Doug Parker says no revenue based frequent flyer program…yet…

Interview: American Airlines Group CEO Doug Parker

Los Angeles – Following his appearance here at the Global Business Travel Association’s annual convention, American Airlines Group CEO Doug Parker late last month spoke with Business Travel News senior editor Michael B. Baker about the impacts of the American-US Airways merger on corporate share and business, the merger’s next steps and possible effects of recent attention to airline route safety. Edited excerpts follow.

Has the merger allowed you to grow corporate share as anticipated?
We certainly have begun to leverage the new network and what we can provide with corporations, and they’ve responded. We’ve now created a product, particularly in the Northeast, that neither airline could provide before. You take the combination of American’s presence flying JFK international, US Airways’ shuttle product and American’s [Airbus] 321T product. All those together are something neither of us can do independently, but together, no one can compete. It’s a great example of what we’ve created in terms of the ability to produce something no one else can produce.

What’s your corporate demand outlook?
It’s the business cycle, but the U.S. economy has at least been growing 2 percent to 3 percent for a while. We’ve seen demand for air travel stronger than that, and it’s been largely corporate-driven. It’s difficult to project demand for corporate travel, because it can change quickly, but there’s nothing to suggest that it shouldn’t continue, as long as the economy continues to grow. You’ll see corporate demand in aggregate grow, and you’ll see corporate demand for American’s product grow at a faster rate because of the positive enhancements that we’ve made.

What are you hearing from corporate customers?
What I’ve heard is a lot of very good feedback about the 321T product, great feedback about [vice president of global sales Derek DeCross] and his team and how they’re working to give people the benefit of the combined network and doing so really quickly. In fairness, there’s a lot of hopeful optimism. They haven’t seen everything that we can provide yet, and we know that. All we ask is for them to give us a chance.

From the customer standpoint, what’s the next major milestone to be reached in the merger?
There are a series of them, but the next major one will be the integration of the frequent-flyer programs. They’re separate today, and we’re planning to integrate those [in the first half of next year]. We’re doing a lot of things already to make sure for consumers that they get the benefits of the combined networks: code-sharing, some frequent-flyer reciprocity, day-of-departure upgrades, use of the clubs—just not a combined mileage program.[During an onstage appearance at the GBTA convention, Parker was asked whether American would follow Delta and United in moving to frequent-flyer program based on revenue accrued instead of miles flown. Such a move was “not even on the plate right now,” he said. “We have to get the two frequent-flyer programs merged first. If it makes sense to make that innovation, we may do that, but to try to change the program now would be foolish.”]

What are your plans for growing Pacific routes?
We just added a couple into Dallas, to Hong Kong and Shanghai. They’re off to a good start. We’d like to add more. We’d like to fly to Beijing, though it’s difficult to do with the slot constraints there. It’s not like we add those routes and they immediately are wildly profitable, but that’s OK. It’s such an important strategic market that we need to be there.

With the discussion around route safety related to Malaysia Airlines Flight 17 [shot down last month over Ukraine], do you anticipate any changes?
Not any changes so much that I know of. Obviously, we all closely monitor this. Tel Aviv is a great example of how important safety is to this industry. As soon as there was something remotely concerning in Israel, we didn’t wait for the [U.S. Federal Aviation Administration] to tell us not to fly there. We just canceled our flights, as did Delta and United. It’s a really competitive business, but we don’t compete on safety. To the extent there’s anything else out there that’s concerning to any of us, I’m certain we’ll do anything necessary to be sure our customers are safe. We at American have less of that issue than some of our competitors, because of our route network and where we fly.