When the text message chimed, I recognized the name, but didn’t “get” the message. “Gary Leff says you are wrong”–end message. And a good morning to you as well. Now what the heck am I wrong about?
I start each day with one goal … trying to be right at least 51 percent of the time. I don’t strive for 100 percent, but I sure don’t want to be more wrong than right. Now, Gary Leff and I are friends. I recall our first meeting when he sheepishly came out to an airport in Washington, D.C. in October 2001 to greet me when I was flying around helping to convince the traveling public it was safe to fly again after the tragedy of 9/11. He’s a wonderful person and a smart frequent flyer–and I don’t understand why people at times refer to him as “Mr. Fancy Pants”–he’s never come across to me as a GQ kind of guy.
As I became busy with my day, I forgot about the text message until hours later when a phone call reminded me I was wrong and Gary Leff said so. My interest was piqued–is “Mr. Fancy Pants” calling me out? (You can tell by my using his street moniker that I had decided I really had to find out what I was wrong about.) Was it because I thought that the Denver Broncos would win last year’s Super Bowl? Seriously Gary, that is so yesterday. Minutes later, I began the ‘blog scan’ part of my day (made easier with the new front page of BoardingArea) and there it is, on one of the most popular blogs for road warriors in the entire world–“Why American Has Its Frequent Flyer and IT Priorities Right (and Randy Petersen is Wrong)” Gee, Gary, couldn’t you have toned it down just a little? Maybe said, “I found Randy Petersen’s recent editorial to be of interest, here’s my take on the topic …” But NO, Gary declared I was wrong. Wrong in front of more than 50,000 people. So, okay, I take the obligatory chill pill (I eat a piece of chocolate) and read about how wrong I am. Apparently Gary loves to see huge public companies blunder their IT expenditures. Maybe he and Carl Icahn are shorting American’s stock? Who knows. In my editorial, in response to Doug Parker’s statement that a move to a revenue-based FFP on American Airlines’ part was “… not even on the plate right now …” I said, “Really? How could the topic not even be on the plate right now?” Since I am acutely aware of the sizeable investment a change to a revenue-based program would incur, I am inclined to believe that since three top airlines have announced plans for a revenue-based frequent flyer program, it would make sense to at least have a dialogue about this when designing the new systems required for the merger of American and US Airways. To neglect to do so would likely require an additional investment of, in my estimate, hundreds of millions of dollars.
But, if Gary and Carl have indeed shorted American’s stock, then such a waste of capital would be welcome. Really Gary, by suggesting American has to be looking at the possibility of a revenue-based program I am “enthusiastic” about revenue-based programs? I’d rather say I’m a realist. The history of loyalty programs is littered with incidents where the exception to the norm did not move market share or loyalty. An example: When American and United introduced three-year use-them-or-lose-them expiring miles in 1989, everyone expected a mass movement to Continental, because that airline did not enact expiring miles. But Continental did not gain substantial growth in membership or market share. The fact is, historically one-off efforts do not drive enough market share to make a difference.
Gary’s point that, “Changing the underlying value proposition of a profitable, multi-billion dollar business is a pretty big, bold step–that could work well or fail spectacularly” is well taken, but is not my point. Gary believes that it makes good sense to “wait and see what happens when other programs actually do it. Does it work for them? Do they lose business?” And to, “Focus on getting the merger right.” I’m not at all opposed to Gary’s thoughts, but I do think he’s being shortsighted in the long view on this one.
My point is, I believe that the technology required for American’s future should be a topic now, regardless of the future of the loyalty program. I implore Doug Parker to tell the truth, that they have indeed considered a revenue-based program. And while merging the two loyalty programs, their new systems should be flexible, so that if a day comes when they realize that their competitors’ loyalty program decisions were wise, they don’t then have to begin a three-year process of building a new system, spending hundreds of millions of dollars to do so. Gary’s kool-aid is the mantra “integrate before we innovate.” Gary, change the flavor, a revenue-based frequent flyer program is no longer an innovation. Gary is never wrong, but I will be proven to be right at least 51 percent of the time.