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Siegel Turns Up Heat On DCA, PHL, PIT  
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4499 posts, RR: 33
Posted (11 years 2 months 4 weeks 1 day ago) and read 2438 times:

Dear Gang,

US Airways' David Siegel is rattling his saber about moving the carrier's headquarters out of Northern Virginia to PA, NC, or AL. I think this is probably a negotiating tactic to get the Metropolitan Washington Airports Authority to pay for the new regional-jet terminal he wants at DCA.

Also, I think it's another salvo in an increasingly aggressive campaign to reduce US Airways airport costs.

http://www.nj.com/newsflash/business/index

The Washington Business Journal had a piece about the DCA RJ terminal this week; US and MWAA talked in 1997 about a remote facility on the apron where US parks regional a/c now. Castelveter said that he "couldn't speculate" on what kind of terminal they want now. Another US official said that taking buses out to planes is an additional "hassle factor" in a market with lots of very short haul flights. Still, a remote facility still requires buses to get out there, right? I think US might have something else in mind.

I wonder if US isn't going to propose tearing down the hangar at the north end of the airport--where MWAA's offices are also located in the old Delta temporary terminal--and build a new perpendicular finger off of the current US Airways concourse into that area. Which would take a lot more money than US probably wants to spend...hence the threatened move, to turn up the heat on the region's jurisdictions.

Jim


Need a new airline paint scheme? Better call Saul! (Bass that is)
13 replies: All unread, jump to last
 
User currently offlineSTT757 From United States of America, joined Mar 2000, 16858 posts, RR: 51
Reply 1, posted (11 years 2 months 4 weeks 1 day ago) and read 2424 times:

"Remarks of David N. Siegel
President & Chief Executive Officer, US Airways
To the Greater Washington Initiative Annual Meeting
May 28, 2003

Thank you for the kind introduction, but more importantly, thank you for the invitation to speak with you here this morning.
I have been at US Airways just over a year now. 14 months to be exact. And, it’s been 14 months of experiences I could not have predicted. I knew the challenges of being a CEO. But I wasn’t fully prepared for all that was in store for me as we pursued our restructuring. I’ve learned to walk a tightrope without a net. I’ve gotten pretty good at bronco bull riding. I’ve honed my decision-making at 180 miles per hour in ways that would make Richard Petty proud. There were even a couple of days when I felt like I was shot out of a cannon.

The one thing I know for certain is that being an airline CEO in this day and age isn’t for the faint-hearted. At US Airways, it was made all the more challenging by the fact that we were forced to lead the industry in being the first major US carrier to restructure. At the beginning of 2002, many industry analysts were writing us off for dead. We had the weakest cash position and the highest costs, and many were predicting that we would be liquidating by year-end 2002.

Thanks to the hard work of many – including our very dedicated employees – those predictions were proven wrong. According to BankruptcyData.com, we completed the fastest-ever-successful Chapter 11 restructuring of a major U.S. corporation.

We are certainly not out of the woods, given the macroeconomic problems facing the industry. A stagnant economy. The lingering after-effect of war. Weak business travel demands coupled with over-capacity. The threat of terrorism. SARS. But today we are in a better position with a competitive cost structure, reduced debt, and a well regarded business plan to make us a vigorous competitor.

Now that we have completed the financial equivalent of the iron-man triathlon, I am looking forward to implementing our business plan. We have been building some very positive momentum over the past few weeks, having recently announced a big order for new, regional jets, and a marketing alliance with Lufthansa Airlines to complement our existing partnership with United Airlines. This coming weekend, the CEOs of the world’s premiere airline alliance, the Star Alliance – anchored by United and Lufthansa – are meeting here in Washington. We are very optimistic about their affirmative vote on our application to become a Star partner. We are finalizing a proposal for a new regional jet terminal at Reagan National Airport so that we can get you out of the wind, rain, snow and heat when you fly our great new regional jets. And I am also excited about becoming an even more active member of the greater Washington community. I am so committed to the success of US Airways that I moved my wife and 12 year old daughter here with the promise that we would stay here at least through high school. While we’ve been a little distracted getting settled, this is clearly a beautiful city with many opportunities and assets.

To be a success, however, we are going to need to rebuild a strong relationship with the Washington business community. I want to offer some constructive commentary so that we can grow and prosper together.

I will be the first to admit that US Airways shares responsibility for a situation I currently view as unacceptable. The last twelve months, of course, we have been completely consumed by our restructuring. And before that, our focus was on our unsuccessful merger with United. So for the past four years, we haven’t done all we could to maintain and build the relationship that is needed.

However, over the course of our history, we have been an active player in this community. We put our name on the old Capital Center and the Board of Trades International Trade Center. We have supported scores of organizations and causes with contributions and in-kind donations. We have invested tens of millions of dollars in the rebuilding of Washington Reagan National Airport. And we have been a partner of the travel and tourism industry that is so vital to our region’s economy.

So it is with all that in mind that I was absolutely dumbfounded that the most important voice of our region – The Washington Post – has taken such an indifferent attitude towards our company. Not once during our restructuring did the Post devote a single word on its editorial page about our airline. Absolutely nothing about how the prolonged closure of Reagan National Airport impacted us more than any other airline. Or that we had put together an impressive restructuring plan that was worthy of a federal loan guarantee. Or that our bankruptcy plan was well thought out. Or even after we had emerged from bankruptcy, some commentary saying, “Gee, we’re glad they made it.” I am not naive enough to expect the Post to be our cheerleaders. I am grateful to Bob Levey who dedicated a column applauding our wonderful employees, but in general, the Post has left me scratching my head more than once.

Now, we are embroiled in the congressional debate to expand service at National Airport. Of course, the way members of Congress view expansion at Reagan is to get more service for their constituents and communities. Over the past 12 years, Congress has allowed new nonstop service beyond the airport’s perimeter rule, opening up direct service to Phoenix, Denver, Las Vegas, Salt Lake, Los Angeles and Seattle. However, the law essentially precludes US Airways from effectively competing for these new route authorities.

As an airline with a long-standing commitment to Washington Reagan, we can’t allow ourselves to be shut out, nor should we be shut out. We have invested in slots, planes and airport facilities from which the airport and the region have benefited. Now we need the community to invest in us by making its voice heard in Congress, because in spite of our enormous investment in Reagan National, we continue to be negatively impacted by Congressional actions. Next week, both the House and Senate will consider legislation to provide carriers with little or no investment in the airport the right to add even more flights inside and outside the perimeter. US Airways stands to get nothing. For both your sake and ours, we should be able to use a few of our existing slots to provide service to cities such as San Francisco and Los Angeles, so that the hometown carrier can offer the same nonstop service Congress is giving our competitors. US Airways’ proposal is advantageous to you because we would add no additional flights or slots, create no additional noise, and use no equipment other than what we currently are using at DCA.

One of the most exciting things I have done in our restructuring is our regional jet order. You will be thrilled when you see our new 76-seat aircraft with six-and-a-half feet of headroom, full-sized storage bins, a first class cabin, and two-by-two seating in coach. That is, if you ever get to see them at National. In this same airport legislation, we are trying to change the definition of a commuter slot so that we can offer you these new generation aircraft – which are quieter, more fuel efficient, and certainly more comfortable than a turboprop. Currently, the law only allows those carriers which have been given slots for free over the past several years to fly regional jets of up to 71 seats, while we are limited to jets with 56 seats. Does that make sense to you? We need to have these valuable slots made useable for the new technology of the new jets. The community must speak up if we are ever going to be able to deliver on what we want to offer you.

The airline industry is a tough enough business on its own. We can’t be successful if we don’t have the support of our hometown partners. We all remember with great clarity the negative economic consequences of the Reagan National shutdown after September 11. That was a great example of how we worked together for a common goal, and we are certainly appreciative of your support. But fast-forward some eighteen months later and I am struggling to determine where US Airways fits in within the broader fabric of the greater Washington business community

Our new majority owner – the Retirement Systems of Alabama – would love to find an economic justification for moving our corporate headquarters to Montgomery. As of now, they understand the benefits of our staying here, but they clearly would like to see Alabama benefit from their investment in our company.

That has gotten the Charlotte business community’s attention, because they have long courted us to relocate to North Carolina, and they are engaged in an active effort to make sure that we know we are loved and wanted in Charlotte.

Most recently, the governor of Pennsylvania has suggested that we should relocate to that state as part of our negotiations to maintain our hub in Pittsburgh.

So after years of being the geeky kid at the school dance, things are looking up. We got the braces off our teeth and the acne has cleared up. We’ve got a new hair style, and wardrobe. We’re starting to look pretty good to people. I admit that I like the fact that people are actually vying for our attention. So far, I really don’t get that feeling from the Washington community, however. Maybe it’s because we have been so inwardly focused since I came to US Airways. But if we had died, rather than successfully restructured, would the community have even come to the funeral?

The reality is that every one of our major competitors has a hometown advantage. Atlanta works closely with Delta, and vice versa. Houston with Continental. Dallas-Fort Worth with American. Chicago with United. If we went to O’Hare to propose a project, I know darn well that nothing would get done without United’s approval. United opposes changes at Reagan National, in an effort to shield their hub at Washington Dulles from competition. Quite frankly, I don’t understand why United’s opinion should matter more than ours with regard to how we want to improve service at Reagan National Airport. You’ve built that Illinois company some great facilities at Dulles. They ought to pipe down and let us work with MWAA on how we can now further improve National. And the local community should tell them so.

We have had some constructive talks with MWAA, and I have every reason to believe they will work with us to bring our customers and the region better air service. Our local congressional delegation has done an outstanding job over the years, but it’s an uphill battle as they try to mitigate the efforts of their counterparts from all across the country who think that Reagan National is an open target. We simply can’t allow members of Congress to undermine our restructuring efforts and put our airline at a competitive disadvantage. Giving other airlines the right to fly long-haul service from National Airport and writing the law to exclude us is simply unacceptable. The only way we are going to be successful, improve our service to our customers, and pay back the $1 billion loan that is guaranteed by you, the taxpayers, is to give us the competitive tools we need. As business leaders of this community, I hope you agree and will help our congressional delegation. And the Washington Post – and for that matter, the Washington Times – should think so too.

Thanks for your indulgence in letting me get some things off my chest. We really do hope for great things for our airline, our employees and our community, and I look forward to working with you. "



Eastern Air lines flt # 701, EWR-MCO Boeing 757
User currently offlineWMUPilot From United States of America, joined Jan 2003, 1473 posts, RR: 12
Reply 2, posted (11 years 2 months 4 weeks 1 day ago) and read 2396 times:

He's complaining about the busses at DCA? The parking spots are almost close enough for the passengers to walk to the planes. C8 seems to do if quite well at MDW with the busses. Is he looking for some type of island terminal like AE had at DFW with busses making trips between the main terminal and the new regional terminal?


JetBlue - Bringing humanity back to air travel
User currently offline762er From United States of America, joined Feb 2001, 542 posts, RR: 1
Reply 3, posted (11 years 2 months 4 weeks 1 day ago) and read 2395 times:

This guy's good. Make no mistake about it. Who can argue what he put down. This airline's got a future with leadership like that. The sky's the limit.

User currently offlineJohnboy From United States of America, joined Aug 1999, 2579 posts, RR: 7
Reply 4, posted (11 years 2 months 4 weeks 21 hours ago) and read 2349 times:

Gosh, if I didn't know who was making the speech, I would have sworn that I had heard it last week on an episode of "The Sopranos....."  Big grin

User currently offlineDeltaMD11 From United States of America, joined Dec 2002, 1701 posts, RR: 35
Reply 5, posted (11 years 2 months 4 weeks 18 hours ago) and read 2317 times:

Yeah well, the State of Pennsylvania is also turning the heat up on Siegel. They say when US Airways current contracts run out at PHL, next time they are going to make US bid for their gates at PHL instead of alotting them to the airline. This is to increase the opportunities for other carriers to serve PHL, but moreover other carriers who want to initiate service out of PHL will finally have a chance to get a gate. US is being a gate whore right now (excuse my crudeness).....This news came from Harrisburg, not Philadelphia-so Gov. Rendell is cracking his whip. Which I think is good. This news comes from KYW News Radio 1060 on your radio dial (sorry....their slogan gets stuck on your head).

Bryan



Too often we ... enjoy the comfort of opinion without the discomfort of thought. - John Fitzgerald Kennedy
User currently offlineLuv2fly From United States of America, joined May 2003, 12090 posts, RR: 49
Reply 6, posted (11 years 2 months 4 weeks 15 hours ago) and read 2252 times:

Well I think the state of PA learned just how USAirways will in fact play when it come to negotiating and gates, and signing contracts.


You can cut the irony with a knife
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4499 posts, RR: 33
Reply 7, posted (11 years 2 months 4 weeks 14 hours ago) and read 2233 times:

Thanks STT for posting Siegel's full remarks! Some thoughts:

--The Post has not been silent. They cover US Airways extensively, especially on the business page, and have had many articles on each of the topics Siegel mentioned. There have been many editorial columns, not just Metro-section coverage by Bob Levey, about US. I read the Post more or less daily and admit I don't remember seeing an unsigned left-column staff editorial. Still, the Post has done anything but ignore US Airways.

--United's hub at Dulles and US's super-focus-city operation at DCA are different kinds of operations with different markets. I would be surprised if United opposed US improvements at DCA as strongly as Siegel says. I would be less surprised if bean counters at MWAA, already struggling to fund under-construction pre-9/11 IAD projects like the people mover, were the issue. Especially since there's a good chance that UA will close its IAD hub.

--The 1997 discussions, as I noted, were for an island terminal like AA's at DFW with buses (DL's at DFW has an underground moving walkway for access). But buses are part of the "hassle factor" for US's DCA short-haul, O & D pax traffic. I'll bet US really wants the hangar and MWAA offices torn down so that they can build a nice perpindicular finger from C concourse.

Jim



Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineScottb From United States of America, joined Jul 2000, 6745 posts, RR: 32
Reply 8, posted (11 years 2 months 4 weeks 7 hours ago) and read 2121 times:

It is certainly no wonder that US Airways would LOVE to be able to fly long-haul non-stops from DCA; the trans-con routes from WAS (with the sole exceptions of OAK and LGB due to B6) are all among the highest-yielding trans-con routes in the U.S. United's *average* WAS-SFO fare in 2Q2002 was $537 each way, even with B6 flying IAD-OAK. Clearly, US Airways could get some very, very impressive yields with a monopoly on non-stop flgihts from DCA to the West Coast; as it stands, they're not much of a competitor given that none of their hubs have good geography for connections to the West.

The carping about "hometown advantages" for other airlines is terribly disingenuous. Philadelphia has built two attractive new facilities for US Airways in the past five years; Charlotte has done the same AND probably supports US Airways as much as Houston, Fort Worth, Chicago, and Atlanta support their hometown carriers. And even Pittsburgh has in general been very supportive of US, at least until the airline decided to poison the well by rejecting its leases. That expensive new terminal was built primarily for US Airways, after all. And, moreover, Houston, Dallas, Chicago, AND Atlanta have all been very supportive of the low-fare carriers present in their airport systems -- Houston just built a spanking-new 24-gate concourse for WN at HOU, Chicago Midway's beautiful new facilities are nearing completion, and Atlanta is planning a new terminal for AirTran.

Dave Siegel asks for a stronger relationship with the Washington business community, laying out two reasons why US Airways has fallen down on its end -- distraction with the UAL merger and distraction with the carrier's restructuring. And yet, he says nothing about an important reason for the airline's poor relationship with the community -- the fact that fares at DCA are among the highest in the country. (But hey, at least they're lower than at IAD!) Perhaps that explains some of the community's perceived indifference to US Airways' fate; after all, even if US Airways were to have liquidated, someone else would have taken over their gates and slots at DCA, and the gouging would likely remain at similar levels. And while the loss of US Airways' headquarters facility would represent on the order of 1,000 jobs, that's a relatively small number against the total employment of the metro area.

If I were the MWAA, I'd be a little bit leery about "working with" US Airways given what they consider to be "working with" Allegheny County and the Commonwealth of Pennsylvania. And I can also imagine that MWAA would not want United to abandon its hub, given that they are (along with ACA) the largest tenant at IAD (thus, the primary revenue source). While jetBlue, AirTran, or even Southwest might take advantage of that sort of opportunity at IAD, MWAA also has stated that they want to direct growth away from DCA. Given Pittsburgh's recent experience with US, along with UAL's attempts to reject its obligations with respect to special facilities bonds at DEN, SFO, etc., I'd be very surprised if MWAA were willing to front the money to build a regional jet concourse for US Airways at DCA.


User currently offlineSrbmod From , joined Dec 1969, posts, RR:
Reply 9, posted (11 years 2 months 4 weeks 6 hours ago) and read 2110 times:

With the new majority ownership being based in Alabama, it would not be a surprise to see the HQ move to somewhere like Birmingham or Montgomery. But if they do move from Crystal City, I would think that Charlotte would be the likely destination.

User currently offlineDeltaMD11 From United States of America, joined Dec 2002, 1701 posts, RR: 35
Reply 10, posted (11 years 2 months 4 weeks 6 hours ago) and read 2094 times:

Actualy Governor Rendell is turning up the heat on US Airways. The basic context of his statements were that it US Airways wants to have two large hubs in the two largest cities in Pennsylvania, then their Head Quarters should be here as well. If not...then we'll see some major changes in attitude towards US. Of course that is paraphrasing what he said....but that's the gist of it. And I agree with him. I think We'll see US Airways HQ be moved to either PIT or PHL.


Too often we ... enjoy the comfort of opinion without the discomfort of thought. - John Fitzgerald Kennedy
User currently offlineDCA-ROCguy From United States of America, joined Apr 2000, 4499 posts, RR: 33
Reply 11, posted (11 years 2 months 4 weeks 5 hours ago) and read 2051 times:

And yet, he says nothing about an important reason for the airline's poor relationship with the community -- the fact that fares at DCA are among the highest in the country. (But hey, at least they're lower than at IAD!)Perhaps that explains some of the community's perceived indifference to US Airways' fate; after all, even if US Airways were to have liquidated, someone else would have taken over their gates and slots at DCA, and the gouging would likely remain at similar levels. .

I'm not sure that DCA gouging could continue as well if US were liquidated. AirTran would pitch hard for a bunch of slots, a lot more than to just run 6 or 7 dailies to ATL. They'd want to run a bunch to Florida, and maybe connect some dots in their system. JetBlue would also likely try to get in; Neeleman has made noises in the past about wanting into DCA.

It's not difficult to imagine JetBlue trying to start a DCA-LGA shuttle, the way Southwest runs LAX-OAK shuttles in the West. Can you imagine what kind of volume a B6 shuttle would generate, even at fares slightly higher than B6's norm? Delta would probably have to turn its shuttle into a Song-type operation with 738's, to stay tenable (Maybe call it "Dance" airlines?  Smile )

Delta or CO would also probably get a bunch of slots by promising to run RJ's to lots of US's DCA 'legacy routes' to medium-size places like ROC, BUF, ALB and GSO. That's where the gouging would continue.

If I were the MWAA, I'd be a little bit leery about "working with" US Airways given what they consider to be "working with" Allegheny County and the Commonwealth of Pennsylvania. And I can also imagine that MWAA would not want United to abandon its hub, given that they are (along with ACA) the largest tenant at IAD (thus, the primary revenue source).

That's a really good point too. US is no longer in bankruptcy and couldn't pull a maneuver like that anymore; presumably, they'd have to stick with whatever they negotiate unless they go BK again...which isn't impossible. Nevertheless the damage has been done; US will probably have trouble negotiating with airports for a long time.

But even if MWAA told US, we're not building you a terminal, and US pulled out, someone else would probably have to promise to run many of those RJ-density routes to get slots...and they'd probably want an RJ terminal too. Maybe US is betting on that possibility.

I still think the UA IAD hub is history, sooner or later. UA will keep a bunch of 767 or 777 transoceanic flights, and whatever O & D service the market will still support. The hub is not competitive with US, CO, and DL hubs in the East, and there's too much network-carrier capacity flying these days anyway.

Jim






Need a new airline paint scheme? Better call Saul! (Bass that is)
User currently offlineUS AIRWAYS From United States of America, joined May 1999, 432 posts, RR: 4
Reply 12, posted (11 years 2 months 4 weeks 5 hours ago) and read 2030 times:

Let's hope its PHL Bryan! If they did, after college they would be the first company I would apply to. I think its still kind of sketchy though. Something tells me that they'll still stay down in Arlington.

Jonathan



Go Eagles!
User currently offlineScottb From United States of America, joined Jul 2000, 6745 posts, RR: 32
Reply 13, posted (11 years 2 months 4 weeks 4 hours ago) and read 2004 times:

Actually, I don't think it would matter if AirTran or jetBlue or Spirit or whoever were to lobby for US Airways' slots in the event of a liquidation. Since they have real slots, not exemptions, I believe the slots are saleable and transferable, UNLIKE the beyond-perimeter slot exemptions. Consequently, those slots would either be auctioned off as part of the bankruptcy estate or transferred to the creditors who were offered the slots as collateral. While AirTran could bid for the slots at auction, I don't expect that they would go cheaply.

AirTran already has free slot exemptions that were granted for flights to select Florida cities. I'm pretty sure they're not interested in using them unless and until they get slots for flights to ATL. I don't know if I can see jetBlue offering LGA-DCA Shuttle service -- they currently serve neither airport, and seat-back TV's aren't a real draw on a 1-hour flight used mostly by businessmen/women. And short-hop flights to and from congested airports don't do much for their utilization. LAX has a heck of a lot more capacity than either DCA or LGA.

The UA hub at IAD isn't much more than the profitable flights to the West Coast, DEN, ORD, Florida, BOS, and international. Virtually everything else is ACA. I think the big question is whether United and ACA stay hooked up; if not, I think IAD drops down to a focus city of at most 50 or so daily flights (basically the hubs, trans-cons, international, and *maybe* BOS). Interestingly, the elimination of the IAD hub would also remove one of the barriers to a hypothetical UA-US merger redux -- which would also mean that US ditch PIT. But I digress.


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