American Airlines Restructuring: Hundreds Of Layoffs In Customer Service To Serve You Better?

American Airlines is laying off about 8% of customer relations staff, the team that tries to win back unhappy customers, as well as lost baggage staff, and AAdvantage customer service agents. The layoffs, effective March 30, will include

  • 335 in Phoenix
  • 321 in Dallas

These employees will be able to apply for other positions in the company, including 135 jobs in a new “Customer Success” group which will drive efficiency by handling multiple complaints from a single trip rather than having different employees handling each issue. And American will outsource more:

Remaining functions, including single, easily addressed issues like a damaged suitcase, will be shifted to existing international contact centers run by American and its partner airlines. Those centers, mostly belonging to American, operate daily around the clock, the airline said.

There is reason to think that demand for customer service can fall:

  • There are some ways where American’s current processes are overly bureaucratic. They point out that someone with multiple issues on the same flight deals with different people on each.

  • American’s operation is much better than it was during the pandemic, so there are fewer complaints.

  • Travel isn’t exclusively one-off and first-timers anymore, who tend to need more hand-holding.

  • The airline is working to push more customers to self-service tools.

However the airline was understaffed to begin with relative to providing reasonable service. After the third quarter earnings call, during an employee question and answer with senior leadership (a recording of which was reviewed by View From The Wing) we learned that months ago customer relations morale was exceptionally low.

Their department has been outsourcing, and this announcements continues that process. American tells employees this is good for them, because more outsourcing means less mandatory overtime (because there aren’t enough staff as it is!). But employees say that “automated system responding to customers is faulty” and they have the “lowest wages in the industry.”

A customer relations employee shared that their director told them that the work they perform is “generic” and that “no cost of living [increases] would be considered” – though employees leave for other airlines making “$15,000 more.” That same director, we were told, also said that if employees in customer relations “want to get paid what reservations gets paid… need to go work for reservations.”

My takeaways from this move:

  • American is understaffed in customer relations to begin with, which is why employees have faced mandatory overtime.

  • If American was interested in improving this function, rather than seeing it primarily as a cost center, the correct way to do this would be to improve processes and service first, and then trim staff if they were actually unneeded. Here, American leads with the layoffs while promising better service later.

  • The airline’s finances lag major competitors. Their approach continues to be not spending a dollar they don’t have to rather than winning customers with good inflight product and good service.

Traditionally the thinking is it’s cheaper to retain a customer than to find a new one. That isn’t always true, there are unprofitable customers!

Meanwhile American has more employees than competitors, and has historically outsourced less. Customer service employees just ratified a new contract so this is how American Airlines will manage its rising customer service costs – fewer employees get the higher wages, and more outsourced employees get lower wages. This is how UPS pays its drivers so much now.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Just tried to ask a question via their website. It was a little unusual and didn’t fit into any of the categories given so put it in one that was sort of close. Two days later got back via email a ridiculous answer that just repeated useless information I already knew and which had little to nothing to do with my question. Replied with a fairly sharp note and immediately got a phone call from a really nice lady who went over the issue with me. (Bottom line: They couldn’t do anything as it was outside normal issues, but at least she tried.)

    I guess personal service like that is going to get harder to access. It’s a big company and like too many others in America the next quarter’s bottom line may be all that counts. Long term planning might show that good customer service is ultimately more profitable, but often that’s not the model anymore.

  2. I’d bet customer service request volume is way down. Firstly, with improved operations comes fewer complaints. Secondly, AA has done a decent job in the past year or so enabling more activities to be performed via the App. They still have more work to do on the automation from but process is visible and this leads to fewer manned calls.

  3. I’m curious to see what the outsourcing looks like. If it’s the old school India/Philippines route, I very much doubt service levels will improve. If they leverage an innovative AI solution, it may just be an improvement (albeit probably over time as kinks are worked out). But it’s probably not AI because such a solution would have higher up-front costs.

  4. I find it interesting that this article states about the layoffs coming at American and yet on the same page as the title, there’s an advertisement as to why one should apply for the American Airlines co-branded credit card.

  5. I tried to call to attach my BA number to my AA award travel so I could select seats 45 minute hold time I just hung up

    You can’t do this on line have to reach out to AA “Going for great”

  6. @ Gary — Welcome to the world of AI. We will receive inaccurate, customer-unfriendly answers faster than ever! I got routed to some sort of psuedo-AI yesterday with AA, and it was kinda rude to me. It was too fast to be human — some of the responses appeared instantly when I hit enter on my question, while others seemed to require human intervention.

  7. Just another reason to avoid flying American. My issues when I have flown them are typically customer service related and eliminating customer service doesn’t solve customer service problems. If I want Frontier, Spirit or Allegient level service I would fly those airlines. As it stands now, My 5 year potential revenue for American Airlines is the same as for Pan Am, TWA, Eastern or Air Tran. At this point for domestic travel it’s Delta, Southwest or I am driving. I grew up flying American as my dad was an exec over there a long time ago.

  8. These agents can only do whatever the computer says. The future for AA, and all others, is going to be an AI chatbot–no humans involved–going strait to the computer boss. It will be absolutely terrible and very frustrating for the customers, but the exec’s will reward themselves will millions in bonuses for cost cutting and “enhancing” the customer experience.

  9. “Due to unusually high call volume …” has become the mantra when attempting to call any 800 number, not just American. It is actually a synonym for not having enough customer service reps. It would be interesting to know when and how many times in the past (to pick a number) month that American has not had unusually high call volume?

  10. Gary – the short answer is no it will not improve customer service. However, American has to cut costs or improve profitability and if they can’t raise fares, get a better revenue mix on planes or compete on higher margin routes the only option is cost cutting. Can’t cut flight crews (without downsizing which would hurt revenue) so have to look at cuts in non-revenue generating areas. Maybe they have technology that can improve throughput and, to an extent, offset these reductions but the fact is I’m not sure American had a choice but to cut costs somewhere. This is a drop in the bucket and I wouldn’t be surprised if more are coming (likely mid-level corporate management).

  11. AA’s race to the bottom continues, meanwhile on outsourcing…

    I set an outsourcing center in Cebu, Philippines. We spent a lot of time hiring and training and paid better than the local mean. Our guys in Cebu were wayyyyyy better than our US staff, and had much better attitudes towards our customers. Oh, and cost ~1/3 of my US staff.

  12. Being proactive would further relieve the workload on AA customer relations staff . Set reasonable thresholds based on cabin and status and send reasonable customer recovery “ compensation” when things go awry that under are under the airline’s control . So , a 3 hour maintenance delay would trigger an automatic email with an apology and some sort of recovery voucher for miles / money based on cabin and status . Let FA’s give service recovery for onboard issues – I think they may have this but seem to really come down on FA’s who utilize the system .

    AA seems to be set on a single minded course of trying to cut its way to profitability- this has been tried soooo many times in the airline industry without much success . Profitable passengers care about product , onboard service , and competitive benefits ( such as the AA woefully uncompetitive million miler program ). As long as AA believes that the schedule is all that matters to high value passengers, then their earnings / profitability will continue to lag far behind the industry leaders .

  13. This is all rooted in AA’s belief that they will dominate their markets, leave competitive ones, and customers will simply accept whatever service AA provides.
    I have experienced AA’s AI-driven first line customer service tools and they got some things right but didn’t address other issues.
    Because customer service support is not-revenue generating, AA sees the function as a cost center. Reservations is a revenue generator.
    And those that compare AA to ultra low cost carriers should note that they do the same thing; the differentiation is access to a human, even if you have to wait.
    It should also be noted that I had to process the same type of transaction at both AA and NK within a few weeks of each other and the NK automated tools and AI delivered faster and more accurately.

  14. This would be funnier if the number of employees being cut was a total of 666 instead of 656.

    How about they give the 656 frontline CS employees tools to resolve their customer needs. At another company frontline employee can take phone calls, establish video calls, or open chat platforms to resolve customer issues. If RDU has a major issue – the customer can contact an agent-in-charge at a location where there are people resources available to assist. Rather than stand at the RDU ticket counter with other 2 employee.

    Of the 135 newly created jobs, will the furloughed employees be able to carryover their union seniority. …or is this new position outside of union protections.

  15. you people complain so much. Try calling the IRS “due to high call volume please call back another DAY” disconnect. Or on hold for 45 min then you are disconnected. Love that congress has appropriated $$Billions to fix this then took it all back. The IRS get the crooks (Orange ones) . At lease they can not outsource their work to India.

    What AA needs to do is CLEAN OUT THE dead beat workers who are there only for the check and benefits… Flight Attendant Wanda needs to retire. Gate Agent Natashia needs to go back being a dom in private.

  16. It’s sad watching what has become of this airline after nearly 35 years as a flight attendant and purser. I never supported the merger with US and was a huge fan of the improvements to the service offered when Horton took the reins for an all-too-brief period. His right hand man, Virasb Vahidi, was taking the company in the right direction and I had high hopes. Improved catering, video screens were to be installed on all aircraft at all seats, beautiful cabins (for the time in 2013) on aircraft like the A321T and 777-300. It was a joy to serve people and we could take pride in the offerings we had for the customers once again, after 9/11, bankruptcy, etc. But the unions back deal with Parker sealed the company’s fate to becoming Greyhound in the sky. I’ve never seen morale so low, and the management doesn’t care. I’ve never heard so many passenger complaints, and the management doesn’t care.

    The current mindset at America West International as we call it, is to eliminate anything that makes the customers happy. They waste their time thinking up what to call each department in the company. Passenger Service, which was the agents, and people who work in the Admirals Clubs was changed to “Customer Care.” And now my department, Flight Service, has been changed to Inflight. The reasoning behind it? Because that’s what other airlines call it, is what we were told. It’s a subliminal message because service has been removed from the titles of the work groups, because there is no service.

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