace and that real estate that’s how we make our money.
We don’t want to make decisions that ultimately put us at a disadvantage, we’d never do that.
American’s CEO Doug Parker calls Southwest Airlines ‘the cattle car’ but his domestic economy product is too, and less customer-friendly. Indeed American seems to see customers as the thing that gets in the way of their airline operation.
Southwest Airlines is clear about what their product is. I fly them reasonably frequently and have A-List status because they offer the most flights from my home airport of Austin. They have the only non-stop to Washington’s National airport for instance.
- I do not like their boarding process because I have to line up at the start of boarding and be one of the first to board in order to get my preferred seat.
- But their people are friendly, and their product straightforward for a short flight, an internal motto is ‘we do short better.’
I don’t want to fly Southwest on a cross country flight, or to Hawaii. But with American’s new product I don’t want to fly them on a cross country flight either, even with their new less comfortable domestic first class.
British Airways and Iberia are close partners of American Airlines. They coordinated prices and schedules and share revenues on transatlantic services. At Friday’s Investor Day for the parent company of British Airways and Iberia, IAG management has come to the recognition that you cannot be all things to all people.
British Airways has tried to be a budget holiday brand with cut after cut, for instance charging for food and even for hot water if you bring your own tea bags. Their premium cabin seats are legions behind competitors. Cutback after cutback under IAG head Willie Walsh and now ex-Vueling CEO Alex Cruz has gutted the carrier’s brand. Cruz reassures often that ‘British Airways will always be a premium brand’ but the reason he has to say that is because it no longer is.
American management is confused. American employees are confused. And British Airways is confused. This phenomenon isn’t at all limited, though, United is similarly confused as they invest in new business class seats and lounges while remaining the only US airline that still forbids customers on basic economy fares from bringing a carry on bag onto their aircraft.
Delta has basic economy fares, but they aren’t as punitive as United’s. They also haven’t see sawed their fare restrictions. They’re continuing to add seat back video to planes as part of their effort to drive loyalty to the Delta brand.
The Delta strategy has never been to deliver greater value through its frequent flyer program. United and American customers were willing to stick to those airlines when their loyalty programs were more generous. However they’ve given up that competitive advantage.
It’s important to recognize your core capabilities and leverage those, and to know who your customers are and focus on delivering value to them. An airline cannot be all things to all people, and an airline with relatively high costs can’t win as a low fare carrier. It needs to earn a revenue premium. It’s really no surprise that American’s President says they have a premium revenue problem.