Three months ago Marriott laid off Ambassador customer service staff as part of customer contact center closures, effectively gutting the personalized nature of the Ambassador program – which still requires customers to spend at least $20,000 annually, even with this year’s reduced elite requirements.
Now Marriott has gone a step further and just announced the closure of two call centers.
This is a good reminder that there are people who are thrilled that international travel has grinded to a halt, and that flying is severely depressed amidst the global pandemic.
My home state of Texas is seeing a surge of cases, including in the Dallas area. But American Airlines flight crew at DFW and Dallas-based ground staff were photographed not wearing masks.
When airline employees don’t wear masks, they’re endangering passengers and scaring them away. That’s bad for business. And when employees don’t wear masks, passengers model them. It’s tough to get passengers to wear masks when pilots don’t.
A crisis is an opportunity to rethink the business. In normal times there are plenty of good reasons not to take chances, and too many entrenched interests standing in the way. Those are largely swept away. And the old arguments favoring the status quo hold little weight when the status quo is no longer an option.
Parker is right that the pandemic and rebuilding the airline’s routes and traffic from almost zero is an opportunity to re-think the business. Unfortunately he does not articulate here a creative new vision for how American Airlines might do that.
There are several surprising side effects of the coronavirus pandemic, that make a lot of sense once they’re pointed out. For instance one of the prime drivers in reduced GDP during the first quarter was drop in health care spending. How can that be with all the investment in treating COVID-19? Elective treatments were put off, nobody was going to the dentist either.
When restaurants closed down, rats had to go scurrying elsewhere in search of food….
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Airlines want another bailout. They’ve been laying the groundwork for two months. The major unions are asking for full payroll through March. The American Airlines pilots union, at least, is trying to frame the subsidies as pro-consumer calling it the government ‘buying all the middle seats’ although in many ways that’s an even worse idea.
There are two things the airlines have going for them, and five reasons a bailout just isn’t going to happen a second time.
American Airlines CEO Doug Parker shared with pilots last week that they’re planning an international route announcement in a couple of weeks. The flights they’ll be adding soon have already been shown to pilots, who had to bid on which trips to take. They’re also going to share plans for which flights they’ll run next summer – and which they won’t.
Senior Vice President Vasu Raja then went on to explain how they’re deciding which flights to add, and dropped two that look likely to start back up in August.
There’s no question American Airlines, and all of the major U.S. airlines, survive 2020. The federal government gave them over $50 billion. The question is what revenue looks like in 2021, and whether airlines can get closer to breaking even including debt service.
Once that happens though if American Airlines is carrying more debt, with greater debt service, they’ll financially underperform the industry. And then Chapter 11 bankruptcy starts looking attractive in order to get competitive costs. Financial markets appear to be predicting there’s a reasonable chance of it. Doug Parker says it’s not in the cards – and stands to lost out personally if they do given his 2.4 million shares in the company.
Either blocking seats on planes for social distancing is important, or it isn’t. American Airlines will no longer block seats for passengers (claiming it isn’t necessary) but will continue to block seats for flight attendants (for their protection).
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 »
