Is American Airlines Getting Ready To “Value Engineer” For The Future?

Back when I used to be responsible for construction projects we used to use the term “value engineer” when a project was in final planning stage.  Quite simply, that was when we were tasked with cutting out as much cost as possible and still build a restaurant that functioned correctly.

There are many different ways to build a restaurant.  Similarly, there a multitude of ways to build an airline.  A “full-service” airline like American Airlines used to look much different from a “low-cost” carrier like Spirit.  In many ways, they still do.  But, with the advent of Basic Economy on top of an already lengthy list of fees, it can be harder to tell the difference.

View From The Wing notes that the most recent American Airlines earnings call may indicate that American is preparing for some value engineering.  Now, it’s worth noting that eliminating merger redundancies still remains on their list of cost-cutting measures.  But, as Gary notes, “changes to process and procedures” is a bit more concerning.

Are There Still Merger Redundancies?

For sure.  They’re not even done integrating union groups on one contract.  That should result in significant cost savings by being able to more effectively schedule crew.  This came up during the most recent American Airlines Media Day.  During Media Day, CIO Maya Liebman also brought up the fact that they’re not done merging systems.  If I remember correctly, she said that they were approximately 80% of the way there.

So, What Are The Changes To Processes And Procedures?

Unfortunately, I can’t find any reference to specifics.  And, this is where I start to feel a bit like a cat in a room full of rocking chairs.  It’s not the first time I’ve felt that way.  In the last decade that I’ve been a business traveler, there have been profound differences to airline travel.

On the positive side, business class seats on international flights are lie-flat now.  Fleets are significantly updated, though that means we get less comfortable slimline seats.  Soft product improvements at American and United are in the “nice to have” category.  On the negative side, upgrades are a lot harder to come by.  And, the food service has taken a big step back.  Revenue-based mileage earning is upon us, which is mostly negative.

There are certainly behind-the-scenes processes that could lead to cost savings.  Maybe that means I’m being unreasonable to think that more changes like Basic Economy are coming?

The Final Two Pennies

I think it’s prudent to withhold judgment, but I wouldn’t be celebrating.  Cost-cutting mode certainly means it’s less likely we get more improvements.  The status quo for customers right now isn’t terribly exciting.

There used to be a separate path where airlines designed a product that convinced customers to pay more for their product than a competitor.  American lead in some of those areas (domestic first class catering, for one).  Delta has tried to carve out a bit of a path there lately.  But, it’s not really a hallmark right now.  It feels more half-hearted, which makes it a self-fulfilling prophecy when it doesn’t succeed.  “Customers just don’t want to pay more”, the airlines scream.

There are plenty of examples of customers paying more for a higher quality product across a variety of different industries.  In the US commercial airline industry, it still feels a bit like a race to the bottom.

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