SunValley
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US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 8:18 am

There is an interesting article abou US Airways.

http://www.thestreet.com/markets/ericgillin/10142174_2.html

If US Airways were to begin methodically changing their operation and reinvent themselves, how do you think they could pull it off?

My feeling is that rather than being reactive, to LCC's they should become a proactive airline , and enter a market that exhibits extremely high airfares, that is underserved, and start a fresh operation. Begin weaning themselves from dependence on high cost hub operations, and begin a policy of
non traditional service as is exhibited by B6, WN, & HP.
Additonally I don't believe they should start a so called LCC within their airline.
Stay as US Airways, but instead of reacting to a LCC entering their turf, enter
a turf with action in place to discourage another LCC from entering theib back yard, and etner that market with reasonable fares, gaining customer loyalty for doing that. (kinda like B6 did at JFK) What do others think about US Airways re-inventing themselves....?
 
ssides
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 8:26 am

enter a market that exhibits extremely high airfares, that is underserved

What markets do you have in mind? When I think of underserved markets, I think of markets that have either (1) high airfares because their "underserved" status means a low supply of flights, or (2) low yields because demand is not significant.

In case (1), market entry would produce lower airfares (and yields) due to an increase in supply. Case (2) might be slightly more viable in the sense that USAirways could try to build more customer loyalty, but it would be very difficult for them to generate revenues in such a market.

I don't think USAirways will be able to "reinvent" themselves. My prediction is that they will liquidate by the end of 2004, with AA taking over shuttle operations and JetBlue possibly picking up some of their Airbus aircraft on the cheap. No one really knows, but I think that it's time for a legacy carrier to fold. The market's simply not there.
"Lose" is not spelled with two o's!!!!
 
SunValley
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 8:33 am

Sside, you probably sais the same about HP
 
NIKV69
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 9:46 am

I don't think they can survive, they have alot of debt and JetBlue and WN is just killing them. I hate to see airlines fail but looks like the end is near.
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
cloud4000
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 9:59 am

The problem with US is their concentration east of the Mississippi. Not only is where most of the population is located, but it also it is the most competitive business wise, especially with LCCs like Air Tran, JetBlue, Southwest, etc.
I only see three options for US:

1) Become a LCC. Not another airline with airline, but completely transform themselves into a LCC. This will mean standardizing aircraft, rationalizing the route structure, maybe get rid one or two of their hubs. Perhaps sell of their international routes.

2) Merge with another carrier. Consolidation is ripe for this industry. A US Air/HP or US Air/NW combination. Something that will expand its presence beyond the easter portion of the United States.

3) Liquidation.



Boston, USA
 
jeffrey1970
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 10:18 am

SunValley,

I agree with what you are saying however I am not sure I would have thrown HP in with that group since they are a hub and spoke airline.

God bless through Jesus,

Jeff
God bless through Jesus, Jeff
 
dsuairptman
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 10:26 am

One thing that will half to happen, and rather quickly is US cut throat unions giving into concessions (which is a pipe dream) giving serious cuts. The fly two many planes for the current system, and would have to expand to meet their seat capactiy, but the arrogant pilots don't want expansion, just no pay cuts, and less flying. BTW the pilots also wanted to keep all those mainline jets, but weren't enthused to fly them more. So you can see that US mgt will have to stop bowing to the pilots union (and probaly the others) before any sort of turn around could occur.

(Maybe Mesa or AC need to get the check book ready for former US planes)
GEAUX SAINTS!
 
ssides
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 10:31 am

SunValley --

I admit that I didn't think America West would be as successful as it has been, but that is simply comparing apples and oranges. HP and US serve very different regions of the country -- the primary difference is that HP's main markets (PHX, LAS) are growing rapidly, while many key US markets (primarily in the Northeast -- PIT, PHL, etc.) are shrinking. In addition, in its turnaround, HP followed advice that is just the opposite of what you are suggesting -- they pretty much became an LCC. I don't see USAirways doing this, nor do I see them making it.
"Lose" is not spelled with two o's!!!!
 
PVD757
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RE: US Airways, Could They Re-invent Themselves

Sat Feb 07, 2004 11:22 pm

The major problem with US becoming a LCC is the fact that they operate primairly east of the Mississippi. From DCA north, these are the most expensive airports to operate out of if you include the weather element. The revenue side of things is being diluted by the LCC invasion. I don't know how they could reinvent themselves and still be the airline that they currently see themselves. The only thing they could become is a regional player who feeds others. They have a great presence in the markets they operate in. The only problem is the distance flown and the type of aircraft they operate on those routes. If their flights are not full, the plane is being wasted in that market. The reason why HP and WN are successful when they go into these markets is that there are enough other markets that they operate in that are not as expensive. I think jetBlue gets by right now with innovation and the fact of they're still young. They have less labor costs associated with seniority and they have less maturation with their fleets.
 
SlamClick
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RE: US Airways, Could They Re-invent Themselves

Sun Feb 08, 2004 12:28 am

From an outside point of view, NO they cannot re-invent themselves. That would imply that they had been "invented" in the first place and it does not appear to me that US management has any idea whatever who or what USAIRWAYS is.

They seem to have no discernible business plan other than reducing their payroll costs. If they were successful to the point of getting everyone to work for Federal minimum wage their seat-mile cost would still be high.

It appears to one industry cynic that Wolf and Siegel had just been hired to pre-digest the company to make the final days easier for the predators out there.

Happiness is not seeing another trite Ste. Maarten photo all week long.
 
UAL727222
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RE: US Airways, Could They Re-invent Themselves

Sun Feb 08, 2004 1:02 am

The question goes to whether a mature business model can be changed to create a new product. I recall the days when Braniff in the late 70s attempted to expand its product into many different markets and bought close to $1 billion in new aircraft, 727s and 747s to meet the anticipated yet never materialized increase in traffic. They spent billions on a lavish headquarters in Dallas and a hostess training facility, all the result of Harding Lawrence's visioning of Braniff as a chique, with it airline. The result was of course the eventual crippling of the airline. Howard Putman of Southwest was hired from SWA to "re-invent" it, but with almost no cash, the airline was DOA. A chapter 11 would not have been possible, as no financing would have been available for such a fruitless experiment, and it was effectively beyond the point of fixability. Employees' final paychecks bounced, and I recall the eerie sight of its entire fleet parked at DFW in May 1982, just after its demise.

Pan Am was cash drained as well, as was TWA in 2001 when AA bought it. A re-invention would not have worked. A re-invention of US is not possible in the judgment of this career pilot; the airline can fix its current model to be more profitable and efficient, but a new business model with the same name, culture, employees, leadership is a likely failure. I don't see it happening, and believe me, I would be distressed to see the airline go out of business.
 
thestooges
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RE: US Airways, Could They Re-invent Themselves

Sun Feb 08, 2004 2:49 pm

I think they should get rid of PIT and PHL, get rid of every single non-airbus in their fleet, get rid of the shuttle and focus on CLT and essentially become as much of a LCC as possible. Maybe even keep the CLT european routes if they are profitable and maybe even build up Latin American routes because they've already started to do that and CLT is in a geographically good position (obvioulsy not as good as MIA) to do this.
Nobody expects the Spanish Inquisition !!
 
PVD757
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RE: US Airways, Could They Re-invent Themselves

Sun Feb 08, 2004 8:17 pm

Getting rid of PHL would be very stupid. They have ownership of terminal A and F. They have the majority of their trans-atlantic traffic funneling through this airport. I would go for PIT and make it a focus city. They only have guarantees on ten gates now. They could unload all of the rest with no penalty. CLT isn't the only way to get to the Carribbean and Latin America. Check the schedules out of PHL. As far as becoming a LCC. They could not unless they expand towards the west. Right now, they operate in a very expensive environment. WN does well in the east because of their spread into other markets that are not high cost. This offsets the others that they are really paying for. jetblue does not have fleet issues or seniority issues yet. This will affect them in the long-run until they can spread into lower cost markets.
 
AA717driver
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DL Ch. 11 Counsel?

Mon Feb 09, 2004 1:54 am

Thestooges--Ironically, you just described Piedmont!  Smile The unfortunate aspect of USAir is that they bought a couple of well-run, effecient airlines and absorbed them into a poorly-run, corpulent airline that fed on the high yield market in the N.E. That market doesn't exist any more.TC
FL450, M.85
 
haveric
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 2:14 am

thestooges -- promise me you'll never become a CEO. PHL is about 4x the size of CLT. It is the 2nd largest city on the East Coast and has a gleaming new international and Express terminal.

IMHO, US needs to:
1. Continue to review work rules with the unions.
2. Outsource some heavy maitenance while instituting stringent Quality Control measures.
3. Review First Class -- put it on par with the competition
4. CLEAN CLEAN CLEAN aircraft, terminals, etc.
5. Rebuild a positive corporate identity with strong operations along the East Coast, to Europe / Carribbean, and (soon to be) membership in Star
6. Fight WN hard in Philly
7. (possibly the most important) inspire all employees -- a tall task indeed.
 
cloudboy
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 3:21 am

What they need to do is stop focusing on becoming a low-cost operation! Everyone seems to be caught up in these low cost model. If everyone offers the same exact product, why not go with the lowest cost? What US (and all the majors, for that matter) need to do is focus on providing a better product. Forget the first class stuff - most companies will only pay for coach anyways. Focus on a better flight for business travelers - more room, better service, easier ticketing, more flexibility in ticket exchanges and more agents so you don't have to wait so long at the counter. A simple but decent bag lunch for flyers who don't have time to grab lunch on the way to their meeting. How about a business center at the airport for all travelers where you can go in and make a phone call or set up your laptop while you wait for your flight.

US will never compete as a low cost in the north east. As a service airline, maybe there is a market for them.
"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 5:52 am

I know I've mentioned this a billion times, but here's how US could re-invent themselves, IMO...START FLYING THOSE A319's BOS-Europe/West Africa...BOS-Algiers, Casablanca, Tunis, Barcelona, Valencia, Bordeaux, Nice, Marseilles, Milan, Venice, Zurich, Geneva, Ljubljiana, Zagreb, Vienna, Dusseldorf, Hamburg, Berlin, Copenhagen, Brussels, Warsaw, Oslo, St. Petersburg, Prague, Reyjkavik, and just about any other similar-sized European city within the A319's range that I left out...throw in some significant feed with those brand-new E-170's into BOS, and you have 45-50 routes that Southwest, jetBlue, AirTran, Frontier, ATA, and Spirit can't (or won't) touch...further, base the E-170's at BOS, all of the other Airbuses out of PHL, the 733's and 767's out of CLT, the 734's and 757's out of PIT, and you've cut down on your maintenence costs significantly...other than that, well, I might need some time on the job...
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ContinentalEWR
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 5:55 am

BOS to Africa on US Airways?? I am delirious with laughter.

US Airways' days are numbered. It has always been a lousy airline and apart for a few quarters in 1998 and 1999, it never made money. US lost billions from 1990 to 1997, even after it bought Piedmont and PSA. The merger idea with UA was designed to sell it, not to make it better.

Bad airline. Poor route network (except of course if you live in PA or NC) and short-sighted management.

Let it fail. I always hated US Airways and their high fares. Good riddance.

Sorry for the employees though.

One thing though that they could do is merge with America West. They have similar fleets and could create a mega LCC with a true coast to coast network.

 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 6:08 am

ContinentalEWR-I'm talking about BOS-Algiers on an A-319...you're talking about filling maybe 100 seats on that for a profit...not a 762ER or an A-330...additionally, those E-170's jobs would be to provide feed to BOS for those flights...makes a heck of a lot more sense than to provide excess frequency domestically just to use those 279 planes required by the scope clause in the pilots contract...
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
Guest

RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 6:15 am

ContinentalEWR,

You may have struck upon something. Just in practical terms -- fleet commonality, management styles, perceived opportunity -- that's an idea whose time may have come.



[Edited 2004-02-08 22:38:36]
 
haveric
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 7:15 am

SHUPirate -- do you really think that 100 people a day want to fly from BOS to Algiers? I mean, your hypothetical airline would have NO hub feed. Those destinations are rediculous.

ContinentalEWR -- your analysis would be more worthwhile if you removed your biased hatred of the airline that employees 29,000 people...
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 7:20 am

Haveric-What do you think I would have all of those E-170's doing...same thing Delta has their CRJ's doing at JFK...feeding Boston...in effect, BOS would be transformed into US Airways' fourth hub, with it becoming the transatlantic gateway for those routes without the demand for a 330 or a 767...obviously Boston itself couldn't support an A-319 from BOS to ALG, but combined with the feed from the rest of the US Airways network, I'd bet it could...
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
cloudboy
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 10:11 am

Who would want to fly two hours in the US, have a two hour turn around (and a terminal change!) to a fly a 319 all the way from Boston to Algiers? Heck, can you even fly a 319 trans Atlantic, let alone from there to another continent?
"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
 
JGPH1A
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 7:08 pm

I think the idea of flying A319's from BOS to secondary destinations in Europe has merit, especially if the connecting service is able to provide convenient and time-efficient service to other secondary cities in the US North East. Look at the range of cities served by CO from EWR, with 757's - places like BHX, LIS, EDI - OK EWR is a NY airport, and has monster O&D traffic, but I'm pretty sure CO couldn't make a go of them without a fair bit of connecting traffic too. If US could target cities not served yet by CO out of EWR, this would give them an advantage - places in France or Italy maybe (NCE, VCE, LYS, BOD), not served by their national carrier either. Secondary cities in Germany too, in conjunction with LH and Star Partners.

I'd certainly take a US 319 NCE-BOS (suits me down to the ground !), as long as the seating was a reasonable pitch for longhaul and it had good IFE (seatback, not flipdown). Something like AF's A319 service to outlandish oil destinations would work.

My one reservation might be that BOS is a pretty hideous airport to transfer through, especially international-domestic - changing terminals from E to anywhere else is not fun or simple. If US Airways could get a dedicated Immigration set up in Terminal B (AA could use it too), this would make life a lot easier. CO's big advantage with EWR is having their whole operation under one (very big) roof, so that transfers are not too ghastly.
Young and beautiful and thin and gorgeous AND BANNED ! Cya at airspaceonline.com, losers
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Mon Feb 09, 2004 8:19 pm

Cloudboy-I chose the A319 for exactly that reason...range is not an issue...in fact, from BOS, the A-319 can reach most of Europe (part of the Balkans, and most of the former Soviet Union excluded...St. Petersburg and the Baltics are within reach) and northwest Africa (Casablanca, Algiers, and Tunis are all within reach)...use those E170's coming in as feed for those flights (although, I'm convinced, the real cash-cow would be for passengers coming into the US from those smaller cities that would be able to bypass MXP and CDG, and the shuttle would be GREAT for those passengers)...just to use an example, a passenger going from Tunis to Chicago would, currently, have to go Tunis-Casablanca-JFK on Royal Air Maroc, and then take a Delta CRappyJet from JFK to ORD...wouldn't it make things a heck of a lot easier for US Airways to provide A-319 service, through BOS, as their salvation?
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
cloudboy
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 12:01 am

True, there would be some market, but I am not sure enough to be profitable on. When you get right down to it, most of the non-major cities in Europe and north Africa probably don't have a lot of passengers destined for anything other than the most major cities in the US. And as pointed out before, at least at Boston you are still going to have to go through a major transfer as terminal B side A is not equipped to handle international flights.

What about Hartford - I am assuming you could reach Europe from there with a 319 as well. Could they provide a sort of low-cost Europe connection through Hartford?

Would it be easy for a carrier like US to just start flying into smaller foreign airports, though?
"Six becoming three doesn't create more Americans that want to fly." -Adam Pilarski
 
PVD757
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 12:01 am

BOS is not, and will not be suited for anything even close to that type of operation. It is delay prone without having "banks" of flights now, which would be required in order to properly feed the international portions of this set-up. This would be nothing short of an operational disaster and would undoubtedly fail. The real answer to the question of this thread is simply NO. They cannot re-invent themselves. They have huge presence in huge markets (with huge costs!). They need to balance costs by operating at some lower cost stations and continue to cut expenses associated with labor. Productivity - both employee and asset wise need to be increased. Get it over with and drop PIT as a hub, de-peak PHL and CLT, where they have critical mass to offer connections throughout the day throughout thier system. This will allow them to increase flying with the same # of ships and hopefully the same # of pilots (work rule changes?). Use the 170's to feed/free up mainline crafts to do some point to point flying and some mid/west markets. Europe and Latin America leave alone and/or expand where needed. At stations where WN enter, combat with the 170's and offer more point to point AROUND PHL. This will help sending passengers from tying up 2 seats on 1 ticket for $99 (PVD-PHL-MCO for example, a passenger occupies a seat from PVD-PHL, then PHL-MCO). US could sell the point to point between PVD-PHL AND PHL-MCO for $99 each.
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 1:13 pm

PVD-how about then if they based the 319's at PHL then, and they could still reach all of those cities I mentioned except Tunis, Warsaw, and St. Petersburg...that said, I feel BOS would be a better city for it for another reason...BOS would finally be the East-West hub that has eluded US Airways for the last decade, out of the newly named "Doorstep to Independence"...and, suddenly, you have the cash cows flying in from those second-tier European cities that now can bypass Milan, Paris, Frankfurt, and London on their way to JFK or IAD, and instead fly through Boston into LaGuardia or National, both much closer to their respective cities (the shuttle routes, IMO, would be the big winners here as for dispersing feed from BOS to the destinations, additionally, flights to the second-tier US cities and major Canadian cities would catch a massive windfall)
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
haveric
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 1:36 pm

Where is the gate space in Boston?

Why shift all of your feed from Philadelphia where you just built a new international terminal?

Why call it the Gateway to Indepedence if your current international hub is situated in the birthplace of independence?
 
freshlove1
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 1:44 pm

From what I have heard USAirways will not drop PHL even if they have to sell things. PIT will be the first to go unless they get some great deal from Allegheney county to stay. CLT is strong but they can do with out it considering PHL is only an hour and 20 by air. PHL has to much $$ invested in it by US, eventhough WN is comming in US will still keep hold of its dominance in PHL. They have the new F terminal and the new Intl' terminal, they wont get rid of PHL unless they are on life support and someone is getting ready to pull the plug on the machiene. In the end in sure it will all work out.
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 1:50 pm

Haveric: as far as the gate space in BOS, obviously that would be an immediate issue, although if Massport was informed by US Airways that they planned to make BOS a hub of this magnitude, I'm sure Massport would be more than accommodating...

As for your question about shifting feed from PHL to BOS, I feel that is a non issue, for the following reason. International cities served from Philadelphia are, primarily, cities that are served by several other US Airlines, as well as major European hubs, and passengers on those flights, as a result, are primarily United States-based passengers flying to Europe...on the other hand, BOS would serve primarily secondary cities in Europe with the 319's, cities that, generally, passengers going to the US would have to change planes in another city, such as Milan, Paris, Frankfurt, and London, and in many cases, would have to double-connect...as a result, the passengers on the Boston-Europe/Africa flights would be primarily European/African-based passengers flying to the United States, and the Philadelphia flights would not be cannibalized as a result.

Why call it the "Doorstep to Independence"? Are you not aware that the Revolutionary War started in the Boston suburbs? I think that that idea would be very symbolic for a city that the Revolutionary War started in, and, additionally, would serve many passengers flying into the United States from Europe and Africa...
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
PVD757
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 10:57 pm

SHU: on paper it sounds like an interesting idea. BOS has no room now, nor any room for any substantial growth (a few more gates here and there at best). US needs more mid/west feed now, never mind to fill 2nd tier European destinations. The traffic is just not there. The costs to open up all these stations (domestic feed out west and Europe) would be nothing short of astronomical for a carrier with it's cost structure. Your idea is better suited for a new airline, not one that would need to transition to it. This concept could even work on a smaller scale at a secong tier east coast city, since it would mostly depend on connecting traffic (BDL, ORF, etc. come to mind). I do think your idea is interesting at least.
 
elwood64151
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 11:30 pm

USAir need not reinvent the wheel, nor change from hub ops to p2p ops (WN). In fact, all USAirways need do is determine what they are actually trying to sell, and to whom. (I'll give you a hint: It ain't seats! It's much more simple than that!)

In any event, I do not believe USAirways can or will reinvent themselves. However, that doesn't mean they can't turn around a make a profit the way WN, F9, B6 or FL do.
Those who fail to learn history are doomed to repeat it in summer school.
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 11:36 pm

All BOS-ALG flights aside, I do have a question...correct me if I am wrong, but there are two ways for an airline (or any other business) to turn around a cash-bleeding operation, either to raise revenues, or to cut costs...can somebody PLEASE explain to me why every single business thinks to cut costs and (in the airline industry) shrink into its shell, rather than attempt to raise revenues?
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
TomFoolery
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RE: US Airways, Could They Re-invent Themselves

Tue Feb 10, 2004 11:44 pm

I would venture to guess that US having a hub in PIT and major ops in PHL, one should be scaled back. I understand that PHL is the international hub and PIT is generally a domestic hub. It would seem logical to concentrate on one or the other. There is DCA, while not a hub, there is a pretty decent sized operation there. Is it really necessary to have 3 concentrated areas within a 5 hour drive from each other? I just font see the revenue there.

TF
Paper makes an airplane fly
 
SHUPirate1
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RE: US Airways, Could They Re-invent Themselves

Wed Feb 11, 2004 12:31 am

TomFoolery-You also forgot about LGA (about 2 hours northeast of PHL) which is US Airways largest non-hub airport in terms of departures (including mainline, Express, and Shuttle)...
Burma's constitutional referendum options: A. Yes, B. Go to Insein Prison!
 
Howdy
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RE: US Airways, Could They Re-invent Themselves

Wed Feb 11, 2004 6:55 pm

US Airways has pretty good route network and assets like 219 gates at DCA. I think they can capitalize on these. There are still many routes where yields are more than 40 cents, like DTW to DCA and Atlanta to DCA (30 cents). I don't see why the airline can't start flying on some of these non-hub routes point to point.
 
ScottB
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RE: US Airways, Could They Re-invent Themselves

Thu Feb 12, 2004 5:55 am

"if Massport was informed by US Airways that they planned to make BOS a hub of this magnitude, I'm sure Massport would be more than accommodating..."

You clearly are unfamiliar with politics in Massachusetts and the facilities at Logan. First of all, Massport wouldn't put up a dime to build new terminals. If US Airways were willing (or even able!) to put up several hundred million dollars to build an adequate international facility for this sort of operation, they might consider it -- *if* they could get permission for it without lawsuits from the surrounding communities. Delta's paying for its new terminal, American was going to pay to expand its half of Terminal B, and US Airways paid for the additional gates it opened a few years ago. There is little to no room now at Terminal E (the only terminal with FIS facilities) during the afternoon peak for international arrivals and departures. Transfers from Terminal E to Terminal B are inconvenient at best on Massport's shuttle buses. And this doesn't take into account Logan's delay-inducing airfield configuration. How would you justify the significant investment in terminal infrastructure for a hub that could have at most two or three banks? Is there even enough premium small market to small market transatlantic traffic to justify it?

Moreover, the A319 is simply unsuitable for most transatlantic routes. While the eastbound crossing is no problem, you'd be hard-pressed to make FRA-BOS westbound with 120 passengers and baggage without a tech stop -- even with the highest MTOW option. I doubt you could do much more than Ireland/U.K.-PHL if you tried this scheme at PHL.

To respond to the thread starter:
"My feeling is that rather than being reactive, to LCC's they should become a proactive airline , and enter a market that exhibits extremely high airfares, that is underserved, and start a fresh operation."

Underserved markets with high airfares describes US Airways' business plan for the last 15 years! Look at the many of highest-fare short-haul markets in the U.S. -- markets like PIT-WAS, BOS-PHL, NYC-RIC, PIT-PHL, NYC-ORF, CLT-WAS, NYC-PIT, BDL-WAS, BOS-ROC, PHL-RDU, CLE-PHL, BWI-CLT, PVD-WAS, etc. -- all dominated by US Airways. US dominated 11 of the 25 highest-fare short-haul routes (all under 750 miles with average fares over $257) in the 3rd quarter of 2003. There is little high-fare competition for them to undercut -- aside from themselves!

To some degree, that is the answer, though. The fare structure must be rationalized and the operation restructured to drive out costs which add little or no value. They must offer a competitive product at a competitive price. This is not to say that they need to have the lowest fares -- they need to offer fares with an acceptable value proposition when compared to other legacy carriers and LCC's. Do something creative like comping drinks (or lounge access or meals if available) for passengers who have paid "business" fares. Make sure the product looks clean and safe to the passengers. Give the public a quality product for which they are willing to pay, and make sure employees are empowered to make that happen.

PVD757 says:
"WN does well in the east because of their spread into other markets that are not high cost. This offsets the others that they are really paying for."

Why bother to expand in the east if your costs there are higher than your revenues? Unprofitable growth reduces the company's earnings, and we haven't seen that (9/11 and recession effects aside). WN eliminates service that just doesn't work -- PVD-ISP and PVD-HOU are examples of that. I find it difficult to believe, though, that they would operate 12 daily PVD-BWI flights if their actual costs exceeded their revenues on a long-term basis.
 
airways6max
Posts: 474
Joined: Sat Aug 09, 2003 6:22 am

RE: US Airways, Could They Re-invent Themselves

Thu Feb 12, 2004 12:56 pm

They don't have the money to reinvent themselves. Maybe if Bill Gates donated some of his billions, but don't expect that to happen. US is heading down the drain.

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