Harvard Business Review

Where American Airlines Needs Help


Posted on Harvard Business Review: June 11, 2010 8:53 AM

I'm sitting on American Airlines 1387 from Boston to Dallas, and by the time I land, I will be close to accumulating five million miles on this particular carrier. Unlike Ryan Bingham, the protagonist of Up in the Air, I am not particularly interested in accumulating more miles on American. In fact, I would be really depressed if I ever hit the 10 million mark.

Why? Because it's a boring place to spend time. There are some things I like about American: It seems safe, the flight attendants are usually competent, the silver planes look cool, they serve decent sparkling wine in domestic first class, and I happen to be an American myself. But I resent all the time I have spent in its planes' seats. This is clearly a company that doesn't know how to have fun or to help its customers do so.

The predominant color scheme of the cabin is off-white and beige. There are no fun drinks—something even Delta has! Unlike on JetBlue planes, there are no personal TVs, the opiate of the flying masses. There's not even any internet service on my plane. (American has been slow to implement WiFi.) Unlike on Southwest flights, the flight attendants don't joke or goof around as they tell you how to put on your seat belt. The service is not particularly attentive like Singapore Airlines' is. In short, there is absolutely nothing interesting or amusing about the AA flight experience, which undoubtedly explains why American is usually well down the list in the JD Power service rankings.

American was once a pioneer in IT, analytics, and operations, but I don't see much evidence of that anymore either. It sticks doggedly to hub-and-spoke route structures even though there is plenty of evidence that customers like direct flights. It was an early (perhaps the earliest) adopter of frequent flyer programs, computerized "yield management" seat pricing, and computerized crew scheduling, but now every carrier does those things, too.

This is a great illustration of what happens when companies lose their sense of fun and institutional vigor. Maybe size and simple competence was adequate for companies in the past, but it no longer suffices. American has lost considerable market share to airlines like Southwest and JetBlue that are not only cheaper but also more fun to fly. American always prided itself on its military bearing, but even the U.S. military seems more open to innovation and fun than AA does. Unless something or somebody comes along to rejuvenate the company, I foresee a long period of decline for it and other fun-starved firms.

Copyright © 2012 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Tom Davenport writes the Harvard Business Review blog: The Next Big Thing.

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