Wednesday, April 15, 2009

Spinning the Bad News As Era's Ending Looms in Air Travel

AMR Corp., whose principal business is operating American Airlines, reports a $375 million loss in the first quarter today, and tries to spin it positively.

"Thanks in large part to the efforts of our employees we also continued to improve our customer dependability," said the company's proud CEO, Gerard Arpey, who seems to believe that the rest of the planet understands whatever that is supposed to mean.

The loss comes even though oil prices are down sharply. "While lower fuel prices have provided a significant buffer against falling demand in 2009, the struggling economy and capital markets remain significant challenges for American and the rest of the industry," said Arpey, in the no-shit-Sherlock observation of the day (so far).

Let's look at the numbers to see the real "challenge:"

In March, American's revenue passenger miles were down about 10.8 percent over March 2008. Like its competitors, American has been frantically trying to shrink its system, and reduced capacity 8.2 percent domestically and 1.1 percent internationally. But the cuts in capacity were exceeded by a plunge in demand. In March, 9.9 percent fewer people boarded American flights. For the first three months of this year, American's revenue passenger miles were off over over 12 percent, and the number of passengners boarded was down 11.8 percent.

This occurred despite generally lower fares across the board.

Here's my own quarterly report for most major network carriers:

You are not looking at "challenges." You are looking at a verdict. The economy is obviously a huge factor, er, I mean "challenge." But you are also looking at a conclusion by a great many Americans that air travel, with the arrogance of the airlines and the indignities of the airport-security ordeals, is no longer worth the hassle, at least not to the extent that it has been for 25 years.

These desperate fare sales, and the lack of strong public response to them, are the herald of the day of reckoning. Airlines, you have made people hate you. The good times will not roll again, even when the good times roll again elsewhere.

An era is ending.



Anonymous said...

I saw an article that announced that Southwest made a small profit. They are the only airline aggressively promoting a "no fees" policy. Coincidence? I think not.

Anonymous said...

You're really jumping to conclusions with your "verdict" comment. If that were true, we wouldn't have across the board declines in both "network" airline shares and other airlines.

See also said...

OK, that's it with "anonymous" comments.

John said...

Well said! I can't help but agree with you 100%.

I think we should give credit to the folks that work for the airlines that are trying to make a difference; I've come across some great people at United, JetBlue, and even US Airways (I don't get to fly the other airlines that much). However, these folks are few and far between, even on JetBlue (the new management has also forgotten about the customer).

I also hate being treated like a criminal as I travel through the TSA's security theaters. All it takes to distract *the entire TSA staff* at an airport is a tray of freshly baked chocolate chip cookies.

I much prefer traveling through airports in Germany. They take airport security seriously, but go about it in an efficient and effective manner. I've never waited in a line; in fact, I feel like an unexperienced traveler in Germany because their staff is so much quicker at their jobs.

Thank you for your verdict!