Details of US Airways' Philadelphia strategy due today
Thursday, February 19, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
US Airways is expected to tell its pilots today how the Arlington, Va.-based carrier intends to defend its Philadelphia hub against low-fare, low-cost rival Southwest Airlines.
The Philadelphia strategy already has these broad components:
Simplify and lower fares.
Improve advertising.
Use US Airways resources, such as its frequent flier program, to entice travelers into Philadelphia instead of nearby Newark, N.J., or Baltimore, where Southwest is stronger.
Showcase what US Airways provides above and beyond Southwest, and convince travelers that they can fly at a low, Southwest-esque price but with more services. "We have products Southwest can and does not offer," said US Airways spokesman David Castelveter.
Use physical changes at the airport to turn around planes more quickly on certain routes, making it easier for US Airways to compete against Southwest's lauded efficiency practices.
The Philadelphia strategy, designed as Southwest plans to start service from that city in May, goes hand-in-hand with the company's larger restructuring plan, which pilots also expected to hear more about at today's meeting in Charlotte, N.C.
The plan, which the company referred to last week in meeting with flight attendants as a "framework for the future," includes eight broad initiatives: increasing productivity to low-cost carrier standards; combining the best of US Airways' existing business model with low-cost carrier strengths; building on the airline's strengths in large Northeast cities; providing consumers amenities they are willing to pay for; using simple restriction-free pricing; marketing directly to consumers; reversing East Coast market share losses; and building a franchise that can grow westward.
The pilots, in their meeting today and tomorrow, also will consider a proposal that would give US Airways flexibility to transfer its smaller, more nimble regional jets already on order to other US Airways Express commuter carriers. The company has told the pilots that it needs this flexibility in case something goes wrong with its regional jet financing from GE Capital Corp., which could pull its commitment if US Airways' junk credit rating worsens.
If that happens, US Airways would like to be able to perhaps sell US Airways-owned commuter affiliate PSA Airlines or US Airways commuter division MidAtlantic Airways to another US Airways Express carrier not owned by the company. That way, the planes would still operate under the US Airways banner, but the company could relieve itself from the costs of operating and staffing them.
In fact, US Airways has already contacted Phoenix-based Mesa Air about buying some of the 170 smaller jets on order from Embraer and Bombardier, and has raised the idea in a meeting with GE.
MidAtlantic is still scheduled to begin service in April, serving six cities from Pittsburgh (Albany, N.Y., Atlanta, Nashville, Boston, Newark, N.J., and Syracuse, N.Y.) and two from Philadelphia (Kansas City and Syracuse). It still is awaiting the necessary certification from the Federal Aviation Administration, which is expected later this month.
The company plans to roll out five additional Pittsburgh destinations in May and two more in June. The goal is to be serving 16 markets from Pittsburgh and Philadelphia by June.
Thursday, February 19, 2004
By Dan Fitzpatrick, Pittsburgh Post-Gazette
US Airways is expected to tell its pilots today how the Arlington, Va.-based carrier intends to defend its Philadelphia hub against low-fare, low-cost rival Southwest Airlines.
The Philadelphia strategy already has these broad components:
Simplify and lower fares.
Improve advertising.
Use US Airways resources, such as its frequent flier program, to entice travelers into Philadelphia instead of nearby Newark, N.J., or Baltimore, where Southwest is stronger.
Showcase what US Airways provides above and beyond Southwest, and convince travelers that they can fly at a low, Southwest-esque price but with more services. "We have products Southwest can and does not offer," said US Airways spokesman David Castelveter.
Use physical changes at the airport to turn around planes more quickly on certain routes, making it easier for US Airways to compete against Southwest's lauded efficiency practices.
The Philadelphia strategy, designed as Southwest plans to start service from that city in May, goes hand-in-hand with the company's larger restructuring plan, which pilots also expected to hear more about at today's meeting in Charlotte, N.C.
The plan, which the company referred to last week in meeting with flight attendants as a "framework for the future," includes eight broad initiatives: increasing productivity to low-cost carrier standards; combining the best of US Airways' existing business model with low-cost carrier strengths; building on the airline's strengths in large Northeast cities; providing consumers amenities they are willing to pay for; using simple restriction-free pricing; marketing directly to consumers; reversing East Coast market share losses; and building a franchise that can grow westward.
The pilots, in their meeting today and tomorrow, also will consider a proposal that would give US Airways flexibility to transfer its smaller, more nimble regional jets already on order to other US Airways Express commuter carriers. The company has told the pilots that it needs this flexibility in case something goes wrong with its regional jet financing from GE Capital Corp., which could pull its commitment if US Airways' junk credit rating worsens.
If that happens, US Airways would like to be able to perhaps sell US Airways-owned commuter affiliate PSA Airlines or US Airways commuter division MidAtlantic Airways to another US Airways Express carrier not owned by the company. That way, the planes would still operate under the US Airways banner, but the company could relieve itself from the costs of operating and staffing them.
In fact, US Airways has already contacted Phoenix-based Mesa Air about buying some of the 170 smaller jets on order from Embraer and Bombardier, and has raised the idea in a meeting with GE.
MidAtlantic is still scheduled to begin service in April, serving six cities from Pittsburgh (Albany, N.Y., Atlanta, Nashville, Boston, Newark, N.J., and Syracuse, N.Y.) and two from Philadelphia (Kansas City and Syracuse). It still is awaiting the necessary certification from the Federal Aviation Administration, which is expected later this month.
The company plans to roll out five additional Pittsburgh destinations in May and two more in June. The goal is to be serving 16 markets from Pittsburgh and Philadelphia by June.
