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 »

More articles by Gary Leff »

Comments

  1. Parker (Former AA CEO) was the downfall of American Airlines. All Parker wanted to do was compete against Spirt and Frontier instead of Delta and United. Parker won as Spirt is now in bankruptcy and I hope AA does not join them in bankruptcy.

  2. Blah, blah, blah. Oh no, the stock price. Better blame the ‘lazy’ workers. /s (folks, we’ve been in a silent recession for a little while now; not AA’s fault.)

    Naw man, things are actually looking up for American Airlines; new Flagship Suites on the way; opening new Flagship lounges (PHL); and unlike their primary competitors (*cough* Delta *cough* United), they already ditched their ancient 757, 767, a330, etc. (seriously, Delta, 717, are you kidding?)

    Fine, AA doesn’t fly to Africa, Greenland, or Mongolia (gasp!) But, at least for now, they’re still the only US carrier with an actual international First. And, darn, we can’t churn Barclays AAviator cards anymore; but they just gave us an opportunity for 90K points with Globe. Keep flying that ‘credit card with wings’!

    Sure, I’d like to see more IFE and free WiFi for AAdvantage members, and those sliders are awful, but they still get the job done, and I’m gonna keep aiming for Platinum Pro each year for that sweet oneworld Emerald. I may prefer Delta (and jetBlue, and foreign carriers), but I still appreciate American (and United), and am not a doomer on them at all.

  3. AA’s recipe for success, brought to you by US Air: 1) Be extremely cheap and cut as many corners as possible. 2) Hire the rudest, nastiest employees you can find and pay them peanuts. 3) Blame your customers for your problems.

  4. I guess you won’t be appearing on the next season of Jet Lag! Good counterpoints though.

    I’ve sounded a bit over the top perhaps on the ridiculous lack of MCE seating on AA’s newest planes, but the problem is this is more of the let’s compete with Spirit and Frontier thinking that didn’t work. If the loyalty program is the profit center, and MCE seating is the biggest loyalty program benefit, has someone at AA done the math in a way that makes any sense at all?

    AA as always continues to be the easiest to poke a stick at, but is the one that for whatever reason we are all rooting for. Buried under a big debt load it needs a management team with real vision to effectuate a 5-10 year turnaround plan, not just some new business class seating. Inch by inch I suppose.

  5. good summary and analysis, Gary.

    what is shocking is how AA mgmt failed to realize what was wrong and change course. There are few companies that have made as many strategic mistakes and survive as long as AA has.

    The real question is whether AA can be turned around. There are plenty of people that will tell us what is wrong w/ the world or AA.

    Few can articulate a viable path forward, esp. AA leAAdership.
    Continually being “too big to fail” but always skimming just above the surface is not the win to over customers, investors or employees.

  6. Outstanding summary and analysis. Every bit of it accurate too.

    After a decade+ of being PE, I happily walked away from this miserable airline, with its delays, surly crews, and subpar network (the sunbelt is not where I want to go). I enjoyed the frequent upgrades and the occasional card left at my seat, but not enough to keep my business (or my company’s for that matter). American is a decade if not more behind DL and UA. It generates outsized revenue and yet produces puny profit at best, and usually losses. It’s future is in the arms of another carrier that will swoop in and rebuilt the house from the ground up, not the other way around. It also will likely lead the industry into another bankruptcy round, eventually.

  7. Spoiler alert!

    Thanks for the analysis, Gary, and everyone for the comments so far. Very useful to pair all this alongside the video.

    (Petition for Sam to add Bary to his fact checking team!)

  8. @Peter — I enjoy how AA’s lack-of MCE is the ‘hill you’d die on’ as ‘EU261 for the USA’ is my own.

    @Tim Dunn — Isn’t ‘too big to fail’ literally most major companies strategies these days anyway? I did enjoy your use of ‘leAAdership’… I’d add, if only ‘mAAnAAgement’ would ‘leAAd’ more.

  9. The only smart strategic decision AA made was the arrangement with Jet Blue. Everything about that partnership made sense. How could they know the plan would be foiled by TDS infected government officials?
    Today they seem to be taking baby steps in the right direction. The question is can they fix enough problems fast enough to save the airline from bankruptcy?

  10. @David P — UA is cheating B6 outta reciprocal lounge access. AA was good to its own elites (and to B6), which was especially nice for elites and for those in Mint, where applicable.

    Yeah, it was a mistake by the prior administration to go hard on anti-competition with the NEA; and, it was merely a matter of timing; had AA and B6 tried this now, it would’ve worked without interference (so long as they pay their ‘gratuities’ to our Dear Leader).

  11. The video doesn’t claim Austin housing prices fell, in fact the opposite, which led to decreased demand at the airport.

  12. While Ohtani gets on base 100% of the time (going 9 for 9 the other night), Isom and his executive team is still batting .000 at practically everything. And AA still lacks a competent board after all of these years. What a waste.

  13. I was definitely wondering about your thoughts when I watched the video. It almost felt like the video was created by an AA exec that just felt like they couldn’t catch a break and always made the wrong decision but it was never really their fault. The video wasn’t critical of AA management, which, as you mention, was chasing after Spirit and Frontier despite being a high cost airline, and how that influenced all their other decisions. AA long had the mentality that on time D0 was all that mattered but rather than invest to make D0 possible without causing passengers to misconnect, flights to not be catered, etc. they just put pressure on gate agents and flight attendants to close the door. Management failed again and again. Bad breaks like the failed alliance with JetBlue certainly didn’t help, but the bigger issue has been management failure over the past decade.

  14. Another Wendover piece that looks to have been sponsored by UA. It was most obvious in the first chart where they list highest volume and its inversed. So UA is on top with the lowest seats and flights.

  15. Here is the uncomfortable truth about American. This is a governance problem, not a fleet or marketing problem. A board that signs off on a sales experiment that vaporizes an estimated $1.5 billion in revenue, forces a public reversal, and ends with the chief commercial officer getting sacked has failed in its core job of risk oversight. You do not greenlight ripping fares out of agency channels without a working migration path, then watch corporate share crater, then claim you are “winning it back” while revenue stalls. That is how you break trust with your highest-yield customers and your distribution partners. The timeline is public. Management pushed the NDC hard pivot, corporate bookings collapsed, guidance was cut, the architect exited, and American began walking it all back. The next quarter they were still telling investors they lost money in every region. That is not bad luck, that is board-level negligence. The same board also presided over a capital structure that still carries roughly thirty billion dollars of net debt, which means every operating miss is amplified by interest expense before a single meal is catered or a seat is sold. There is no credible turnaround while this board and senior team keep congratulating themselves for “resetting” what they broke. Swap them out, bring in directors with real distribution, enterprise sales, and network planning expertise, and stop letting airline strategy be written around press releases and slideware. Until that happens, American will keep running in place while Delta and United lap them in card economics, corporate share, and pricing power. Also, the culture is completely toxic and it shows. Miserable employees mean miserable passengers, on average at least. Until shareholders meaningfully revolt, nothing at AA will truly be fixed.

  16. @Mike Hunt — Agreed on your statement: “Management pushed the NDC hard pivot, corporate bookings collapsed, guidance was cut, the architect exited, and American began walking it all back.” Clearly, New Distribution Capability (NDC) was a failure at AA, and justifiably, many were upset. (@Tim Dunn and @Max Power should be thanking AA for all the benefits DL and UA got from that.) But, let’s be real, the folks that complained the loudest about AA (or any airline) are ironically often those traveling using “Other People’s Money” (OPM), for work, etc. Namely, because their corporate travel agencies (and their employers) no longer fund ‘premium’ cabins anymore. Sure, you could self-upgrade, or ‘hope’ for complimentary upgrades (which are less-and-less a thing.) But, once more, folks traveling OPM are cheap.

  17. Lot of missteps which will be hard and long to fix. Assumption that business travelers only care about schedule. Business travelers could be forced into aa.com therefore by-passing travel agencies. Too much concentration on just CLT and DFW. Retiring the A330s. Assuming all coach passengers are Frontier like passengers. Not enough emphasis and investment in operations and operational recovery. Heavy banking of all hubs.

  18. American is fortunate (or not?) to have oneworld partner Alaska (and Hawaiian) to coordinate with (since they really do not operate international long-haul); whereas, Delta doesn’t really have a domestic ‘partner’ airline; United ‘sorta’ does with the new B6 limited ‘partnership.’

    @Adam — I’m always down to blame over-paid top management over the workers, so thank you. However, you sure Delta or United didn’t ‘pay’ for this Wendover video, instead? Like, they can’t say enough good things about ‘ancient’ 757, 767, and a330s (*cough* DELTA!) Like, as a passenger, I definitely prefer newer aircraft (gimme AA’s 787, especially with the new Flagship Suites, over DL’s 763, any day). Then, there’s all that praise for ‘Seattle’ as if it were some ‘perpetual fusion generator’ for profits, simply because SEA is literally closer to E. Asia. Psh.

    @L737 — I, for one, welcome our (comment delay) overlord. Ya know, I’m fascinated by the different viewpoints on here. Clearly, there are some who are industry-analysts (promoting their particular airline, or the ‘investment’ opportunity or risk, therein); we got workers (crews and support staff, active and retired); then, within the consumers, there are the OPM travelers and the leisure folks; finally, we got the banterers (guilty, sometimes *wink*).

  19. Sam Denby is an unrepentant moron who speaks authoritatively on subjects while ignoring context, cherry-picking facts, and “wet streets cause rain”ing. He’s also a scummy leftist that hates capitalism and democracy. Anyone who listens to anything he has to say has a severe case of Gell-Mann amnesia.

  20. “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.” ― Theodore Roosevelt

    Hindsight is always 20/20 – Howard Cosell

  21. “Hindsight is always 20/20” Cosell was dead wrong. Ask people what caused the Great Depression, you’ll get many conflicting reports. By definition, they can’t all be 20/20. I find many have very flawed hindsight. Relevant here is that AA’s upper management’s hindsight on AA’s woes won’t match with what many of us feel to be the actual case. And, that’s why hindsight is so important. How can AA improve tomorrow with today’s decision if they haven’t learned from the past?

  22. Mike is absolutely right. At the core, this is all about a governance problem that has gone on for 20 years.
    AA failed to get its costs down post 9/11, thought it could do an out-of-court restructuring and then failed to seek Chapter 11 when CO, DL, NW, UA and US all did it and got significant cost reductions.

    Again, regardless of the platitudes that some tout, it is perfectly legitimate to ask how a company with tens of billions in assets and the use of other people’s money has failed to recognize FOR 20 YEARS that their strategy is not working when other carriers have managed to overcome crisis after crisis.

    AA has tried for 20 years to fix the problem w/ airplanes and to blame its people and to fire half of its best customers – and still hasn’t admitted at least publicly that they got it all wrong.

    and 1990, do you realize that a fairly good chunk of DL’s 330-200/300 fleet is half the age of AA’s 777-200ER fleet?
    And DL IS retiring 767s but didn’t do it all in one fell swoop like AA did or think like UA that by putting in an uncompetitive business class product even if the airline itself thinks it it the greatest think since sliced break it makes the plane any newer.

    Again, the question is whether AA can turn the ship around given that B6 and WN are both turning themselves into legacy carriers – perhaps lite at first – but could in time be capable of winning over AA corporate passengers in major AA markets.

    yeah, AA should be scared that it can’t turn itself around when other carriers are managing to do it.

  23. Is Bob Crandall still alive? If so, I wonder if he would come back and run this airline?
    It’d be nice to have a real airplane guy at the helm and not bean counters.

  24. Great article. Much to ponder.

    I agree with others that D0 should also be in the top 10 of AA bad decisions.

    Corrosive to both employee moral and customer experience, it did not solve the core issue: passengers not arriving/unboarding on time.

    Even in cases where D0 was effective in achieving on-time pushbsck, it left arrivals waiting for gates to free up.

  25. Sam definitely has a general bias towards United but regardless, I appreciate his reach and his ability to generate a discussion like this one which has been super insightful.

    @1990 – Healthy meta right now here, woot woot!

  26. AA should be very concerned. Flashy new business class seats are nice, but nowhere near enough. Folks think about the overall value proposition, and I think AA needs to offer NYC customers a lot more now to secure their loyalty, because between new lounges, first class, expansive extra legroom sections and the brand new JFK T6 that’s going to offer B6 customers with great connectivity to star alliance carriers, the future of B6 is going to be here in the next 12-18 months.

    To counter that, AA thus far has a small number of XLRs that it will fly JFK-LAX (with reduced premium capacity compared to the 321Ts and barely any MCE seating) and announced one flight to Tel Aviv. If you’re making money on the credit card spend and loyalty program, you have to be competitive in NYC, and AA is going to look flat at best as compared with B6 and DL.

    And B6 will have a much easier time poaching AA customers than DL customers. I have to imagine the status match offer that B6 is going to launch ~12 months from now is going to directly target AA’s top loyalty program members. Hopefully by then B6 will rename its idiotic loyalty program names (Mosaic 1, 2, 3 and 4 sure has a ring to it…) so folks will be excited to match over to Mosaic Spearmint or whatever (with the cool logo of a spear crossed with a mint leaf to be designed).

    As for WN… I suspect they will be watching B6’s roll out very carefully, but they still feel like they are multiple years away before being able to really offer first class / lounges and be competitive in that manner (much slower than Elliott would like I am sure).

  27. You cannot accidentally make the wrong decision 100% of the time. Even a 5 year old would make at least one right decision over a 10 year period when presented the options. They’re doing it on purpose because they want to file bankruptcy again and pay off all those airplanes that they bought, the new headquarters and the want to take the employee pensions that they were only able to get frozen when they tried to take them the first time in bankruptcy. You’ve got a bad board backing a bad executive team, protecting each other and patting themselves on the back while lavishly rewarding themselves with 30+ million dollar a year compensation while their stock price is in the toilet. The whole thing is criminal. The government needs to look at what’s going on here and not let them file bankruptcy again. I’m shocked there hasn’t been a shareholder revolt. Shocked!

  28. Camille,
    your “odds” statement is absolutely correct.
    However, it really isn’t possible in today’s world to get rid of airplane debt in chapter 11. There is just too strong of a market for any airline to be able to really cut airplane acquisition and ownership costs. NK’s chapter 11 is proving that.

    You may well be right that AA mgmt is looking for a reason to get rid of AA’s frozen pensions but more importantly to cut its labor costs.
    But again, now is not the right time. Although the pendulum is swinging back fairly quickly, the demand for pilots and mechanics is still strong enough that any airline that attempts to cut its labor costs in bankruptcy will lose employees.

    even w/ lower costs, AA flies too many routes that don’t make money; their entire system margins have been less than 2% for several years which means there is a lot of their network that doesn’t work financially even at lower labor costs.

    AA is simply valuable to banks and leasing companies that make money keeping AA on perpetual life support

  29. @Tim Dunn – Very well said. And I fully agree. American isn’t a zombie yet, but it’s living off the patience of banks and lessors who profit from keeping it on a financial ventilator rather than letting it collapse. With margins under pressure and loyalty revenue doing much of the heavy lifting, American can’t afford another shock to its system. If the Credit Card Competition Act ever becomes law, for example, it will hit the one dependable source of profit the company has left, and there’s no safety net big enough to catch that fall.

  30. @Mike Hunt — Rest easy; there’s no way anything like that is getting passed anytime soon. However, we are probably in a silent recession, but for the AI bubble, so… ‘brace! Brace! BRACE!’

  31. @1990 – It’s indeed a very low probability, but the chances aren’t zero, either. As stated, it was just one example. There are many other ways things could go sideways, including a messy economic deleveraging at large.

  32. @Mike Hunt — Payin’ off debt; not a bad idea, if you can; heh, we still talking American Airlines here, or the US/global economy at-large?

  33. I’d be curious to hear what effects the mass layoffs of Customer Relations, the Central Baggage Resolution Office and AAdvantage Customer Service nearly two years ago has had. They claim that despite letting go 700+ of their most experienced employees who diligently worked to resolve issues for and to service customers the newly created Customer Success department would be better for everyone. How many customers have gotten frustrated with bot responses and generic help from overseas call centers and simply stopped flying AA? Shiny new airplanes or airplane interiors don’t fix that. Especially for customers who generally fly in coach.

  34. I wonder if in the next couple of years, this premium trend reverses a bit as AA is investing money on trying to be more premium. It takes time and if that changes it’ll be yet another wrong decision where they both missed the boat on a decade plus of cash generation via the premium trend and then wasted money on chasing that a bit too late.

  35. @ 1990. How does the USA pay off its debt and still intiate your favored programs of a better life for everyone at G expense? Serious question. Tax the rich is not a serious answer.

  36. @Jack the ladd. I don’t read the idiot’s posts. But, I am also confused at how frequently the uninformed think our problem is not enough taxes instead of irresponsible spending. The 1% pays over 40% of income taxes. How dare they not pay 100%.

  37. @Marco – You can’t. This commenting platform that Gary uses feels like it’s from 1995 and doesn’t even allow edits once you post. I really wish he’d upgrade it but seriously doubt that’ll ever happen.

  38. Parker and his decisions made have been the seed of the downfall of American. But then Robert Isom and his USAir cronies and their decision to become a low cost cousin of Spirit put the nail in the coffin. The AA board should have fired and replaced the top executive’s and CEO long ago. Pushing AA to the edge of bankruptcy every day and putting inferior product and service on the planes with minimum crew. Then trying to ramp up service with minimum crew. Putting excess flight attendants on reserve instead on being in the aisle. Isom needs to be fired. New blood brought in, not more old school airline executive’s with the same old ideas and padding their own Golden Parachutes. Change is needed, badly! Still to this day. Oh, yes, let’s cramping more passengers in with uncomfortable seats and no leg room. Plus, hey, let’s put the lavatories in the galley where the food is and put a toilet jumpseat in the back! How stupid!

  39. American Airlines started to decline after merging with US Air because they made too many cuts in all areas. Only people who really like junk food enjoy their meals. Also, their service has gotten worse. I paid for a first class upgrade from San Francisco to New York to use the Chelsea Lounge, but the service and food there were just okay. I waited over 25 minutes for someone to take my drink order in thier first class flagship lounge!!!. They only took it because I went to the customer service desk to complain… On my next flight from New York to Paris, the flight attendants were extremely rude. I’m lifetime platinum I regret investing so much in the crummy airline.

  40. One big mistake that you do not mention was American abruptly killing its AIrPass program. That program, of which I was a member for 13 years, attracted frequent flyers who prefer Premium cabins and service. Because of it, I used American even if a connection was needed while there was a non-stop on another airline.

Comments are closed.