Flight Perks

American Airlines' Retirees Are Furious Over Changes to Their Flight Benefits


Passengers wait for flights at the American Airlines terminal at O'Hare Airport on Dec. 9, 2013 in Chicago

Photograph by Scott Olson/Getty Images

Passengers wait for flights at the American Airlines terminal at O'Hare Airport on Dec. 9, 2013 in Chicago

The chance to fly for free, or nearly free, is a bedrock perk in the airline industry that helps to attract, retain, and reward employees. Any tinkering with these perks is also highly controversial—and that ire was displayed today at American Airlines’ (AAL) first post-merger shareholders meeting.

As part of the merger integration on policies governing this travel, American’s new executives made several changes that have angered American’s retirees and workers from the former US Airways. The new American, which was formed in December, has about 700,000 people who fly for free as part of its “non-revenue travel” program, including about 110,000 employees, plus 515,000 spouses, dependents, relatives, and friends. That huge group illustrates how many people American is allowing employees to take on free flights, including foreign-exchange students they host.

Granted, in the grand scheme of corporate America’s gradual whittling of pensions, medical care, and other perks retirees enjoy, these free flights aren’t even a financial issue for airlines, which generally allot only their unused seats for workers, their families, and retirees. You may even be thinking: Um, cry me a river. Still, the changes at American pit the interests of current workers and retirees, who have not hesitated to tell Chief Executive Doug Parker that they feel slighted by the changes.

The biggest change was to split American workers and retirees into separate groups for seat priority, which is what other U.S. carriers do. The merged airline also eliminated fees American had charged workers for seats—US Airways had not—and scrapped a seniority system that US Airways had used to mete out seats. The airline also cut the number of free, one-way “buddy passes” that retirees receive each year, from two dozen to eight. (Current workers receive 16 per year.) The new program also gives new workers flight privileges on their first day, a change from American’s old system that required a waiting period.

“We did our best to take elements from both programs so everyone would continue to have some of the same privileges they have enjoyed previously,” American said in a statement.

Retirees argue that the new rules will cost the airline huge sums of money and that it creates incentives for new employees to plot how to plan free trips more than to learn their new jobs. “Shouldn’t they be looking at a cost-benefit analyst on something like this?” says Gail Dunham of Greensboro, N.C., who retired from American in 1995 after 28 years working at the airline’s Chicago hub. Dunham traveled to New York Wednesday to urge Parker and the airline’s board to reconsider the changes, which she considers offensive to retirees, given the generous group of people American now lets workers include in their flight privileges, including foreign-exchange students.

“It was a really hard decision,” Parker said of the flight changes. “I hated it, to tell you the truth.” He said that juggling seat availability among the various groups is “a zero-sum game” and “there’s no possible way to make everyone happy.” He also said that executives had examined flight data and that seat availability is such that for those flying as non-rev passengers, “usually everyone’s going to get on the plane, or no one is.”

Many in the company are dubious. The flight-benefit changes are so dramatic that “I never would have left,” a retired flight attendant who accepted a buyout package from the company told Parker. “Can I have my job back? I’m devastated, I really am. It’s just not right.”

Bachman is an associate editor for Businessweek.com.

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    (American Airlines Group Inc)
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