AA's reply is an example of corporate sophistry and a total attempt to bamboozle you with irrelevant detail in order to avoid the fundamentals of your complaint. It is very interesting that in your letter you raise 5 key issues.
1. Incompetent handling by AA staff of your initial check in process
2. Failure to allow you onto the flight you had booked
3. Overbooking of flights
4. Failure to handle you and your family's needs during the excessive wait
5. The outrageous conduct of the AA Supervisor at the airport
According to your timeline, you arrived at the airport at 6.30, were directed to the kiosk and began the check in process at 6:45. It then took AA 30 minutes to process you from 6:45 to 7:15. That is unacceptable service. The reasons it took this long is because of the incompetence of their own staff... firstly by incorrectly directing you to the kiosk and then by taking excessive time time to check you in at the counter. This is not addressed in their reply. The reason this is not addressed is because they know that all the consequences which followed are the result of this. They think by responding with a load of waffle, you may miss the fact that they have not addressed the fundamental issue.
They choose instead to address the issue of why they cannot board you after the official cut off time. One of the most objectable things that US airlines have started to do since 911 is to exploit this grotesque tragedy as an excuse for providing poor service and as a revenue opportunity. It leaves me speechless that airlines and their employees are willing to use the murder of thousands of people as an excuse for their incompetence. The simple truth is this: if they had processed you correctly at the time, this issue would never have arisen. In truth, it was highly beneficial to the airline to deny you boarding by declaring you late.. as this way they did not have to pay you the DOT mandated compensation. To use the death of thousands of people as a means of saving the airline money is OUTRAGEOUS.
The explanation of why they overbook is equally bogus. The majority of passengers on AA flights book non-refundable tickets. How is a no show in these circumstances a loss of revenue to AA? On the contrary, it is double dipping by the airline. Furthermore, they go on to imply that it takes between 2 and 3 times as many reservations to generate a booking. This is utterly dishonest and bordering on lying. The airline does not have to have 450 bookings to generate 200 actual paid passengers in seats. That statistic is only possible if they include the people who put a "hold" on seats for 24 hours and allow it to lapse. There was a slight justification for overbooking in the days when tickets were fully transferrable, but that is not true today and the vast majority of tickets are non-refundable if you "no-show".
AA failed to offer you any amenities or compensation for your long wait, as they choose to record your "missed flight" as being late. You should challenge this. Ask AA for a copy of the data they hold on your electronically relating to the time you attempted to check in at the kiosk. I believe you have a right to request this information in the US. You should then use this to prove that you did in fact begin the check in process in a timely manner and they you were in effect, denied boarding. You should then complain to the DOT (there is a link under the quick links on this page). You were entitled to substantial compensation when denied boarding, and the airline cannot simply stall processing you to make you "late" in order to avoid compensation.
The conduct of the supervisor is sadly all too common these days in US based airlines. They operate complex monopolies which are actually by law protected from the normal consumer law and enforcement by the states. They are also protected from foreign competition and anti-trust legislation. Until this changes, or the public demand change, they will continue to abuse their power over the public and exploit them.
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