American’s Problem: Management is Out of Touch With Customers

The most successful businesses try to understand their customers, figure out how to add more value, sometimes even before customers themselves know what they need. Executives work to understand a product, how it’s experienced by customers, even before it’s introduced to customers. That’s the very opposite of doing the least amount possible for customers.

Doug Parker spoke with employees American Airlines ‘Crew News’ this past week, and he seemed to reveal which approach they take at American Airlines.

American Airlines Thought They Could Live Without Offering Seat Power

US Airways was late to add internet to its planes. They didn’t think they would make more money offering internet, so why should they do it? Doug Parker explained at the Phoenix Sky Harbor International Aviation Symposium in 2012 that they only decided to move forward when they saw they were losing ticket sales from customers who wouldn’t fly an airline without being able to stay connected.

It seems he admits to not learning his lesson. When America West took over US Airways, they actually took power out of planes that offered it because that would reduce weight and save fuel. Parker suggests he doesn’t remember why the legacy US Airways fleet mostly doesn’t offer seat power (“for.. some reason.. cost, I’m sure”) and says “in retrospect, we should’ve started earlier [installing seat power], we thought we could live with this, probably shouldn’t have tried so at any rate we’re going as fast as we can now.”

Parker liked that when US Airways consistently offered no power, customers knew that and had to have their devices charged. Now he thinks the problem isn’t lack of power per se but the inconsistent product so customers don’t know not to expect power. (!)

It’s really a problem when some do and some don’t. People can’t even know with confidence. One thing when they used to know I’m on US Airways I need to be charged before I get on. You don’t want to have people thinking that but at least people knew that, now it’s I’m on American I was going to be powered, I don’t have enough power, and they get upset.

One year ago they announced that they had a plan to add power. They’ll finish adding power to planes in 2021, eight years into the merger.

And since as of September they had no maintenance program in place for existing seat power outlets but were ‘working on’ developing one, I bring a UK power adapter to use even on planes I expect to offer plugs.

American’s CEO Has Never Flown the Plane With Tiny Lavatories and More Seats Than Ever

At the end of November I flew American’s inaugural Boeing 737 MAX flight. That’s the plane which reduced legroom in first class and main cabin extra, and which has just 30 inches of pitch (the distance from seat back to seat back) in the rest of economy.

The seats don’t recline as much as before, and they don’t have seat back video screens either. They do have power and Viasat satellite internet which didn’t work well when I flew, and that I’ve heard many complaints about since, though it’s likely I only hear about the complaints and not the successes.

However the biggest problem with this planes, in my opinion, is the tiny lavatories with even smaller sinks.

In Q&A with Parker a flight attendant asked about the lavatories.

    Flight attendant: “The doors open in the lavs and nobody can get in or out. i don’t know if you’ve been on it”

    Doug Parker: “I have not been on the MAX.”

    Flight attendant: “If you gain an ounce you’re not coming down the aisle i assure you.” (laughter) “but what are they revamping anything on it or is this something that it is what it is?”

    Doug Parker: “tell me what the issue is again, it’s the bathrooms?”

    Flight attendant: “In the aft of the aircraft the two bathroom doors open up and they lock into each other. so now you got people coming out of the bathroom into the galley and then we have to shut the doors, let them out, and let the next two people to use the restroom… and the sink you get soaking wet because it’s so small you can’t get your hands in there, so it really has some design flaws”

Doug Parker, the CEO of American Airlines, has never been on their new plane with their new standard interior which generated a flurry of controversy since April causing the airline to back off a plan to offer even less seat pitch.

The executive team talked about possibly changing the doors on the lav going forward (a ‘cutover’ not a ‘retrofit’), but that they chose the ones they did for customers.

Parker joked (!) about how customers were having water splashed up on them when turning the water on because the sinks were so small. They’ve reduced water pressure to compensate. And they claim that customers like the 737 MAX more than other aircraft which doesn’t say much about their other aircraft.

Failing to Put Yourself in Your Customers’ Shoes Explains a Lot of the Airline’s Problems

American puts a single-minded premium on on-time departures, believing those are highly controllable and the major determinant of on-time arrivals. However the pressure they put on employees to get there means that other service elements fall by the wayside. D0 is considered an excuse for almost any other decision, D0 trumps any customer concern. Yet they don’t even do a good job with D0.

It’s why we sometimes see first class seats go empty when passengers remain on the upgrade list. Or why some gate agents won’t process upgrades for customers unless they’re waiting at the gate.

American investments heavily in its lounges. Customers spend for those lounges. But instead of being able to wait in the club and work before a flight they need to be at the gate or risk losing an upgrade, or find the flight is boarding prior to the time posted on their boarding pass (risking not having overhead bin space for their bags).

Boarding early is frequently thought of as a D0 issue but for larger narrowbodies the issue is IT. They board 35 minutes prior to departure on Airbus A321s and 757s for instance, but haven’t ever updated the IT to tell their customers that. It wasn’t a priority — compared to doing the tech updates for basic economy, revenue-based mileage earning, devaluing award charts or myriad other cost savers and revenue raisers. Communicating smoothly with customers didn’t make the cut.

Wasting my time by the way is the number one thing American has done to kill my loyalty more than basic economy or changes to the loyalty program.

In Order to Generate a Revenue Premium, Put Your Customers at the Forefront of Everything You Do

American to their credit has tried to put employees front and center, believing that well treated employees will treat customers well and earn their loyalty. However it was clear at Media and Investor Day that there isn’t an overall mission or purpose being communicated to employees, just better pay and benefits.

Relying on second order effects for employees to be nice isn’t enough in any case, products and systems decisions need to be made with customers in mind, understanding how they interact with the airline — how they want to interact with an airline — and more importantly understanding what customers value most and finding ways to continually deliver that better and better.

Do that and seat power would have seemed an imperative years ago. And actually experiencing the product would seem a must.

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, 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 »

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  1. I agree with everything you have to say about AA and their lack of customer focus back in the cattle class, or now the Sardine Class. The introduction of Basic Economy is what drove me from AA. Before Basic Economy, I could purchase a reasonably cheap ticket, be able to choose my seat, and bring a carry on bag. With Basic Economy, they took that same price ticket and turned it into something I don’t want. I’m sorry American, but now, for the same price I can fly Southwest, and check two bags.

  2. @Gary — I think you are overstating the benefits of cheaper oil for the airlines. First of all, oil isn’t really cheap now. It’s historically average (which I think is wrong given the American shale revolution, and I personally would not be investing in oil futures here). If you look at charts, airline stocks actually often move in direct correlation with oil prices. In other words, cheap oil doesn’t necessarily help airline stocks or airline profits. Oh, sure, when oil completely collapsed a couple years ago, airlines made windfall profits, but those didn’t last, and airline investors didn’t really think they would. Rather, the key for airlines is to have sufficient pricing power to raise airfares when oil prices rise. That’s what a rational free market would allow, and that seems to be what is currently happening in the USA airline industry. Most capital-intensive industries don’t have a dozen major competitors, and that rationalization has now occurred in the airline industry. There were fears about how bad this would be for consumers but, objectively, I think most fair-minded travellers would say they haven’t been hurt by airline consolidation. Honestly, the only major downside has been the diminishment of frequent flyer programs for people who previously gamed them — especially for people who liked to fly up front and not pay for it. That includes you and me, but I’ll be the first to admit that I was actually over-entitled (I was getting way more than I was paying for). So to complain about this is a bit self-serving.

  3. Don’t forget the lack of TV screens, which make a huge difference when seating in the ever-shrinking space they leave us with.

    Delta is adding them to all of their fleet, while AA is getting 737-MAX outfitted like Spirit to go the 6 hours across the country.

  4. This is so true, I have been platinum for many years, my family of 10 flies millions of miles a year on AA, this 2017 I flew the necessary miles but because AA canceled my flights because of hurricane Irma, I was not able to reach the Dollar amount. When I reached to customer service asking for a break to retain platinum status they said, with pleasure just sends us 1200 dollars and you are all set. Amazing!!

  5. AA and British Airways go hand in hand. Until Americans stop this corporate consolidation crap by getting rid of these lobbyists this will continue. “Vote with your wallet” is a word con artists tell the suckers when you pretty much own the entire or a piece of the market.

  6. Dougie is flying the brand into the ground, making decisions that his successors won’t be able to easily undo, not matter how soon they get here. No significant brand has been built by delivering incrementally less year after year, not even in commercial aviation. By lowering the bar and barrier to entry eventually we will see more competition and AA will be the first to lose.

  7. This is a reflection of corporate culture. Parker makes millions with his “let them eat cake” attitude. There is no downside for him. I am a captive in an AA hub, but it seems the other “legacy (snicker, snicker)” are not any better, as they literally run subsidized monopolies.
    The current administration will, in all likelihood not make things any better.

  8. United successfully drove me away some years ago with its service and now it appears American wants to do the same thing. Please see if they’ll let me transfer my 400,000 miles to another airline.

  9. you’re naive if you think that only management is out of touch with customers at AA, so many more levels of AA are out of touch with any sort of customer focus.

  10. Sounds like American management has lost it again. The Board needs to fly in the MAX in coach.
    It’s not the airline of CR Smith anymore, pity the current employees.
    Retired AA

  11. Sounds like American management has lost it again. The Board needs to fly in the MAX in coach.
    It’s not the airline of CR Smith anymore, pity the current employees.
    A couple of diversions for passengers stuk in the lavv are in their futurre.
    Retired AA

  12. You realize Crew News is off the record?
    You should not be publishing quotes from these sessions.
    In fact, you should not even be privy to these sessions.

  13. @Jay — Due respect but I do not think what you describe as ‘off the record’ applies in this situation. It was not off the record with me in fact this is how sources work, sharing things with journalists who were not themselves in the conversation or at the event.

    For what it’s worth, I did interact with American’s Corporate Communications team on this – and in their words “not asking you not to post” so American itself doesn’t see anything inappropriate here.

  14. I recently flew from Miami to Buenos Aires on American leaving mid-morning. The cabin crew insisted the window shades be down because “passengers are sleeping.” A quick trip down the aisle revealed about half were sleeping or trying to sleep.. Is this a cost cutting tactic? No requests from “sleeping” passengers. We flew the entire 8-hour daylight flight with no lights and the shades down. Why did I opt for a window seat? This is crazy.

  15. I have flown AA all my adult life. The experience continues to go downhill for me. Cramped quarters, FA who are unfriendly, poor service inflight & when calling the AAdvantage Desk. Fees added on to what used to be included in the coach ticket price. It is no wonder that more passengers “lose” it and cause disruptions on flights. Perks in the miles program not being awarded for whatever reason. Why cram more seats into a plane? People who can only afford that experience can fly low cost airlines designed for that. Designing the back of the plane like a sardine can only cheapens AA’s brand IMO.

  16. My response to that is simple. For just a few dollars more, and I do mean just a few, I can get a seat on Southwest, and be able to check two bags, for no additional cost. So far, the seat pitch seems to be a bit better, and the restrooms, while small, do not approach the micro level that AA has crammed into the -Max. I only travel AA now, when that is the only contract carrier on the GSA city pair list.

  17. Most of the Big 3 airlines are the same not sure why American’s always focused on. United doesn’t have screens, minus the DirecTV birds, and they also fail to have power ports at most seats. Delta may be different, but I’d say as a whole most hospitality companies have lost their way when it comes to consumers interest.

  18. This plane is basically a sardine cans with wings. I fail to understand how passenger safety has not been considered with this design. In my understanding, the specifications / requirements for passenger safety are based on studies done decades ago when people where for the most part smaller framed. In an emergency, there’s no way that the crew could evacuate the plane safely and quickly — the panic and resulting every man for himself, would be a nightmare! The stewards could barely navigate the aisle with the refreshment cart — god help anyone if they needed the bathroom! My wife and I will avoid airlines that use this aircraft. A recent trip to Maui with Air Canada was an extremely unpleasant and uncomfortable trip. We both needed to go for a massage upon our arrival. Corporate greed is to blame. Further more, they have added extra rows of seating for passengers, there’s not enough overhead bins for carry on luggage. On both flights passengers were asked to voluntarily check-in — free of charge, carry-on bags. Airlines have started to charge extortionate amounts for checked in luggage, people are resorting to cramming in as much as possible into rucksacks, soft shell bags and small suitcases — adding to the already crammed spaces. The bathroom is an absolute joke! This is safe? I think not. The CEO’s and management need to take their spouses and kids on this plane and fly economy to get a true taste of what it is like for ordinary folks.

  19. You are absolutely correct in everything you said. Personally, I think the CEOs and other senior management should be required to take a four flight in the coach section (sardine class) of their aircraft. It’s really sad when I would rather fly on a military cargo plane than a commercial passenger aircraft.

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