Winning Friends in High Places : American’s Emphasis on Service Earns It Uncommon Praise

DALLAS â€”  It was after 11 p.m. when the phone rang at the home here of Robert L. Crandall. On the other end was a distraught woman whose baggage had not arrived in Salt Lake City when she got there aboard an American Airlines flight. Her daughter was getting married the next morning--and the suitcase contained the wedding dress.

Crandall, chairman and president of American Airlines, says two or three passengers manage to get through to him on the telephone every week, and he often handles their complaints personally. In the case of the lost suitcase containing the wedding dress, he worked into the early morning hours mustering American’s forces to try to set things right.

The story had a happy ending. The suitcase was found in Dallas and was shipped to Utah on the first available flight--which happened to be by competing Delta Airlines.

The bride waited for the plane at the airport, and American Airlines provided her with an office in which she could change. She walked down the aisle just on time.

No airline, including American, is embarking on a honeymoon with its passengers. But with perhaps more determination than any other domestic airline, American is going to great lengths to keep its passengers content, or at least keep them from getting furious.

Amid almost universal angst these days over airline travel, American Airlines is getting some uncommon praise.

Passenger groups rank American’s service tops among U.S. carriers and high on the list of airlines worldwide. In a survey of 30,000 frequent fliers conducted late last year in 100 cities around the world by the International Airline Passengers Assn., American ranked as the fourth-most preferred airline in the world behind Swissair, Singapore Airlines and Lufthansa German Airlines. It was selected as the top airline in the world by the passengers from North America who responded to the survey.

When Financial World magazine recently polled people with incomes of more than $100,000 to find out which products or services they would choose if money was no object, American was the top choice for a U.S. airline. In another opinion sampling by Advertising Age magazine last year, American was the clear winner, with more than 30% of the votes cast choosing it as their favorite airline. Delta, which had been No. 1 in Advertising Age’s poll two years earlier, came in second with 25%.

This is not to say that American works miracles. Hardly. American chief Crandall wouldn’t have had to help that woman in Salt Lake City if his airline hadn’t lost the bag in the first place. And even Crandall concedes that the bride’s dress would not have arrived on time without his intercession.

Planes are still late. Flights are still cancelled. Employees can still be surly.

But American is beginning to demonstrate that an airline can be sort of like McDonald’s--a place of few surprises.

“American has made a commitment to improving the level of service, while most of the other airlines have basically ignored it except in their advertising,� said John F. Tschohl, president of Better Than Money Corp., a Minneapolis company that produces and designs systems to help organizations be more service-driven.

“The industry has spent no real effort or money trying to improve the level of service. They are all somewhat mediocre. Even Delta, which used to have a marvelous reputation, has slipped. Improvement is a real opportunity for most of the airlines, and it is not expensive to implement.�

How does a company in what is perhaps one of this country’s most berated businesses improve its service and bolster its image? Small steps, but steps that can be difficult and expensive.

Sometimes, American’s special efforts to improve service are easy to notice. For example, starting last year it increased its personnel at gates and ticket counters during busy periods. When a departing wide-body airliner is expected to be at least 65% full (75% for a narrow-body plane) an extra agent is stationed at the gate. And a second gate agent is now routinely added 35 minutes before a flight; previously it was 20 minutes.

According to American, these moves alone have made necessary the hiring of about 50 new gate agents at the airline’s Dallas/Ft. Worth hub. Throughout its system, the airline has added about 130 new gate agents.

In another change, American airport agents have been given more authority to settle customer complaints with payments on the spot, and the airline’s lost-baggage claims policies have been relaxed. For example, cameras used to be excluded from coverage, but now there is an allowance when they are lost in baggage.

Some Efforts Subtle

More telephone reservationists have been hired, and some of them are kept in reserve during slow periods so that even when it gets busy, 80% of all calls are certain to be answered within 20 seconds.

And, in what Richard Pearson, senior vice president for field services, calls “turning a negative situation into a positive situation,� the airline recently began telling passengers, whenever possible, that their baggage has been misdirected before they find it out for themselves. The result, American hopes, will be that fewer passengers will turn into seething enemies of the airline as they wait at the baggage carrousel for suitcases that never show up.

At other times, the service efforts can be so subtle that, despite their importance, they go largely unnoticed by passengers.

American now keeps spare aircraft at more stations, for example, so substitutes will available quickly for planes with mechanical problems, avoiding cancellation of flights. To prevent such mechanical problems, it also has reduced the time between major maintenance checks.

Some efforts are designed specifically to soothe nervous passengers.

Earlier this year, a federal report concluded that the failure of two Northwest Airlines pilots to follow required cockpit checklist procedures caused the deaths of 156 persons in Detroit last August.

American’s senior vice president for operations, Robert W. Baker, took measures immediately to reassure jittery passengers. On his orders, American pilots, when making their routine announcements before takeoff, must first say, “This is your pilot. We have now completed our cockpit checklist.�

Service improvements don’t come cheap. According to Crandall, the service improvement program cost $30 million last year after being launched in March. This year, the cost will be between $45 million and $50 million--enough to buy a new Boeing 767-300.

But the expense of such service improvements is small compared to American’s annual operating costs. The cost of the added quality comes to less than 1% of the airline’s total operating expenses, which were $6.7 billion last year.

It is impossible to quantify the result of such efforts. But it seems to be money well spent.

“In terms of American’s reputation and its ability to promote itself, it is probably pretty cost effective to spend that kind of money--and American has the money,� said Paul Turk, an official of Avmark Inc., an aviation consulting firm in Arlington, Va.

“Other airlines, such as Eastern, don’t have the money to do the same,� he added. “American probably gets its money back in extra passengers. The product they are selling is a seat moving through space and time. The airlines all fly the same planes. What American is trying to do is capture as many of the folks in a given market as it can and keep them coming back. The whole logic is to build customer loyalty.�

On-Time Departure Key

Baker said American is doing many things to improve performance, on rare occasions even flying the airplanes faster in order to beat anticipated heavy traffic to a crowded airport. Getting planes away from gates quickly to allow arriving planes to unload is another important aspect of the effort.

He said dependability standards in every department of the carrier have been tightened. “What used to be goals are now performance standards,� he said.

A major standard sought is to have planes leave within five minutes of their scheduled departure times. If a flight does not achieve that goal, Baker said, it is likely that it will arrive late at its destination.

Every Friday morning American executives conduct a four-hour telephone conference call linking all stations. The week’s “worst performing flights� are discussed and an effort is made to “isolate the problem and fix it,� Baker said. “We’re trying to move the worst trips to an acceptable level.�

Observers say American has received excellent ratings for a number of reasons. For one thing, it has a reputation for having one of the best and most stable management teams in the industry.

In addition, during the period of consolidation in the airline industry in the last few years, it has not merged with any other major carrier, so it has been able to devote its full attention to service improvement. Airlines that did merge were often troubled by the problems of meshing fleets and work forces, with the result that customers were neglected.

In addition, unlike many other carriers, American has had relatively good labor relations. And when employees are happy, they tend to treat customers well.

But the most important ingredient of service for most airline passengers is dependability, particularly what is known in the industry as on-time performance. Officially, that is defined as flights that arrive within 15 minutes of scheduled arrival time.

In this area, American has regularly been at the top of the list of the major carriers in the few months that they have been publicly rated by the Department of Transportation. Some smaller carriers, such as America West and Southwest, have done better. But that is because they operate largely in warm climates and operate short flights, resulting in their flights experiencing few delays.

In May, the last period for which figures are available, American’s on-time performance was 87.6%, compared to the industry average of 81.9% and an improvement for American from the 66.7% it recorded in the same month last year.

Some of the on-time improvement comes simply from more realistic timetables. Previously, there was a benefit for airlines to be gained from claiming that their flights took less time than they actually did.

Airlines showing the shortest elapsed time for a particular flight were given higher display on the screens of computerized reservation systems. For example, if an airline scheduled a flight between New York and Los Angeles to take 4 hours and 20 minutes, it got a better computer display than a competitor’s flight scheduled for 4 hours and 22 minutes. Better computer display resulted in more business because travel agents and passengers would often just look for the flight at the top of the screen.

Flight Listings Changed

But then American successfully urged the Department of Transportation to publish on-time performance figures each month. As a result, starting last year, the airlines began publishing more accurate schedule times.

Also, flight listings now come up first on the computerized reservation system screens when their departure times are closest to the time the passenger has requested. Other factors also influence the computer listing: A nonstop flight will get better display than one that makes a stop, and a one-stop flight that requires a change to another airline gets less prominence than a one-stop flight that does not require such a change.

When there are several flights at the same time, with no other factors involved, the computer makes the decision. It is like shuffling a deck of cards or flipping a coin. And no carrier is favored by the computer.

The entire airline industry’s on-time performance has improved under the new system, but American says it has done better than the other majors because of the special effort it has made to get its planes off on time.

But by increasing scheduled flight times to improve on-time performance, the airline must keep flight attendants and pilots working longer hours. In addition, it gets less use out of its airplanes each day. The cost of these changes totaled nearly $9 million in 1987. And that does not include the cost of the two new airliners that had to be bought to make up for additional scheduled flight times, said Donald Carty, senior vice president and chief financial officer.

The amount of luggage “mishandled� on American’s flights has also declined, although American is no standout. The Department of Transportation, basing the figures on complaints received from passengers, said 5.65 bags per 1,000 passengers were misplaced by American in May, down 42% from a year ago. That’s better than the industry average of 6.16 in May, but ranked it only sixth among the 13 carriers that make such reports.

Many of the ideas for service improvement come from passengers themselves. About a year ago, American began arranging small meetings of members of its frequent-flier program with airline employees and executives.

One of the suggestions that came out of those “focus group� sessions is now being implemented by the airline. Passengers complained that it was difficult to understand the flight information--arrival and departure times, gate numbers and flight status--displayed on airport monitors. The passengers said, and the airline agreed, that the screens would be easier to read if flights were listed alphabetically, according to cities, instead of chronologically.

Booze Is Back

Sometimes the airline gets so many complaints in the mail (and in the focus groups) about a decision that it has to rescind it. Such was the case with its recent decision to discontinue serving liquor on early morning (7 to 10 a.m.) flights.

“The trucks backed up to the docks with the letters,� recalled Baker, the senior vice president for operations. “There were lots of people who wanted a Bloody Mary or a bourbon on the way to Chicago.�

As a result, the booze is back on most flights.

And some passengers on late-night flights complained about being awakened when meals were served. American came up with a simple solution. At the start of a flight, an announcement is made that if passengers want to be served meals they should cover their seat belts with a blanket. If they do not wish to be awakened, the seat belt should be visible.

American Airlines employees are rewarded for ideas on how the carrier can cut costs, make more money or improve quality. An employee suggestion program begun in January last year has either cut costs or raised revenue of $27 million based upon 1,400 worthy suggestions. Employees have been paid $6 million in either cash or goods, such as TVs and fur coats. Two computer programmers together received the maximum payout of $37,500.

To keep an eye on how its employees render service, American has instituted a so-called “shoppers� program. More than 300 people who are not full-time employees of the airline make several round trips a month to check on service. They secretly observe such things as flight attendant service and attitude, ticket clerks and gate service.

If the “shoppers� find deficiencies, they report them to a special office at company headquarters, and disciplinary action can be initiated.

Japanese Culture Taught

The airline considers it very important that new flight attendants be fully indoctrinated in American’s concept of service during their five weeks of training at Dallas.

“The first impression (passengers) get as they board a flight is going to set the entire tone of the flight,� instructor Larry Babcock told 50 fledgling flight attendants at one recent session. “Through our efforts of being cordial and gracious on board the plane, the passengers will want to come back.�

Babcock added that special efforts should be made to recognize first-time flyers so that they can be put at ease. Also, flight attendants destined for the airline’s Tokyo run are taught aspects of Japanese culture.

The effort must be continuous, airline officials say, for they know that a reputation for good service can be lost quickly.

Experienced travelers used to say that Delta Airlines had the best service of any U.S. airline. But then a few embarrassing and well publicized incidents occurred last year and, overnight, Delta became the butt of jokes on the Johnny Carson’s “Tonight Show.� The airline’s reputation was tarnished.

So despite the current accolades, American Airlines is not complacent.

“If someone has a good reputation,� Crandall said, “it is a bit of an advantage because it is presumed that the service will be good. But there is an old saying: ‘It takes a year to build a reputation and a few minutes to destroy it.’ �