Is Us Air Implementing The “transformation Plan?

USA320Pilot

Veteran
May 18, 2003
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Is US Airways implementing the “Transformation Plan�

US Airways’ plan to radically transform the company into a LCC/legacy carrier hybrid airline is an enormous task, but as MEC Chairman Bill Pollock indicated it’s likely the last chance to return the company to sustained profitability.

The brash plan involves changing the route structure, schedule, distribution channels, and the products the company offers the customer. It is normal for all of the company’s stakeholders to be frustrated with the pace of change, but much is going on behind-the-scenes to truly transform the carrier. However, without a competitive cost structure across-the-board, to the levels of Southwest, JetBlue, and AirTran, the “Transformation Plan†will fail.

For those of us who suggest the company is not moving fast enough nor has no intent of changing the airline, consider the following:

 US Airways joined the most prestigious alliance in the world, the Star alliance.

 The company has created the United, GoCaribbean, and Bahamasair alliances.

 Lufthansa and US Airways have joined forces to create increased cargo revenue.

 MidAtlantic Airlines was successfully created. The new airline is aggressively growing providing US Airways with a very competitive EMB-170 product and provided airline employees with the first ever J4J opportunity.

 PSA has successfully integrated CRJ aircraft into its operation and will lower its CASM with more CRJ-700s introduced to the fleet.

 LOA 91 was ratified to provide the company with increased RJ flexibility.

 US Airways is improving automation by implementing boarding pass readers in 18 airports and continues to improve IT with the addition of Kiosks.

 The airline is de-peaking the PHL hub with improved operations and procedures.

 Piedmont and Allegheny Airlines were merged to provide increased efficiency and cost reductions. The two pilot groups have agreed on a combined seniority list and pilots can now bid to MDA, creating a flow through.

 Later this year the new Philadelphia baggage system will become operational, which will result in less PAWOBS and increased savings.

 Pittsburgh will become a “focus city†with flights transferred to Boston, New York, Philadelphia, and Washington to provide lower cost and better revenue point-to-point opportunities. This November the schedule will be reduced and in February it is expected the city have a further decline in flights in the money-losing city.
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 The company has begun the consolidation of flight crew ground school and simulator training with the closure of three Pittsburgh facilities and moving these functions to vacant space in Charlotte.

 The GoFares simplified fare structure has been incrementally implemented in Philadelphia, Washington, and New York. This is a glimpse of the new, permanent fares that will have a no Saturday-night stay requirement and never more than $499 for a one-way coach class fare.

 The company has begun a mainline expansion program with applications on file with the DOT for 24 Washington National slots and new service to Honduras, Nicaragua, and Panama. In addition, new domestic mainline point-to-point service as been announced between LaGuardia and Ft. Lauderdale and Washington and five Northeast cities.

 The company is lowering unit costs by not conducting Pittsburgh airport automated baggage system maintenance and de-icing. In addition, this will be done in Philadelphia too.

 The company is revamping the website to attract more online customers to increase the distribution of e-tickets, which will lower distribution costs.

Some of the most important changes that will lower unit costs require labor participation, or the “Transformation Plan†will fail. These changes are:

1. Increased aircraft utilization: Currently US Airways is staffed for normal operations per the current contracts, but the single most important cost reduction item is to increase aircraft utilization. This will improve productivity of employees both in the air and ground and a 15% increase in block hours should lower CASM by one cent. Expect major schedule announcements soon, which will dramatically increase aircraft utilization around President’s Day.

2. Further de-peaking of hub schedules and adding two additional banks in Charlotte. This also will improve employee productivity and lead to fewer misconnected passengers, lost bags, and flight delays.

3. Lower simpler fares. US Airways has begun the GoFares program in key market where the competition is dramatically depressed yield. In particular in Philadelphia where Southwest is growing, In Washington in response to Independence Air’s emergence, and in LaGuardia in response to JetBlue’s new service. LCC’s are expected to increase their dramatic growth, which will further pressure revenue, thus it’s becoming increasing important for the company to have it’s lower, rationalized fare structure in place soon to preserve traffic. With a less complex fare structure in place, reservations talk time could be reduced by 40% from 5 to 3 minutes, improving productivity and customer service. Moreover, the Sales Department will have fewer complex contracts to manage, there will be lower selling costs, fewer passenger complaints, and a better customer booking experience.

There are reports that the company will announce major changes soon, which could include Ft. Lauderdale becoming a Caribbean/Latin American focus city with a possible announcement in early August , LaGuardia increasing mainline service from 42 to about 150 daily flights this winter, EMB-170 flights replacing 50-seat RJs in Washington, more Boston service to key U.S. business/leisure markets, and adding five new transatlantic markets from Philadelphia this spring. Potential new European markets are: Birmingham, Oslo, Copenhagen, Vienna, Rome, Helsinki, Zurich, and Barcelona. Moreover, there are reports the company is evaluating adding A320 family and A330/340 aircraft to the fleet, provided the company can return to the capital markets. To obtain the financing, the company must first obtain a competitive cost structure either with new labor accords or in a “judicial restructuringâ€, where it’s anticipated that labor would be worse off.

Although the rate of change is going slower than many observer’s desire, the company is moving forward with the “Transformation Planâ€. Further radical changes to the business model can occur, which are required to compete with the new “realities†of the industry, as soon as labor participates in new business plan, either consensually or if necessary, through court ordered labor accords.

I do not like what is happening to US Airways and the U.S. airline industry, but the Arlington-based airline has a plan to create a new airline designed to compete in the future. US Airways is the first network carrier to truly adapt to the “new realities†of the industry where the LCCs now control 70% of the pricing power.

In a recent New York Times article, AFA president Pat Friend said, “ This industry is transforming itself in front of our very eyes. The economic situation of the industry is a reality. We can’t change that. We have no choice but to try to adapt ourselves to a new business model while reserving as much as we can,†she said.

I continue to believe it’s in the best interests of every labor group to reach new accords prior to a potential bankruptcy filing. Then if these deals are unacceptable, rather than to fight the change, as Dave Siegel said, "If it doesn't work, I'd encourage you to support the change, and then go on and find something else. It's better to have a job when you're trying to find another job."

Respectfully,

USA320Pilot
 
It's nice to see some positive news. However, there are a few points that seem a bit too positive.

"Adding five new transatlantic markets from Philadelphia this spring. Potential new European markets are: Birmingham, Oslo, Copenhagen, Vienna, Rome, Helsinki, Zurich, and Barcelona"


------with what aircraft and what employees

" PSA has successfully integrated CRJ aircraft into its operation and will lower its CASM with more CRJ-700s introduced to the fleet."

------successful? I think the PAX with constant cancelled flights might disagree with that word. Have you seen the story on Flyertalk of the businessman who had great stress doing business and Bangor, Maine due to cancelled PSA flights all week due to unavailability of the flight crew ALL WEEK?

" The airline is de-peaking the PHL hub with improved operations and procedures"

------that seems premature. Did you talk to any of the folks stuck in the charade of Wednesday's fiasco? Which seemed more "business as usual" to regular Philadelphia fliers?

" The company is revamping the website to attract more online customers to increase the distribution of e-tickets, which will lower distribution costs."

------this seems premature. I personally tried to buy a ticket online this past week and got many failures from the database. Also the thing doesn't work without Internet Explorer - something I complained about a few years ago. The web folks aren't reading the security bulletins, security leaks, and are not responding by making the code STANDARD for other browsers such as Opera, Firefox, Netscape, Mozilla ....sure the market right now is only 5% for "alternative products" but why lose any revenue from educated customers? Especially since I challenged them personally numerous times 2 years ago to LEARN WEB STANDARDS and not use PROPRIETARY MICROSOFT EXTENSIONS. Is this new web site going to be outsouced to a DIFFERENT COMPANY because these folks have NO CLUE the web site doesnt work, fails, is not reliable, and is using code that is proprietary to a web browser that is LOSING MARKETSHARE.

I appreciate the positive news and hope that this company becomes a lesson in business school about how to change quickly and survive and prosper. But on these points I am skeptical.

Thanks
 
You see...Usaiways etc... can make money. All they have to do is rid themselves of those annoying employees.

It's all very simple....
 
USA320Pilot,

Why must you continue to get your soap box out and spin your message over again,again and again?

We heard you the first hundred times.

I do not post here much (just like to read posting) but you are KILLING ME.

Most (if not all) people here are intelligent enough to remember what you have already have said.

You must really have some kind of ego to feed.

Sorry to blast you. I have been holding back for sometime but I think you have going into the third person for too long and it is time come back.
 
Is US Airways implementing the “Transformation Plan�

US Airways’ plan to radically transform the company into a LCC/legacy carrier hybrid airline is an enormous task, but as MEC Chairman Bill Pollock indicated it’s likely the last chance to return the company to sustained profitability.

The brash plan involves changing the route structure, schedule, distribution channels, and the products the company offers the customer. It is normal for all of the company’s stakeholders to be frustrated with the pace of change, but much is going on behind-the-scenes to truly transform the carrier. However, without a competitive cost structure across-the-board, to the levels of Southwest, JetBlue, and AirTran, the “Transformation Plan†will fail.

US Airways is a business. For a business to succeed, its revenue must exceed its costs. You don't have to have a cost structure matching Air Tran. US has a high RASM. You need to take your existing resources and utilize them more effectively, more efficiently.


For those of us who suggest the company is not moving fast enough nor has no intent of changing the airline, consider the following:

 US Airways joined the most prestigious alliance in the world, the Star alliance.

 The company has created the United, GoCaribbean, and Bahamasair alliances.

 Lufthansa and US Airways have joined forces to create increased cargo revenue.

And how many years ago did all US' competitors take such actions? The next question is do these actions increase revenue more than they increase costs?


 MidAtlantic Airlines was successfully created. The new airline is aggressively growing providing US Airways with a very competitive EMB-170 product and provided airline employees with the first ever J4J opportunity.

 PSA has successfully integrated CRJ aircraft into its operation and will lower its CASM with more CRJ-700s introduced to the fleet.

 LOA 91 was ratified to provide the company with increased RJ flexibility.
Are these aircraft being used to upgrade existing service and open new markets, or to replace mainline service? If they open new markets, they are beneficial. If you replace 737s with CRJs because you can't make money with a 737, this is not the solution. The solution is to use that 737 more effectively and lower its costs so that it is profitable.

 US Airways is improving automation by implementing boarding pass readers in 18 airports and continues to improve IT with the addition of Kiosks.

 The airline is de-peaking the PHL hub with improved operations and procedures.

 Piedmont and Allegheny Airlines were merged to provide increased efficiency and cost reductions. The two pilot groups have agreed on a combined seniority list and pilots can now bid to MDA, creating a flow through.

 Later this year the new Philadelphia baggage system will become operational, which will result in less PAWOBS and increased savings.
Where is improving the website? Thats your biggest IT problem. And the more reissues that are automated, the better. And why wasn't PHL depeaked years ago?


 The GoFares simplified fare structure has been incrementally implemented in Philadelphia, Washington, and New York. This is a glimpse of the new, permanent fares that will have a no Saturday-night stay requirement and never more than $499 for a one-way coach class fare.

 The company has begun a mainline expansion program with applications on file with the DOT for 24 Washington National slots and new service to Honduras, Nicaragua, and Panama. In addition, new domestic mainline point-to-point service as been announced between LaGuardia and Ft. Lauderdale and Washington and five Northeast cities.
Go-fares are nothing more than the name that US marketing to US being forced to match WN, DH and other LCCs. Get your costs down and become more efficient, and THEN "rationalize" systemwide fares, and you'll see a difference. Go-fares.... yawn.

DCA and LGA are huge for US- you should be able to get a substanial revenue premium from those ops.

 The company is revamping the website to attract more online customers to increase the distribution of e-tickets, which will lower distribution costs.
Last I checked it still sucked.

If you want distribution costs lowered, the website has to be much more functional than it is now. Simpler fares and rules also reduce distribution costs. But that won't produce sufficient revenue until the operation of the airline is more efficient. But contracting out some pricing functions to India is step in the right direction to reduce distribution costs.

Some of the most important changes that will lower unit costs require labor participation, or the “Transformation Plan†will fail. These changes are:

1. Increased aircraft utilization: Currently US Airways is staffed for normal operations per the current contracts, but the single most important cost reduction item is to increase aircraft utilization. This will improve productivity of employees both in the air and ground and a 15% increase in block hours should lower CASM by one cent. Expect major schedule announcements soon, which will dramatically increase aircraft utilization around President’s Day.

2. Further de-peaking of hub schedules and adding two additional banks in Charlotte. This also will improve employee productivity and lead to fewer misconnected passengers, lost bags, and flight delays.

3. Lower simpler fares. US Airways has begun the GoFares program in key market where the competition is dramatically depressed yield. In particular in Philadelphia where Southwest is growing, In Washington in response to Independence Air’s emergence, and in LaGuardia in response to JetBlue’s new service. LCC’s are expected to increase their dramatic growth, which will further pressure revenue, thus it’s becoming increasing important for the company to have it’s lower, rationalized fare structure in place soon to preserve traffic. With a less complex fare structure in place, reservations talk time could be reduced by 40% from 5 to 3 minutes, improving productivity and customer service. Moreover, the Sales Department will have fewer complex contracts to manage, there will be lower selling costs, fewer passenger complaints, and a better customer booking experience.
You also don't want to oversimplify fares. Its not a simple airline. B6, FL, WN and DH can offer simple fares cause they are simple airlines. They don't interline, codeshare, fly transatlantic, they aren't part of major alliances. Having all those things should get US a revenue premium, and you don't want to go from overly complex to overly simple overnight. You need to maximize revenue, and mirroring their fare structures is not going to do that for US. Matching some aspects of their structure is necessary, but not the whole thing. Don't give up your revenue premiums voluntarily. And the sales department contracts shouldn't be that complicated to begin with.

There are reports that the company will announce major changes soon, which could include Ft. Lauderdale becoming a Caribbean/Latin American focus city with a possible announcement in early August , LaGuardia increasing mainline service from 42 to about 150 daily flights this winter, EMB-170 flights replacing 50-seat RJs in Washington, more Boston service to key U.S. business/leisure markets, and adding five new transatlantic markets from Philadelphia this spring. Potential new European markets are: Birmingham, Oslo, Copenhagen, Vienna, Rome, Helsinki, Zurich, and Barcelona. Moreover, there are reports the company is evaluating adding A320 family and A330/340 aircraft to the fleet, provided the company can return to the capital markets. To obtain the financing, the company must first obtain a competitive cost structure either with new labor accords or in a “judicial restructuringâ€, where it’s anticipated that labor would be worse off.
The DCA/BOS/LGA service sounds excellent. But you won't be adding European cities. You are in the Star Alliance to provide east coast feed. Not to fly Vienna to PHL. That is Austrian's job. But instead of buying new planes, US needs to maximize the usage and utility of those it has. And FLL? vs. WN? How many cities will it take to learn? Keep them in check in PHL before you get delusions of grandeur in taking them on in their own major cities.

I do not like what is happening to US Airways and the U.S. airline industry, but the Arlington-based airline has a plan to create a new airline designed to compete in the future. US Airways is the first network carrier to truly adapt to the “new realities†of the industry where the LCCs now control 70% of the pricing power.
I guess AS is not a network carrier.

In a recent New York Times article, AFA president Pat Friend said, “ This industry is transforming itself in front of our very eyes. The economic situation of the industry is a reality. We can’t change that. We have no choice but to try to adapt ourselves to a new business model while reserving as much as we can,†she said.
Yep that is what happens in industries that mature.

All the best to US employees, I hope your management team can transform and evolve the company into a competitive entity.
 
Justair said:
USA320Pilot,

Why must you continue to get your soap box out and spin your message over again,again and again?
.... and why can you not let your posts stand on their own merits just like everyone else? Quit acting like this is a children's playground.

Additionally, the last time I checked, US already flew to Rome? :D
 
1004,

Yep we do,from PHL. Nothing to stop us from flying out of BOS though. Our last two gates in the Shuttle wing can handle wide bodies for trans atlantic.
 
Question: where are the 108 additional slots at LGA coming from? who are we buying them from?
AirbusA320 said:
There are reports that the company will announce major changes soon, which could include Ft. Lauderdale becoming a Caribbean/Latin American focus city with a possible announcement in early August , LaGuardia increasing mainline service from 42 to about 150 daily flights this winter,

:blink:
 
USA320Pilot said:
Is US Airways implementing the “Transformation Planâ€￾?

 PSA has successfully integrated CRJ aircraft into its operation and will lower its CASM with more CRJ-700s introduced to the fleet.
:shock: :blink: :eek:

OMIGAWD! I can't believe that PSA would even be mentioned with all the "Crew" problems.
 
javaboy said:
Question: where are the 108 additional slots at LGA coming from? who are we buying them from?
I believe they are probably coming from the large number of mainline slots currently used for Express flights, unless US isn't using mainline slots for non-mainline flights.

Also, FWIW, I still have faith US will transform itself. While adding BOS, LGA and DCA service will in essence spark a 'market share' war in some cases, I think US needs to do this to survive.
 
There is no shortage of widebodys, just a shortage of those a/c with US Airways colors. And thats what we have to get to.
 
USA320Pilot said:
 US Airways joined the most prestigious alliance in the world, the Star alliance.
Great marketing ability too. Usairways owns the billboard (aircraft) thus an unlimited canvas in order to advertise its relationship to the Star Alliance, but yet can't seem to even get that right. The stickers won't stick for more than a month.
 
  • Thread Starter
  • Thread starter
  • #15
1. US Airways has 19 widebody aircraft. Pittsburgh will lose its London and Frankfurt service, which will free two aircraft for the expanded service. Next spring the company will operate service from Philadelphia to Amsterdam, Dublin, Frankfurt, Glasgow, London, Madrid, Manchester, Munich, Paris, Rome, and Shannon; as well as service between Charlotte and Frankfurt and London.

The company can add 4 destinations from Philadelphia, and operate this years Philadelphia and Charlotte service, with current widebody aircraft. If the airline has a competitive cost structure, the airline will be able to return to the capital markets and I understand management has looked at used B767-200s that can be obtained on the cheap, which could be used for more transatlantic life. Moreover, Bruce Lakefield told ALPA in a recent open meeting that he was meeting with Airbus officials about the company obtaining new aircraft, with delivery's scheduled as early as 2005.

I mistakenly indicated new service could be added to Rome, but I meant to write Milan. US Airways' new business plan calls for more transatlantic service, primarily into Star Alliance hubs, to feed the Arlington-based company's transatlantic flights.

2. US Airways will introduce its new website with greater functionality this fall.

3. The Port Authority of New York and New Jersey control LaGuardia slots. Unlike Washington National, Express turboprop and RJ slots can be used by mainline aircraft. Expect more Florida, other business/leisure markets, and more Shuttle flights from LaGuardia, which could include 9:00 and 10:00 p.m. Shuttle flights flown with the EMB-170.

Respectfully,

USA320Pilot
 
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