American Airlines is Losing Important Customers

Overall, the number of passengers flying American Airlines fell 4% in September to 8.3 million, according to figures released by the airline Monday. Miles flown by paying passengers on domestic flights fell 7% to 5.7 billion miles compared to a year earlier, although an increase in miles flown on international flights limited the overall drop. The airline was also forced to cut domestic flights by almost 6% to deal with the delays and a shortage of pilots.

Several business travelers told CNNMoney that their firms are avoiding American flights and won't be returning any time soon.

"If someone has to be somewhere for a meeting, or has to be there in the morning, there's no way I can take a chance and book American," said Zalmi Duchman, CEO of TheFreshDiet.com, a daily meal delivery service. He said it'll take at least two or three months of normal service before he will have his executives return to using American again.

Jim Angleton, president of AEGIS FinServ Corp, a credit and debit card issuer, said his firm has found alternatives to deal with these service problems, including greater use of video conferencing, driving more and even private plane charters. Asked how long he thought it would take for his company to return to American Airlines, he responded, "We're not going back to that."

"Some of my people have gotten really burned by some of the nonsense going on," he said. "I can't afford to allow the problems with the airline to affect my business."

Airlines don't break down what portion of their revenues comes from business travel versus leisure travel, but the Business Travel Coalition, an industry trade group representing business fliers, estimates that business travel is responsible for between 55% and 60% of airline revenue, despite filling only a third of the seats. Airline experts say the loss in business customers is likely to get worse, and linger long after the airline puts its labor problems behind it.

"This started in mid-September, most folks had bought their tickets for travel the rest of the month," said Jeff Kaufman, analyst with Sterne Agee.

Kaufman and other experts agree that it's tough to win disgruntled customers back once they find alternatives to what had been their preferred carrier.

"In general terms, we're talking months rather than weeks (to win back lost customers)," said Philip Baggaley, Standard & Poor's senior credit analyst for airlines.

American has been hit by a high number of canceled flights and delays that pushed its on-time record below 50%. Management attributed these delays to frivolous maintenance complaints by pilots and an increase in pilots calling in sick. The Allied Pilots Union, which represents flight crews at the airline, denies that there's any coordinated effort to impede operations. However, it said the pilots are upset because the airline won bankruptcy court approval to throw out the pilots' existing labor deal. Pilots held informational pickets on Monday.

The airline also had a high profile problem last week when three flights had problems with passenger seats coming loose during flights, forcing it to ground 47 aircraft for inspections.

American Airlines spokesman Bruce Hicks insisted the service problems at the airline started to improve last week when the APA and management returned to the negotiating table. Hicks said the airline believes that as service returns to more normal levels, any customers who had left will return fairly quickly.

"We have an 82-year history of serving our customers, meeting their needs," he said. "We think the customers understand that American runs a great operation."

Numbers from FlightStats, a flight tracking service, show American was up to 64% on-time performance on Friday and 77% by late afternoon on Monday. But that was still below the industry average of 80.5% for all of September, a figure that was hurt by the problems at American.

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