Springtime for American Airlines (Flashback Post)

Note: This post was originally published in March of 2020 on my now-defunct newsletter, “Windbag Mails.” (Although I’m not sure if it was ever not defunct, since I only ever wrote all of four posts.) American is in the news again now that they’re abandoning award charts and setting the stage for endless devaluations, which shows how much they really want to win the race to the bottom of the loyalty program game. As we’ve seen time and time again, United and American copy Delta, not realizing that Delta gets away with shit the other two can’t, because it’s genuinely a more pleasant way to fly.

Although, I don’t know how true this is anymore. The consensus has always been that Delta gets leeway on stuff like this because its planes are nicer, its flight attendants are nicer, its lounges are nicer, Ed Bastian’s hair pomade that holds his mane in its perfect Dirty Rotten Scoundrels coif is nicer, etc. But the funny thing is that United and American haven’t gone anywhere, despite devaluing the shit out of their loyalty programs à la Delta, but then refusing to revalue their product to balance it out. One thing the pandemic showed us — and which disproves my argument below about American going down the tubes — is that there’s no such thing as a major airline going down the tubes anymore. They’ve gotten, how do you say, “too large to not succeed” and thus can always count on some sort of bailout or rescue plan to keep them chugging along. I think it’s still true that American has no corporate identity, that they don’t have a compelling customer proposition, and that the only thing consistent about them is how much they waffle between wanting to seem like a premium carrier one week and a ULCC the next. None of that changes the fact that American is always going to be a part of the landscape, as will United. There is no success or failure for them anymore, they just are. And with that, I’ll leave you with my now-disproven post from 15 months ago, since even though it may be wrong, it’s still one of my favorite things I’ve ever written.

One of the very first posts I ever wrote was a screed about how much I hate American Airlines, AKA “The Airline Americans Love to Hate.” It was about how shitty their old interiors were, and I said something like “Thank god someone was there in a back alley to witness and old couch fuck the easy chair your grandpa farted in 1000 times before he died so they could get the idea for those seats.” Hey, I had a voice from the very beginning, and I stuck to it!

American really has become the most hate-able airline in America, which is a feat when you think about it. United has that whole “we physically assault our customers” stigma, Delta devalues their loyalty program with the enthusiasm and vigor of a college freshman doing beer bongs, and Spirit stretches a thin membrane of fabric over a jagged metal frame and calls it a “seat.” Yet people flock to Spirit for their rock bottom fares knowing their fair bottoms will be rocked, Delta gets people where they’re going on time so they get a pass for their worthless miles, and Oscar Munoz secretes just enough good will from his dimpled lil cheeks that people forgive the occasional brutal passenger beating.

That leaves American, who seems to think that the existence of high travel demand and hub dominance in some key cities is enough to excuse everything from mileage devaluations to rude flight attendants to Spirit-quality seats, to planes without wifi, to a comprehensive program to remove amenities from planes. Their lack of identity is draped all over their planes in the form of a wan, listless livery that insists “you can’t insult what you don’t notice.”

Funnily enough, I actually fly American fairly often, because they usually have the best fares in first class between San Francisco and Chicago. I hate everything they stand for, but their first class is fine enough that it’s not worth an extra $50-100 to get more legroom and flight attendants who aren’t fantasizing about poisoning their passengers. (I should ease up on flight attendants, honestly, because it seems like a miserable job as it is, and working for a company like American probably compounds that fact. Plus, I’ve had some very nice, enthusiastic FAs on American, it’s just rare compared to Delta/Alaska (and even Untied, to be honest).)

So my relationship with American is a mixed bag, since I won’t go out of my way not to fly with them, but I hate them with my entire soul. At least a little bit. However, I have to hand it to them so far in 2020 for putting together one of the most mind-bogglingly idiotic business plans I have ever witnessed. The sheer audacity of it all is worthy of awe, if not respect.

First, they decided that they had too many outstanding miles. Per their financial statements, they account for miles earned for flying separately from miles sold to banks — all miles represent a liability on American’s books, but around 2/3 of the sale price of sold miles immediately goes to marketing revenue. A very nice cost-free way to eliminate the liabilities while keeping the revenue would be to cancel the miles. So they did.

Blake from corporate security decided that anyone who had used a Citibank credit card offer mailer addressed to someone else had violated American’s terms, and he shut their accounts down permanently, with no recourse. Some of the mailer abuse was definitely sketchy — like people who bought 25 mailers online and then used them to rack up sign-up bonuses. Others were more innocent, like using a mailer sent to one’s spouse, with no language anywhere indicating that the offer was non-transferrable. The genius behind Blake’s plan, though, was to cancel not just the miles earned in this arguably fraudulent manner, but all miles earned, including from credit card spending, flying, buying miles, etc. It’s a blanket get-out-of-debt free card that uses a technicality to invalidate miles earned 10 years ago, and since it’s initiated by the airline and not by Citibank, it’s not governed by any financial regulations. Citi can just claim that earning miles from credit card spend requires that you abide by the terms of the loyalty program, and you’re back where you started, in supplication at the altar of Blake.

*For anyone who isn’t aware, there actually is a guy named Blake who’s been sending out letters and emails notifying people that their accounts have been shut down.

The crazy thing is that in American’s zeal to wipe millions in mileage-related liabilities off their books, they shut down accounts of their most loyal customers — multi-year Executive Platinums, people with lifetime status, million milers. Hell, Blake probably wishes he could go back and shut down Pudding Guy, since clearly that was not in the spirit of the Healthy Choice pudding promotion.

As an aside, this situation demonstrates what’s so difficult about the milage-earning hobby these days, which is that things that are not in the spirit of a program but are technically legal are being deemed illegal after the fact, with no notification or recourse. The overly broad terms that you have to agree to end up giving these programs a ton of leeway to ban you, and companies like American and Amex are finally starting to use it. It’s at the point now where anything you do in a gray area has to be understood as a potentially fatal risk in terms of your future participation in that program. That whole Morgan Stanley dealio that I wrote about a couple years ago seemed great at the time, but who knows if a wave of new accounts in 2020 would trigger Amex’s resident Blake to take a closer look, realize that the Access account wasn’t supposed to be a gateway to the Morgan Stanley Platinum card, and then shut down everyone’s Membership Rewards account. Blake is omnipresent. Blake is your subconscious.

The top dawgs at American probably didn’t think much of firing a few thousand of their most loyal customers either, because demand for travel is on an infinite upward trend, and nothing could ever stop that… so they’d just get some new most loyal customers and keep shuttling around the DFW-based prisoners who form the lifeblood of their customer base, and everything would be fine. Right?

The accumulated filth of all their shutdowns and devaluations will foam up about their waists and all the Blakes and Doug Parkers will look up and shout “Save us!”… and I’ll look down, and whisper “LOL.”

Clearly no one at American thought that the industry was about to go through the type of generational shockwave not seen since 9/11, so their “Two steps forward, directly on our customers genitals” attitude probably seemed fine. But the fact that Blake was going on his rampage while COVID-19 was percolating in China is an especially good illustration of the risks of treating customer loyalty as an extremely exhaustible resource.

Delta just instituted an incredibly forgiving change fee waiver policy that I’m sure is going to cost them a fortune. However, Delta understands that this is an opportunity to invest in long term customer loyalty, and presumably the hive mind there has run the numbers and expects that loyalty to pay off once we’re clear of this trifling little pandemic and people want to fly on planes again. There’s an obvious counterargument to be made, which is that when demand for travel is high, most customers don’t give a shit about what airline they fly. American probably figures those people will forgive and forget, and they don’t need to worry about cultivating loyalty for the fat times when they’re suffering through the worst of the lean times. Or maybe they just can’t afford it. Blake is hubris. Blake is your righteous vindication.

Ultimately, the one-two punch of mass layoffs of an airline’s most loyal customers combined with an external event siphoning off everyone else probably just comes down to a debt-mired airline whose stock was already in the toilet trying to figure out what to do and just getting profoundly unlucky. However, no one has yet floated the alternative scenario, which is that American’s upper management is pulling a Producers, and they shorted the stock before all this started happening. They stopped #GoingForGreat a while ago, and then they started #GoingForGround, with a nice assist from a global health catastrophe.

Blake is laid off.

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