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The novel coronavirus pandemic has created the worst economic crisis in airline history, and no carrier is expected to bounce back quickly. But at least one U.S. airline may be using this as a brand-building opportunity.
It’s American Airlines, which since its 2013 merger with US Airways had fallen behind peers on customer sentiment. President Robert Isom last year told investors the airline’s failure to recommend score, a metric that measures whether a passenger would tell a friend or relative to fly American, had dropped below expectations. On many issues, including on-time performance, seat comfort, and service, some flyers thought American wasn’t getting the job done.
Given that history, American might have been expected to take a hard-line against customers seeking to cancel tickets during the Coronavirus. But American seemed to realize earlier than most carriers that while it needed to conserve cash, this once-in-a century crisis was no time to take an antagonistic stance.
More often than not, observers say, American is saying yes to customers.
“American is looking at this saying, ‘Yes, we are losing money on this but we are doing the right thing,”‘ said Brett Snyder, a high-end travel agent and blogger. “In contrast to United, it looks so different.”
Among the First to Act
By now, most U.S. airlines have been beaten into submission by customers, lawmakers, government regulators, and aggressive lawyers. All of them have made it clear that, when an airline disrupts cancels or significantly delays someone’s journey, that airline owes the traveler a refund, regardless of whether the passenger planned to fly.
But as recently as two weeks ago, not every airline took that approach. A least two — United and JetBlue Airways — were so focused on survival they took more of a “screw the customer” strategy, deciding they would retain every last dollar. Whenever they could, they would keep fare money and fix the customer damage later.
American might have had that approach in the beginning, too. But last month, it was among the first U.S airlines to pivot to a more passenger-centric approach, helping customers rebook flights, or refund them, with few questions asked. If customers didn’t want to fly because of coronavirus, American wouldn’t make them.
Not all customers are eligible for refunds, but American has not tried to withhold them from passengers who qualified under the airline’s terms and conditions.
American still wants to retain money, but has been more creative with its approach. It was among the first airlines to offer customers an incentive deal — cancel for a full refund, or take a travel voucher for 120 percent of the ticket’s value.
On the back end, American built IT to handle refunds, so fewer travelers would have to call the reservations department. It’s a small but notable improvement, Snyder said.
“They are devoting resources to doing this work, which means it has to be a proactive strategy,” Snyder said. “They are putting effort into it. I think that’s a pretty admirable thing to be doing. You are basically watching your ship sink but you are still making sure that everyone gets to take their personal belongings will them.”
A Concerted Strategy
At least a once a day during the early days of the crisis last month, American executives met on a conference call to discuss how the carrier would react, said Ross Feinstein, an airline spokesman.
Executives with a finance background might have recommended a hard-line against customers, since they would fear the company would run out of money. But American also had many other departments represented on the call, including sales, reservations, social media, and corporate communications.
Many understood the customer view and advocated a gentler approach, Feinstein said. The phone reservations team, which had its two busiest days in Americans history, after on March 12 and 13, understood this was no ordinary crisis.
“We are looking at every single aspect of what we are hearing from our customers,” Feinstein said. “Every idea was listened to and analyzed. We came together to form a consensus as a group to come up with a way to take care of customers.”
The group is still meeting, though less often, to discuss refunds, waivers and other issues, Feinstein said.
During the conference calls, most discussion centers around the current situation and not about long-term implications, Feinstein said. But others wonder whether customers will remember that American treated its passengers better than some competitors during this crisis.
Henry Harteveldt, an industry analyst and former airline marketing executive, said American may emerge with stronger brand equity — assuming the airline survives. Perhaps, he said, customers will forget the airline’s 2019 stumbles when this is over.
“I think passengers are going to have long memories when it comes to how airlines treated them during this crisis, and the airlines that don’t treat passengers well will probably see lower levels of loyalty,” he said. “They may see some of their frequent flyers move to other airlines. They may see fewer people carry the co-branded credit card or spend less on it. I appreciate the financial challenge that all airlines are facing now, but airlines that don’t put the customer first risk coming in last.”
American is not the only airline taking care of customers. Three other airlines — Alaska Airlines, Southwest Airlines and Delta Air Lines — generally have excelled at weighing customer satisfaction against the need to conserve cash. But those airlines were well-liked by customers before the crisis and didn’t need to improve their reputations.
Still, there’s some question whether customers will remember American’s actions during the crisis, Snyder said.
“I would like to think they will, but it may be difficult because United may have done enough damage to everyone with the stuff that they are doing,” travel agent Snyder said. “Everyone is focusing on what United has been doing to prevent refunds. Not as much attention will be paid to American doing the right thing.”