Amidst all the bad publicity airlines have been receiving lately, there’s news that airlines are moving to reduce legroom in coach on some planes. If it’s possible to be surprised and just not surprised at the same time, that’s how I felt with this announcement.
American Airlines appears to be the first of the legacy carriers to make a major move on legroom. Reports are that they will receive new Boeing 737 Max aircraft with a reduction in pitch (legroom) throughout coach. They appear to be accomplishing this by reducing pitch to 29 inches for a few rows in the very back of the plane and 30 inches through the rest of coach. I haven’t done the math, but I wonder if this also affects the extra legroom seats near the front of the coach cabin. That’s one of the few reliable remaining benefits for elite members. Wandering Aramean astutely asks if the trappings of loyalty are worth it as these benefits continue to erode.
There are rumors that United Airlines is considering a similar change. That’s not terribly surprising. Scott Kirby spent a number of years honing strategy at American Airlines before moving to United recently. He brings with him plenty of research and strong convictions. And, in a world where the legacy airlines play monkey-see, monkey-do, there’s money left on the table that can create shareholder value if an airline doesn’t participate in a race to the bottom.
How Tight Is Tight?
Ultra low-cost carriers like Spirit feature 28 inches of pitch on their planes. American isn’t going quite that far with this change. Plus, the newer slimline seats are better designed to allow more room around the knees. I’ve flown a 28-ish inch seat pitch on a long-haul (almost 5 hour) flight on Norwegian. It wasn’t horrible. Then again, I’m only 5’9″ tall. I suspect taller folks will be quite uncomfortable in the new American Airlines configuration.
Why Are The Airlines Moving In This Direction?
Short answer? Because they can. Which isn’t to say that they should. Airlines have finally gotten some discipline when it comes to yield management. Instead of always thinking about growth, there’s a sharper focus on profitably. RASM (Revenue per Available Seat Mile) is the drumbeat in quarterly airline earnings calls. It’s interesting to watch these developments, even as I’m disappointed as a consumer.
View From the Wing points out that the days of American Airlines earning a premium for their product are numbered/gone. It’s a reminder of a time when I used to go out of my way to fly American Airlines. I’m far from the only one. Prior to the merger with US Airways, American Airlines attracted many customers who valued the premium product they offered. It wasn’t all sunshine and roses, but I could rely on American for consistently high quality onboard meals and customer service that was unrivaled for top-tier elite earned elite status.
The value proposition has changed, no doubt. I still like American Airlines, but it’s no longer worth the extra time it takes me to connect through DFW or Charlotte from my home airport of Washington-Dulles. Taking away a few inches of legroom in coach won’t be the death knell of the airline. Not even close. But, it will represent another piece of the pie that used to differentiate the legacy carriers from low-cost carriers like Southwest, Spirit and Frontier (the last two in a special category all their own).
As a business traveler who loves to travel the world with my family, the miles I earn on American and United are enough to keep me from flying low-cost carriers when the price is comparable. But, the similarities between the Big 3 make it easier to select the airline most convenient for me.
There hasn’t been a ton of resistance to the rollout of basic economy fares, where passengers give up benefits like carry-on bags and seat selection in exchange for a lower fare. The airlines are public companies, beholden to shareholders. “Managing to the quarter” is a phenomenon that drives me nuts. The leaders of public companies drive quarterly results for their business. In many cases, their compensation is tied to their share price. In certain cases, it can incent them to forego the long-term outlook in favor of the short-term performance of their stock. Translation: airlines may not be managing for the future as much as they should be.
Squeezing 12 more seats onto a 737 should have an immediate positive impact on profitability. That’s almost 10% more seats without additional crew. The extra fuel is minimal. Those fares can literally flow right to the bottom line.
The Final Two Pennies
We definitely haven’t seen the end of revenue optimization. United and Delta are likely to follow in some form or fashion with less legroom. If I were a betting man, I would have wagered that the next move by airlines would have been to eliminate first class on domestic short and medium-range flights. European airlines have been doing this for as long as I can recall. Instead of offering a larger seat, they block the middle seat in a standard row of 3 coach seats.
Cutting legroom instead of eliminating first class seats is an interesting tact by American. Most customers won’t miss an inch or two of legroom. I can recall Scott Kirby (ex-president of American, now in the same role at United) saying that something like 80% of the airline’s customers only fly the airline once a year. Is that customer really going to remember the difference between 32″ and 30″ of legroom? American is effectively saying they don’t think so.
The airlines are betting on prosperity and restraint. The current low fuel prices and improving economy fatten their wallets. They proclaim to anyone who asks that they’ll have restraint when the market pulls back again. The airlines are growing now. They can afford to charge customers a bit more while providing a bit less. It’s a supply and demand business. I’m just not sure if those same customers will stay loyal during the next downturn. And, nobody is really sure that airline CEOs can stay restrained.
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