DCA-ROCguy From United States of America, joined Apr 2000, 4451 posts, RR: 35 Posted (12 years 7 months 3 weeks 3 days ago) and read 2231 times:
I just wrote a shorter version of this post on another thread, and felt that its own thread was in order. Many of us are interested in the fate of US Airways. It seems to me that solving "The US Airways Problem" includes figuring out how it came to be in the first place. What does everyone think of this theory?
As Monty Python's Anne Elk would say, "Aaaaa HEM! ecchuh, ecchu, ecchum...My theory is: "
The US Airways problem is the result of one simple historical principle: no one wanted the Northeast. Allegheny, Lake Central, Mohawk, US Air, and Piedmont were allowed to congeal over thirty years into US Airways because *other bigger airlines didn't want them.*
All of the medium and small size destinations in the Northeast were not wanted because of our weather and our short stage lengths, which tend to high CSM's. So medium-yield, short-haul service in the Northeast was not neatly gobbled up in little pieces by the majors. It was instead allowed over thirty years to congeal into one big high-cost, high-CSM regional blob: US Airways.
Remember that Continental's Newark hub is a historical accident. They got it by buying People Express which only came into existence as a low-fare carrier. Amazingly, higher-cost mainline CO has prospered with it. This is a result more of Gordon Bethune's managerial genius and the sheer strength of the NYC region market than any Big Six/ Six Families desire to offer good short-haul service in the Northeast other than Shuttles, etc.
Sure, UA and AA have been happy to fly from us to their high-yield ORD hub, and EA and now DL have been happy to feed us into ATL. But general, point-to-point service in the Northeast *was not wanted by the majors* before or after Deregulation.
US Airways is the unwanted stepchild of the mainline/oligopoly airline industry, and now they don't know what to do with it. An anticonsumer supermerger wasn't the answer because it was too much market mass to pass antitrust muster, and it didn't make financial sense for United.
How to solve it? I'm not sure. Breakup still seems to me the best option for the Northeast. Would it be best for US Airways shareholders? The jury's out, I think.
Aaron, if you're there I'm especially interested in what you think.
Jmc1975 From Israel, joined Sep 2000, 3234 posts, RR: 16
Reply 1, posted (12 years 7 months 3 weeks 2 days 23 hours ago) and read 2114 times:
I believe USAirways really has a chance of being a successful airline with a concentration if they do the following:
1. Turn over a significant number of their small- and medium-size markets, with especially short stage lengths to their Express operations.
2. Discontinue MetroJet altogether. There is too much cost in having another "brand" in the same company.
3. Limit mainline BWI service to the 3 hubs and select high-yield markets, preferably with long stage lengths (i.e. LAX, SFO, SEA). An Express operation based at BWI should be successful at feeding those few mainline flights as well as handle alot of the high-yield, short-haul O&D traffic at BWI.
4. Dump all DC9s, MD80s, and 737-200s ASAP! They should have ordered the A330-200, not the -300. There is too much size difference between the A330-300 and the 767-200, but you can't cry over spilled milk. Also, on the A330s, they should've offered two-classes of service (i.e. Continental and Delta), not three.
5. Enter into a code-share partnership with America West Airlines. They compete on very few markets and they both could generate a tremendous amount of revenue at minimal cost through such an agreement.
6. Increase stage length by adding such cities as Portland, San Jose, Ontario, Vancouver and restarting Mexico City, as well as build up Europe via Philadelphia (huge O&D potential).
USAirways has many great high-yield routes and if they simplify their operation, which in turn will drive down costs, they could do very well in the long-term.
D L X From United States of America, joined May 1999, 10898 posts, RR: 52
Reply 2, posted (12 years 7 months 3 weeks 2 days 13 hours ago) and read 2080 times:
Jim, you're right on with the past. The thing that separates US from the other airlines, seeing that they are *all* conglomerates of old smaller airlines, is that they adapted better to the changing world. As much criticism as US receives for buying PSA and dismantling it, you have to note that PSA is the only airline that got dismantled. Sure, the DAY hub has been consolidated, but for the most part, all the cities that were served in the past, are served today. Look at other airlines, notably CO and AA. AA bought AirCal and did a complete retreat, and looks to be doing the same for Reno, to a lesser extent. CO completely bailed on DEN. IN both cases, the moves made good business sense.
I still think that US can retain it's de fact ownership of the Northeast, and gain prominence elsewhere. What may be necessary is a change in the work rules, especially for pilots, and allow the company to run the airline right. That means perhaps making a low-fare spinoff that is designed to perform, and a regional airline that can adapt to the changes other airlines are putting up (like RJs).
As for JMC's reccommendations:
1) Small markets are already served by mostly Express. However, I still like seeing a mainline jet show up during the morning and evening banks. People prefer jets as they are more comfortable.
2)I don't know if discontinuing MJ is that great an idea. WHat is your reason for thinking the costs incurred by hosting it are high? DO you really think it will cost LESS to run mainline service on these legs? MJ serves an additional purpose that most people don't realize. The old gas guzzling planes are put on MJ. MJ has a longer average stage length than mainline flights. (for now.) That way, the old guzzlers are used at their greatest efficiency, much better than they could do in mainline. An interesting stat is that the 732 costs are below industry average now that MJ is around. I'll have to search around for the source of that.
3)That's pretty much what's going on now. The BWI service has been reduced to less than DCA offers. BWI is still important because DC is the home market for US Airways. It would be a shame to let another airline come in and take that from them.
4)DC9s and MD80s are being dumped very quickly. There used to be about 80 or 90 of these birds. Now, there are barely and 9s, and just a handful of mad dogs. as the 320s come in, the mad dogs go out. The 9s will be gone by the end of the year, iirc.
The 333 is the right sized plane. In fact, it may even be too small. US is making a KILLING off the 333. Don't forget, its cargo capacity is what makes it a winner. The 333 fills up with cargo going across the pond. Passengers adore the 333 experience as well, and are converting from other airlines to try the P@ssport IFE system. Also, the 3 class layout was important for getting into OneWorld, which appeared to be on its way. It's also a requirement for Star.
5)Code share with HP. Looks great on paper, but would you really choose HP over AA, or CO, or any other airline when US doesn't fly there? Unless HP gets its act together, this is a partnership that's not going to happen. Also, what cities does HP serve that US doesn't? Not too many.
6) You nailed it.
Jmc1975 From Israel, joined Sep 2000, 3234 posts, RR: 16
Reply 3, posted (12 years 7 months 3 weeks 2 days 11 hours ago) and read 2054 times:
Regarding the HP-US code-share idea, you were asking about what cities HP serves that US doesn't. I think there are actually quite a few that wouldn't be profitable if US were to set up shop, but would be through an HP partnership: TUS, BUR, LGB, OAK, RNO, GEG, BOI, ANC, ABQ, ELP, SJD, PVR and HP Express cities like FAT, SBA, PSP, BFL, MRY. America West has come along way in a year but still has much room for improvement.
I was also thinking that Salt Lake City would do alright as a USAirways field station, since Denver, Phoenix and Las Vegas are it's closest markets that are currently served. I believe it has sufficient O&D traffic to handle flights to all 3 hubs.
D L X From United States of America, joined May 1999, 10898 posts, RR: 52
Reply 4, posted (12 years 7 months 3 weeks 2 days 3 hours ago) and read 2016 times:
Okay. With the exception of SLC, OAK (both of which I think US should serve) and maybe Tuscon, all the HP cities you mention are second-tier. I guess there could be some good by cooperating with HP to get to these cities. But, the first-tier cities are all currently served by US.
I still don't like the idea of joining forces with HP though. US is trying to brand itself as a best-of-breed airline in terms of service. Aligning with what some call the worst of the majors will undermine this image. Unfortunately, raising HP to industry standards, or beyond may mean increasing the cost structure to the point that US buying HP isn't such a bad idea.
CactusA319 From United States of America, joined Jan 2000, 2918 posts, RR: 26
Reply 5, posted (12 years 7 months 3 weeks 1 day 12 hours ago) and read 1982 times:
I'm surprised this thread only has four replies. However the opinions on what US should do are very interesting. As for HP's somewhat tarnished service reputation and how it affects a carrier code-sharing with it, just look at CO. They have code-shared for years, including an agreement to handle ground each other's ground operations at certain airports, i.e. HP would handle CO on the west coast and CO would do the same on the east coast. Although the latter agreement has been slowly phased out, the Code sharing agreement was expanded. This has not affected CO negatively in any way as you know. They are one of the few airlines posting profits this year. I think it would be a good fit for both airlines. Granted the cities US would have access to may be "second tier" but HP serves most of the "First Tier" cities in the East, so this would just give both airlines a bigger network where they are currently lacking, as well as giving pax of both airlines more options. HP has been making strides to improve themselves and it seems to be working, at least so far.
But enough about HP, this post is about US. I agree with the statements above for the most part. They should do more transcons, as well as more international flying out of PHL. Keep MetroJet going and try to add more destinations to Latin America if possible.
Tan flyr From United States of America, joined Aug 2000, 1897 posts, RR: 0
Reply 6, posted (12 years 7 months 3 weeks 1 day 9 hours ago) and read 1958 times:
There are some great ideas in the few replies so far. I'm not sure I can add much as my travels to the east are generally to a point and from a point back to California. However, a few times I have used US to get around the NE and SE.
As I think about MJ, at times it makes sense to dump it, and others not. The example of stage length makes a lot of sense.
I think the answer to point to point in the NE is a new type of operation, and I am not even sure RJ's are the answer, as data looks to be showing a need to have 250 mile + segment average to make any money. This new operation would have to have far better labor contracts to ensure utilization at profitable levels. Perhaps some ATP's or ATR's could be employed in such an operation. But, the BIGGEST challenge is a total turnaround in employee morale. LEADERSHIP of the highest caliber is needed. Once everyone at US is pulling in the same direction Some very positive results will appear.
Tango-Bravo From United States of America, joined Jun 2001, 3784 posts, RR: 30
Reply 7, posted (12 years 7 months 3 weeks 1 day 6 hours ago) and read 1926 times:
US Airways has, in its past as USAir, expanded beyond the confines of the Northeastern U.S. by building up mini-hub operations at CMH, DAY, IND and MCI for East-West and Florida services. The acquisition of PSA in 1987 was for the purported purpose of expanding in the Western U.S., while the addition of Piedmont gave US a significant presence in the Mid-Atlantic and Southeastern U.S.
US has managed to squander each of these opportunities to become a truly national carrier - as its name change from Allegheny to USAir was intended to denote when it became official on Oct. 28, 1979. Aside from services to a handful of the largest airline markets in the Western two-thirds of the U.S. and the trans-Atlantic routes, the network covered today by USAirways mainline and USAirways Express differs very little from the combined pre-deregulation networks of Allegheny, Lake Central, Mohawk and Piedmont.
Can anyone comment on why US has chosen to make a hasty retreat to its PIT/PHL/BWI/CLT hubs every time it has ventured into expansion beyond its traditional Northeast/Mid-Atlantic "turf" where the bulk of its flights are concentrated? Or, why is it that two decades after de-regulation took effect and a name change to reflect aspirations of becoming a national carrier, the network of USAirways and its Express affiliates continues to closely resemble the regulated networks of the feeder/regional airlines that were absorbed to form USAir, and now USAirways?
ScottB From United States of America, joined Jul 2000, 6489 posts, RR: 33
Reply 8, posted (12 years 7 months 3 weeks 1 day 5 hours ago) and read 1921 times:
Actually, I'm not so certain that I agree with the premise that "no one" wanted the Northeast; rather, I think that historical circumstance, management strategy, and the failures (or near-failures) of several competitors led to US Airways' strength and concentration in the Northeast.
Look at the mergers which ultimately formed today's US Airways from several smaller carriers: Allegheny, with strength in Pittsburgh and the heart of its operations in Pennsylvania, merged with both Lake Central, based in Indianapolis and routes in the Midwest, and Mohawk, based in Utica and with routes in NY and New England. USAir in 1980 had the vast majority of its operations in the Northeast and Midwest. Piedmont, with its original base in Charlotte, purchased Syracuse-based Empire and opened hubs at Dayton and Baltimore, forming another airline with the bulk of its operations in the Northeast and Midwest, as well as the Southeast. The merger between USAir and Piedmont, in my opinion, was less about building an airline with a broad route network and more about subsuming a competitor which had been taking passengers away in USAir's core markets. And the PSA merger was poorly thought-out; there was simply no logical fit between the route networks.
How could USAir have been anything but a regional carrier with its greatest strengths in the Northeast? After all, with the exception of PSA, the carriers which formed it all had hubs (or the bulk of their operations) north of Charlotte and east of Indinanapolis.
USAirways' strength in the Northeast and East also resulted from weathering the turmoil and shakeouts in the industry from deregulation until the mid-1990's. Eastern was a large presence in Boston, New York, Atlanta, and Florida - and they failed. National had a significant presence on the East Coast and became part of the Pan Am debacle. Air Florida failed after its meteoric rise (and equally spectacular post-crash decline). Texas Air/Continental withdrew from the La Guardia market as part of its retrenchment. TWA's JFK hub went through a protracted decline. And many of the other major airlines (like United, American, and Delta) began focusing their attention on their strongest hubs, which also happen to enjoy better geography and demographics than US Airways' hubs.
Not to mention that there are very few airports in the Northeast which are even suitable as hubs from the standpoints of population, geography, and operational suitability. BOS is too far Northeast. LGA and DCA don't have enough capacity (and don't allow trans-cons, except the handful of recent perimeter exemptions at DCA). JFK isn't desirable to most New Yorkers (and is a disaster during the evening rush hour). BUF, SYR, ROC, BDL, and ALB don't serve large enough populations. IAD until recent years was undesirable due to its distance from the District.
That leaves just a few successful, and several failed hubs: EWR - which was rediscovered as a result of PeoplExpress and CO's takeover/buildup there. PHL - which US grabbed as a hub. PIT - a long-time US hub. BWI - a Piedmont, then neglected US hub. RDU - an abandoned AA hub. GSO - Continental's failed CALite hub. CLE - Continental's smallest hub. CMH - an extremely weak HP hub. CVG - Delta's Midwest hub. IND - a failed US hub. DAY - an abandoned PI/US hub. And, of course, CLT - also a US hub. It seems to me that the lack of suitable (and unoccupied!) hub airports in the Northeast led more directly to USAirways' dominance and dependence there.
Point-to-point service was scaled back by everyone (except Southwest) in favor of the efficiencies (and market dominance) afforded by the hub-and-spoke system. And with few suitable hubs in the Northeast which didn't belong to US (or its eventual takeover target PI), the market fell to them by default. Remember that USAir had some VERY profitable years.
US Airways has been dealt two major blows - both due directly or indirectly to low-fare carriers. Southwest and AirTran have begun to invade US's core markets on the East Coast - and US has found it hard to compete with its cost structure. Moreover, the other major network carriers have been building their presences on the historically high-yield East Coast - in large part due to declining yields elsewhere from low-fare competition.
I don't think that other airlines "didn't want" USAir. Rather, the merger of USAir, Piedmont, and PSA led to an airline which was itself a large carrier - and perhaps too large to be swallowed by another. And remember that some of the mergers seemed to be mostly about consolidating competitors at a hub - TWA and Ozark at STL, Northwest Orient and Republic at MSP, Continental and PeoplExpress' Frontier subsidiary at DEN.
The Northeast fortress strategy worked for many years - giving US Airways high yields in its core markets with little competition. Unfortunately, the fortress was also a cage, since their attempts to expand beyond its borders (PSA, the IND hub, the MCI hub) ultimately failed.
DCA-ROCguy From United States of America, joined Apr 2000, 4451 posts, RR: 35
Reply 9, posted (12 years 7 months 3 weeks 12 hours ago) and read 1896 times:
Scott: Look at the mergers which ultimately formed today's US Airways from several smaller carriers: Allegheny, with strength in Pittsburgh and the heart of its operations in Pennsylvania, merged with both Lake Central, based in Indianapolis and routes in the Midwest, and Mohawk, based in Utica and with routes in NY and New England. USAir in 1980 had the vast majority of its operations in the Northeast and Midwest. Piedmont, with its original base in Charlotte, purchased Syracuse-based Empire and opened hubs at Dayton and Baltimore, forming another airline with the bulk of its operations in the Northeast and Midwest, as well as the Southeast.
Jim: All of these airlines, in my view, could have been bought out by larger airlines, with better network distribution and better CSM's, had they wanted to. The Northeast is not easy money except on the DCA-LGA-BOS shuttle routes, and it seems to me the majors simply wanted to go after easier money elsehwere. Yes, USAir was profitable, but its costs were high and no one wanted the challenge of integrating them.
Mohawk would have been a good fit for Eastern or American, feeding LaGuardia. Allegheny would have been a good fit for United, feeding traffic north/south and westwards. Piedmont would have been a very good fit for American or United had they wanted to buy. In all cases, these carriers had the financial strength to outbid the USAir glom had they wanted to.
Scott: The merger between USAir and Piedmont, in my opinion, was less about building an airline with a broad route network and more about subsuming a competitor which had been taking passengers away in USAir's core markets. And the PSA merger was poorly thought-out; there was simply no logical fit between the route networks.
Jim: Absolutely. God forbid that two network airlines in the Northeast actually compete for regional mainline traffic at BUF, ROC, SYR, ALB, BDL, PVD etc, and offer consumers lower fares and high seat capacity. It's much easier to run a monopoly and slash service and hike fares, which is what the merged US Air did after the settlement agreement with the NY Attorney General ran out. Reagan should have put his foot down on the disastrous late '80s consolidation, but there it is.
Scott: How could USAir have been anything but a regional carrier with its greatest strengths in the Northeast? After all, with the exception of PSA, the carriers which formed it all had hubs (or the bulk of their operations) north of Charlotte and east of Indinanapolis.
Jim: Had the US Air pieces been bought by other carriers, they would have fed and been fed by larger and lower-cost nationwide route systems. Think of what Charlotte could have done for Dick Ferris' United in the 1980's, or how it could have save Crandall's AA the RDU debacle.
Scott: USAirways' strength in the Northeast and East also resulted from weathering the turmoil and shakeouts in the industry from deregulation until the mid-1990's. Eastern was a large presence in Boston, New York, Atlanta, and Florida - and they failed. National had a significant presence on the East Coast and became part of the Pan Am debacle. Air Florida failed after its meteoric rise (and equally spectacular post-crash decline). Texas Air/Continental withdrew from the La Guardia market as part of its retrenchment. TWA's JFK hub went through a protracted decline. And many of the other major airlines (like United, American, and Delta) began focusing their attention on their strongest hubs, which also happen to enjoy better geography and demographics than US Airways' hubs.
Jim: But none of these airlines ever offered *regional point to point service among medium and small-size cities in the Northeast, and from those cities to major markets.* Eastern shuttled high-fare business pax between megalopoleses, and fed people to Atlanta and Florida. Air Florida shuttled people to Florida. National never darkened a single tarmac in Upstate New York or western Pennsylvania or Ohio. National really existed to feed a cross-country network on the I-10 corridor and NY-FLorida. American dropped its Upstate NY-LGA service in 1981 to chase easier money at DFW.
And Continental only settled on Newark by historical accident. Had Don Burr managed People Express better and kept its product quality up, I'm convinced that it would be thriving today as a low-fare carrier flying A320's or 738's. And CO flies far fewer regional pax in the Northeast than People ever did. From Rochester, CO flies four measly ERJ's a day to EWR and four measly ATR's to CLE; People flew five Boeings on ROC-EWR, usually 2 731's and 3 732's. At one point in 1986 People flew EIGHT boeings on ROC-EWR. Do the seat capacity math for yourself.
Scott: Not to mention that there are very few airports in the Northeast which are even suitable as hubs from the standpoints of population, geography, and operational suitability.
Jim: Those suitable hub airports could easily be in the hands of strong national-network oligopoly carriers today had they wanted them. CLT could be AA, PIT could be UA, PHL could be NW, etc. The other airlines didn't want them and let them congeal into the USAir blob.
Hypermike From United States of America, joined Dec 1999, 1001 posts, RR: 5
Reply 11, posted (12 years 7 months 3 weeks 3 hours ago) and read 1847 times:
Folks, write this down. I'm going to disagree with my friend DLX.
I think a partnership with HP might actually work. But I think it will only work if US buys a controlling interest in HP. Keep in mind that US DOES have the cash to do it.
HP has some great strengths as a west coast carrier, something that US could exploit. HP also has a serious disadvantage, their maintenance and management nightmares. With semi-consistent fleets, those US mechanics who've been keeping the niners flying for so many years could prove an invaluable resource to the HP mechanics.
That brings me to yet another point. By entering into a "partnership" with HP, US could gather a west coast hub and maintenance facility for A320, B733, and B752 aircraft. I'm thinking the opportunity is GOLDEN.
Let's get off the 'we want to merge with UAL' bandwagon, dump the Wolf and Co. management team, and get back to running a great airline.
I need to admit that I have a slight bias toward US. I live in Pittsburgh, and I'd run out of both fingers and toes counting the number of people I know who 'work at the airport.'
D L X From United States of America, joined May 1999, 10898 posts, RR: 52
Reply 13, posted (12 years 7 months 3 weeks 2 hours ago) and read 1840 times:
Hypermike, you're wrong. You should know better than disagree with me.
Seriously, I don't think we really disagree on this. I'm talking about HP in its current state. Sure, if you change the way HP operates, and turn it into a world class airline, it could work quite well. But, doing so would very possibly make it unable to compete with its peers in the region because of the increase in cost.
I remember that HP was originally going to be a member of OneWorld when it was first announced. What happened? I suspect the level of service had something to do with it.
Lsjef From , joined Dec 1969, posts, RR:
Reply 14, posted (12 years 7 months 3 weeks 1 hour ago) and read 1833 times:
Having lived in the northeast only a year, many years ago, I know very little about the USAir history, but some thoughts arise that tie back to the original premise...
Why would a number of smaller airlines congeal into USAir by default, with larger airlines having failed to snatch them up?
1) simple geography...BigAir has thrived on building hubs where it takes more than a two-hour drive to fly on a more competitive airline. The Northeast is so densely populated that it is the least desirable portion of the USA to accomodate a fortress hub. E.g., today, more and more BOS passengers just drive to PVD or MHT
2)geriatrics (with no offense intended to all of us past age 20)...with age comes the complexities of, well, age. USAir, having patched so many work units together, must have serious arthritis...you know, the stiff, unyielding back, the chronic labor pains, etc. Kinda makes it alot less attractive for a big buyout today; spouse-pickers do tend to prefer youth over age. The only reason UAL tried to choose age today may be the affinity some airline execs have for gold-colored parachutes. How relevant is Wolf's UAL past in the present situation?
3)Evolution and Natural Selection...eons ago, rodent-sized mammals finally gained the upper hand on dinosaurs like the ferocious T. Rex. The same is happening now. USAir is the BigAir dinosaur with the runny nose, hardened eyes, and partially paralyzed hind-legs that is so easily attacked by the nimble SWA, JBU, etc. USAir will be the first to fall; the best the government can do is allow the "natural laws" to apply.
Travelin man From United States of America, joined Mar 2000, 3401 posts, RR: 0
Reply 15, posted (12 years 7 months 3 weeks ago) and read 1819 times:
I have to agree with DLX: It would be a BIG mistake to buy HP as they are. However, I think there are bigger issues with the potential transaction than service quality or maintenance issues:
HP can compete because they have a fairly low cost structure necessary to compete on the West Coast. People can overlook the crap service, delayed flights, etc if they can get from point A to point B and save a buck. If you input US's cost structure into the equation, what do you get? A high cost, poor quality airline that would be killed in the market. Any advantage would be thrown out the window, and we'd probably end up seeing "PSA, part deux". Do you think US's pilots would allow HP's pilots to continue working for their current pay scale? Or their flight attendants? Or ramp agents? etc. etc. etc.
US MUST keep its domestic network, and stop retreating from many of the markets it seems to be ceding to WN (especially at BWI). Airtran is now starting PIT-PHL service. WN is bringing up ORF on-line (and you better believe US is paying attention to this -- can CLT be far behind?). And if you think WN, JetBlue, AirTran, etc. are going to be staying out of US's "fortress" hubs for long, you better think again. Somehow US will have to compete, and even expand in the domestically. Routes to Europe and Latin America are nice to have, but without the domestic route structure, the airline will die.