Your Top Ten

[Ch. 12]

I'm not really sure how to make this any more clear.

a) I'm not saying that U should throw away what it has and become the new westpac.

B) I'm not saying that U should try to copy AWA but rather AWA is a decent model for a HCC trying to become a LCC rather than re-starting unprofitable routes.

c) I agree that systemwide CASM is a terrible measure and have mentioned that over and over. I was just following the suit of this thread when that was pulled in for comparison purposes.

d) True, WN is in the west, but WN, FL, B6, and NK are strong in the NE to FLA markets. I'd rather have one against me than all four.

e) The secret to battling WN is that they publish low fares but only their n/s flights enjoy much availability at the lowest levels. Check and market that has a combination of n/s and cnx flights and see for yourself. The n/s's will have the low fare available, but more times than not, the cnx's will be higher fares.

f) My whole point is that U is missing a huge number of markets due to their structure. In looking at HP and their hubs only in the west (since their "hub" at CMH has been dismantled), if you notice...their hubs are still located between the bulk of the largest cities in the west and all of the east/midwest. Eastern US population is more spread out and does not hug the coast as much as the west. With hubs fairly close to the coast at CLT/PHL and PIT which is still east of several of the large markets, U cannot get as much east coast feed to the west. And they are not trying, either.

They are stuck in the notion that NE-FLA is the breadwinner b/c they cannot get past the era that WN, JB, FL, and NK did not exist. Think of adding the west as diversification. You wouldn't buy only tech stocks, would you? Why only try flying in the east which is plummeting rapidly as a profitable venture for HCCs? U had purchased much tech stock in the past b/c it was the strong one but those stocks have since crashed. So why do we keep revisiting that we should buy tech stocks again? B/c nobody seems to be able to get past the fact that this is a different era and that is not where the opportunity is.

As far as COS goes...just an example...There are many cities in the west and what is the point of renaming them all every time?

So back to the thread...if the adding the midwest/west coast to the network is apparently such a terrible idea (as was a transcon hub out of JFK, as was taking on DL directly out of ATL, as was flying a silly triangle between HOU-DAL-SAT) ...what is the best NEW idea that everybody can think of. I challenge that we get past NE-FLA and building a vast feeder network to mini-markets as that is what U has done in the past with no success.

 

[funguy2]

CH. 12.

As usual, you have some good points. Yes, U's hubs (except for PIT, soon to be dropped as a hub. most likely) are closer to the coast than HP's. But if jetBlue can get folks from BUF to LGB with a conx at JFK, then there is no reason US Airways cannot be competitive via PHL, as an example.

My "If I were US Airways CEO" plan would be something like this:

1. Dismantle PIT, focus hubbing on PHL/CLT, roll PHL hub - being done

2. New system wide fare structure similar to LCC's. No Saturday stays, less distance from the bottom fares and top fares. Also, no more "priceline give-a-ways". Revamp coporate accounts to decrease corporate discounting (don't discount the new "every-day low fares").

3. Create large focus cities with mainline ERJ-170's and mainline jets at BOS/LGA/DCA. As I have discussed in other threads, I would decrease frequencies at LGA in order to offer fewer flights in each market, but more seats, and more nonstop destinations. My example was taking a few frequencies away from the 9 LGA-BUF ERJ/DH8 flights, upgrading the remaining flights to larger equipment, and reallocate those slots to other new markets.

Look, if Southwest can offer BWI-BUF 7 737 flights BWI-BUF and JetBlue can offer 6 JFK-BUF 320 flights, then US Airways can do better than ERJ's. I think this requires a shift in fare structure. But at similar fares (maybe even a slight $10-$20 premium over LCC and distant airports) US Airways can win from LGA/DCA vs. JFK/BWI/IAD. The problem is that the US Airways fares are not even close.

I would focus my new markets from LGA/BOS/DCA on the major biz markets like ORD, STL, DTW, MSP. This would anger the other legacies, but as HP learned, sometimes you need to go your own way. And, given my new fare structure, I would beat LCC's to the punch in some big city pairs. I would make sure that I had a few token flights to high-demand leisure destinations: Read TPA, MCO, FLL (but not every Florida city). These flights would be used to complement the biz traffic, and allow for DM redemptions (i.e. loss-leaders in order to keep DM members on my new flights to DTW/ORD, etc). Lastly, the added service to existing US Airways stations would presumably make the ORD/MSP/DTW outstations more efficient from a gate use perspective (like Southwest and AirTran do).

4. I would focus new drives to get more DM members in the NYC/BOS/DCA areas, and rebrand the airline. I think the airline already has a good image in terms of, we go anywhere on the east coast you could want to go. But, I think the airline is not considered user friendly... All marketing efforts would be based on US Airways is USer-friendly. The web-site, easy. The check-in kiosk, easy. Finding your way around our terminal, easy. Enjoying our friendly service, easy.

5. As part of the focus above, I would stop worrying about the DFW-originating passenger who wants to get to both costs... I would also stop focusing on being the "hometown airline" of PIT/BUF/ROC/RDU/IND, etc. I would focus on being the "hometown airline" at LGA/DCA/BOS and getting DCA/LGA/BOS passengers where they need to go, nonstop (where possible).

6. I would add European flying from BOS.

7. I would move Corp HQ to CLT. Cheaper, more bang for the buck, etc. I would initially expect that CCY folks take a paycut and a paid-move if they want to go. However, the paycut would be adjusted so that the CCY folks who do move make a bit more when adjusted for cost of living... Make it a win-win scenario. Over time, CCY empoyee rates would decline to be equal to the current DCA wages, adjusted for cost of living differences.

8. I would find a a way to eliminate duplicate fleets... Probably settle on Airbus and Embraers. The only exception might be the 757:

A319/A320/B733/B734 - I only need Airbus narrow bodies. They perform better than the Boeings in the fleet, and have longer range capabilities that these Boeings just don't have. And going to a B737NG fleet would be more difficult than going Airbus.

B757/A321 - I would keep the B757 in this case, due to better field performance. The A321 doesn't have to leave the property, but it the A321's would be focused on Florida, not the west coast.

B767/A330 - Get rid of the B767's. Use the A330 due to commonality and age.

Embraer 170/CRJ-700 - Why even have the CRJ-700 when the 170 is a superior aircraft? I would remove the "Express" titles from the 170.

ERJ vs CRJ. I would go with the ERJ only because they are the majority of the Express RJs today... Also, that allows me to eliminate an aircraft supplier.

9. Employee empowerment. Enough said.

10. Rationalize Express carriers. Merge all WOed's to one carrier. That would be an all-RJ airline. I would probably focus non-WO RJ's and props on Mesa and Chautauqua (and their affiliates). The other Express carriers would be eliminated. In exchange for this additional business, I would demand higher operating standards from Mesa and Chautauqua.

11. I would encourage contracts everywhere possible. A new airline wants to fly to MCO, fine, US Airways would bid on the ground handling and customer service handling contracts, aggressively. Same for MX, US Airways should go after contract work where/when available. This would be focused primarily on downsized operations on filling unused capacity created by the changes in operations. I would look for other revenue opportunities such as these.

12. I would focus the company on cost-controls. If it costs money and provides little strategic value, and no profit, cut it. This would include things like the US Airways Club/Envoy Lounge, etc. I would not dismantle the whole program, but I would definitely review whether or not I needed every club, especially at smaller outstations, where they have clubs as a legacy to a by-gone era.

13. My plans would probably get US Airways kicked out of Star Alliance/UAL codeshare. That would not be the end of the world to me, because I am no longer worrying about the guy who wants to go from MCI to SEA.

That's just the top of my head.

 

[Ch. 12]

Funguy,

With all due respect, excluding your thoughts on relocating HDQ from CCY to CLT as well as the bits on the DM program, your "plan" sounds like a summary of the plan that has actually been unveiled recently. I don't disagree with what you have posted but it just doesn't seem any different than what management has proposed.

I agree that retreating from CCY would make much sense. For years we have heard how expensive it is to operate flights out of PIT and how that must change but rarely does the public hear how U is based in one of the costliest cities in the US. Moving management to a cheaper locale that still has a large pool of prospective administration is the best bet.

-Ch. 12

 

[RowUnderDCA]

I think this anti-DC bias is a bit overblown. Crystal City isn't exactly Fifth Avenue. I can't imagine the savings would be that great. I guess the only advantage is that Charlotte would probably roll out the red carpet. How about moving into the District? Say into an emerging neighborhood in SE, near the Navy Yard or in Anacostia, or near New York Avenue? I'm sure that there are tax breaks for doing that! Since it's cheaper, certainly you would agree that it would be a good idea and no need to relocate personnel.

 

[Harry Callahan]

I think this anti-DC bias is a bit overblown. Crystal City isn't exactly Fifth Avenue. I can't imagine the savings would be that great. I guess the only advantage is that Charlotte would probably roll out the red carpet. How about moving into the District? Say into an emerging neighborhood in SE, near the Navy Yard or in Anacostia, or near New York Avenue? I'm sure that there are tax breaks for doing that! Since it's cheaper, certainly you would agree that it would be a good idea and no need to relocate personnel.

DC has a gun ban, Can't move there.

 

[RowUnderDCA]

DC has a gun ban, Can't move there.

We won't miss you. I hope you're not implying that you take a weapon to work, whereever that is.

 

[Ch. 12]

I think this anti-DC bias is a bit overblown. Crystal City isn't exactly Fifth Avenue. I can't imagine the savings would be that great. I guess the only advantage is that Charlotte would probably roll out the red carpet. How about moving into the District? Say into an emerging neighborhood in SE, near the Navy Yard or in Anacostia, or near New York Avenue? I'm sure that there are tax breaks for doing that! Since it's cheaper, certainly you would agree that it would be a good idea and no need to relocate personnel.

Do the comparison yourself. DC is the San Jose of the East. It has long escaped scrutiny b/c it is in the shadow of NYC but the cost of living is sky high and ever increasing there. You should know if that is where you reside. Sell your house there and see what you can get anywhere else. It's not a bias based on anything other than the fact that it is one of the costliest regions in the US. I love the city but many people cannot afford much there. Simple economics tells you that if you can relocate the high-priced mgmt elsewhere, the salaries would not be nearly as high but since the cost of living would be much cheaper, nobody would notice. It's a simple avenue to reduce costs by lowering pay without affecting the management employees' bottom line. Much better than asking for more concessions from the non-management employees that live in far less costly areas but still cannot pay the bills.

 

[Harry Callahan]

To me "Gun Control" Always meant using both hands while discharging the weapon

Apparently it means something else

Bob:
That is right on !
And to the other poster I am not implying that at all.