Aviation Week Article

[Justme]

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U.S. Airline Future: In the Eye of the Storm
By Anthony L. Velocci, Jr.
02/29/2004 11:25:47 PM

IN THE EYE OF THE STORM

////Beginning in the middle of the story////

.....Waiting in the wings are embryonic groups that aspire to be the next JetBlue success story. "There are a lot of people who are trying to launch a low-cost carrier," said Ray Neidl, an analyst at Blaylock & Partners. "Most won't get off the ground, but you can't dismiss the possibility that someone will have the same winning formula--a good concept, good management and plenty of capital."

There was a time when traditional hub-and-spoke airlines gave little or no credence to the low-costs. "Now majors are more worried about low-cost competition and less about terrorism," Baggaley said.

They have good reason to worry, of course, but it's US Airways whose survival is most at risk.

This spring, Southwest plans to invade US Airways' fortress hub in Philadelphia, which generates about 17% of the latter carrier's total system revenues. US Airways already faces stiff competition from other low-cost airlines in the six markets Southwest will serve initially. As a result, the immediate impact may not be as dramatic as many observers expect.

But in the longer run, Southwest is expected to make mincemeat of US Airways because its operating costs are so much lower (7.7 cents per available seat mile versus US Airways' 11.7 cents in the fourth quarter of 2003). The likely outcome of this competitive mismatch is that US Airways' viability as a network carrier may well come to an end forever. To make matters worse, JetBlue has also successfully penetrated some US Airways markets on the East Coast.

Buttrick shares Neidl's somber outlook. "It's extremely difficult to be optimistic about US Airways' long-term future," he said. "As the carrier is now configured, it will be almost impossible for them to make it."

Still, even the most troubled airlines have demonstrated a remarkable ability to hang on in the face of seemingly impossible odds. There's no better example than Trans World Airlines, which practically was on life support for 10 years. In the case of US Airways, Buttrick pointed out that it posted respectable profits several years in the mid-to-late 1990s. There is nothing to preclude a bout of profitability in the future as demand for travel continues to improve, although its long-term outlook is extremely poor, he said.

Here is the entire story: http://www.aviationnow.com/avnow/news/chan...ws/03014top.xml

 

[Flying Titan]

Nothing new or earth-shaking here -- just a statement of what most people believe. US Airways and the other legacy carriers have to find mroe efficiencies to compete with the LCCs over the long term.

Of course, the devil is in the details. How will costs be reduced?

Is management strong enough or smart enough to find ways to develop new or improved revenue streams in this environment. US Airways and many of the other legacy carriers have core strengths that give them their own advantages in this battle (comprehensive route systems, schedule frequency, strong FF loyalty, attractive ammenities for biz travelers, etc.). Will they use them - or will these advantages be wasted? Time will tell.

 

[usfliboi]

Its amazing to me that some can read these things and yet talk facts a la their way! We have to adapt, and change. I hate the fact they we have given and give and yet were having to give again. However when reality is as clear as it is today , I for one am for it.

 

[ITRADE]

Interesting how the article focused solely upon costs yet folks think that the only solution is revenue. With LCCs coming in, revenue is not going to be the answer.

 

[BoeingBoy]

ITRADE,

The article at the top of this thread is but one of several from Aviation Week - the rest are only available with a paid subscription. I posted them to start the thread "U.S. Airline Future - In the Eye of the Storm".

Take a look at the one that talks about the big six network carriers (and the accompanying charts a few posts after the last article) and you might see why our costs are still high.

Jim

 

[insp89]

ITRADE,

The article at the top of this thread is but one of several from Aviation Week - the rest are only available with a paid subscription. I posted them to start the thread "U.S. Airline Future - In the Eye of the Storm".

Take a look at the one that talks about the big six network carriers (and the accompanying charts a few posts after the last article) and you might see why our costs are still high.

Jim

Now be careful Jim, You might confuse them with Facts..

 

[Just Plane Crazy]

The problem with in the six legacy airlines (and not just them) is that starting at the management down to the lowest paid employee there is a common factor hindering a turn around. No one wants to admit that they have to give up something to make a future happen. Unions are not helping to that fact neither. Every one is asking "What is in it for me and why do I have to do something"!

Every one has to do something. Starting in the management to limit their income to a reasonable amount and to the higher paid employees to make some consessions and let the ones that are allready working for minimum wage have a breather.

Executive Management should not receive any sallaries in the millions. Pilot's should start acting like adults. Flying less than 60 hour a month and making +100K/year is not reasonable. Get your feet back on the ground. If youwant to get paid that amount fly 75 or more hours a month. Don't always ask what is in it for me. Frankly answered : YOUR JOB! If all of them continue that way they do the result will be that the one or other airline will face the same ending like PanAm, Eastern and if you are lucky like TWA. At least some of the staff had some additional month to work.

As I said, all changes and giving has to be made by all but it should not stop anyone to speak out lound and start the ball rolling.

Don't let the following be engraved in your Resume and company tumbstone:

" Dinosaurus imobiles " Extinct because he (they) did not want to change!

 

[Winglet]

It's management that sets the schedule and makes up the flying lines. They can fly pilots up to the contractural limits, but they don't a lot of times. Don't blame pilots for flying less than their contract calls for.