American Airlines CEO Doug Parker interview with Richard Quest: CAPA Americas Summit (VIDEO)
At CAPA's Americas Aviation Summit in Las Vegas in Apr-2015, American Airlines CEO Doug Parker gave a candid interview with CNN's Richard Quest, covering a range of issues from ATC privatisation, through staff bonuses, domestic market strategy, US airlines' competitiveness and international partnerships.
Some extracts below are taken from the video replay embedded in this report.
There are many interesting insights in the video - for example, in managing employee expectations: "You act instead of talk. You do actions that back up your statements", and on international routes to Asia, "we need a strong (Chinese) partner."
- American Airlines chose to give higher wages to employees instead of profit sharing, which was an unconventional approach.
- Building trust with employees requires consistent actions that align with management's statements.
- Delta's differing stance on ATC privatization may be driven by its own agenda.
- American Airlines competes in the low fare market by matching fares to avoid losing passengers.
- American Airlines recognizes the need for a strong Chinese partner to expand its presence in the China market.
- The airline acknowledges the need to catch up in terms of product innovation and improving service quality.
American Airlines, CEO, Doug Parker in conversation with CNN's Richard Quest
1. Domestic - employees and merger
Profit share or base pay. Which do employees prefer when airlines are profitable?
(When the other majors were giving bonuses and not pay rises, American went the other way with the intention of locking in benefits for staff): "We decided to do higher wages. Each union agreed it. That was the choice that was made. In the old days we would have said that's it....(but) It got to the unintended consequence that we didn't want them sharing in the profits.
"We're 90% unionised; and we just gave them the extra, no negotiation, no concessions. It was so non-traditional ... but it just didn't feel right (not to do it)."
How do you convince employees to trust management after all they have been through, with Chapter 11 and mergers
"You act instead of talk. You do actions that back up your statements.
"Try to find some positive surprises. You must act consistently with what you are saying.
"We had a large pay increase for engineers. You can't just do that and walk away. But also you need to say 'I am so happy that I am able to do this for you; I know how hard you work.'"
2. Domestic - industry affairs, new fare offering
Why did Delta split with other U.S. carriers that support a proposal to privatise the US ATC system?
"Why is it that Delta believes something different that no other airline believes?...I don't think it's because they have different facts. I think it's because they have a different agenda.
"What's best for Delta is for the rest of us to live in an environment that is relatively more harmful to us than to them. Nothing else makes sense."
On competing at the low fare end of the market
"There are a number of airlines we need to compete with who don't have the same product as we do. But the fare is such a compelling argument that we have to compete. We can't ignore that fare or we lose passengers, so we match the fare."
3. International - partnerships and products
The China market, on needing a partner
"For the moment we serve just the big points, so we don't need the feed. But we need a strong (Chinese) partner."
(American has an existing limited partnership with Hainan Airlines)
On Innovation and US airlines not being innovative
"Perhaps. I would say, we were going through a period which didn't allow that to happen (to be innovative). It is entirely different now. With service we are catching up; it may not be innovative, but it is a massive move.
"We do have to catch up. When I took over, one of the things that was as shocking to me as anything was when I went to our partners at British Airways and JAL and Qantas, having them tell me your product is not up to our standard.
But now with our 777-300 new product that is as good as anything in the world."