60 Seconds with Tom Plaskett, American Airlines (retired)

60 Seconds with Tom Plaskett, American Airlines (retired)

One of the most influential marketing executives at the launch of frequent flyer programs in 1981 was Tom Plaskett, SVP Marketing at American Airlines. Tom takes us back to that point in time.

InsideFlyer
Tell me what you remember from the beginning of the AAdvantage program.
Tom Plaskett
I remember at the time we were struggling with two issues that did not seem related but ultimately were at the core.
One of those: we didn’t have the ability to track our customers. In those days all we had was the telephone number that was inputed in the PNR. As more and more businesses started moving to travel agents and growth of these business originated travel agency’s the telephone number that would appear in the PNR was the travel agencies telephone number. So we would produce all these reports of our customers and find out that it was a travel agency. So it turned out we were unable to keep track of out customers. That was one issue. And before we started thinking about what we would do with it we send the data processing folks off to put in a tracking database. The idea came from Avis; they developed their own CRM program that gave you a number. So the data processing people went off to find a way to keep track and it took them about a year. That was one item that would not have been possible if we hadn’t done that work.

Second, was we were struggling with how do we built brand loyalty in a commodity. When I first came over in the marketing activity, they were working on something called the loyalty fare. It was dead on arrival. No matter how you looked at it, your competitor would match the price. It became a zero gain. So how in world do you built brand loyalty in a commodity product?
As the group began struggling with it I remembered the days when my mother use to have S&H green stamps. They would get thrown in the bottom drawer of the kitchen. Every so often we would get those stamps out and mount them in books and take them down and exchange them for a toaster.
Then, I was in a customer’s office one time and he was very proud to show me a plaque on the wall, it was from the Admirals Club. When you joined the Admirals Club you would get a plaque and you would get a star mounted on it after so many million miles.

All of a sudden it began to pop up, would something like that work in the airline business?

We started scoping it out.

I do remember a couple of quirky things.

The first idea they came back with was a free trip to Hawaii. You acquired so many miles; you would get a free trip to Hawaii. I was thinking, that means we are going to have a whole bunch of airplanes filled up with people flying for free. That’s where the idea of “what’s wrong with a free trip anywhere?” We will spread out the award trips over a much larger base the same way we handle non-revenue. If we have empty seats and we can find a way to fill them, that’s where it all came about. As we began putting the finishing touches on it, there was a considerable amount of decisions inside of the marketing group if it made any since to do it at all. Mike had some real reservations about it, so we had one giant last chance for everybody to speak their piece. It was a big meeting; Peter was there, Mike was there, everybody had an opportunity to say why it wasn’t a good idea and then we made the decision to do it!

IF
Was that the moment of truth for this program?
Tom
Yes, even though people were working on it and trying to put the best face on it there was an undercurrent. One consolation, to the one who may have been opposed to it, was a one-year expiration date. So when it was announced it was announced with a one-year expiration date. I think it was 90 days later that away.

IF
Could it have gone either way?
Tom
There was a serious feeling among a number of people that it was expense, and everyone was worried about the one upsmanship. If we set the goal at this level and then one of our competitors is going to come in and cut the mileage requirement in half. But there is a risk in anything you do and the airline industry has a tendency to self-destruct in that regard.

IF
So it almost didn’t happen?
Tom
It almost did not happen!
I can remember after we got through with the summit meeting I went into Bob and we hashed it about and he said, “Do you want to do it?” I said, absolutely, I think we should.

IF
Were miles the currency in the original idea?
Tom
Miles came in very early when we got to the concept of accumulating something. Also, it was easy to do from a systems perspective.
You had the arrival and departure city already in the PNR, all you had to do was put a table of miles in. Then you could strip off the segments and post them to customer’s accounts. It all tied together.

IF
Were you surprised how quickly United appeared on the horizon?

Tom
We fully expected the match; the one advantage we had early on was it had to be totally automated. United had to do it with coupons and that added a lot of cost to it.

IF
Where did the name come from?
Tom
Here is what really happened.
The agency proposed a whole list with 50 to 60 ideas on it. Everyone was looking at this a talking about it and nothing stood out. We coming down to a deadline and we had to have a name.
The agency recommendation was “AAdvantage” and I thought it was terrible! But I couldn’t find anything that zinged it so I said, go ahead and use that one. There is no fancy story, I just couldn’t think of a better name.

IF
What was the length of the whole process?
Tom
It was over a year.

IF
Is there a certain legacy you saw early on that you took a certain pride in?
Tom
I think the power of the mechanization to morph into virtually every industry or service you can think of has developed some sort of loyalty. The principal of brand loyalty. It has a very high-perceived value but to produce it is relativity low.

IF
How long after the original launch did you say, “We did it!”
Tom
It was within the first 90 days.

IF
What gave you the indication?
Tom
It was the enrollment numbers. We hit the 250,000 mark no longer than 10 days. The original projection we thought maybe it would take two to three months to enroll 250,000 people and we did it in 10 days. The best indicator was how fast people enrolled.

IF
Is there any uniqueness of a customer you remember?
Tom
People took crazy routings and multiple trips even then.

IF
What do you think was the biggest challenge?
Tom
Everyone underestimated the power.

IF
Any comment on being a true father of the impact of these programs?
Tom
The concept was a team effort. I think having been involved in something as dramatic as an impact in my field is very gratifying. Watching it develop and then the launch it was very satisfying. I’m very pleased to be a part of it.

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