Yesterday, I posted the first half of my interview with current US Airways CEO Doug Parker. We talked most about employee communication, but today, I post the second half which is more about the customer experience, and what we might expect from the new American Airlines when he takes the helm of the merged carrier. Keep reading to find out which product features he thinks are most important, how the airline is going to compete in Asia, and a little bit more about the oneworld transition.
Cranky: When you are looking at the combined airline, a couple years down the line, there’s obviously a lot of integration that has to be done. But when you’re looking at the other two most similar competitors in the US, do you look and say, “this is an area we’re going to need to do a lot of work in to be competitive”? Or is it just a matter of getting the network together?
Doug: You know this stuff as well as I do. The big value is getting the networks together. Our biggest disadvantage at two carriers is scale. No ifs and or butts about it. You have to get that done. Are there others? I’m sure there are, but you know, I don’t think we at US Airways are losing customers to Delta and United because of the inflight product differential. If we’re losing customers, it’s because of scale.
Having said that, what I do think is once we get to the same scale… if the classic airline people care about schedule and price, you’re gonna have three airlines that pretty much have similar schedule, value proposition, and we always have the same price proposition because we have to match each other, or close to it. So then the other product attributes you’re gonna start seeing become more important again. You’re gonna see us start competing more on those other things. We do a lot of it now of course, but it becomes more important as we get to three airlines that are competing for those high value customers.
Cranky: Are there specific parts of the product that you see as being particularly important? Not the olive you put in the salad, but the seat, the service, the meal or is it everything?
Doug: No, it isn’t everything. Some things matter a lot more. Certainly for international, lie flat seats [in business class]. If you don’t have it, you’re gonna lose customers. It’s incredibly important. We have it now. Domestically, you know, we have a lot of anecdotal evidence, including ourselves, of people switching airlines because of whether or not there’s wifi on the airplane. That’s one of the things that will drive share if you’re not there. We’re all gonna be there for that reason, but that’s what happens with these things. We all have to do it or we’ll lose share. Those things are incredibly important.
Other things are important but hard to actually identify if you’re losing share or not from things like an extra inch of legroom or the olive or slightly better meals… but if you’re not competitive, you don’t have something that’s close enough or in the same ballpark, maybe I don’t have quite as much room but the seat is more comfortable. If it really feels different, you’re going to lose customers. So we can’t get in that position. And we think we’re going to be a position where we’ll have a product that’s as good or better than what the other guys have out there, the other guys being Delta and United.
Cranky: Do you consider premium economy, similar to Main Cabin Extra on American, is that something you have a view on right now?
Doug: Yeah, but I don’t think we’ve announced it yet but it’s one of the things we’re going to look at. Certainly the other guys have it, and there’s no doubt that customers will tell you for certain it’s one of those things that really matters. The offset to that is whether there’s enough [benefit to justify] the fewer seats, of course. Those are decisions we’re going to have to make, but it’s definitely a product attribute that matters to people.
Cranky: I’m probably getting a little more into the weeds for you, but how do you view Asia? We’ve talked today about how that’s the hole in the route network. How do you view that? Is there a way to adequately serve everything that needs to be served?
Doug: Adequately, of course. I think we will have a lot of growth opportunities with the bigger and stronger network with more hubs to serve more spots on American to Asia. When you add them all up, it’s still not going to be as big as what Northwest brought to Delta or what United has because they’ve had those things since a treaty in 1952 or some such thing. So that’s not something that can be replicated, but they can’t replicate our Latin America network. What really matters is when you add it all up, how does it compare? And we feel really good about our network versus either of those in total.
Agreed they’re going to have a stronger Asia network, but then what really matters is making sure you don’t lose customers throughout the rest of your network because you can’t get them anywhere in Asia. Of course, we don’t have that problem because of oneworld with JAL and the other partners, Qantas etc. We can get people anywhere in the world on really good airlines. I don’t view it as an issue. I think there’s a lot of growth opportunity; I’d probably describe it more as tactical than strategic. But we’re not gonna go try and build something we can’t build. We just need to make sure our customers that want to get there can use the miles they earned flying around our network and they can do that with our partners.
Cranky: And with oneworld, do you think this is going to be a difficult transition for you and your management team? I know you have this anchoring, I guess, with Star Alliance and your partners’ hubs and operations, and now to switch like this. Is that not really an issue?
Doug: I don’t know… Go ask Andrew [Nocella, SVP Marketing and Planning] or one of those guys who knows better than I do, but I haven’t heard it described that way. It’s the anchoring term where I kind of looked at you funny. I don’t think we view them as anchors. There are airplanes that fly into there that can fly to somewhere else. There are other airplanes currently flying around oneworld that can be flying into our new hubs. They are movable assets that’ll move. They’re not anchored at all. We certainly haven’t gone and built immovable structures around the Star network and Star partners haven’t built them around our network. To the extent Lufthansa is flying to one of our hubs and now we’re not in Star so it doesn’t make sense for them to fly there, which may or may not be the case, but my guess is that it makes sense for BA to fly there. Those kind of things might happen. But it’s as simple as that; an airplane stops flying to Frankfurt and begins flying to London.
Cranky: I’ll end on a personal note. Are you gonna be sad to leave Phoenix?
Doug: Yeah. We like it here, man. The kids have all grown up here. That’s one of the bad things, but it’s not about me.
Cranky: It has to be done.
Doug: Exactly. And Dallas is a good place. Gwen and I met there; she has family there. It’s not a bad place. It’s a good place. For the record [laughs], we like Dallas. Dallas and Phoenix are both great cities.
Cranky: And Ft Worth [laughing]?
Doug: Ft Worth, great city.
Cranky: Well I want to be mindful of your time, so I’ll end it here.
Doug: Thanks, Brett.
And that’s a wrap on my interview with Doug Parker. Click to read the first part where we talk about employee communication.