American Airlines is reportedly spending $1 billion on their new corporate campus and that’s apparently up from a previously-reported $350 million. It’s possible that’s not an apples-to-apples comparison. American has been tight-lipped about the project’s costs. However it fairly clearly represents a project that’s grown substantially more expensive.
Just keep that number in mind for a moment as we walk through the economics of American’s decision not to offer seat back entertainment for domestic passengers, instead streaming content to passengers’ own devices (mostly phones). Legacy US Airways Airbus A320s, by the way, aren’t expected to offer seat power to charge customer phones until 2021.
- American’s mainline domestic fleet had 801 aircraft at the end of 2018. That is expected to grow to 806 in 2021.
- Of those 83 Boeing 737-800s, 32 Airbus A319s, and 98 Airbus A321s have seat back entertainment. These were new aircraft ordered prior to being taken over by US Airways management.
- If American doesn’t remove seat back entertainment from these planes — as they have planned to do — that would leave 593 domestic narrowbody aircraft lacking seat back entertainment in the 2021 projected fleet.
- On average outfitting a narrowbody aircraft with seat back entertainment runs $1 million per aircraft. However the new approach, being used by Delta, is to stream entertainment to tablets installed in seat backs. That cuts the cost by two-thirds.
Using the new approach to cheaper seat back inflight entertainment, then, would cost American ~ $198 million. For context that would be 30% of what appears to be the cost overrun on the new headquarters the airline is building.
Last month I reported that there was internal vigorous debate over whether to reverse course on domestic inflight entertainment and add back some form of seat back video.