American chases Delta with $2 billion onboard-amenities push

🕐 5 min read

Mary Schlangenstein and Michael Sasso (c) 2014, Bloomberg News.

DALLAS — American Airlines is chasing rivals led by Delta Air Lines in updating passenger amenities with a plan to spend $2 billion on new seats, in- flight entertainment and onboard power outlets.

A year into the US Airways merger, American is embarking on upgrades more visible to fliers after emphasizing the basics of meshing operations. With the blending of the carriers still under way, the world’s largest airline faces twin challenges years after competitors finished their combinations.

“American is playing catch-up to other airlines, the result of past business decisions to not invest in its passenger experience,” said Henry Harteveldt, a travel consultant with Atmosphere Research Group in San Francisco.

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Most of the changes unveiled Dec. 6 by Fort Worth- based American involve larger jets used on international routes. Work has begun on American’s Boeing 777-200s and 767-300s, including in-seat entertainment or in-flight connectivity and lie-flat business class seats. It’s due to be completed in 2016.

Lie-flat business seats also will be added to single-aisle Boeing 757s flown on overseas trips, while power ports and Wi-Fi will be extended throughout the plane. American says all its wide-bodies have power in business and coach, and about 58 percent have seat-back screens in at least one cabin.

On the heels of American’s product changes, Delta Monday said it would rebrand its cabins to create five distinct offerings. Paul Skrbec, a spokesman for Atlanta-based Delta, declined to say specifically whether the airline’s changes were a response to American.

“Delta is leading the industry in what products we are offering our customers, and the market is seeing that,” he said.

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Most of the changes Delta announced Monday were nominal, including renaming some classes of onboard service, and take effect March 1.

American has produced record profits since the US Airways deal closed on Dec. 9, 2013, paid its first dividend since 1980 and announced a $1 billion share buyback plan — soothing creditors who ended up with stakes in the new airline when it left bankruptcy via the merger. The shares have more than doubled in the past 12 months.

“In 2014, the team accomplished great things, and that gives us a lot of confidence,” Chief Executive Officer Doug Parker said in an interview. “What we are now in the position to do is to go take the product up to a level that is better than either airline had in place.”

By year’s end, American will have received about 100 new aircraft while retiring older planes, swaps the carrier said will give it the youngest fleet among its U.S. peers at 12.3 years. It will add 112 new planes next year, 84 in 2016 and about 300 more through 2022.

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“The act of replacing those aircraft with a brand-new airplane is an enormous customer enhancement,” said Parker, 53, who previously led US Airways. “They are nicer, they’re brighter and they’re more comfortable. It’s a much better flying experience.”

Most of American’s new aircraft will have seat-back video screens throughout. All of the planes in the carrier’s primary jet fleet now have Wi-Fi, with plans to expand to it to regional aircraft, said Joshua Freed, a spokesman.

American’s merger was the last among the deals shrinking the ranks of U.S. full-service carriers to just three. Delta bought Northwest Airlines in 2008, and today’s United Continental Holdings was formed in 2010 when former United parent UAL Corp. combined with Continental Airlines.

The “angled-flat” business-class seats that American began installing in the mid-2000s had a slight slope and were inferior to the lie-flat models being adopted by United and foreign carriers, according to Atmosphere’s Harteveldt.

While American’s earlier strategy squeezed in more seats, it now has to meet the lie-flat standard to appeal to high-fare corporate customers, Harteveldt said in a telephone interview.

US Airways, meantime, earlier decided against adding in- flight entertainment and power outlets on its domestic fleet. That leaves American rushing to add outlets because United and Delta offer them on so many jets, he said.

Delta has had seat-back entertainment systems on all cabins of its international fleet since 2013, Skrbec said. The airline has standard power outlets at each seat in its BusinessElite cabin and in the first 10 rows of economy on all of its wide- bodies flying abroad.

Delta couldn’t provide a percentage breakdown for power and seat-back screens on its narrow-body jets, the workhorse models on U.S. routes. All of its domestic aircraft with two-class cabins, including regional planes, have Wi-Fi, Skrbec said.

Among changes announced Monday, Delta will rename its BusinessElite cabin, which is found on long-haul international routes and some transcontinental U.S. flights, as Delta One. Its Economy Comfort section, which offers extra legroom for a fee, also will get a new name, Delta Comfort Plus. Customers in the premium section of coach will get expanded access to complimentary beer and wine and upgraded snacks on international routes and domestic flights of more than 900 miles (1,450 kilometers).

Delta is retaining its First Class, Main Cabin and Basic Economy fares and cabins. To better differentiate its premium offerings, the airline will install new seat covers on its Delta One, First Class and Delta Comfort Plus seats, Skrbec said.

“It really distinguishes for the customer the broad choices they have in front of them,” he said.

At United, 88 percent of the international jets have seat- back monitors in all cabins and 80 percent have in-seat power in all cabins, said Rahsaan Johnson, a spokesman. The airline is installing equipment to support personal electronic devices in the aircraft that don’t have it now, Johnson said.

United has seat-back entertainment on almost half its domestic fleet, and plans to provide seat-back screens or personal-device streaming in all U.S. jets the end of 2015. The airline also has in-seat power in at least one cabin on about 46 percent of the domestic fleet.

While about 60 percent of American’s narrow-bodies have power ports, only 9 percent boast seat-back screens in one or more cabins.

American announced other improvements as part of its $2 billion program, including new kiosks designed to reduce wait times at airport check-in counters worldwide by mid-2015 and 400 kiosks in gate areas for reprinting boarding passes and securing day-of-travel upgrades.

The airline will install 500 worktables with 12 power outlets each near gates at its major airports, refurbish its airport Admirals Club lounges and expand food offerings.

American will seek a single operating certificate from federal regulators and fully merge its loyalty programs in the first half of 2015, and plans to move to one passenger reservation system sometime in the second half. It also must reach combined labor contracts for the two airlines before the final integration.

— Sasso reported from Atlanta.

Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

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