Originally Posted by
SOBE ER DOC
It's unfortunate that when a post is placed to stimulate discussion that some people choose to resort to sarcasm and rude comments that don't add value.
The INTENTION of my post was to stimulate a conversation about how AA's CEO views his own business model and lack of understanding into the client and their needs. Those of you who say this is a business are correct, it is a business and not a charity. However, simply saying AA is s business and leaving it a that demonstrates a lack of understanding of the nuances of business strategy and services design. AA is a business that provides a perishable service. As such, they are dependent on demonstrating that their value proposition to consumers exceeds that of their competitors. One way to do that is to design experiences that will resonate with consumers, driving them to some degree of brand loyalty or willingness to pay a premium based on a belief that their experience will be in some manner improved or better than with a competitor. This is part of the strategy of airlines like B6 and why their new Mint service has been a smashing success. The best companies give their customers what they want before their customers even know they want it.
AA is welcome to do as they please, but they are losing out on a tremendous opportunity to differentiate themselves in the marketplace on something other than price. Parker's approach is to provide the bare minimum that consumers will tolerate before jumping ship. That is one strategy, but it is not the strategy of a company that claims to be "Going for great." AA has no consistency of brand in their hard product and that, IMHO, is a major failure of their leadership that WILL matter to a certain portion of the consumer segment.
Yes, After emerging from bankruptcy, DL made major investment into their hard product. While they purchased used airframes, they completely overhauled their interiors, installing powerports at all seats, replacing old seats, creating a unified brand in their interiors. As a result of this and other initiatives, they have consistently been able to command a higher fare than their competitors.
DL is most profitable because of where its hubs are. It completely dominates ATL/MSP/DTW/SLC, which are probably 4 of the top 10 most profitable hubs in the country and 3 of top 5. It does this with its FCM that sells really well in its core hub markets. It really doesn't make much money in the new hubs/focus cities its competing in like JFK/LAX/SEA/BOS. In fact, it has the lowest margin of any major airline in NYC despite having the most slots. If DL investment was so great, then shouldn't it do better in NYC and LAX? It seems to me while they do have a good product, much of their success is due to being the dominant carrier in a metropolis with little outside competition.
It's no wonder AA's CLT hub is the most profitable given that it's of the same profile. Whereas DFW/MIA/PHL all have to compete against other carrier hubs like DAL/FLL/EWR.
Now I would agree that in hub situations like MIA where AA has to compete against LCCs at FLL, it's less impressive product with high cost is causing defections. But that's a decision AA has to make. I think if DL was in a similar position, it would also have similar problems.