Transformation Plan Update

[geo1004]

From where I sit Im looking at this scenario? PIT not a hub which means I have to either do my flights out of LGA non-stop or mostly PHL connections.

Methinks you would be wise to see if new non-stops from LGA are added as a result of the PIT reductions? This new plan does mention that significant point-to-point additions will be made in the key markets of DC, NYC and BOS.

 

[Prince of PAWOBs]

Wow! Heavy duty topic.

A lot of what I see in these postings is driven by the local press scaring everyone to death by putting a nightmare slant on everything that anyone says, even persons who are peripherally connected to what goes on at US.

So, the plan is to make PIT into something other than a hub city. Okay, we've all heard many plans in the past to do something with Pittsburgh: Concentrate operations, dump it as a hub, make it less than what it is. A greater question would be: What is the timeframe for this transformation?

The only thing that seemingly changes at PIT for any length of time is the number of flights that come and go, and the posturing that goes on between the various governments and US management.

Wait and see is a mantra that is sometimes hard for the average employee to chant, but I think in this case it might be a better idea than getting freaked out about who's losing their job, what facilities will be closed and how many flights PIT will lose.

Besides, it appears to me that PIT continues to gain flights as of recent, albeit on smaller aircraft with the Express group. And I've noticed that there is road construction going on to the airport (Findlay Connector). Now, I know that there are reasons for road projects other than encouraging airlines to come to Pittsburgh, and maybe my thoughts seem like birds to be caught right now, but wouldn't it make sense to improve the airport at this time if you had a guarantee that someone would be flying out of it?

Of course, that might not neccessarily be US. Wait and see.

 

[RowUnderDCA]

So, Clue, with all due respect, you criticize every plan and everyone talking about the various plans. What, pray tell, are your profitable ideas?

I have to tell you, I find Clue brilliant about everything except Pittsburgh. It baffles me that he actually recommends U staying at PIT, in part, because of monopoly pricing! Either U is going to continue to pursue this bad karma strategy and 'melt like an iceberg floating south' or it's going to change. If it changes, it changes without PIT as big as it is. I always thought that PIT with smaller aircraft providing convenient and efficient connectivity up and down the East made some sense, if the airport costs could come down, but they didn't fast enough. It's the 'do what's good for me, even if it makes no internal sense' attitude coming from the PIT posters that seems SO consistent. What's in the water up there?

So, which is it, Clue: charge monopoly prices at PIT or not. Or charge them to everyone except Clue?

I always had positive impressions of Pittsburgh, until I started reading this board.

 

[RWerksman]

Have you seen the Transformation Plan Power Point presentation? I have and your comments are not in-line with management's plan.

You absolutely blow my mind. I have not seen the "official" plan to see where U is going. They are pulling from PIT, and investing in PHL -- which I believe is a huge tactical error.


In fact, yesterday the Associated Press reported a spokesman for the pilots' union said the airline's plan is a solid one.

"We like what we see," said Captain Jack Stephan, a spokesman for the US Airways unit of the Air Line Pilots Association, which had been very critical of the previous management team led by former President David Siegel, who resigned last month. "This may be the first time that US Airways is going to take part in something truly groundbreaking. It's going to be a change to the entire way we operate."

For every quote you give me, I can return with one just the opposite. Why are you attempting to paint the picture that this is the greatest thing since sliced bread when it clearly is much more average? Your attempt to make it look "groundbreaking" makes me want to puke.


RWerksman, either the company or labor agree to implement this plan in short order or there are rumblings David Bronner will implement the plan "with or without employees" in a pre-packaged bankruptcy.

I know. I have never advocated that employees not support it. I have simply pointed out that a portion of the plan is crap. When I know all the "features" of the plan, I will come out for or against it.


In addition, if a person gets laid off it's still better to have the airline survive with employee support because you get severance pay, COBRA medical insurance, J4J opportunities (some employees) travel privileges, and recall rights in addition to unemployment.

True. No arguement there.




For as long as I can remember, you have been a parrot for management. With millions of lost dollars, thousands of laid off employees, and a feeling of impending doom, you must be quite proud.

 

[USA320Pilot]

RWerksman:

With all due respect, I believe you are in denial about the market and economic realities. Your insults serve no useful purpose when every legacy carrier is facing the same challenges as US Airways.

Respectfully,

USA320Pilot

 

[RWerksman]

I have to tell you, I find Clue brilliant about everything except Pittsburgh. It baffles me that he actually recommends U staying at PIT, in part, because of monopoly pricing! Either U is going to continue to pursue this bad karma strategy and 'melt like an iceberg floating south' or it's going to change. If it changes, it changes without PIT as big as it is. I always thought that PIT with smaller aircraft providing convenient and efficient connectivity up and down the East made some sense, if the airport costs could come down, but they didn't fast enough. It's the 'do what's good for me, even if it makes no internal sense' attitude coming from the PIT posters that seems SO consistent. What's in the water up there?

So, which is it, Clue: charge monopoly prices at PIT or not. Or charge them to everyone except Clue?

I always had positive impressions of Pittsburgh, until I started reading this board.

I always had positive impressions of Pittsburgh, until I started reading this board.

That sucks. Im sorry about that.



It's the 'do what's good for me, even if it makes no internal sense' attitude coming from the PIT posters that seems SO consistent. What's in the water up there?

Give me a few examples of this. Keeping PIT as a hub, I think that makes sense. "Consession stand closed" attitude seems to be pretty much universal. What am I missing?



charge monopoly prices at PIT or not. Or charge them to everyone except Clue?

Charge higher prices -- but not stupid high. Put a fare structure in place that focuses on realistic fares. Price it so there would be no reason to spend 1-2 hours driving when you can fly from PIT for $75-100 more. Try to eliminate the "grandma scaring" fares by auditing competators prices and adjusting so everything falls in line.

I belive O&D traffic will go through the roof with just doing what I have listed above.

 

[funguy2]

What is the timeframe for this transformation?

Prince of PAWOBs:

This was exactly my thought too.

You have a plan. Fine. But if there is no time frame to the plan, then implementation will be poor. Just the way it is.

Meanwhile, US Airways is in a position where it cannot "wait-and-see." What does US Airways expect to change? The writing has been clearly on the wall since prior to bankruptcy.

So I would bet the plan is to continue to rape, pilage, and plunder through the summer, instead of acting immidiately. "Wait-and-see."

 

[RWerksman]

With all due respect, I believe you are in denial about the market and economic realities. Your insults serve no useful purpose when every legacy carrier is facing the same challenges as US Airways.

Denial?

The people that have been in denial for years and years have been legacy airline management -- U included. They saw the changing of the tides, and did way too little to adapt. From my viewpoint airlines are not solely victims of the economy, they are victims also victims of stupidity.

In addition, U is in denial about challenges faced at PHL -- can anyone say BWI?

 

[funguy2]

Clue: I generally agree with you, however, I think LCC's are coming to PIT. whether US Airways is there or not...

If US Airways remains with a hub and "monopoly pricing" ability, that invites the LCC's. The LCC's have swarmed to PHL because US Airways had a hub and monopoly pricing. Whenever you have a situation where one market is paying more for air travel than another, it becomes a focal point for the LCC's. Look at the trends AirTran, JetBlue, and Southwest have all followed. When they enter new markets, they generally don't go somewhere with lots of low fares... They went to BDL, and BUF, and MKE, and ISP, and JFK, etc. These were all markets where the legacy carriers exercised their "monopoly pricing" until the LCC's came in.

If US Airways dismantles the hub, there would be plenty of facilities and probably some under-served markets which would welcome the LCC's. If US Airways doesn't focus on the west, then Southwest, ATA, and America West come in and do that. If they don't focus on Florida, then jetBlue and AirTran do that.

I think its just a matter of time before the LCC's come to PIT, especially since US Airways is wounded. A wounded US Airways makes PIT a much more attractive market than DL's CVG hub or NW's MSP hubs, for example. Also, I think the LCC's, with their hundreds of ordered new aircraft, need a lot of new places to go.

I think the same is true for CLT, but as of yet, US Airways has already publicly admitted that they are wishy-washy about PIT. If the company had the same attitude about CLT, the LCC's would already have a a bigger foothold there.

 

[funguy2]

US Airways can enter bankruptcy and preserve the equity. It's not automatic that the security will be cancelled, therefore, David Bronner could maintain control and file a S.1113 action against any union.

I am sure that's what Hawaiian Air CEO John Adams thought too... Only to find out that his creditors and the judge are fighting him, and the court-appointed trustee is shopping the company around to other potential investors.

Bronner's control in a new BK filing is not a guarantee. The court's control is the only guarantee.

If the unions reject the deal, they are free to exercise self help and the company is free to use replacement workers.

This is true, but it is also a clearly losing proposition for the company. How long will it take to hire and train workers (in any category)? And how does the airline operate in the meantime? And how much does this cost?

The answers: It takes time. The company cannot operate a full capacity in the meantime. It costs a lot. No airline has ever survived a strike with replacement workers, except for the original CO bankruptcy in 83 when Lorenzo broke the Unions. Is that the road you are advocating for US Airways?

 

[Prince of PAWOBs]

I'm with you on this one, Funguy.

US cannot afford to "wait and see", but as I posted in the Top Ten thread, that tends to be the position that most of the company takes on issues concerning profit-making and cost-saving ideas.

Once upon a time......

......there was a S/R manager for a media retailer. He ran a shipping and receiving department meant to be staffed with 17 employees with only three, including himself. The S/R manager always told his employees the following:

"If you think of a better, faster, safer, more efficient way of completing a task, tell me immediately. We will implement it right away, and if it works better than the way we do it now, it will become the new procedure."

The two other employees agreed to share their ideas with the manager, and as a team not only did they accomplish every goal set in front of them, they made the company a great deal of money, the S/R department for their particular store became the third busiest in the entire company, and the paper trail of invoices and billing was not only easily accounted for, but also invulnerable to scrutiny by corporate operations. And the S/R manager always gave his employees credit for the department's success. So, it all ended happily ever after, right?

Of course not. The store manager was not as beneficent as the S/R manager, and constantly tried to take credit for the S/R department's success, and when the S/R department succeeded, the store manager tried every type of sabotage known to mankind to ruin their success. So, one by one (pretty short period, since there were only three of them) the S/R department left the company. The store went down the toilet, and a certain store manager had a lot of questions to answer from his superiors.

The End.

Send this story to someone at US who you think might benefit. Let them come up with their own moral.

 

[ClueByFour]

So, which is it, Clue: charge monopoly prices at PIT or not. Or charge them to everyone except Clue?

Alas, I don't reside there anymore, so US can only hit me up to visit.

US, in the short term, _needs_ to retain pricing power in a major market or two to get thru the revenue shortfall that is going to befall PHL in shorter order. Once the theorectical transformation starts to take gain, you slowly ramp down the fares (at places like PIT).

US' cost per pax at PIT, before they started pulling down, was $7.25. After the debt reduction of $15 million/year or so, that would have put it at $6. Even after the pullback (thus far), it would have been down to around $8 which is right about where PHL is.

Had US expressed (pardon the problem) their intentions to PIT early in the Chapter 11 process, they might have gotten an immediate relief of $15 million/year, and had a much better shot at getting some more bucks from the state, perhaps as much as a $30 million/year reducton in the debt service. That's 50%, friends--not bad for an airport that US demanded and basically designed in the first place.

I'd go so far as to say that if US did rationalize their fares, the costs at PIT would drop at least a buck per pax, as you would pick up the half-million boardings a year that drive to CLE or CAK.

Let me say a few words about what U ALPA thinks of the plan--here is a group of guys who did not grant flowthru/flowbacks or any meaninful RJ relief until their backs were against the wall. They liked the chances coming out of Chapter 11, they initially liked Siegel. As I've said in the past, two things are universally true:

1. U ALPA likes anything that gets the top 51% of their active list one day closer to retirement. Selling out the junior folks, the furloughees, and every other union on the property has and will continue to happen in order to keep a seat for the top 51%.

2. If the ALPA folks, from the LECs to the spokespeople to the officers and support staff at ALPA International knew anything about running an airline, they'd be doing it. They are interested in keeping as many dues paying mainline pilots in a seat as they can, and everything else is secondary. It's not a shocker that the pilot group that has obtained the best job security, some of the best overall compensation, and is savvy enough about the business to do both is NOT alpa (I give you the SWAPA).

 

[funguy2]

Clue:

Good post, and I see your point about the need to retain pricing power at PIT in the short term. Unfortunately, the company's ability to retain pricing power is very tenuous, as it vanishes with any significant LCC entry (See PHL and before that BWI).

Do you remember what happened when America West entered PIT? US Airways dropped fares to $79... Not only to PHX, but to every city US Airways served on the West Coast. US Airways did not say drop PHX fares to $79 and then drop the others to $99 ($20 premium for non-stop service). Do you think this cost US Airways money? I do.

All it will take is a minor increased incursion by LCC's to PIT, for US Airways to slash its wrists and bleed at PIT for the sake of market share. The company cannot afford to continue to defend its monopoly pricing power like this over and over again, as it has. (See also AirTran to LGA and MDW, Nations Air to PHL and BOS, Vanguard to MDW and MCI, etc). This is a structural flaw with PIT. One way to fix this is to simply move on. I don't like it any more than anyone else, but I think its the economic reality. I think this is what AA saw at BNA and RDU. I think this will eventually catch up to DL at CVG and NW at MEM.

 

[firstamendment]

Clue said: No ability at all to commute in or out of PIT.

The folks from LAX, SFO, SAN, SYR, BWI, MIA, and agents from DAY, IND, the west coast, and Florida understand and feel your pain. You are now experiencing the pain and anguish that many over the years have felt. Like all the others, you will either do what you have to do or b**** about it. Advice? Go talk to the former PSA f/a's. Those people are troopers. <_<

 

[ktflyhome]

I have a question: If Pit becomes a focus city and no longer a Hub. Would it still be a base??? In the past when Bases closed the company paid for relocation. Wonder what would happen in Pit??? And do they still even pay for relocation at all?

And you are right First Amendment, I have talked to many who have commuted from the West Coast, Kudos to them all.