IAG chief Willie Walsh says North American airlines need to invest in customer enhancements

Bankruptcies, spiking oil prices and general economic malaise have plagued the global airline industry for the better part of the last decade, with North American carriers being particularly hard hit. But as those airlines embark on a steady climb to recovery, some of their global alliance partners believe opportunities abound for US carriers to catch-up with the their global counterparts in enhancing the customer experience.

Chief of British Airways’ and Iberia’s parent company IAG Willie Walsh offered that conclusion recently in New York as he officially invited Skytrax award winner for best airline of 2012 – Qatar Airways– to join the oneworld alliance anchored by British Airways and founding member American Airlines.

Speaking in the context of the consolidation that has swept the North American airline industry during the last 10 years, Walsh said the restructuring and mergers undertaken by carriers in the region have left the industry in better shape that it has ever been. He believes passengers stand to benefit the most from the restructuring of the North American airline industry. Those customers, explains Walsh, “without wishing to be critical of what has happened, have suffered from signifiant under-investment in the product compared to products that are available in other parts of the world”.

Making a plug for fellow oneworld partner American, Walsh remarked that “You can see that Tom [American CEO Tom Horton] and American are addressing that with a major fleet revamp and investment in products that will benefit the consumer going forward.”

While weak operational reliability and problems with loose seats on some of its Boeing 757s have put American uncomfortably in the headlines as of late, the carrier is working behind the scenes to enhance the experience for the target oneworld customer – the high-yielding international business traveller. Amerian’s long-haul flagship Boeing 777-300ER debuts on flights from its Dallas hub to Sao Paulo in December. Similar to other global carriers the widebody aircraft features a walk-up bar for first class customers, which is a first among North American network airlines. Other passenger enhancements introduced by American include fully lie-flat business class seats on its fleet of 777-200ER and 767-300ER widebody aircraft, something the carrier’s global counterparts have long offered as part of the business class passenger experience.

American’s fellow oneworld partner British Airways was an early adopter of lie-flat seats, and the differing product offerings among alliance members pose a challenge as all three of the major airline groupings – oneworld, SkyTeam and Star – work toward creating a seamless passenger experience for customers travelling on the respective member airlines of those groups. While the member airlines share best practices and adopt some of the amenities across the group, the reality is some members are financially constrained in committing to the same level of service offered by other carriers that participate in a given alliance.

American has admitted that its financial situation during the last few years has prohibited the carrier from making its desired product investment and enhancements, and believes its restructuring offers it the opportunity for the carrier to become a new airline “operating a new state of the art product”, says Horton.

Just how American will look post-emergence from Chapter 11 remains highly uncertain as the carrier has signed a non-disclosure agreement with US Airways that allows the companies to conduct an in-depth study of a potential merger between the two carriers that includes a deeper financial analysis of the possible tie-up. If US Airways succeeds in its highly-publicised pursuit of American, it is not clear how the merged carrier would approach design and execution of the passenger experience under a US Airways-led management team. US Airways’ network has more of domestic focus, so its share of international business travellers is somewhat smaller than other network airlines. But the carrier has seen an favourable results from the lie-flat seats introduced on its Airbus A330s, which could bode well for the plans laid by American to bring its international widebody fleet up to par with its oneworld counterparts.

However, many aspects of a combined American-US Airways remain speculative at this point. Recently, Atmosphere Research co-founder and chief research officer Henry Harteveldt concluded that an American-US Airways merger creates “a great opportunity to re-write the passenger experience”, for two carriers that presently offer an adequate passenger experience at best. It seems that IAG’s chief Walsh has reached a similar conclusion.