What American Airlines Is Doing Wrong (And The Competition Is Doing Right)

If you’ve flown on American Airlines lately, I am willing to wager you’ve had a “unique” (and typical) American Airlines experience.

I have a scheduled flight on American in the next few days and I’m regretting that decision already. So, let’s start from the beginning…

BACKGROUND

After the market crash (2008), all the airlines were attempting to pull themselves together. American Airlines’ CEO Doug Parker, President Robert Isom, and Scott Kirby (who is now the President at United Airlines) merged with US Airways, and turned it from one of the world’s worst-run airlines to one of the best. They invested billions in the passenger experience and strengthened relations with foreign partners.

Around that same time, investors were asking one simple question: What’s wrong with United Airlines? The company had so much potential, including hubs in the largest U.S. markets and partnered with great Asian airlines, however, they repeatedly disappointed investors. However, in 2016, United Airlines hired new leadership (Scott Kirby mentioned above) and clawed their way back.

It wasn’t long before investors AND CUSTOMERS began asking another simple question: Now, what’s wrong with American Airlines (again)? The insiders never mentioned AA when comparing airlines and the airline itself was disappointing its best customers with late flights.

PRESENT DAY

Fast forward to October 2019 and Delta Air Lines snatched a 20 percent share in American’s most important Latin American partner – LATAM Airlines. American downplayed the move, saying LATAM Airlines only produced incremental revenue for them, however, LATAM is the largest carrier in Latin America. Regardless to how they spin it, American Airlines depends on South American routes for a significant share of its revenue so it’s a major loss.

THE REALITY OF THE US3

FACT #1: LATAM Airlines is not very profitable but with a nearly $2 billion investment from Delta, Delta gains major scale in an important region, while wounding a big competitor.

FACT #2: Delta makes industry leading moves and writes the playbook! They have invested in the passenger experience (e.g. installing relatively comfortable seats and personal televisions on most airplanes), and are expanding their footprint in the fasting growing markets (e.g. Seattle, Boston, Austin, and the research triangle). It’s also taking a step back from airline alliances and instead investing in key airlines (e.g. Virgin Atlantic, Air France-KLM, Aeromexico, etc.)

FACT #3: United has been making some similar moves, albeit more slowly. This past month, United removed their award chart so we’ll see what impact that has on the customer experience.

FACT #4A: American is cramming as many seats as it can in its airplanes
FACT #4B: American is using cheap seats with limited padding
FACT #4C: American is removing personal televisions on short-haul airplanes that have it

FACT #5: Unlike Delta, which is focusing on growing cities (see Fact #2), American is content in cities where they are currently strong. Don’t get me wrong, fortifying its best hubs makes sense, but American is also losing customers in key cities (e.g. NYC, Boston, Austin, and Raleigh)

FACT #6: In the past two years American has lost two key partners in the Americas – WestJet (dropped its deal with American and is now with Delta), and now LATAM.

FACT #7: American’s executives repeatedly make excuses for their troubles. For example, they have blamed the grounding of the Boeing 737 Max aircraft for lower profit margins. You know who ordered more 737 Max and depend on the Max more than American? Southwest Airlines. Do you also know who is more profitable than American Airlines despite not having the Max? Southwest Airlines.

FINAL STAMP

In the past 3 months, I have flown American Airlines 17 times. 14 of those flights have arrived more than 30 minutes behind schedule and 4 flights have been cancelled. Those numbers are not good!

Second, Delta outmaneuvering American Airlines and collaborating with a key partner plays into a repetitious narrative: American is unable to match Delta and United on passenger experience, operations, and foreign partnerships.

Additionally, American has been slow to respond to emerging trends and that is an aspect that has to be recognized, not only in the airline industry but, in any type of business.

American Airlines is the world’s largest airline and has the tools to return to glory but it will take new leadership at American Airlines to make it happen.

What has your experience been with American Airlines? Good, bad, indifferent?

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