The straight version without market speak:

Q1: How do you describe the new pricing structure for South Florida?
A: This brings "sane" pricing to the airline market. We realized that our "complex" and "extortive" price schemes in the past were allowing LCCs to proliferate and expand at our expense to the point we are losing business and money. We have also removed any minimum stay requirements as we could no longer monetize this flexibility.

Q2: Where does the new fare structure apply?
A: This simpler fare structure applies for flights between all cities served by American/American Eagle/American Connection throughout the Continental US and Canada and the three South Florida airports where we were getting hammered by the LCCs.

Q3: What are some of the strengths of this fare structure?
A: We will no longer have the one or two people in each of our flights that paid way too much and never flew us again.

STRATEGY
Q4: Why did you announce this new pricing structure in South Florida?
A: It was a choice between doing this or completely pulling out of MIA, where we have a major hub since more and more people had started to fly other airlines to/fro MIA. We could no longer support our operations in MIA if any more people left. This is an attempt to see if we can maintain our hub at MIA.

Q5: Is this just a Miami initiative? Why now?
A: This is primarily a Miami fare initiative. It had gotten to the point that it was no longer feasible to continue operations in MIA unless we improved our customer base.

Q6: If this is such a good idea, why not roll it out nationwide?
A: It is a good idea where are getting clobbered by LCCs. We are not getting clobbered nationwide...yet.


Q7: Why don’t you offer this in international markets?
A: Are you kidding? Let the LCCs fly to international markets and we will see. Beisdes, our international flyers really like the complexity and the minimum state requirements of our international flights. It is one of our strongest selling points.

Q8: Is this an admission that the previous complex fare structure has failed?
A: You may presume that but we cannot possibly comment. People had stopped flying into MIA on AA. You figure it out.

Q9: Why did you wait so long to make this change?
A: We were hoping for one of the major airlines to fail and give us the traffic that could have kept us going with our previous fare structure. These airlines are taking a long time to die.

Q10: If a competitor responds with ridiculously low fares or gimmicks, how will you respond?
A: In the past we would have given money to people to fly us and put that airline out of business but alas in these times, we have to settle for more subtle approaches such as begging them not to do it in private phone calls.

Q11: If other carriers don’t match, will American revert back to previous fare levels?
A: The LCCs that created the necessity do not need to match. They already offer low prices. If other carriers do not match they will die and we can go back to our previous extortion fares.

Q12: What markets will be affected by the new pricing strategy?
A: The new fare structure will apply to travel between the Continental US/Canada and Miami, Fort Lauderdale and West Palm Beach.

Q13: Is this just a test?
A: All airline pricing is a test as we continually change it, often seveal times in the same day. If any of the airlines we are competing with should go out of business, we will be back to our favorite pricing scheme.

Q14: Haven’t you done fare tests in other markets? What were you testing and what were the results of those tests?

When they paid lower fares, they were happy. When they paid higher fares, they were unhappy. We lost money both ways.

Q15: How did you pick $699 as the highest coach fare? Isn’t that still above the highest fares on some LCCs?

A: Nobody pays that fare anyway. Most of our seats sell at deeply discounted levels even up to the date of flight. We just wanted some flexibility in case one of the airlines should fail and we need to get the price up in a hurry.

Q16: Do the fares also include taxes, fees, and airport and security charges?

A: Yes, but not ticketing fees if they use one of our phone centers, change fees if they suddenly have a family emergency, the fee for the headset, the second can of coke, or any other fees we have plans for in the near future.

Q17: How committed is AA to this initiative? Will this look the same in six months from now?

A: What choice do we have? We are not even sure if AA will look the same in six months.

Q18: Doesn’t this initiative actually raise some fares?
A: Well,...er...no..yes, depends. We are hoping that this advertising and the buzz will make people think we have the lowest prices and not notice that we are no longer offering some of the deep discount fares we used to. But if enough people notice it, we will rectify it immediately.


IMPACT ON FARES
Q19: Do you expect other carriers to match your new fares?
A: We hope not, so they can go out of business and we can go back to our previous fares. We do know that only our FL customers are telling us they want fewer restrictions and easier access to great fares – and that’s what this new structure delivers.

Q20: Can you make money with these fares?
A: Yes, if enough people buy the walk up fares rather than the deep discount advance fares they have been buying so far.

Q21: Are you making money today in the markets where you compete with LCCs?
A: We are not making money in any market. LCCs are not helping, of course.

Q22: What is the measure of success?
A: We are able to continue our operations at MIA and not pull out.

Q23: Do you have the capacity to meet the anticipated demand these fares will bring?
A: That is a good problem to have and we hope we have that problem. We will worry about it when we do.

Q24: Who will benefit most from these changes – business or leisure travelers?
A: Neither. But more business travelers now get the option to use AA instead of driving to FLL to fly an LCC.

Q25: Some industry observers have been advocating just these kinds of changes to the legacy carriers’ pricing structures. You said that it would be revenue negative to do this before. What has changed and why did you change your mind?
A: You cannot change a leapord's spots overnight. It took us a while to come to grips with reality. Our OW partner BA has done this very successfully in Europe and we are envious. But we needed to figure out a face-saving way to make this transition.

Q26: Will you still match other airlines fare sales?
A: We just did. Florida is permanently on a fare sale. Has been for the last 18 months.