American Airlines was behind United and Delta in devaluing its award chart and its elite program because it had bigger fish to fry. Finishing the US Airways merger came first. The internal mantra was “integrate before we innovate.”
But key elements of backend integration are slipping, there are huge gaps in American’s IT that drive customer service costs and limit revenue growth, while American focuses on reprogramming who gets upgrades.
On October 17, 2015 US Airways ceased to exist to customers. That piece went remarkably smoothly.
Integration Went Too Smoothly — Customer Service Agents Hung Out With Nothing to Do
It was no surprise, then, when a month later American announced they’d be making big changes to the AAdvantage program.
But calling US Airways flights American Airlines flights didn’t mean the integration work was over. Getting pilots onto a single seniority list, and flight crew onto a single scheduling system, remained.
American still operates largely, though not exclusively, separate fleets operated by separate crews. There’s legacy American Airlines and legacy US Airways. They aren’t able to put the most appropriate aircraft on each route, they’re stuck flying one legacy carrier’s planes on its own routes for the most part until the work finishes.
Legacy American Airlines Airbus A319
At one point flight attendants were going to be integrated by the end of 2016 (a year later than the passenger service system become one). Then the target date apparently moved to Spring 2017. Now that’s been put off even further, with no new target date announced. (HT: Alan H..) Maintenance still remains separate as well.
Pilots, on the other hand, are “schedule[d] to [have] combine[d] systems by the end of September that will allow pilots to fly on either carrier’s planes and move aircraft to any base.”
This seems to suggest American has its IT priorities wrong.
- They invested in re-programming AAdvantage mileage-earning to move to revenue-based accrual rather than distance-based.
- They re-coded mileage-earning on partners to award up to 75% fewer miles.
- They reprogrammed award pricing to increase the pricing on most premium cabin awards.
- Changing the IT behind how AAnytime awards work
None of this really counts as ‘innovating’ since they’re more or less copying Delta (and United), so perhaps it doesn’t technically violate the mantra to integrate before they innovate.
But they’re also doing these things when there are clearly higher priorities beyond integration as well
- American boards flights earlier on large narrowbodies like 757s but hasn’t updated boarding passes to tell customers that
- American’s mobile app is severely deficient — it doesn’t let you change flights when your flight is cancelled, for instance (this costs American dearly in extra customer service labor expense). But more significantly you cannot even buy a ticket from inside the mobile app. Their mobile investments do not support actually giving the airline money.
Meanwhile, they’re investing in the IT to re-order upgrade priority based on a rolling 12 month average ticket spend.
It seems clear that:
- IT isn’t getting the resources it needs
- IT is getting priorities from management that are way off.
While they’re no doubt able to walk and chew gum at the same time over in American’s IT shop, integration is slipping and revenue is being lost while they re-order who gets moved around on an airplane when there are unsold seats.
It’s crazy a customer cannot buy a ticket from within the AA mobile app. Shouldn’t making money be one of your highest priorities?!?!!!! And yes, Delta app (for example) is soooo much more proactive at offering alternatives when IRROPS hit.
Isn’t the real issue that legacy AA had crAAp for IT? It was crAAp before the merger, and the AA apologists insisted on migrating to AA systems, so we still have crAAp today. Legacy American IT never had it’s priorities straight. No news here … Move along.
It’s easier for a bean-counter to notice costs than missed profits. They know exactly how much money they spend on AAdvantage, but they can’t quantify how much lost-revenue is caused by subpar app, unpredictable boarding times, and now a run-of-the-mill loyalty program.
Gary, how do you really know that the IT priorities are wrong? the bottom line for them is to increase profits, and the two ways to do that are either increase revenue or reduce costs or both. IT is a cost, so my bet is that the business case internally is that the cost cost savings to integrate FAs and mechanics vs the NPV of other places to spend money is just not as good/important as it is for pilots (real expensive labor). It seems to me they clearly think IT investments to increase revenue and reduce cost of the AAdvantage program are bigger bang for buck and does seem to be aligned with their program priorities, but that doesn’t necessarily mean that they’re priorities are wrong (regardless if you/we might not like them as elites), but to me it actually seems that the IT priorities are aligned with overall priorities.
AA won’t pay for IT talent. It’s pretty clear if you look at their open positions and salary out on glassdoor. I’d love to work at a large airline making the customer technology experience better given how much I like travel and this hobby in general, but who in their right mind would take below market to do it?
For me, the truly crazy thing about that mobile app is that YOU CAN’T VIEW YOUR UPCOMING FLIGHTS WHILE IN FLIGHT. I often want to peek at my itinerary during a flight – sometimes to see my connecting flight information, other times to grab the flight number for a customs form – but I can’t because it inexplicably wipes the information from the phone and can’t get it back again. They know its happening, because a pop-up says “this function is unavailable in flight mode.”
hear, hear
@Ed
H1B’s with a lot of family overseas. A sponsored visa and free flights back home for the whole family are a very compelling reason to accept way less than what a citizen or green card holder would consider to be market rate.
It is, unfortunately, only going to get worse. The new American is committed to Shares (i.e., legacy US system) and will phase out SABRE. Those of us who lived through the UA/CO integration nightmare (and some, like me, defected to AA) will remember this vividly as the merged entity went to Shares as well.
I came over to AA with the US Air merger. Last year was a nightmare – there must have been a million glitches in the system that affected those of us who were US Air elites. All my flights purchased through the US Air site or through the AA site before last October were consistently messed up – no seats, no preboarding, no PreCheck, mistaken coding of my account as a disabled person, barring me from ER seats and automatically ordering of wheelchairs, etc. Every flight was a new nightmare. Fortunately, this year things seem to be improving. Frankly, from my perspective, I want them to continue taking baby steps until they get it right.
The AA app is ridiculously substandard compared to its competitors. United, Delta, jetBlue, they get it done. Not only is the AA app of limited functionality, it has a garbage UI and it’s unstable, at least on iOS. I’m in the camp of that it’s not that IT has the wrong priorities as much as that they don’t place a priority on quality IT. Disclosure: I’m an IT person.
Chris your comment is literally the opposite of the truth. At PSS cutover in October, AA did exactly the opposite of what you said. AA migrated all data from Shares into SABRE.
Tom – Agreed. But long term (next year or two) Shares will be phased in and SABRE will be phased out. This will eliminate a ton of flexibility with agents with irrops.
@Chris the Qik overlay which has been used with shares is being used for sabre, this both makes it easier for legacy US Airways agents to use the system and ensures enforcement of business rules.
They’ve also invested in imposing business rules even for folks still working in native Sabre.