What’s wrong with American Airlines?
The carrier, which in the 1980s called itself the On-Time Machine, hasn’t earned that label for quite a long time.
Over the past year, American has ranked last in on-time arrivals among all U.S. carriers that report performance numbers to the U.S. Department of Transportation. It has performed worse than the industry average for 20 straight months.
The carrier consistently ranks low among its peers in customer satisfaction. It mishandles a greater share of its baggage than the industry average. It has been at the top of the industry in numbers of canceled flights.
What’s going on here?
American is taking drastic steps to rejigger its schedule and beef up its operations this fall to improve the dependability of its flights, if not their speed. Early results in August and September have been promising.
But executives freely, though glumly, acknowledge how poorly American has done.
“There’s really no excuse for our performance of late,” says Bob Cordes, American Airlines Inc. vice president of operations planning and performance. “It really hasn’t been up to snuff.”
“No excuses,” adds Mark Mitchell, American’s managing director of customer experience. “I do believe from a leadership perspective, we’ve learned along the way and we’re committed to regaining American’s position.”
Among the indicators of American’s problems:
•It finished last among 19 U.S. carriers in on-time arrivals for four straight months between March and June, before improving to 16th in July – its highest finish in nine months.
•Its on-time marks have been beneath the industry average every month since December 2006.
•For the 12 months ending July 31, American was last among all carriers in on-time flights, with only 67.5 percent arriving within 14 minutes of schedule. That was 6.7 percentage points worse than the industry average of 74.2 percent.
•Among the 10 largest carriers, American ranked second-worst in the rate of lost-bag complaints for the year ending July 31, ahead of only Delta Air Lines Inc.
•It has had the third-highest rate of flight cancellations through the first seven months of 2008, ahead of only two regional carriers, Mesa Air Group Inc. and American’s own partner, American Eagle. Even excluding about 3,300 flights canceled in a maintenance inspection in April, American still ranked near the bottom.
St. Louis University professor Brent D. Bowen, who co-authors the annual Airline Quality Rating Index, said that customers absolutely care whether their flights operate on time.
“It’s the top indicator for air travel consumers,” said Dr. Bowen, chairman of the aviation science department at the university’s Parks College of Engineering, Aviation and Technology.
In his survey of more than 5,000 frequent travelers this year, 48 percent rated on-time flights as the most important factor when they fly. Next were customer service at 24 percent and on-time bag arrival at 23 percent, he said.
As airlines are taking away free meals and snacks and other amenities, “about the only thing left for people to expect is on-time service. The bad news is they know it’s not going to be good.”
Until fairly recently, American tended to finish around the middle of the pack, with its on-time numbers not far off the industry average.
A massive operational nightmare on Dec. 29, 2006, drew attention to American, when tens of thousands of passengers were delayed for hours – in some cases days – by a daylong thunderstorm that hung over North Texas and American’s hub at Dallas/Fort Worth International Airport.
In the wake of sharp criticism, American officials pledged to do better at handling weather disruptions and other problems. But December 2006 seems to have marked the beginning of a long period of subpar operational performance by the Fort Worth-based carrier.
Month after month, American blamed extraordinarily bad weather, air traffic control snarls or unusual events such as the safety inspections it undertook under pressure from the Federal Aviation Administration in April.
But there has seemed to be no respite from the “special” months; other airlines that were flying in the same weather with the same air traffic controllers have consistently beaten American’s record.
American believes that the answer is to add time to its schedule, both on the length of the average flight and the length of stops on the ground. It is taking other steps as well, but the added schedule time represents the thrust of American’s attempt to return to an acceptable on-time record.
The changes won’t speed up flights. But the added time increases the cushion for dealing with problems.
Mr. Cordes said 2006 was a pretty good year for flying weather, notwithstanding the Dec. 29 debacle. Schedule planners expected – or hoped for – the same in 2007.
“I think it went back to a sense of operational optimism,” he said. ” ‘Oh,’ we just thought, ‘the weather will get better. The storms will go away.’ ”
When 2007 turned out to be bad, planners thought 2008 would be better. Until July, it hasn’t been.
Since the start of 2007, American has recorded four of its top 10 days for flight diversions, when weather has forced the airline to land planes at airports other than their intended destination.
“It sounds like rationalization,” Mr. Cordes said. “But the fact of the matter is we’ve been dealing with these weird weather events for a year and a half.”
The carrier built more time into the schedule in September and will do so again in November, implementing the lessons the airline learned earlier in 2008, he said.
“Unfortunately, the lag time is a good six to nine months from the time you analyze it and say we’re going to have to invest in this because things are not changing,” Mr. Cordes said.
For an example of how the schedule changes will work, consider American’s Flight 743, an afternoon nonstop flight from Dallas/Fort Worth to LaGuardia in New York.
Until Sept. 2, American scheduled the flight to take 3 ¾ hours from gate to gate. On Sept. 3, the time was increased by five minutes. On Nov. 2, it’ll go up another 25 minutes, to 4 ¼ hours.
The schedule changes will affect both the time airplanes are supposed to be in the air and on the ground.
With the changes, American’s McDonnell Douglas MD-80s, the mainstay of its fleet, will spend at least 45 minutes on the ground, up from 40 minutes.
The Boeing 737-800s are now scheduled to be on the ground at least 50 minutes, up from 40 minutes.
In recognition that much of American’s delays start or end in the New York area, American is adding another 10 minutes to those ground times for flights arriving at New York’s LaGuardia Airport after 2 p.m. It is adding 10 minutes to flights arriving at Newark after 3 p.m.
And in San Francisco, where fog is often a problem, American is adding 10 minutes to morning arrivals, Mr. Cordes said.
Ground crews will be scheduled for 20 minutes between flights rather than 10, to make sure that flights have adequate staffing for bag handling and other servicing, he said.
American used to staff spare gates at D/FW Airport so it could respond quickly if extra flights arrived or a gate was occupied by an airplane with mechanical problems. It ended that practice several years ago, but this month it began staffing four or five spare gates to better handle disruptions, Mr. Cordes said.
Whether coincidence or not, the airline’s on-time problems have grown as it has entered negotiations with its three major unions: the Allied Pilots Association in summer 2006, the Transport Workers Union in fall 2007 and the Association of Professional Flight Attendants this summer.
Mr. Cordes and Mr. Mitchell said they don’t think morale issues or employee problems have contributed much – if at all – to operational problems for American. Mr. Mitchell noted that the number of teams working to improve the airline’s customer service has grown over the past year.
Laura Glading, president of the flight attendants’ union, said there is a link between employee morale and customer service, particularly as the airline has cut staffing and onboard amenities.
However, “the flight attendants are doing an incredibly stellar job, without the tools, to try to make lemonade out of lemons,” she said.
The Allied Pilots Association has been increasingly critical of the airline’s management, blaming it for the delays, cancellations and other problems.
Bill Haug, secretary-treasurer of the pilots’ union, noted that the airline’s performance has declined since employees took big concessions in pay, benefits and working conditions in 2003.
Along with the concessions, American created an “annual incentive plan” to reward employees for finishing high in the U.S. Department of Transportation’s rankings of on-time arrivals, baggage handling and other areas.
Despite the incentive plan, he said, “we have not improved one bit. … You can sit and theorize all you want [about the reasons]. But there’s no question whose responsibility it is. It’s theirs.”
Without directing comments specifically to American, Dr. Bowen said that a lack of cooperation among different groups and with management leads to poor on-time performance.
“After everything bad that has been happening to airline employees over these past eight years, how do you expect them to happily cooperate?” he said. “That’s the management challenge. If you have a happy workforce in an airline, you’ll have a well-performing airline.”