Interview with the CEO of American Airlines Part 3; The Future of the AAdvantage Program

Mr. Parker Wished the AAdvantage Program Could Have Always Been Revenue Based

If you’ve been following this series, you’ll recall that I had stated that I planned on having this post published two or so week ago.  However, after becoming backlogged at my summer job, I decided to put this post off.  To be honest, I’ve had very little motivation to blog lately, and with a massive drop-off in readership, this whole blog feels pointless.  But, a follower on Twitter is holding me accountable to completing my three part series.

Part three will cover the AAdvantage program, a handful of random and irrelevant questions, and what Mr. Parker sees as American’s biggest hurdles and advantages.

Doug Parker Talks the American Airlines AAdvantage Program

In recent years, the American Airlines AAdvantage program has been dealt a few major blows.  This year, American Airlines followed in the footsteps of Delta and United in awarding miles and elite status based on the price of tickets rather than on miles flown.  The day this was announced, American loyalists made it known that going to a revenue-based system was not a welcomed change.  Additionally, AAdvantage loyalists have reported scarce Miles SAAver redemptions and overall are less compelled to keep their elite status.  I decided to ask Mr. Parker a few questions regarding American’s switch to the AAdvantage program.

Right off the bat, I asked Mr. Parker, “Why did American decide to make the change to a revenue-based loyalty program?”

Mr. Parker definitely took some time to think about this question.  As he thought about the answer, I mentioned that top travel bloggers and American elites were not happy about this decision.  He responded, “I wish Robert Crandall would have just created the AAdvantage program as a revenue-based program from the beginning.”  He continued saying, “It’s not about matching the competition, but it’s the correct way of doing things.  We should be rewarding the flyers that spend the most money and put the most into this airline.”

As someone who doesn’t have tens of thousands of dollars to spend on full-fare tickets, I didn’t really like that answer.  I presented the example of a college kid and a first class flyer.

“My issue with that is, let’s say a college kid who lives on the east coast needs to fly home to the Midwest multiple times throughout the year.  He’s not going to buy full fare tickets, and he’s certainly not going to buy first class tickets.  However, by going revenue-based, what you’re saying to that college kid is, though you fly more than most of our customers, you’re loyalty isn’t as valuable as they guy who takes two round-trip first class flights across the Atlantic and is dumb enough to pay full-fare prices.  I don’t want to come off as rude, but I take issue with revenue-based programs.”

Mr. Parker chuckled as he knew it was evident that I had thought long and hard about the switch to a revenue-based system.  Finally, he responded, “I’m going to be honest, and yeah, that guy who spends more money with us and flys in our premium cabins should be rewarded more.  That college kid is spending $2500 on coach tickets when that business person going to Europe is paying $15,000.”

Of course, I understand the rationale behind going to a revenue-based program.  It does make sense to reward the flyers who spend the most on a particular airline.  I mentioned again that many travel bloggers weren’t happy with the airline’s decision.

He responded saying, “Look, it’s not fair to the people who buy full-fare tickets all year round when some guy finds a cheap fare from some US city in First Class, flys to Beijing round-trip and earns Platinum status for the year.  We want to reward the people who do the most business with us.”

Though revenue-based programs have essentially rendered much of the points/miles hobby pointless, it makes sense.  I don’t like it, and I know many readers don’t like it but it’s reality.

I asked a few questions about Concierge Key.  I tried to get an exact amount out of Mr. Parker regarding how much someone has to spend a year to earn Concierge Key.  He responded saying, “It varies.  Everyone knows that, and everyone knows the exact amount too.  Just go to any of those blogger forums, and everyone knows.”  I also asked about the possibility of Concierge Key possibly becoming a full-on elite tier.  Mr. Parker said, “No.  We’re happy with Concierge Key as it is right now.  There’s always room for improvement, but it’s not going to become a new elite tier.”

The Boeing 757 is on Its Way Out

Following our heated (kidding of course) exchange regarding the AAdvantage program, I decided to ask a few personal questions.  These are questions that were not remotely related to anything I had planned to discuss.  For example, I inquired about the possibility of St. Louis getting a flight London in the future.  The answer was that it’s pretty much up to American’s partner, British Airways.

Another question, near and dear to my heart, was about the status of the Boeing 757.  I asked, jokingly, “Why do you have to retire the Boeing 757.”  He laughed saying, “It really is a fantastic aircraft, but they’re old.  I love the 757 too.  It’s not very passenger friendly, and it’s not fuel efficient.  Unfortunately, the 757 has to go eventually.”  I responded saying, “I’m a passenger, and I love the Boeing 757.  I get that it’s old but other airlines have them.”  He continued to chuckle saying, “You’ve still got some time with the 757.  It’s going to be in our fleet until the end of the decade.”

So I didn’t save the Boeing 757.  I can’t say I didn’t try!

Employee Morale is American’s Biggest Hurdle and Advantage

To wrap up the interview, I asked a question concerning the future of the largest airline in the future.  “Going to forward, what do you see as American’s biggest hurdle or drawback?”  This was obviously a question that’s come up at a few board meetings.

Mr. Parker responded quickly, “We need to unite our employees.  We need to motivate our entire crew and boost morale.  If we’re not unified as a company, and we don’t like the company we work for, we can’t provide the best service we possibly can.”

I really appreciated Mr. Parker’s answer to this question.  I’m glad it wasn’t something like “We need better catering” or “Sometimes our planes aren’t on time.”

In recent years, American has experienced a series of events that have caused division or discontent among the airline and its employees.  From the uniform issues to disagreements between the airline and unions, there’s obviously a disconnect between corporate and the airline’s flight attendants, pilots, and other crew.  Mr. Parker said that if the airline can successfully address this issue, the airline’s entire staff over 90,000+ employees will become the airline’s strongest advantage in the industry.

Mr. Parker stated that American is already working towards unifying its entire team citing flight crew pay hikes and new union contracts.  Again, I really appreciate the thought that was put into this answer.  If American can address employee unity, I see a lot of the issues affecting American Airlines being resolved as a result of having a team that it is dedicated to the airline and its passengers.

Overall

Again, I really want to thank the entire American Airlines executive team for taking time out of their schedules and allowing me to come visit.  This visit and my discussion with Mr. Parker has only reaffirmed my commitment to pursuing a career in the airline industry.

What did you think of my interview with CEO of American Airlines? Do you have any additional questions about the meeting?