Just back from a biz trip JFK-LHR-JFK, and I have a few new observations about why AA is losing so much money.

(1) Gross process inefficiency. I booked the trip through my corporate travel agent about two weeks ahead, and immediately called the AAdvantage Gold desk to secure upgrades with miles. I was waitlisted for the outbound, but the waitlist was full for the return (another thing that irks me, but off topic for the moment). The agent took down my credit card info so I could be charged the fee if the upgrade cleared, since I was within 21 days of travel. My outbound upgrade cleared within a couple of days, as confirmed on AA.com (at least 10 days before the trip), I selected my seat, and all was happy.

Until I got to the airport.

The agent said, "I see that you have upgraded for this flight. Do you have a certificate?" Uh...no. It should have been handled electronically. "Oh. Well, you see, there is nothing I can do about that. You will need to speak with the AAdvantage desk to process this. I'll dial for you." So she dialed, handed me the phone, and I attempted to conduct my transaction while she carried on loudly gossipping (I had to ask her to quiet down twice) with two colleagues. The AAdvantage rep confirmed that I had the miles and deducted them, but then she had to transfer me to a reservations rep. The reservations rep asked me how I was going to pay the fee. I told her with my credit card, and she asked me the number. Obviously, I was reluctant to read my credit card info aloud in the midst of the busy check-in area, so after I asked her three times, she found the number that had been left in my record the first time around and processed it.

I went back to the counter agent, who still had to call another person, whom I suppose had to link the upgrade "certificate" and the reservation together.

All in all, including hold time, 20 minutes and 4 AA employees to check me in. And there was not one single piece of information I gave them at the airport that could not have been processed in advance based on my conversation with the AAdvantage rep at the time the upgrade was requested, two weeks earlier.

Anybody who has anything to do with efficiency and expense management at the airline should cringe at episodes like that. Especially if what the agent said to me is true: "Oh, this exact thing happens ALL THE TIME!"

(2) Perverse fare structure costs AA money. My business trip ended on Friday, and I would have flown back late Friday or, more likely, early Saturday. But as we all know, the peculiar pricing structure induces the Saturday night stay. In this case, I saved $700 by staying over, which my company allows me to apply toward my hotel and meals for the extra nights.

So the silly pricing system diverted me (and presumably plenty of others) from a relatively underbooked flight on Saturday to an overbooked one on Sunday. Result: AA was asking for volunteers to be bumped and offering $500 vouchers. I saw them give away 4 vouchers (i.e. $2,000), and they were still asking for more volunteers. "Money" that had never needed to be paid, if the pricing incentives had directed toward the underbooked rather than the overbooked flight.

A pricing system that bears no relationship to supply and demand is doomed to cause unintended consequences.