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And They Wonder Why We Hate Them

I've been an American Airlines elite-level flier since the late 1980s. I have nearly 1.5 million miles as a member, which means I'm AAdvantage Gold for life (and would be Platinum for life if I ever hit 2 million miles, but read on to understand why that won't happen). In the past, I helped recruit plenty of new AAdvantage members among my co-workers, because I honestly felt their service was better than the other major airlines. American recognized the amount of business I gave them and bent the rules for me on a regular basis. When a relative died a few years ago, I called up needing four award tickets with just days' notice, and had my choice of flights. If I needed an upgrade coupon's expiration date extended, it wasn't a problem. If my baggage was overweight, they looked the other way.

Oh, how things have changed.

A couple of months ago, I needed an award ticket from Raleigh/Durham to Hartford, with about a week and a half's notice. American flies directly between the two cities multiple times a day. I logged on to check the Web. No joy -- no award seats available at all. I called to talk with an agent -- no better luck. I asked them to bend the rules. "We don't do that anymore," she said. I ended up having to fly into Boston instead -- not where I had wanted to go.

I needed to fly up to Hartford again not long after that. Again, I checked with about 10 days' notice, and again, no award seats at all. It wasn't that there weren't seats available for purchase; there most certainly were. It was that American had decided to allocate a very limited number of seats for award travel, and those seats were (or, for all I know, that seat was) gone. In fact, there were no award seats available to fly anywhere in New England. But American graciously offered to allow me to spend twice the mileage (50,000 miles instead of 25,000) to pick a seat on any flight I wanted. A first-class seat anywhere in North America is only 40,000 miles, but I had to use more miles for a round-trip, one-and-a-half-hour flight on a puddle jumper.

Then I needed tickets to fly out to Seattle. This, I thought, shouldn't be a problem. There are four different ways to get from Raleigh/Durham to Seattle on American: through Dallas/Fort Worth, Chicago, St. Louis, and New York. Nope, not an award seat on any of them. Not in coach class. Not in first class. I spent an hour on the phone with two different American agents and ended up with the following options:

  1. Spend 40,000 miles to drive three-plus hours to Charlotte and fly first class to Seattle, with a redeye and the drive again on the return.
  2. Spend 25,000 miles to fly to Washington National, then take a bus to the Metro, take the Metro out to the end of the line, take another bus to Dulles, and hope that I made my connection to an Alaska flight to Seattle. Do the same thing on the return.
  3. Spend 50,000 miles to have my choice of flights.
Disgusted, I once again chose to spend the extra miles. Now, after three award trips this year, my account is down 125,000 miles instead of 75,000 miles as it should be.

This past week, my co-founder and CEO Richard Boyd told me that he had called American to try to use some of his upgrade credits on his flights out to San Jose, only to be told that he couldn't because the flights weren't full-fare. It didn't make any sense to me. I called up American for him. I explained the situation. "He no longer has Gold status," the agent said. "You can only use upgrade credits on discounted tickets if you have elite status." As I remembered things, that was a change from the old days, but when Richard said that he had missed Gold by about 1,000 miles without realizing it, I thought, hey, we can fix that. The agent transferred us to customer service to discuss his account status. It was going to be a wait, so as I walked out of his office, I left him with my suggested strategy.

"When you get customer service on the phone," I said, "remind them that you have almost 800,000 lifetime miles with American and were a loyal flier for many years. Explain to them that you didn't travel much last year because of the economy, but that your business is picking up this year and you would like to be able to do most of your flying with them. Remind them that you missed Gold status by only 1,000 miles, without realizing it, and that you would have been happy to put in a flight to make it had you known. Tell them that you're CEO of your company. You won't have a problem."

About 10 minutes later, Richard walked in my office.

"I told the rep that the economy had been tough on our business and so I hadn't traveled much last year, but that I was going to travel more this year," he said. "He answered, 'The economy was tough on our business too, so we can't bend the rules for you.' Then he offered to sell me a Gold membership for $395."

"You're kidding."

"No."

And they wonder why we hate them.

The major old-line US airlines -- American, United, and Delta -- are in a cost-cutting frenzy. Every expense is fair game. No opportunity for revenue is overlooked. It doesn't matter whether cutting an expense or adding a charge impacts their elite-level travelers -- in fact, one imagines they think they can abuse such travelers to a certain degree and get away with it.

The major airlines are telling themselves that if only they can get their costs down within range of those of Southwest, then they can stay competitive. They're telling themselves that people will pay a small premium for the additional services they offer:

  • Fare-shopping on Orbitz and Expedia. Southwest doesn't participate in the reservation systems that would be required for this; you have to go to Southwest's site.
  • Reserved seating. On Southwest, it's first-come, first-serve.
  • Real food on longer flights. It's always snack food on Southwest.
  • Clubs for frequent fliers. Southwest has no such thing.
  • Non-stop flights between popular destinations. On Southwest, one is often changing planes in the middle of nowhere.
The list goes on. If we can just get our fares down close to Southwest, the majors are telling themselves, we'll be okay.

It's a load of bull. Here's why:

  • Fare-shopping on Orbitz and Expedia. Most people I know already check both those sites when they make reservations, as well as Hotwire, and often the airline's own site. I know I do. It's worth a few minutes to me to make sure I'm getting the best deal. So why wouldn't I spend another minute to check Southwest's?
  • Reserved seating. Reserved seating sounds great until you walk up for a flight, the good seats are gone, and you're stuck in a center seat for two or three hours.
  • Real food on longer flights. First of all, no coach-class airline food is real food. Second, the majors are already moving towards charging people for real meals -- $10 for a Wolfgang Puck sandwich on US Airways, I noticed this week. Why not buy it yourself for a few dollars less at an airport cafe before departing? That's what more and more people are doing.
  • Clubs for frequent fliers. If I'm barely on the ground long enough to change planes, as with Southwest, I don't need a club. If I'm flying American and am on the ground for an hour or longer (as I was on my recent flights to and from Seattle), am I to understand that to pay the airline $300 or more a year for a quiet place to use my computer is a benefit to me?
  • Non-stop flights between popular destinations. Not for most people, not to most places they're going.
But this misses the point, really. I'm not a Southwest flier and have no desire to become one. No, the model for the future -- and the true enemy of the major airlines -- is JetBlue.

Like Southwest, JetBlue is non-unionized. Like Southwest, JetBlue keeps its fares low (though not always the lowest on a particular route). But JetBlue has improved on the Southwest model:

  • All seats are reserved.
  • Every seat has 24 channels of DirecTV, no charge.
  • Plenty of cross-country non-stop flights.
  • All fares are one-way -- no round trips required.
  • No Saturday stayovers are required.
  • Free 802.11 access at hub airports.
To my mind, this is the true threat to the majors -- airlines with fundamentally lower costs, but not positioning themselves as pure discount carriers. Instead, these new airlines will compete with and beat the majors when it comes to service.

JetBlue doesn't yet serve Raleigh/Durham, so I haven't yet had the opportunity to fly with them. But I was talking with a long-time friend who lives near San Jose recently, and he talked about how he flies JetBlue now. "American and United and the others like them are going to die," he said. "And they deserve to die." I know that I'm waiting for JetBlue or a similar airline to start serving Raleigh/Durham so that I can switch. Until then, American's antics have made me less loyal, not more so. All other things being equal, I'll probably continue to choose American. But I won't bend my schedule or pay a dollar more to fly with them -- I'll pick the cheapest, most convenient carrier instead. If, in today's world, loyalty to a particular airline is meaningless, then loyalty to a particular airline is pointless.

So what should the major airlines do? I'll write about that later.

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