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Was it a Freudian slip, an unintentionally revelatory statement, or just a mistake when American Airlines Group CEO Doug Parker told financial analysts and the press today: “We are not asking our customers to be happy with anything.”
Parker’s statement came during American’s fourth quarter and full-year 2014 earnings call today when a reporter asked him whether the airline would lower fares because of jet fuel savings or whether American thought it would be enough to tell passengers to be happy with improvements in the passenger experience.
Parker, who led the merger of American Airlines and US Airways in December 2013, would undoubtedly ask for a do-over in that statement during his off-the-cuff remarks.
He elaborated, though, saying that American is focusing on products, such as lie-flat seats, international Wi-Fi, updating airport lounges, and improving the airport check-in experience, that matter to customers.
Parker acknowledged that the airline has some “catching up to do” in terms of making those improvements but intends to “leapfrog” competitors.
When asked later about Parker’s comment, a spokesperson for American Airlines Group said: “It’s unfortunate if someone takes it out of context and doesn’t use it as it was intended — in support of our need to invest in the customer experience. We’re investing $2 billion dollars in new seats, improved lounges and airport enhancements.”
Another interpretation of Parker’s “We are not asking our customers to be happy with anything” comment is that he meant that they are already seeing the improvements in progress because of the airline’s investments.
Like United, Delta, and Southwest, all of which reported earnings in the last few days, American doesn’t intend to lower fares in response to the fuel-savings windfall — despite calls from consumer spokespeople such as Charlie Leocha and Paul Hudson to do so.
In addition to vowing not to lower fares, CFO Derek Kerr said the airline does not have the flexibility to raise capacity beyond what is already envisioned in the next 18 months because in the context of aircraft deliveries and the retirement of older aircraft it would be forced to bring in more flight simulators and trainers.
Kerr said the airline is running the operation as if oil was still $100 per barrel to be ready for any contingencies.
Parker didn’t rule out lower fares entirely.
Said Parker: “When demand drops you will see pricing move accordingly.”