AMR Corp., parent of American Airlines, has trimmed its cost structure by more than $5 billion since 2001 and is looking for more ways to reduce expenses. According to Reuters, AMR's chairman and chief executive Gerard Arpey said: "Finding new ways to reduce expenses is a matter of survival, not just for us, but for every airline." He adds, "Our situation is uniquely challenging in that we must do battle with the newer low-cost airlines on one hand and our traditional rivals — who have used the bankruptcy process to lower wages, eliminate pensions and increase worker productivity — on the other,". Earlier this year, the carrier shared that it aimed to cut costs by $300 million this year.
This information underscores a trend that is apparent to any passenger in the US. Legacy airlines have cut so much cost, that you can see it in tired aircraft interiors, lack of service and feel it in terms of full flights with irritable employees. The airlines with money and pleasant employees are those called low cost carriers – like Southwest and JetBlue. In the very end, even a minimalist service flight can be enjoyable if the cabin crew are happy – anyone who has flown Southwest will testify to this. The crew tell jokes and have fun.
There is another darker side. The cuts at airlines have been severe behind the scenes too. Where are the layers of managers to cover for each other when weather and other exogenous factors strike? Even JetBlue was caught flat footed. Have you tried speaking with a supervisor at any airline lately? They are as rare as hen's teeth. Or try to speak with an airline reservation agent – particularly one who speaks English and is based in the US? Legacy airline's have eviscerated costs and in so doing have also lost any advantage they had over LCCs. No wonder brand loyalty means nothing. Air travel is now a commodity and the lowest fare is often the best deal because the customer expects only to get from A to B. A happy face in uniform on board is like an upgrade.
