AA Puts the Squeeze On

After putting the squeeze on its employees and its suppliers, it was perhaps inevitable that financially struggling AA would next put the squeeze on its customers.

But in a mindlessly gratuitous insult to its customers, AA chooses to squeeze more seats into its 757s and A300s, even though it has close on one third of its seats unsold at present. How stupid is that - adding more seats when you can't even fill the seats you already have?

Rather than helping AA make more profit, all this will do is encourage AA's former loyal customers to 'aabandon' the airline.

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AA's 'More Room Throughout Coach' concept was a brilliant plan that recognized a basic truth - most of the time, planes don't fly full.

And so, by taking out a few seats, the airline was not actually reducing the real-world number of people that would fly on its planes to any significant extent. The percentage of seats removed was much greater than the rare times when fewer seats meant it was missing out on more passenger sales.

With AA having one of the lower load factors of the 'Big Six' airlines, why do they now destroy their unique 'More Room Throughout Coach' program?

AA's Planes are Almost One Third Empty at Present

For the first three months of 2003, the 'Big Six' airlines had the following average passenger load factors :

Airline	% seats filled
Northwest	74
United	72
Continental	70
Delta	69
US Airways	68
American	69

Yes, American's planes are no more full than any other major carrier, even though they have fewer seats! At present, AA doesn't need more seats in their planes - they need more passengers in the many empty seats they already have.

The Precious Benefits of More Seat Room

The airlines seem to have scientifically determined the absolute minimum amount of seat space they can give to a passenger. This is about 31" or so - see my three part article on finding the best seats on a plane for more information on how to tell a roomy comfortable seat from a tight uncomfortable seat.

In theory, with this minimal 31" pitch, you have close to zero spare leg room between your knees and the seatback in front of you. And so, adding just one more inch of legroom would perhaps double the free space in front of you, and adding two or three extra inches starts to really make a huge difference in perceived free space.

Similarly, as anyone knows that has tried it, working on a laptop in a cramped coach class seat is very difficult and often impossible (if the person in front reclines their seat). Again, a small gain of 3-4" can make all the difference between impossible and possible.

There is another minor benefit of this program as well. With fewer seats on board, there was more overhead space per seat, making it easier for everyone to fit their carryon into their overheads.

American's 'More Room Throughout Coach' plan gave everyone, in every coach seat, another 3" - 5" of space compared to what they would get on a similar airplane operated by a different airline. This 3" - 5" made a tremendous improvement to comfort on a flight.

A Unique Program - Now Destroyed

There were two wonderful features of the AA More Room program. It was offered on every plane, and it was offered to every passenger. Other airlines have inferior programs giving extra space to a limited number of coach class passengers (ie very frequent fliers and people on very expensive tickets) but only AA could guarantee that every person on every flight would get more seat room.

AA has now announced it is returning the extra seats back into its fleet of 757 and A300 planes. This means that the average flier will never really know, for sure, if he'll be on a comfortable or an uncomfortable plane, and so, the 'no exceptions' certainty of the More Room program has been destroyed.

Do Passengers Really Care?

It is true that passengers place most importance on an affordable 'fair fare' - and this is a truth that the airline dinosaurs have tried to ignore for too long, pretending that their customers actually enjoy paying exorbitant fares to fly on a 'name brand' carrier.

But the most asked for service improvement is consistently more seat room. American was the only airline with a consistently roomier coach class for all its passengers. It had a unique competitive advantage, that was also a 'real' advantage that its passengers/customers valued and asked for, not just a bit of irrelevant marketing hype.

An expansion minded CEO possessed of a marketing sense and passenger service vision would have chosen to promote this point aggressively in the marketplace, recognizing three key things :

Better customer service brings greater customer loyalty
It was costing almost nothing to offer a benefit that customers have shown they want
The 'More Room Throughout Coach' product meant that, with similar fares to competing airlines, AA would always win a larger share of the business because it was giving more value for the same price

And so AA - like all the other airline dinosaurs - has faced the choice between increased or reduced customer service, and, perhaps predictably, chose the latter.

There is a saying that only fools compete on price, and that is a game that AA, with its very much higher operating costs than competitors such as Southwest and JetBlue, is now finding itself forced to play against competitors that have similar or better service and much more loyalty in their customer bases.

Inflicting the Greatest Discomfort

Although AA are initially squeezing more seats only into their 757 and A300 fleets, these are the planes that are used on their trans-continental flights. So, with an uncanny knack to inflict the most discomfort, passengers on the long 5-6 hour flights will now find their knees once more digging into the seat back in front of them, while passengers on short 1 hour flights will frequently be in one of the remaining roomier planes.

AA's more legroom product is of greatest value to people on longer flights (which also command higher fares). So, why doesn't AA leave the more legroom in their longer flights while taking it out of the shorter flights, where people don't mind nearly as much? AA does the exact opposite of what you or I would do if we were running their airline.

Who Will Use the Extra Seats?

As shown in the table above, most of the time AA's planes don't fly full. This means they can take some seats out of a plane and not suffer any loss of passenger revenue.

Now you can probably think of flights you've been on recently that were full. Let me share a little secret with you. Sure, you'll often end up on a 'full' flight, but guess what! A significant number of your fellow passengers are 'non-revenue' passengers - they are flying with free tickets, probably on a 'space available' basis. These people are usually airline employees and their families. The number of people on any flight that are 'non-revenue' is a closely guarded secret, but it is probably fair to say that there would be an average of 5%-10% on most popular flights.

So, another way of looking at what AA CEO Arpey has done is that, in a situation where his airline is desperately short of paying passengers already, he has given paying passengers even less reason to choose his airline, while making more seats available for his employees to fly for free! I'm all in favor of staff travel benefits being generously offered, but not if it means compromising the quality travel experience of the paying passengers.

The Worst Thing AA Could Do

The bottom line is that with paying passengers only filling two thirds of the current number of seats on his planes, the worst thing Arpey could do is squeeze more seats onto his planes. That isn't going to encourage anyone extra to buy a ticket from him, and probably will discourage many current customers, who may now find the comfort of a lovely leather seat and video entertainment system on JetBlue more to their liking the next time they take a coast to coast flight!

History Repeating Itself?

Do you remember TWA? Almost ten years ago, they introduced a similar program with more room between their coach class seats. Then, after a few years, they ended the program, went broke, and were purchased by AA.

And then AA first introduced their More Room program, and now are in large part ending it. They are also hovering on the verge of bankruptcy. Will the rest of this cycle repeat itself a second time?