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.