Current American AAdvantage head Rick Elieson interviewed former American Airlines Chairman Bob Crandall at the Loyalty Summit online conference on Wednesday. Crandall spoke about innovations at American, from computer reservation systems to launching the AAdvantage program as well as his belief that companies should be required by law to do certain things to advance equality but that companies shouldn’t do those things on their own – to get too political, or stray from their purpose of making money.
Crandall discussed the failed experiment with the airline’s Raleigh hub, explaining that people in the city chose to connect on other airlines over taking American’s non-stop flights because of frequency – other airlines offered more flexibility, and greater redundancy, so actually were providing customers what they cared about most in a way that American didn’t.
He made several interesting points about travel and loyalty programs, largely centered around being transparent and fair with customers and winning the business of the people who are traveling today.
- Crandall hates resort fees. They’re a way to make customers feel tricked, which is bad for a long-term business relationship.
A hotel business for example that imposes but does not advertise a facilities fee is going to irritate the hell out of its loyal customers who show up but have not anticipated paying that fee.”
- He doesn’t believe miles should expire. The point of the mileage program is to cultivate future business, but expiring miles earned does the opposite.
There’s been a lot of talk about let’s let some of these miles expire. I think that’s a really bad idea. The cost of carrying an unsatisfied liability is very small, and the fact of the matter is if you get some man, some woman, some family and they don’t get an opportunity to travel very often but when they do travel they always travel American or they always travel United.
And over a period of years they build up, they finally get to the point where they’ve got enough miles where they can take a trip they wouldn’t otherwise, turning around and saying ‘uh oh it’s been too long you can’t use it’ is a good way to infuriate that person who has for a long time anticipated realizing the promise associated with the program.
I think not only airlines but also hotels have to be very careful about violating the trust of people who have chosen to participate in the loyalty program.
In a separate interview of MileagePlus head Luc Bondar at the conference Bondar commented on mileage expiration that “there will always be some breakage in your program even without expiration” and that a mature program with a good handle on its economics can therefore model itself effectively without actually expiring miles and retaining the business of occasional customers.
American’s Elieson responded to Crandall “the liability doesn’t concern me” but suggested customers finding reason to stay engaged in the program does. It was a bit of an awkward moment, because American’s is the only large U.S. airline frequent flyer program which still expires miles.
- Business travel won’t return. “A substantial share of business travel will not come back.” However there will be a strong rebound in leisure travel among those who have been stuck in place. He thinks air travel makes a long-term difference to society so travel volumes will ultimately recover. And it’s important to give the customers who do want to travel what they need.
Bob Crandall remains outspoken over two decades since his departure from American. He even has a blog which he hasn’t posted to in some time. The new American Airlines campus is named for him.
He’s a decisive leader, and also one who’s far more loved now in many ways than he was when he was actually in charge. He was a micromanager, and tough, though also often wrong. But he’s definitely worth listening to.