Vasu Raja, the Chief Commercial Officer at American Airlines, is out. But I’m not ready to celebrate his departure just yet…
Vasu Raja Out At American Airlines, But Will His Replacement Be Even Worse When It Comes To AAdvantage?
Raja has been a leading figure at American Airlines for two decades and was the driver behind much of AA’s network and loyalty strategies. His departure creates a power vacuum at American and will make AA confront it trajectory in a way that is long-overdue.
I do approach this as an infrequent flyer on American Airlines, but a frequent user of AAdvantage for myself and for my clients at Award Expert.
It’s true that some fares on AA, like many transatlantic flights this summer, are absurdly priced compared to historic levels. But what does that even mean these days? Those flights are still about what you’d pay on a similar United Airlines route using MileagePlus or Delta Air Lines route using SkyMiles.
But the sweet spots are great. I just flew from New York to Tokyo in first class on the JAL A350-1000 then connected to Seoul on the 787-9 in business class, all for 80,000 AA miles…simply amazing. Rates for travel between the USA and Europe, from Europe to the Middle East and East Asia, and between the USA and East Asia remain very competitive and while the space might not be flowing like milk and honey in the Promised Land, it is very possible to secure this space with a bit of patience and flexibility.
And there’s even some advantage to the dynamic pricing of AA flights. Yesterday, I booked a walk-up ticket from San Francisco to New York JFK in three-cabin first class on an A321T for 46,500 miles.
And Raja chose not to gut that. On the contrary, in January he said:
We’re going to make it more rewarding to become our customer. Miles will go farther. We are able to go do things where people are able to get upgrades on other partners, redemption at a level that they’ve never seen before which will make it more attractive.
And while that may be reflected negatively in the ability to book far more Alaska Airlines flights (at a far higher price) than in the past, I do think he realized that some of the more lucrative longhaul redemptions were a key element in keeping discretionary passengers loyal.
The old adage that the enemy you know is better than the enemy you don’t know rings true. God forbid we get some clown like ex-Comcast chief Richard Nunn, the CEO of MileagePlus at United, who comes in and destroys the value of the program.
Compared to MileagePlus and SkyMiles, AAdvantage is the best loyalty program right now of the Big-3. I want it to stay that way but I am not confident it will under new leadership that may quickly decide that redemption rates are long overdue for a massive devaluation.
American Airlines has a profitable loyalty program and loses money flying. AAdvantage is truly the goose that lays the golden eggs. I am of the opinion that Delta and more recently United get it so wrong when it comes to building long-term loyalty and I have never been freer when it comes to choosing a carrier (even if I do still prefer to fly United).
So now things will get better or worse at American Airlines….and we’ll be missing Raja if things get even worse on the loyalty side.
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Finally, I’m not going to speculate why Raja left. The news from CEO Robert Isom this morning that AA will no longer discriminate between booking channels in terms of awarding Loyalty Points or AAdvantage miles suggests a correction, but is not necessarily indicative of why Raja will step down.
Maybe it is his health. Perhaps an HR problem. It could be that he got an offer he could not refuse from another carrier. So rather than speculate that he was fired for his poor stewardship of corporate bookings (with the JetBlue – British Airways axis the final straw), let’s just say that he left AA until we know more.
CONCLUSION
American Airlines is at a crossroads. Raja is out and it can either double down on its existing loyalty model or make thoughtful changes that could make AAdvtanage even more valuable to those passengers on the margin who can drive discretionary spending to AA…but only if they deem it worthwhile. American Airlines must realize that consumers do have a choice and are (generally) not stupid.
image: American Airlines
Memo to Matthew : First Class on JAL is not the same as a flight in AA … not by a long shot . They ought not be mentioned together , as AA is more bush league .
But I never said they were the same!
@Matthew … Yes , you are correct .
Thank you for pointing this out, I agree on the value of AAdvantage.
My hope is the fact that Citi/AA have avoided instant point transfer that the underlying currency has remained more sound, and AA can continue to provide better value to those loyal to its direct ecosystem.
They have something distinctive that keeps me engaged in high margin activities.
You might not rejoicing, but let me tell you that the travel agent community around the globe is! This mental-midget not only didn’t understand what he was doing for the customer, but he brought a living hell to travel agents, corporate travel managers and the like. Not everyone flying are leisure, vacation travelers. As a matter of fact these travelers which over the years has seemingly crawled from under a rock that now crowd flights with their lack of respect and decorum and they simply don’t care.
Airlines such as AA, UA, DL, and even WN, not to mention every major airline around the globe have for decades courted corporate accounts, large and small for their loyalty and profitability. Not the clueless leisure traveler that is only interested in the cheapest fare.
I can assure you that AA will be recalling all of the sales teams they dismissed and put back into the field ASAP! They are suffering big time from the loss of these travelers and doing everything in their power to get them back. Their stock price demands it. This bean counter now finds himself unemployed and will NOT be considered by any airline going forward with perhaps the likes of Spirit, Frontier. I’ve been in travel for over 35 years and have never botherred to remember their two letter codes!
Good riddence!
Agree 100%. As a part of the travel agent community since 1998, AA’s actions beginning July of 2023 have been absolutely devastating and infuriating. AA…leading the race to the bottom!
I hope this turns out to be a positive.
I have been doing more flying on AA recently, and so far it has been a change for the better. They do a good number of E175 flights from my home base, and if I end up in the main cabin extra section, it’s nicer than being on a competitor’s 3-3 narrowbody jet (e.g. a 737).
The lounge and gate situation from my home base is also advantageous.
I’m sure I’ll get burned by them at some point and start looking at competitors, but for now, I’m looking much more at AA and oneworld routes than others.
He was definitely booted but as many incompetents like him in Corporate America he has guaranteed a juicy severance package, perks, stocks, etc… so he is set for life to enjoy a nice retirement.
He actually was the only on the exec team without a pre-set severance package other than lifetime space available flight benefits. Not to say they couldn’t have negotiated one, but he did not have one guaranteed before this action like the rest of the exec team.
Execs at his level get positive space First/Business, lower level execs get positive space coach.
I’m more interested in the story about the 8 blacks being removed from an AA flight because of smell.
Gonna be hard for anyone to justify this one from the initial reports. Two sides, I know, but this doesn’t sound good for AA.
Going to have to wait till tomorrow though I’m sure Gary will have something up soon. I’m done writing for today.
The preponderance of evidence is he was fired. Otherwise,there would have been a transition period for him to mentor the chosen one.
Well said. It wasn’t all great, but there are some things Raja did that were undoubtedly customer-friendly – maintaining much of AAdvantage’s value chief among them. I’m no expert on AA leadership, but I don’t see why we’d believe that Isom of all people will continue to preserve that value
Unless you are purchasing full fare tickets in the premium cabins you are not a profitable customer. Isom needs to deliver profits for the shareholders. That will be amplified with regional expansion. They are not in the business of providing you a free 80,000 mile flight for blogsmanship.
I’m betting that he got an offer to run another carrier, likely overseas. He comes with some impressive experience and a lot of contacts, I can’t imagine he was not attractive to airlines in the ME, India, etc.
As to Matthew, he also gutted the program in making everyone who never flies, including Mabel in Iowa, an Exec Plat. Which is why I left AA in 2021. Sure, some random partner redemptions are decent, but at the cost of a limited network that is primarily domestic and a mess and terrible service (not that anyone in the U.S. is much better). And he normal redemptions that we go after often are just as dismal as the rest.
Fortune magazine is reporting that he was indeed fired. Raja is a classic example of an empty suit with more confidence than competence. AA now has to clean up the mess from its inability (or refusal) to see this for far too long.
Wow…a lot of keyboard warriors. If you know what you’re doing, throw your hat in the ring and become American’s next CCO.
You can agree or disagree on the strategy, but the desire to degrade someone’s life and career because you don’t like a business strategy is a problem. It just is.