AMR, parent company of American Airlines, has decided to repaint of its planes, which have been mostly silver for decades. For some reason, management believes that the new color scheme is a symbol of the carrier’s resurrection as it prepares to exit Chapter 11. In reality, the new paint will not cover up American’s many long-term problems. New branding only works when there is really a new brand.
AMR describes the new design of its planes this way:
No matter where we are, have been or plan to go, the sky will always be a part of our journey. As we unveil our new look, you’ll see that our logo and the refreshed look and feel of our planes is light, vibrant and modern, reflecting the travel experience we aim to bring you
The American travel experience will include tiny coach seats, surly pilots and on-board crews who believe they were robbed of benefits by Chapter 11, paid baggage fees, high fares to cities where American is the dominant carrier, and meals that customers have to pay for, if meals are available at all.
American cannot fool that public by claiming it can create a flying experience that is different from any other airline. They all operate on super thin margins that can be erased by high fuel prices, debt service, the need to buy new aircraft and competition from online ticket businesses such as Expedia Inc. (NASDAQ: EXPE) and William Shatner’s Priceline.com Inc. (NASDAQ: PCLN).
Branding is only as strong as the brands underlying the business. This is why Apple Inc. (NASDAQ: AAPL), Google Inc. (NASDAQ: GOOG), Coca-Cola Co. (NYSE: KO) and Marlboro do so well in brand strength measures year in and year out. People use the products and services from these companies because they are superior, or at least consumers believe that they are. Airlines never show up in these brand measures, because the airline industry by its nature has poor customer service as it tries to handle tens of millions of customers a year, many of whom barely pay fares on which the carriers can make money.
The best thing that could happen to American is that U.S. Airways Group Inc. (NYSE: LCC) or some other rival buys it out. That would save it from the humiliation, which is that a new paint job does not change an awful image.
Douglas A. McIntyre