Doug Parker, former CEO of American Airlines
On Tuesday, March 8, I had the honor to interview Doug Parker. Mr. Parker is the chairman and recently retired CEO of American Airlines. He has over 36 years of experience in the aviation industry working for American Airlines, US Airways, America West Airlines and Northwest Airlines. Previously, Mr. Parker served as CEO of America West from 2001-2005, and CEO of US Airways from 2005-2013. This interview has been edited for length and clarity.
Joshua Kupietzky: What is your background in the aviation industry?
Doug Parker: I started at American Airlines in 1986 straight out of school. I had an MBA and I wanted to go somewhere where finance was important, because my MBA was in finance. American Airlines was hiring at the time. They had a hub in Nashville so they interviewed on campus, and I was fortunate enough to get called to Dallas/Fort Worth for a second round of interviews. I really liked the people I talked to, so I took a job as a financial analyst at American in 1986. I spent almost five years there, and then Northwest Airlines in 1991 was under new leadership and was looking for new people to run finance. They recruited a number of us from American up to Northwest 1991, and I was one of those. I went to Northwest as Director of Financial Planning and became Vice President of Financial Planning and Vice President of Treasury by the time I left there in 1995. In 1995, I went to America West Airlines as Chief Financial Officer and became CEO of America West on September 1, 2001, right before 9/11. And then we merged US Airways and America West in 2005. I became CEO of US Airways in 2005 upon that merger. Then we merged US Airways with American in 2013, and I became CEO of American Airlines in 2013 upon that merger.
JK: As of now the federal mask mandate is still in place. Do you believe if it is not extended it will hurt leisure and business travel for American?
DP: It is not really for us to opine upon. We know it's a federal mandate and we will enforce whatever the U.S. government tells us the mandate is. Our flight attendants do a great job of enforcing it. It's hard on them to enforce it. But they do it incredibly well. And we're going to support whatever the requirement is. The administration will let us know if they want to extend it or not. If they do, we'll keep enforcing and if they don't, we'll proceed accordingly.
JK: How do you view the main changes that have come about in the aviation sector because of the pandemic? For example, a lot of flyers think about change fees. Many airlines, including American, have waived them. Do you think change fees are gone for good, and how would you adapt that part of your business if they were?
DP: They are certainly gone now. I don't expect they will come back, but who knows. It is a pricing decision that individual airlines will make on their own in the future. But I think this is a better and more logical, customer-friendly pricing structure—to not have change fees and have your absolute lowest fare be non-refundable and non-changeable; then to not charge change fees as you move up the pricing structure; I think it's a better structure. I suspect it'll stay in place. But we'll always respond to the competitive environment as it relates to pricing.
JK: Recently, Alaska and Royal Air Maroc joined the oneworld Alliance, and you’ve established new partnerships with JetBlue and Alaska. Can we expect to see more airlines join oneworld soon, or more partnerships emerge? Is there a broader strategy around these collaborations and agreements? For example, last time we spoke you mentioned a desire to welcome China Southern into oneworld, and I know at London Heathrow, China Southern recently moved its operations to Terminal 5. Is that any sign of something happening?
DP: First off, we think oneworld is the best alliance of the three. It has the most global coverage and includes not just great coverage, but also extremely high-quality airlines like American, British Airways, Japan Airlines, Qantas, Cathay, etcetera. We think it is a great brand and great coverage. We are always looking at where it makes sense to expand. China is one area where we do not yet have a partner. But as it relates to American, we have a codeshare relationship with China Southern, as do other oneworld carriers. So it is less important that they're actually a member of oneworld, as long as we have that coverage for our customers. I don't know whether that will happen over time or not; it's really up to China Southern and the other oneworld partners. But as for American, we have a nice partnership with China Southern and expect to keep that in place.
JK: Recently, American temporarily cut ties with Russian carriers Aeroflot and oneworld member S7 Airlines. How might this hurt American and how long do you foresee this termination of ties with these airlines lasting for?
DP: We’re not really concerned about how much it hurts American. We did it because of the war in Ukraine. It was an easy decision to make. It certainly has some economic impact on American, but we know it's the right thing to do. We've stopped Russian overflights before it was mandated by the Russians, and we even made sure that we didn't have Russian vodka on the airplanes—things like that—just because that's the right thing to do right now. I actually don't know the economic costs, but I don't particularly care. It's the right thing to do.
JK: American has had to cut international flights and destinations over the Boeing 787 delivery delays. Are there any plans to bring back retired/stored aircraft or to even charter planes to serve these cities? And do you feel you made the right choice choosing Boeing over Airbus for American’s long-haul fleet?
DP: The 787 is a great airplane that is flying around for American today. It’s hugely popular with our customers, flies a lot of missions for us, and fits into our global fleet really well. We are really happy with the 787, but obviously less happy with the fact that we haven't been able to get some 14 aircraft delivered that we thought we would have in place. But we care about safety, and the FAA has not yet certified those airplanes, so we won't have them available to fly. We are not planning on bringing back any other airplanes. We know that before too long anyway those aircraft will be certified, and we will wait until the FAA makes that conclusion.
JK: Last time we spoke I recall you were waiting on the A321XLR. Now that you have the aircraft, would you look at flying it across the Atlantic to compensate for the Boeing 787 delay?
DP: They are such different airplanes. I do not know if the A321XLR can replace a 787 flying. It may indeed make sense at some point to fly some thinner routes to Europe, but we have not announced anything in that regard—though the aircraft can do it. It could be something we do. But it is not a replacement for the 787; it's not big enough, and it cannot fly the same missions, but it may be something we could do in addition to the 787s. Then again, the 787s will be flying eventually and that's the right answer for us.
JK: When we last met [in 2017] we talked about the potential of American Airlines pursuing routes to Tel Aviv and now American is flying from New York JFK (daily) and Miami (3x weekly) to Tel Aviv. Though there has been a pandemic, I am curious if American Airlines has achieved the financial targets with the Tel Aviv routes from Miami and JFK?
DP: Financial targets are hard to hit right now, given the state of demand for air travel—particularly internationally—but we are happy with the route given the environment and hope to be serving it indefinitely.
JK: Will you look at adding from Chicago or Los Angeles to Tel Aviv?
DP: We want to have the routes that we are flying today to work. We always look to expand, and the best way to do that is to see the ones that we start do well, and then we can expand them. But there are no plans just yet for expansion, other than what we are flying.
JK: While international traffic is down dramatically, domestic travel is almost at, if not higher than, 2019 levels. How is American capitalizing on the domestic market and that pent-up travel demand passengers have?
DP: There is huge pent-up demand for international travel too—it's just that demand is suppressed given certain travel restrictions still in place. But we have seen the demand is there once those restrictions are lifted. Around the United States when there are no restrictions, the demand is just as strong as it has ever been for domestic leisure travel. I think our team's done a great job of growing back further and faster than anybody else. We were about 30% larger than any other U.S. carrier in 2021, which made a big difference in our ability to meet demand that was out there. And we have done things like deploy widebody aircraft that should be flying internationally but to fly them domestically on routes like Miami to Los Angeles, for example, where we were flying 787s for a time.
JK: Given the staff shortages and the difficulty of finding qualified staff, what is your strategy for recruiting people to work at American?
DP: We have no trouble getting people to come to American because it's such a great place to work. So we haven't been faced with that problem at all. Because we pay very well and it's a company where people do want to work, we haven't found any problems within our airline hiring. We have seen problems with some of our suppliers—such as truck drivers for fuel or catering trucks and other airport contractors and vendors. At American, we are adding tens of thousands of people a year: pilots, flight attendants, mechanics—every work group—and having a lot more applicants than we have openings.
JK: What are your thoughts on the potential of Southwest expanding to DFW in 2025? And do you think this will affect American’s operations?
DP: We have some 800 flights a day at Dallas/Fort Worth, so we compete against every airline, virtually, except Southwest. I don't suspect that it will have a major impact on American given how big we are at DFW, and we welcome the competition. Southwest is a great airline, and we compete with them everywhere, so we can certainly compete with them at Dallas/Fort Worth, which is our largest hub.
JK: Many people believe American’s mileage program is the most valuable part of American Airlines. Is there a concern that the recent changes will devalue the program since you have devalued miles? Does it run the risk that your mileage program is less valuable, making American less valuable?
DP: No, we actually think it makes it more valuable. From when the program was entirely based upon miles, there are indeed some customers who may view this as less valuable to them. But those customers tend to be those who were flying a lot but not spending as much to get those miles. We love customers like that, but the fact of the matter is those customers who are spending on the card and those customers who are spending on seats are even more valuable to airlines. So we think it's a more logical way to reward customers. Certainly those who fly a lot of miles will build up a lot of spend as well. But in terms of prioritizing who gets the most benefit we think it makes a lot more sense to do it based on spend rather than miles. And I think that is good for our customers as well as good for American.
JK: As I’ve followed your career, I’ve seen you tend to tackle challenges head on. What is your strategy around handling crises, and why do you think you have been so successful at it?
DP: Part of this industry, certainly over the last 20 years, has been getting through some crises. What we do is we look to the long term, and understand these crises are in almost all cases short-term, and that certainly was the case the past few years. I mean, this was a global pandemic that had a huge impact on demand. But there was nothing about it that would make you think there was something structurally wrong with the airlines or the airline business. We just needed to have enough time to get to where demand came back, and we have. So we just focused upon that and made sure that we did not panic, kept everybody's chins up, did our jobs well, took care of our customers, took care of our team, did all the things that made sense in good times, and stuck to our values, knowing that over the long term things like this will pass. What you do not do is throw out everything that does make sense, like your value system, and instead you ride through it. It means you have got to make sure that you're doing the things you can to get through it. But none of those things should be different than what you value as an organization in the better times.
JK: What do you consider your greatest achievement in the airline industry?
DP: I'm proud of a lot of things, and none of them are personal. They're all about the team, things that our team has done. I like the fact that so many people that I've worked with have stepped up and just done amazing things. I like the fact that the little airline America West, where we started, is now part of this amazing airline American Airlines. I am extremely proud of our safety record. Our team added up for me the number of passengers that have flown for the airlines that I've been CEO of since 2001. And it is like over 2 billion customers—like 2.3 billion, I think—and we have had zero fatalities due to accidents. 2.3 billion people. It's not me of course, but that's what our industry does. It's just an amazing safety record. And I'm just really proud of the professionals we have in the business who do that and make safety a priority. For 2.3 billion people to have gone up in the air and landed safely—there is no other form of transportation that comes even close to that. So I'm proud of all those things. But they all, like I said, tend to be not any personal accomplishments as much as just being really proud of what we have all done together.
JK: What are your goals for American Airlines, short- and long-term?
DP: I am not going to be here in the long term. I feel really good about where the company is at this point with the leadership team that we have moving forward. Robert Isom is fantastic, and the team he has built underneath him is equally fantastic. We have got the team focused on the right things: run a reliable operation and take care of customers. And so I feel really good about what we have been able to accomplish to get to this point. There is obviously still work to do. But I think you're going to see American do really great things going forward, because we have an amazing team who is doing great things already. It's just hard to see in this environment. But once demand comes back, I think everybody's going to see it. I'm looking forward to seeing it as well.
JK: What are your next plans for your career? Do you plan on writing a book?
DP: I don't know what I'm going to do honestly. I am still going to be chairman of the board of American for as long as they would like me to be chairman of the board. So I will be doing that. And really, for right now, I am going to go take some time, relax a little bit. I will get bored quickly, and so I will find other things to do—I am not worried about it at all. But I actually kind of like the uncertainty. I like not knowing exactly what I'm going to do. That is fun to me. And what is really fun is that now I just get to choose what I work on. I love my job, and I always have but it is just like any job—there are parts of it that are less fun than others. And you don't get to pick and choose what you work on. You have to work on the fun stuff and the less fun stuff. Now I can just go and choose what I work on. I am excited about that. I have a lot of things that I am interested in, but I get to pick where my passions are and go work on those things. So we will see.
JK: We have already touched on the COVID-19 crisis, but what has been American’s darkest hour during your career? And what gives you the most hope for the future of American?
DP: Okay, I do not like talking about the darkest hour. But look, we have been through a lot of crises no doubt about it. First and foremost, I mean 9/11 was a global tragedy and particularly tragic for airlines, particularly tragic for American Airlines. So that's absolutely the darkest hour the aviation industry has ever faced because of the lives that were lost and the lives that were lost by people at this airline. But as to the biggest economic impact, COVID-19 was much worse than the 911 events in terms of economics. It has lasted a lot longer than we thought it was going to and suppressed demand a lot longer than any other event has. You asked what I was proud of—of all the periods I've worked through, I was proud of the last two years as any other, and maybe more so, because we got through this by pulling together with our team and putting our team first. We get through this by demonstrating to the U.S. government the importance of our industry, and the importance of the Payroll Support Program to help keep the industry intact.. So left to our own devices, we would have had to furlough hundreds of thousands of people, which we did not want to do. We wanted to be here ready for the U.S. flying public when they were ready to fly again. And so we worked together with our team members and with our unions. Together we convinced people that was the right thing to do, because it was. But we had to do it by working together, and I love that. I love that we as an industry, not just as a group of airlines, but as a group of people, pulled together in support of each other and got things done that other industries did not, because we just pulled together with our team.
JK: We started this interview talking about your background in the aviation industry. What advice do you have for young people trying to start a career in the aviation industry?
DP: People like yourself who have a love for this and an affinity for it… You’ve got what it takes. I think it is a fascinating business. When we started this, I said something about how I wanted to go work where my finance MBA was important. But what I love about airlines is there are so many different functions that are critically important. Finance is indeed important because we are heavily capitalized. Marketing is incredibly important because we are a customer service business and a brand business. Operations—there is nothing more logistically complicated than airline operations. Maintenance is essentially a manufacturing function. So what I encourage people to do is just get into the business, get into the airline, and ideally get somewhere you can see a lot of it, at kind of a higher level. Jobs like financial planning allow that, jobs like corporate communications allow that (where you are working with all sorts of different groups), and then gravitate to the one that interests you most, because you can do anything here. All these groups are really interesting and they are all led by incredible people. That'd be my advice: just get in and the affection you already have for it will make a big difference. And, like I said, you will gravitate to the things that really appeal to you within it. You're off to a good start.
