Friday, June 24, 2011

One More Time, American Airlines

What is wrong with American Airlines? The service is on par with the other legacy carriers, the schedules are convenient and the prices also largely in line with other offerings. The problem is they don't seem capable of making any money, having lost over $450 million last year while every other airline in the sandbox brought home at least a little somethin' somethin'. What gives?

When asked this question the CEO Gerard Arpey said that he was waiting on favorable contracts in both labor and fuel to end at other companies such as Southwest. Uh, yea. And how does that fix the problems at home? American never filed bankruptcy in the decade since the attacks of September 11, clearly a point of pride for all at this proud corporation but now equally clearly a bad mistake according to conventional wisdom. Labor costs at American remain higher than most other airlines despite the rumblings from the rank and file that they've given all they can give in concessions and other give backs.

The shocking revelation here is the simple fact that American Airlines is actually sitting still, waiting. This airline, arguably more than any other in the country, made its bones and broke more than a few thru innovation and daring, bold action, often dragging the rest of the industry along, however reluctantly. The DC-3 owes a lot to American, as does much of the information technology in use today to say nothing of frequent flyer programs the world over. American never, ever, sat still, so to here that they are "waiting" for other airlines' cost to rise up and meet their own is nothing short of appalling. The last time around, it seems, American had introduced B-Scale to save itself rather than wait to see what the other guys were doing.

Route development at American appears to have been largely stagnant ever since the Miami operation was purchased from Eastern Airlines. There have been a lot of hub closures such as San Juan, San Jose, Raleigh/Durham and Nashville but the only recent triumph is a huge, billion dollar terminal at JFK which remains largely under-utilized. So far the only thing coming out of New York is anti-trust with British Airways and Iberia along with mileage sharing with Jet Blue. Little in the way of new, showcase routes (Helsinki, anyone?) have emerged that also happen to make money.

What, truly, has happened that can be called ahead of its time or at least ground-breaking? Sleeper seats? Yawn. Wi-Fi? Whatever. Is it possible that there is nothing left for any airline to innovate and roll-out to the rest of the industry? Emirates has showers on board while Virgin Atlantic has introduced double beds but few others are stampeding to sign up for similar features. The 747 was the revolutionary airplane in 1969 which virtually every major carrier felt they had to have to keep up. The A380 is really just another, larger, widebody. The "new" 787/A350 types are made of plastic. Fine, but they still won't fly any faster or offer more in the way of onboard comfort for any cabin that isn't already out there. What is the next big thing on the horizon and will it be American Airlines that brings it?

American must find a way to deal with its operating costs and then come out swinging with something, anything, that nobody saw coming but absolutely everyone has to have but take years to catch up to. They need another DC-3. They need another SABRE. They need another AAdvantage. One more time.

Gotta go.

1 comment:

  1. The only time in recent memory, in which they introduced anything close to an innovation that was embraced by the rest of the industry was when they started charging baggage fees. Given their great history, that's not much to brag about.