At the American Airlines annual stockholders meeting yesterday, airline Chairman and CEO Doug Parker noted that they earn less revenue for flying similar distances than their two largest competitors. That means, he suggests, they have low hanging fruit to improve their financial performance. All they have to do is catch up.
That’s why, he says, they’re moving from a strategy of producing the most available seat miles at the lowest possible cost to one where they earn a revenue premium by investing in their product.
With all due respect though, Mr. Parker, I do not think you know what’s going on at your airline.
- Adding more seats than ever before to your aircraft reduces the space per passenger. This is precisely designed to reduce your cost per seat mile, earning more money by degrading your product not improving it. These new planes will have uncomfortable slimline seats and no seat back video, too.
- Rolling out Basic Economy fares which are designed to give customers less at the same price, making the travel experience at the lowest fare offered sufficiently unpleasant that they’ll hopefully spend more just to avoid it (while risking that customers book away onto Southwest, JetBlue, or Alaska which offer a better experience).
- Cutbacks in the marketing program which is a strange way to convince customers to spend more.
Apparently their aircraft interiors maintenance isn’t aligned with the CEO’s stated strategy, either.
— Shiv K (@theshivk) June 12, 2017
The aircraft which operated New York JFK – Paris on Monday June 12 appears to be N393AN, a Boeing 767-300 delivered to American Airlines in 1998.
Here the passenger sat in an emergency exit row, paid $2500 for his ticket, and feels the revenue premium was a mistake. I do not think this strategy will deliver the results that Mr. Parker is promising to investors.
When I reached out, American thanked me “for flagging” and let me know they’d “take the aircraft into maintenance and have the window shade repaired.” It’s unclear why the customer’s tweet — which American’s social media team responded to — was insufficient to make that happen… or how this conforms to American Airlines maintenance standards (outside of, perhaps, an insistence on departing on time or early every flight ‘though the heavens may fall’).