In July 2018, American Airlines CEO Doug Parker announced plans to change the company’s business model. The new strategy includes partnerships with financial services firms and making its own flights more attractive in order to attract passengers.
The “american airlines symbol” is a new agenda for the CEO of American Airlines. The company has been struggling to stay in business and this change will hopefully help them find success.
A New American Airlines CEO Has a New Agenda
on December 11, 2021 by Gary Leff
American Airlines’ CEO, Doug Parker, will step down on March 31, 2022, and current airline President Robert Isom will take over. ‘Meet the new boss, same as the old boss,’ was a common reply. For years, Isom has worked with Parker. He was Chief Operating Officer of American Airlines and US Airways before becoming President of American Airlines. He previously worked for Northwest Airlines, which had a reputation for poor product, service, and staff morale.
However, as Scott Kirby of United Airlines demonstrates – he was formerly President of American and US Airways – a new start and ascension to the CEO job allows for a departure from the past. And a CEO transfer is the ideal opportunity to go through everything again. A CEO succession after a pandemic is doubly difficult.
While Isom has previously spoken openly about the need for American to compete primarily with Spirit Airlines and Frontier, and while he has never been focused on delivering a quality product, and he once had a reputation as a “operations guy” but has yet to deliver a top flight operation at American, let’s give him a fresh start. His track record does not imply that he will break with the past and make the best judgments for American Airlines in the future. However, America is in urgent need of fresh leadership, and he has been selected to offer it.
American Airlines, more than any other U.S. airline, has the most opportunity to improve. They have a well-developed route network, a fleet of relatively new jets, and a long track record of success. They also provide a loyalty program that is somewhat better than United’s but much superior to Delta’s and Southwest’s.
They have, unfortunately, managed to alienate shareholders, workers, and consumers.
- Prior to the pandemic, their stock price and financial performance had been behind. They’ve taken on more debt than their rivals, so they’ll have to perform even better.
- They drove away a large number of high-end clients. Prior to the pandemic, the proportion of income received from the top 1% has decreased.
- Employees often express annoyance about not understanding what product management expects them to produce, whether they’re attempting to be a luxury airline with a premium customer experience or an extreme low cost carrier. The airline lacks a purpose statement, and adopting the tagline “caring for individuals on their life’s journey” has been a slogan rather than a guiding principle.
- The airline didn’t bother developing a cabin mockup when it launched its new basic domestic product (“Oasis”). Instead, they “taped it out,” as COO David Seymour put it. It also didn’t work in terms of functionality. They’ve even re-retrofitted first class to make it more bearable (though still much worse than before). Doug Parker, the company’s CEO, didn’t even sample the new standard product he was marketing for more than six months after it was released.
This is an airline that spent years thinking that they would treat their staff well, and that their customers would treat them well, and that people would adore them. Employees, on the other hand, were given weight-loss programs rather than a vision of creating something bigger than themselves and a rival to compete against. They implemented a sick policy that penalizes workers who take time off or use their sick leave while they are sick. Employees, both front-line workers and intermediate managers, need a clear objective to rally behind, one that is actually employed in decision-making. They need to figure out who their consumers are and keep them in mind when they consider the ramifications of each policy.
Details are important. Vasu Raja, the airline’s chief revenue officer, has become its driving intellectual force, but his vision is unfinished. ‘The timetable is the product,’ he thinks. It is crucial to stick to a schedule. Operational dependability is crucial. However, rivals may provide such services as well, and premium consumers want to be treated as such. They must convince Americans that spending more on higher-margin items is worthwhile, and that picking them for that higher-margin expenditure is logical.
It’s not enough to check a box that indicates they have seats for a cabin and make a contract that supplies those seats at a cheap unit cost. They must be obsessed with the little nuances and how clients will react to them. They must verify that when seat power is offered, it is really used. Previously, under Isom’s management, a proactive maintenance program for seat power, to ensure that it was accessible to customers on every flight, was rejected as being too costly. Customers are preferred to find the loss of electricity and notify it to them so that they may restore it on the spot.
The CEO establishes the carrier’s leadership tone and vision. Robert Isom, as CEO, must communicate the airline’s vision. And it requires a customer-centric approach, staff respect, and meticulous attention to detail in producing the greatest possible product that aligns with the airline’s financial objectives.
Oscar Munoz had no experience operating an airline when he took over at United. Health difficulties forced him to retire prematurely. As a new CEO, though, he performed two things:
- Spent time speaking with and listening to workers, presenting a United vision that was superior and something they could be proud of.
- Announcing immediate gains for customers, such as stroopwafels and Illy coffee, as well as greenlighting one of the industry’s finest soft goods for international business class (which had been trimmed under Kirby) and new seats that would at the very least make them competitive.
Munoz provided a vision for how United workers and consumers should improve. He summoned Kirby, who devised a plan to bring them there. United is far from ideal, but it seems to be improving in several areas.
Isom must break free from his past and establish his own path as CEO. Instead of clichés, he has to listen to his people and give product upgrades to consumers. He need people who will take care of consumers and who will be given the necessary tools to do so (such as sufficient gate staffing and sufficient onboard staffing, and real meals for premium passsengers). He must make it obvious that the consumer is at the heart of decision-making, and practices that make it more difficult to fly on American (such as same-day change regulations that prevent customers from taking use of the world’s biggest airline’s multiple hubs) must be abandoned.
The United States has a chance to win. They have some fantastic hubs. They aren’t as dependent on corporate travel as United is, and they aren’t as competitive in as many hubs. The aircraft, the gate, and the slots are all there. They’ve adopted a more aggressive schedule — Parker’s US Airways would never run a flight that didn’t stop at a hub, and he transferred that aversion to competition to American, but they now seem to be eager to fight. They must continue to get the business in order while committing to their consumers and providing personnel with the tools they need to care for them.
While this does not ensure success, the status quo is a formula for becoming the industry’s financial behind. Even for a board that was hand-picked by Isom’s predecessor for reasons other than airline expertise, it shouldn’t be an option.
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