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 The Brancatelli File

joe THE GOSPEL ACCORDING
TO AMERICAN AIRLINES


BY JOE BRANCATELLI

August 15, 2002 -- Did you hear the roar of trumpets on Tuesday?

Feel the earth move under your feet?

See the rays of holy light streaming down from the skies?

You should have. The gods who run American Airlines came down from the mountaintop on Tuesday and proclaimed their latest commandments for the nation's largest airline, all of their competitors, the nation's entire airline system and, of course, all of us humble peons who are unlucky enough to be frequent flyers.

The anointed one, American chairman Donald Carty, issued this edict. "We think, if our analysis is correct"--and since American has never, ever admitted it has made a mistake, their analysis must be correct--"that those that don't follow this will perish."

Ooooooooooh, scary, as Count Floyd of Monster Horror Chiller Theater used to say. A guy running a company that has lost about $3 billion in the last six fiscal quarters and is currently burning through about $6 million a day comes down from the mountaintop with a new sacred text and we're all supposed to genuflect.

And, you know, I would have knelt down. I really would have. There's a lot of stuff that makes sense in The Revealed Word of American Airlines--oops, I mean the "next series of fundamental business changes."

Except I keep getting tripped up in the math. As I mentioned, American is losing about $2 billion a year. American says these new "fundamental business changes" will save $1 billion a year.

I'm no holy man, but I can count. A billion in savings when you're hemorrhaging $2 billion a year still leaves you a billion short on the bottom line. And since none of the gods who came down from American's mountaintop on Tuesday told us how American is gonna make up that billion-dollar gap, I'm not sure genuflecting is in order here.

So get up off your knees, fellow flyers, and let's take a closer look at what American has in store for us. And, remember, this is The Word as divined by Don Carty. Refuse to follow and you shall perish.

LESS ROOM IN COACH
American's major competitive advantage is its "More Room Throughout Coach" program. Most American coach seats offer about 34 inches of seat pitch compared to 30 or 31 inches on other carriers. Well, you'll be seeing less room in coach on American flights in the future. American plans to jettison its fleet of 74 Fokker jets and "seek every opportunity to defer or cancel deliveries" of new planes. And while American expects operational efficiencies and capacity cuts will make some other equipment available, it seems inevitable that the vast majority of American routes currently using Fokkers will eventually be served by commuter carriers with regional jets. That means more routes with less room in coach.

FEWER FIRST-CLASS SEATS
If you fly American on international flights, you'll lose your first-class cabin on more than half of American's overseas fleet. American says first class will be eliminated on its entire fleet of 49 Boeing 767-300s, which will be reconfigured with 30 business-class seats and 182 coach seats. The 767-300s serve many markets in Europe and Latin America. American also flies them to Hawaii, so first class will disappear there, too. (American's fleet of 43 Boeing 777s will retain their three-class configuration; the "triple sevens" fly to London, Tokyo and a few cities in Latin America.) Oh, if you fly American in first on those aforementioned Fokker routes, you'll probably lose your up-front cabin, too. The regional jets that will likely replace most of the Fokkers won't have first-class seats.

A MORE RATIONAL HUB IN DALLAS/FORT WORTH
Give American credit for being the first mainline carrier to throw in the towel on traditional hub-and-spoke operations. Flights will no longer arrive and depart in "banks" at the same time. Instead, at DFW, American will adopt the "rolling hub" concept it has successfully tested at Chicago/O'Hare. Flights will arrive and depart throughout the day. This so-called "de-peaking" means American will need fewer planes, fewer gates and fewer ground personnel to operate the same number of daily flights. With flights spread out throughout the day, however, scheduled connection times for many itineraries will increase. But that's not necessarily a bad thing because traditional hubs using "banks" of flights almost never operate on schedule. If you've flown through O'Hare on American lately, then you know how much calmer and rational the entire "rolling hub" concept is.

FURTHER DEVESTATION OF THE OLD TWA NETWORK
When American scooped up TWA last year, American claimed it would save all the jobs of TWA's union workers and maintain a robust schedule at TWA's hub at St. Louis. Hah! Without a definable strategy for St. Louis, American was slashing jobs and flights there long before September 11. And American says its current round of "fundamental business changes" will lead to 7,000 additional job losses. A disproportionate number of those seem destined to come from the depleted ranks of former TWA employees. American also says it will reduce its system-wide capacity by about 9 percent. The new, shrunken schedule hasn't been released yet, but you can bet your last AAdvantage mile that St. Louis will continue to shrivel.

TRUTH IN LABOR RELATIONS
American's traditionally fractious labor relations may actually improve in coming months. The "fundamental business changes" announced Tuesday did not call for wage givebacks or other concessions from American's workforce. In fact, Carty made a startling concession of his own. "The greatest sin of airline management of the last 22 years is to say, 'It's all labor's fault,' " he said.

Wow! What's next, fellow flyers? The admission that maybe outrageously high airline fares and crummy service are the root of the Big Six's parlous state? An apology for decades of abusive behavior toward their best customers? A promise to listen to the market when it speaks?

Stay tuned. I think I see another airline god descending from the mountaintop now.

This column originally appeared at JoeSentMe.com

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.