Yesterday we learned how American Airlines Chief Commercial Officer Vasu Raja is leaving the company as of June 2024. The airline isn’t taking long to reverse course on some of the changes that Raja had spearheaded.
Continue reading: American Backtracks On Mileage Earning Cuts
Share your questions, experiences, and thoughts below.
And so it begins. Now let’s get lowest fares back on corporate booking engines.
You're confusing the agency strategy with the network strategy. No sign of the network strategy being walked back. Yes on part of the agency strategy.
"Be premium" is not a strategy either. What is your specific plan for profitable, sustainable growth for AA?
They should reinstate AAirPass. Since they did away with it we’ve shifted our business travel to other airlines since we are no longer ‘locked’ into American. With AAirPass we defaulted to them even if times and routes and pricing were better on other airlines. Now we don’t have to. Big loss for them.
@ Greg -- Well, I mean, the network strategy isn't working either. Looking at Raja's strategy, first it was the SEA international hub. That didn't work. Then it was the JFK international hub. That has been scaled back.
We're seeing weaker demand for domestic travel, and American has been so heavily focused on being a domestic airline. That's why American has adjusted down its guidance.
You're right, of course "be premium" isn't a business strategy. But maybe not actively being hostile toward corporate sales/travel is a good idea, no? The agency strategy and network strategy go hand-in-hand, because it's hard to sell long haul premium cabin seats if you like neither corporate travelers nor travel agents.
Thats too bad. Would have been nice if OPM flyers who dont pay for their own tickets dropped out of the elite ranks, and left it for those of us who are true spenders
Looks like Vasu alienated the business PAX which brings in premium revenue which inflates both the top and bottom line which was evidently lacking in the restated quarterly projection.
AA has a big rabbit hole to fill. It needs to embrace the business PAX with appropriate fares, cabin experience, and customer support. Not sure AA is capable of executing on all three.
This is a lesson learned over and over (or maybe not learned clearly). You can save your way to zero volume. Even Spirit realized about 8 years ago that you can only poke people in the eye so many times and it becomes irrelevant how cheap you are. Customers have choices.
AA has someone to blame now so makes it easier to roll things back. I gather if they take too much further on revenue more heads will roll.
Just curious...you're always leaving the same comment. The reality is, most folks with the greatest spend are business travelers (which you seem to be so bent out of shape over), and there's more to it than just shelling out "OPM." As someone who travels frequently for work, I can tell you, I'd trade status for more nights at home. But the frequent business travel (and therefore status) also likely drives a higher amount of personal spend. What does it even matter? I think your ire is misdirected.
That would be the opposite of good business strategy for an airline. They WANT people with other ppl's money to choose to spend that money on AA as opposed to the competitors.
As someone who travels weekly on AA out of a hub, I was ready to walk on them. I'm limited on how much money I can spend on business travel. Id like to see them with fares more in line with their competitors. For example I decided the $500 fare was too expensive for a 15 minute flight. So I'm driving the 1.5 hours. Glad they've changed their mind but would like them to maybe hire back more people to run the cooperate flight division that they fired 1.5 years ago. Delta and United both work with my company on negotiated contracts...American gave us the middle finger.
Would have been nice if OPM flyers who dont pay for their own tickets dropped out of the elite ranks, and left it for those of us who are true spenders
That makes ZERO sense.
Those traveling on corporate accounts are far and away a larger revenue pool than those traveling on personal/discretionary spend.
This whole scenario brings back to mind Gordon Bethune's constant "pizza" comments:
"You can only strip a pizza down so much: the the point of making it so cheaply, that nobody wants to f---ing eat it."
The oldtimers remember. 😉
Bring the TVs back. 6 hour flights without any built-in screen scream cheap, cheap, cheap.
Probably the one of the biggest reversals in airline pricing...ever! Glad to see this change for the travel agency community!
Yes the agency / corporate sales strategy is being walked back a la Delta Medallion fall 2023 changes. Too much too soon, though the trend may well remain.
Network though - domestic mid market high yield connectivity (i.e. not the NY/LA/Miami echo chamber on points blogs) - not sure that's changing. You can't suddenly go international without the airframes and that was set in place well before Raja became part of the most senior mgmt committee.
Run the domestic connectivity on time (which is more than today) while Spirit and Frontier have floundered, with a high value per mile loyalty program vs UA/DL. It's more differentiated than UA/DL are from each other.
I think he blundered with B6 and BA and that part will reveal itself as in large part related to the corporate sales issues vs the connectivity strategy.
Isom and Seymour are part of the problem as well. Raja is just the first domino to fall. This AA management team has set the airline back 10 years at lest with their network changes and cheapness. They basically built a glorified US Airways from a global carrier. It’s going to cost AA a TON of money to try and claw back revenue market share in big revenue markets like NYC and LA. You can forget Chicago, UA will drive AA out it after T2 is rebuilt as a Star International terminal and additional UA gates built in C and the new D concourse. AA’s is down to 30% share in ORD now. That is in the death zone of the S-curve. Couple that with corporates moving to UA there and you have a double whammy. AA’s problems are structural. Only way to fix it in the next 10 to 15 years is an acquisition…….good luck with that! The distribution strategy was boneheaded, but it’s the icing on the cake not the disease.
Agreed. Labor contracts are going to put them there and they haven't even settled the FA contract. The future is very bleak for AA
Prior to last week I would have wholeheartedly agreed.
P2 and I took a trip from DFW to the west coast. First class award tickets. P2 AA 2 million miler, me DL million miler. Obviously we both have experienced a lot of butts-in-the-seat experience and not cc milers. To my shock, we were served drinks before we departed and the food/service reminded me of the glory days ending in the 90s. Yes, I could have used a TV screen, but really got by just fine with my tablet.
Short version, I'm encouraged AA might be coming back. I do, however, still think all the US Air management need to go including Parker on the board.
Next step would be put back all fares into travel agency booking tools. Yesterday, I spent 3 hours trying to get a fare available in aa.com in my travel agency booking system. We have American's new NDC distribution product but the price wasn't there(which happens frequently). I was on hold for American's agency help desk for almost 2hours and gave up. I was able to get a better fare on similar flights on United and it took me less than a minute book. I only book American now for my clients when there's no other choice or they request specific flights. I'm Platinum with AA and refuse to fly them because they've made my work life miserable over the past year. I was excited when my AA sales person told me the new system would be a vast improvement and there would be support and incentives for using it. A month later he was gone, the new system didn't work properly and the support disappeared quickly. Guess they figured out again, travel agents won't go away and can move market share.
This is the second time I’ve seen you mention the city of El Paso in reference to Raja. Can you please explain the significance of El Paso?
Living in an AA hub city after three less than stellar customer service events with a Counter Agent, Lead FA in Flagship and Gate Agent I’ve walked from AA even after receiving my Concierge Key status because I am done with AA’s product and service. I’ve status matched on UA and now enjoy travel again. Actually being offered snack box food on flights under two hours and wait, a longer flight something hot in coach!! I’ve flown transcon to SAN & SFO on AA with NO food options in coach. I am now adding another leg to my flying but, it offsets the torture and poor mean spirited service from any AA frontline staff.
It’s a start, but such a long way to go to get me and other lifetime status folks back. I recently booked a round trip F ticket on BA that was codeshared with AA - besides AA not offering the equivalent of BA’s Chase 10% discount, AA wanted an extra $500 in each direction to make the fare refundable to the original method of payment instead of vouchers (useless since they’ve destroyed loyalty), making the identical codeshare flights (operated by BA) 25% more expensive if booked with AA. No thanks.
Airlines see the loyalty programs as huge revenue centers, but the benefits are not near years ago. If the airlines try too hard to give people a bad deal and there is enough complaint they will backtrack.
I used to be EP, but Raja drove me away! It's obvious AA really didn't care about their frequent flyers unless they were long haulers or using a sponsored credit card. You know, my credit card company owns an airline.
The original decision pissed off all agencies, even the ones that knew they would make "preferred" level. AA has done everything they can to bite all the hands that feed them, including agencies. I book a lot of air (mainly Business/First) for clients and move them away from AA when possible. If AA wants the business of travel agencies, they must make it worthwhile.
I agree with Harry; AA used to be a wonderful airline until they merged with US Air. From that point on, they jumped into the "race to the bottom" with United and then Delta. Unfortunately, AA won. I am a two million miler, and I won't base my choices on loyalty anymore. Now, I will fly anybody (except Frontier & Spirit) that gets me there most expeditiously. Get rid of the whole rotten core from US Air!