I’m often struck by how many successful investors have often described their choices in who to invest in being based upon their own personal experiences with a product.  Time and again, one of these people tries a product and realizes that someone has something worth betting on.

For those who may invest in American Airlines and particularly at this time, I would ask that you try the product out.  Read my trip reviews found HERE and HERE.

Don’t fly in First Class.  Don’t schedule a trip known to AA management.  Buy an economy class ticket for a flight of a duration of 2 hours or more and make a decision based upon your experiences and contrast those experiences with those on other airlines.

American Airlines may have largely fixed its cost problems but it hasn’t addressed its service problems at all.  Service will be what determines the airline’s ultimate success.  Service is what attracts revenue, not cost cutting.

Consider the value proposition AA is offering in comparison to other airlines and particularly those it is competing against.

US Airways may have its problems but it doesn’t have AA’s problems.  It attracts customers on price and it keeps them by doing what it contracts to do.  It competes against the likes of Southwest and Delta all the time and it makes money.  It makes money because it does deliver on the service and value propositions.

Ask yourself if the status quo that exists today at American is the status quo that wins in the marketplace here in the United States.  Consider that despite having a very senior and very well paid service staff and crew, Southwest accomplishes what AA can’t every day.  It does it day after day and has expanded its revenue growth and still has managed to earn a profit.

Contrast the experiences with Delta who is arguably kicking everyone’s butt in the business currently.  It is these intangibles that have always determined the success of an airline.

Yes, it’s important to be competitive on costs but you can’t win if you can’t compete on the service and value side.

Now, ask yourself if the status quo is who should be running American Airlines going forward out of bankruptcy.  Some say that the executive team has changed and that it is leaner and more responsive.  I would argue that we simply have Version 3.0 of the same leadership the airline has enjoyed for 15 years and that this version shows no evidence of being anymore sensitive to the service and value side of the business than the previous regimes.

AA needs new leadership and it needs leadership that can change those service and value propositions.  Even if that leadership is not US Airways management, those in charge today need to go and new people need to come in and change the airline to a model that wins.

Filed under: Airline Service by ajax