American recently decided to revamp its check-in lobby at LAX, and the result is going to be the blueprint for all of American’s hubs. American invited me to come on up and take a look last week. The highlight? The Flagship check-in service for the fancy pants travelers. I also got an update on a few other projects American is working on at LAX while I was there.

Let’s start with Flagship check-in, which is like checking in with a hotel. If you are traveling in First Class on a three-cabin airplane (either to New York or internationally), if you’re a Concierge Key member, or if you have purchased Five Star Service, you are entitled to use the Flagship check-in area which has a separate entrance directly from the curb. About 65 to 85 people per day use the service, so it’s rather exclusive. (Raquel Welch was checking in as I got my tour, so that certainly added to the glamour.)

This whole thing really does have the feel of a hotel to it. There is a doorman out front with a hotel-style bag cart. The doorman has an iPad with the list of people arriving every day so he can greet them properly.

Once inside, there are kiosks for those who want to use them, but most will just go to the hotel-style desk where an agent can help.

After checking in, the traveler walks out the door and into an elevator which goes upstairs to security. This uses the same security area as the regular premium line travelers (discussed below), but there is a separate line so people can go straight in.

Pretty fancy, huh? While it’s not easy to become Concierge Key or cheap to buy a First Class ticket, you can get Five Star Service for $125 a person ($200 for two). Is it necessary? Nah, but it does make you feel a little like a rock star.

Now, what about check in for the rest of us? As anyone who’s flown through LAX knows, the biggest challenge for check-in is that the lobby areas are pretty narrow for today’s purposes. That’s what happens when you’re in old terminals. But American has done a fairly good job at making this work after this last makeover.

The west end of the lobby (closer to the Bradley Terminal) is now all self-service.

They’ve pulled out banks of six kiosks attached to a computer where an agent is manning the operation. Everyone checks in there, and there are skycap-like runners (no tips) who take your bags to the belt. The counter itself is no longer used. By the end of 2014, there will be an in-line baggage screening area built, the counters will be removed, and bags can then be dropped right on the belt for their journey through the underbelly of the airport. At either end of the counter, there are “resolution centers” if people need help.

By the way, that inline baggage screening area will be built on the bottom floor of the new behind-security connector being built between American’s Terminal 4 and the Bradley Terminal next door. American will take 4 gates in the new Bradley concourse and people will be able to pass freely between the two. So that’s the airline’s growth plan. I asked about whether the new tunnel between Terminal 4 and 5 would ever open, and John Tiliacos, Managing Director of Los Angeles for American, said that they would like to open it up but the old tunnel has become something of a storage closet. It might take awhile before we see that happen.

The east side of the lobby has traditional counters for those who need ticketing (John said a lot of people still come to LAX to ticket, surprisingly) or have more complex issues. But the far east end of the lobby is the new premium check in area.

There is someone standing at the far end of this lobby to make sure only premium customers come in. After check in, there is an escalator there just for premium customers which takes people up to the new security checkpoint above the ticket counter so they never interact with coach passengers. (This is the checkpoint the Flagship check-in uses as well.)

All in all, I like what they’ve done with the place. The Flagship check-in piece seems particularly good for recognizing those travelers who really do spend a silly amount of money with the airline.

[See more photos of my visit]

Jetwhine Tries to Out-Cranky the Cranky Flier – JetWhine
Rob over at JetWhine had a painful experience dealing with American/Iberia on a codeshare so he gave me a ring to vent. You can listen to the 11:27 podcast over on his website.

New DOT Regulations Could Kill This Annoying Airline Fee – Conde Nast Daily Traveler
A follow up inspired by the comments in this space last Saturday to my Spirit post. There is one fee I hate, and I’m hoping DOT regulations might kill it off.

“Cranky Flier” Explores Decline in Small City Airline Service – Part 1 of 2 – Expert Flyer Hot Topics
Expert Flyer invited me to participate in their Hot Topics series – we’re talking about small city airline service and why it’s been going away.

In the Trenches: Back in the Saddle – Intuit Small Business Blog
After a break for the baby, I’m back on my Intuit column again. This time, I talk about how things went while I was away.

February 1 was a big day at American. It was the day that the airline went over its (not really) new and improved business plan with employee groups, and that meant detailing the cuts it was going to ask for. As you can imagine, this brought some outrage but also a lot of sadness. American is asking for very deep cuts from employees (and elsewhere), and it’s not really presenting anything new. This seems like the same plan it’s been operating under, just free of some employee contract limitations.

Admittedly, American hasn’t shared all the details of its plan. That wouldn’t be very smart at this point, I suppose. But it’s shared enough at a high level so that it can make its case for massive cost reductions. You can read CEO Tom Horton’s letter to the troops with the high level plan to “not just to compete, but to win.” There’s the “win” phrase again. Ugh.

In short, Tom outlines a strategy of increasing revenue by $1 billion a year while cutting costs $2 billion a year, more than half of which ($1.25 billion) will come from employees. This is the magic plan. Let’s take this one side at a time.

Plan to increase revenue by $1 billion a year
The revenue plan has three parts to it. The $1 billion a year is expected to come from “network scale, fleet optimization, and product improvements.”

Network Scale
American has laid out an ambitious (and quite likely overly aggressive) plan to increase departures by 20 percent over five years from its cornerstone markets of LA, New York, Chicago, Miami, and Dallas/Ft Worth. That’s right. TWENTY percent. For the relatively mature industry we have here in the US, this seems to be very aggressive. I was going to guess that much of this would be from smaller airplanes with fewer seats, but then I saw Tom tell Terry Maxon that the increase would be more in the international arena than domestic. That makes me think that it’s less about regional jets and more about larger aircraft growth. That could mean some serious capacity growth. It’s starting to sound like the days of old when airlines mistakenly chased market share only to hurt themselves and everyone else in the process.

This isn’t just about the 20 percent increase under the American brand, however. This is also about increasing codesharing. Right now, it can’t grow its domestic codesharing business but it has proposed eliminating those shackles. Hello, JetBlue.

Fleet optimization
At first, this seems like a cost savings and not a revenue savings, right? I mean, the airline keeps talking about adding newer, more fuel efficient airplanes and retiring older ones. That has nothing to do with revenue. But that’s not what I think the airline is talking about here. This is really American talking about growing its regional fleet. Today, there is a very tight cap on outsourcing of flying on aircraft with more than 50 seats. American has maxed it out with 47 CRJ-700s, and that’s the only aircraft American has between 50 and 136 seats.

That’s a huge disadvantage for American versus Delta and United, both of which operate about 200 to 250 regional aircraft with more than 50 seats. American is getting aggressive, shooting for the right to outsource a boatload of flying on airplanes all the way up to 88 seats. In a minor bright spot for American’s own employees, American has also ordered Airbus A319s that will give it an option below 136 seats (maybe in the 120 seat range). That’s what American means by fleet optimization, having more aircraft in between the 50 and 136 seat range that it can use to better match seat supply with demand.

Product improvements
This is something that really has nothing to do with bankruptcy. American has already suggested it would improve the onboard product, but what can it do to actually goose revenues? Well, the new flat beds that it’s putting in business class on the 777-300ER aircraft are a good start. Hopefully that expands to the rest of the international fleet, because people aren’t willing to pay a premium for the inferior product in business class today. The new premium economy section could help as well, though that also reduces the number of seats so it relies on American being able to generate a good premium to make it worthwhile.

So that’s what we see on the revenue side. Bankruptcy should allow for more liberal codesharing and regional flying contracts. That’s really it. Now let’s look at the flip side.

Plan to decrease costs by $2 billion a year
Of the $2 billion in annual savings that American wants to see, $1.25 billion will come from employees. The rest will come from a variety of things that allow American to reduce costs – get out of expensive contracts, reduce rates for suppliers, ditch assets it no longer needs, etc. But as expected, American rests the bulk of the weight on employees.

The basic proposal (and it’s only a proposal at this point) is for every work group to give up 20 percent of compensation. That doesn’t mean salaries get cut by 20 percent, but it’s a combination of all types of compensation from benefits to productivity. The cuts vary by each group, and you can read all the union term sheets here.

Some will see pay reductions, all will see pensions terminated, and benefits will cost more for the employee if American has its way. There will also be major increases in productivity. For example, for flight attendants, American wants to increase the maximum monthly hours from 77 (domestically) to 100 which will result in an average of 80 to 90 hours scheduled per person month. I won’t get into the details of each workgroup’s proposed changes, but you should definitely take a look.

In return, what will employees get? There will be company-wide profit sharing that starts with the first dollar of income. Of course, that’s for the employees that don’t get a pink slip. American will be laying off 13,000 employees, about 15 percent of the airline’s total today, and it will come from all groups. We’ll see 1,400 management positions gone, 2,300 flight attendants, and 400 pilots.

But the biggest cut comes to mechanics and fleet service workers – more than 4,000 each. Those deep cuts will come thanks to more outsourcing. American will shut one maintenance base (Alliance, in Ft Worth) and it will start to outsource a lot of work so that it doesn’t need all these employees anymore. The TWU represents both these groups and leadership sounded downright sad in its conference call discussing the proposed cuts. The pilots and flight attendants, on the other hand, sound more angry. At least the pilots don’t sound surprised. The flight attendants strangely acted like they didn’t see this coming.

Let’s back up for a second. Twenty percent more departures in five years but 15 percent fewer employees? Seems strange to think about it, but it really is all about outsourcing.

We do need to keep in mind that these are not final. There will be negotiations and the ultimate resolution will undoubtedly be less dramatic than what we’re seeing here. Regardless, the employees that remain will need to be more productive and they won’t be compensated as well for the work they do. There will need to be more flexibility with work rules, including codesharing and regional flying.

In the end, this doesn’t sound much like a turnaround plan at all. It sounds like an airline continuing to push forward with its same old strategy, just with a new fancy lower cost structure to help it stumble into profitability. I find it hard to really become a believer in this plan, since it’s nothing really new at all. If anything, US Airways, Delta, and other potential buyers should be thrilled to see the current team not really proposing anything game-changing. It gives them a bigger opening to walk through.

Why Spirit Airlines Is Right – Conde Nast Daily Traveler
Admittedly, this post was meant to stir the pot up a little. I do see merit in what Spirit is doing in fighting the feds on one hand, but that doesn’t mean I think the rule should necessarily disappear. Still, fun to look at it from Spirit’s side.

The Pros and Cons of American Airlines’s New First Class and Business Class – Conde Nast Daily Traveler
Just a little piece on American’s new 777 interiors. Not much more than what I wrote about here.

Waiting to board with Brett Snyder – Cheapflights.com Waiting to Board
I did an interview with Cheapflights talking about the blog and some travel tips.

When American announced it would roll out a slew of new features on its new 777-300ER aircraft in December, I was left with more questions than answers. Now, just a bit more info has been released, and we have some answers but not all. Oh, and we have pictures.

A picture of the new First Class cabin shows that it’s not much different than what’s out there today. It’s just cleaned up, new fabric, etc. That’s ok, because much of a change wasn’t necessary. In Business Class, however, it’s a different story.

As you can see, American is using the same reverse-herringbone style of seat that US Airways has on its airplanes. (Calm down, conspiracy theorists. This has nothing to do with a potential merger between the two.) We can now be sure that the “fully lie flat” seats are going to be flat beds. Whew.

There are also a few things we can glean from the new coach seats.

The above picture shows coach seating, and American confirms that there will be a premium economy section with the exact same seats but more legroom. It’s like American is bringing back “More Room Throughout Coach,” but not actually throughout coach.

In this picture, there are at least 4 seats uninterrupted by an aisle. That can mean one of two things. It could mean that American is sticking with the 2-5-2 configuration that it has on its 777-200s, but that would be surprising. Most airlines have moved away from 2-5-2 to 3-3-3 instead because it requires fewer video power units and it allows for standardized seat sets. (United has switched to 3-3-3 as it renovates its 777 fleet.)

But this can’t be 3-3-3 because there are four together. That would most likely mean that American is moving to the increasingly popular 3-4-3 layout. I say “increasingly popular,” but I mean that only on the airline side. Passengers hate it because, naturally, it means narrower seats. That hasn’t stopped several airlines from going this route, so it wouldn’t surprise me to see American do the same.

We could try to do some math to figure out the number of seats across if American would release its planned configuration on the airplane, but it won’t. My requests were met with the response that no further information is being given at this time. What’s with all the secrecy? I don’t understand why they want to keep pushing out dribs and drabs of info.

Anything else we know? Yep. American had been saying that London would be the first to get the new 777-300ER, but now that’s not happening. The first market will now be Dallas/Ft Worth to Sao Paulo. This market is apparently doing so well for American that it’s throwing a ton of capacity into it. In June, the market goes from a daily flight to 12 weekly. And then in December, the 777-300ER will go on to the route, bringing even more capacity to the market.

I suppose we shouldn’t be surprised that Latin America gets it first. After all, that’s really where American excels. It’s almost non-existent in Asia, it’s pretty weak in Europe, but it is the king of Latin. Stick to your strengths, right?