AA reduces domestic meals while UA announces improvements

[FWAAA]

Today,   UA announced improvements to its premium cabin meals in North America, including, by mid-2015,  meals on domestic flights longer than 800 miles or 2:20 in duration, subject to some exceptions:
 
http://newsroom.unitedcontinentalholdings.com/2014-08-21-United-Airlines-Makes-Significant-New-Investment-in-In-flight-Food-and-Beverage-Service
 
http://aviationblog.dallasnews.com/2014/08/united-airlines-to-add-first-class-meals-on-shorter-flights.html/
 
Some of the changes take effect on September 1, 2014, the same date the AA meals are trimmed.   Plus, UA plans to add fresh meals on 2-class United Express RJs instead of snack boxes.  
 
AA earned $1.9 billion for the first half of 2014 before Parker's meal cuts took place, compared to UA's paltry $430 million profit for the first half of 2014.   So which airline is making improvements to better compete?   UA.  
 
AA's cuts are detailed in this closed thread:   http://www.airlineforums.com/topic/57372-catering-cuts-effective-090114/

 

[IORFA]

I wish AA would change their mind. I doubt it as Hector is trying to explain this downgrade away as they are actually spending more money! The only real add I see is an appetizer on some flights and nothing but downgrades for most domestic flights not on the A321T. Seems Hector thinks were all morons already. At least keep the mixed nuts, hot meals on flights 2 hours or more and keep food in Eagle F/C. As FWAAA pointed out 1.9 BILLION made in the first 6 months. AA can afford it! I hope the real frequent fliers are burning an email trail to AA about the new "improved" meal program.

 

[AANOTOK]

Be careful what you wish for. Although a 1.9 Billion profit was made, to upgrade their food, Parker will use that in negotiations as an added cost that has to be taken from somewhere... YOU! We have subsidized ticket prices for years, now it's time to do the same with inflight meals I guess.

 

[FWAAA]

I wish AA would change their mind. I doubt it as Hector is trying to explain this downgrade away as they are actually spending more money! The only real add I see is an appetizer on some flights and nothing but downgrades for most domestic flights not on the A321T. Seems Hector thinks were all morons already. At least keep the mixed nuts, hot meals on flights 2 hours or more and keep food in Eagle F/C. As FWAAA pointed out 1.9 BILLION made in the first 6 months. AA can afford it! I hope the real frequent fliers are burning an email trail to AA about the new "improved" meal program.

I don't doubt that the total AAL food and beverage spending will go up a lot this year, mainly due to the absence of meals on most pmUS flights until recently.   Adding meals to lots of US flights has to be expensive, but that's what you get when you merge a low-fare, no-frills airline like America West dba US Airways into AA.   About the only US Airways domestic flights that got meals before the AA merger were the transcons.    
 
Old AA always showed a line item on the financial statements for food/beverage catering expense.   Looking back, we can see how it declined over the years as economy meals morphed into the Bistro Cart and then were completely eliminated.   Further cuts to meals and beverage spending occurred throughout most of the past decade as AA shrank and some cheapening of the meals happened.   Then, about 3-4 years ago, AA's spending on food and beverage expense climbed dramatically.   Dunno if that was due to improvements or mere inflation.   Maybe GateGoumet and Skychefs simply raised their prices.
 
Parker's US (and most other airlines) do not show a separate line item for catering expenses, and when Parker took over AA last year,  AA re-stated its financials to eliminate that line item.   New AA rolls those expenses into "Other."   That way, investors, employees and passengers are kept in the dark about increases or decreases to those expenses.   
 
Nobody knows whether premium cabin meals drives higher revenues, but I think everyone could agree on one thing:   Cutting meals won't drive any incremental revenue and improving meals won't drive anyone away (decreasing revenue).   So by cutting meals, the best AA could hope for was the cost savings from reduced meals, minus the profit lost from the customers who left because the meals were cut (if any).   Maybe cutting meals won't reduce revenue at all.   Don't know.   
 
Every airline has some finance grads who do "studies" and "analysis" to show management that if meal spending was cut by, say,  $50 million, the airline would lose, say, just $25 million in profit from the customers who left because the meals were cut, making the airline better off by $25 million.   Of course, their assumptions might be flawed, and perhaps the airline would lose $55 million of profitable customers, making the airline worse off by $5 million.   Plus, there's always the chance that your biggest competitors would pounce on the news and trumpet their more generous meal policies just around the same time as your more miserly meal policies go into effect.   Just like UA did.   

 

[jimntx]

I've said from the first announcement of the cutbacks that it was going to get interesting.  On any given flight--unless they are just starving to death--out of 16 FF'ers in F/C on S80/737, 1 or two will not want the meal at all--regardless of what is being offered.  "Just give me a Vodka/Tonic and some nuts."  2-4 more will maybe eat the salad and nibble at the entree--especially in they are seated in the wrong end of the cabin and end up with the pasta.  Most all will have a baked on board cookie when offered.  I just had 11 people in F/C on a dinner flight to RIC.  Only 7 ate, and 3 of those barely touched the entree.
 
However, tell them that there is no meal on a flight over a certain length, and the conversation changes rapidly.  Last month, I worked the late DFW-PDX (departed at 2130) a couple of times which has only the hot nuts and the cookies in F/C.  Several passengers were taken aback that there was no meal of any sort on a 3hr, 45min flight.

 

[DFWFSC]

How much money is made on the Buy on Board food offerings? I've been on about 10 flights this year where the BOB was sold out after about the 4th or 5th row. Why not add a lot more of it if it's selling out quickly? Maybe my flights were an exception and they don't sell out like what I saw?

 

[jimntx]

I don't work in coach that often, but I've never seen much sale of the Buy on Board stuff.  Occasionally we would sell out, but that was usually on flights where passengers didn't have time to purchase something in the airport before boarding.
 
Nowadays, they're not putting much product on the airplane.  A couple of weeks ago on a RIC-DFW flight (blocked at 3:05), we were catered with one sandwich for sale in coach, and it didn't get sold.  An Executive Platinum took it as his complimentary snack item.
 
I know there have been several messages from the company about f/as noting on the catering papers that they needed more of certain products--like the cheese and fruit tray.  Problem:  there were no sales or comps of any of the cheese and fruit trays that they did get.  And, this was happening over and over.  No sales/comps and none returned to the caterer at end of flight, but the f/as insisting they needed more.  Company came to the conclusion that the flight attendants were eating the product.  We had the same issue with the flavored popcorn a couple of years ago.  No sales, no comps, but more product needed.  Not judgin'.  Just sayin'.

 

[eolesen]

Plus, there's always the chance that your biggest competitors would pounce on the news and trumpet their more generous meal policies just around the same time as your more miserly meal policies go into effect.   Just like UA did.

As much as I like what UA is proposing, this had to be in work for the past six or eight months internally, and I'm told that the announcement from AA came out just after their executive committee had approved going forward with the upgraded service.

Had AA made their decision a month earlier, I have to wonder if their decision would have been the same.

I don't work in coach that often, but I've never seen much sale of the Buy on Board stuff.  Occasionally we would sell out, but that was usually on flights where passengers didn't have time to purchase something in the airport before boarding.

True. Part of it was behavior modification... People assumed there'd be a food, and bought it as a captive audience.

Over time, anyone paying attention quickly realized that they could by a full size can of Pringles for 10% of the cost of the Stacks container. Likewise for the fruit & nut bags and other items. I finally started carrying my own items in my backpack. If I don't eat them on the flight, they stay in the hotel room for when I didn't want to head out to eat after a 18 hour day with a client.

 

[FWAAA]

As much as I like what UA is proposing, this had to be in work for the past six or eight months internally, and I'm told that the announcement from AA came out just after their executive committee had approved going forward with the upgraded service.

Had AA made their decision a month earlier, I have to wonder if their decision would have been the same.

While you're probably right, Seth Miller (travel blogger) claims that UA made the decision just a couple months ago, which would line up with AA admitting what everyone already knew from the beginning of the year, and that was that on Sept 1,  AA's generous policies would be reduced to line up with the newly-generous US policies that were announced early in the year.   By February or March, many people suspected that AA's policies would be cheapened to help pay for the huge expense in starting meals on many US flights that were previously meal-free.   And then, about two months ago, AA finally announced it.    

Here's his quote from Flyertalk:
 

The decision to revamp the menus was made only a couple months ago. And now they have something in service. That's an incredibly rapid implementation for catering changes of this nature and that comes in large part because they leveraged the BoB menu. Full entree development takes longer, usually in the 9 months range. That's where the February target comes from. And they annual refresh cycle after that is rather aggressive as well.

 
http://www.flyertalk.com/forum/23406133-post226.html
 
I'm going to give Smisek credit for successfully guessing which way AA would go.  Once US announced that it would begin meals on flights longer than 1,000 miles, it was clear that would be the new AA standard, since US did not say that on Sept 1,  US would shorten that distance to match the existing AA standard, but instead announced that on Sept 1,  AA's policies would be "aligned" with the US policies.   In reality, Smisek has had most of this year to plan on AA's Sept 1 standard of 1,000 miles to get a meal.   
 
And the press picked up on it yesterday with headlines like "UA improving meals as AA is reducing meals."   Once again,  "charge 'em for water" Parker has made AA the outlier.   Now, he can either remain obstinate and be the airline with the least generous meal policies, and hope it doesn't result in reduced revenue (or slower growth than the others) or he has to quickly reverse course and stop the runaway train before it crashes.  
 
The constant drumbeat from US Airways cheerleaders has been "AA filed for bankruptcy and thus its ways led it to its ruin.   Parker & Kirby are "numbers guys" who will institute changes to make new AA profitable."   As if the AA meals policies or upgrade policies or generous frequent flier program or its less-dense aircraft configuration "caused its bankruptcy."   

News flash:   The old AA way of doing things resulted in an AA profit larger than US Airways in 2013 and so far in 2014, the old AA way of doing things (along with some improvements to meals at US) has resulted in a six month profit of $1.9 freakin' billion.   So what does the genius management washout (his 1991 departure from AA to NW) Parker do?  He starts Effin' with things that work.   And seemingly aren't inconsistent with big profits.   All in search of a few dollars on catering savings.   

 

[jimntx]

 
News flash:   The old AA way of doing things resulted in an AA profit larger than US Airways in 2013 and so far in 2014, the old AA way of doing things (along with some improvements to meals at US) has resulted in a six month profit of $1.9 freakin' billion.   So what does the genius management washout (his 1991 departure from AA to NW) Parker do?  He starts Effin' with things that work.   And seemingly aren't inconsistent with big profits.   All in search of a few dollars on catering savings.   

The timing is what surprised me the most.  Right after announcing the largest quarterly profit in company history, they announce that they are cutting meal service in F/C!  When I was in the oil bidness, the PR people made sure that some time elapsed between announcing the top executive's $10million quarterly bonus and the announcement of an increase in gas prices at the pump.

 

[eolesen]

Without violating confidences, I knew about the impending menu changes at UA in July. This has been in work for more than just "a couple months"...

AA officially announced their menu timing changes on August 4th, but it was leaked out on July 9th on Flyertalk, and there was a thread here about the same time.

 

[jimntx]

I know that we flight attendants got an internal email before the official announcement with high-level info--mostly just flying times required for various services to be catered, such as 2.45 for tray service meal and certain markets, such as DFW-ORD, that would be exceptions to the rule.  By now they should have learned that telling the employees before the official notice is tatamount to making a public announcement.

 

[eolesen]

True. Just trying to make the point that both companies were apparently moving in opposite directions, presumably without knowing what each other was doing until they were too far down their respective paths to make a course correction.