livingontheedge,
I think this is the article you mean. The Charlotte Observer has gone to a free subscription online service.
Jim
Posted on Wed, Aug. 04, 2004
Trouble in the air
Marketplace sends message to US Airways: Change or die
Independence Air's launch this week of low-fare flights from Charlotte produces mixed feelings here.
US Airways and its predecessors have been important contributors to this region's economic growth. From Charlotte/Douglas International Airport, passengers have good access to almost anywhere -- but often at high prices permitted by lack of competition at US Airways' largest hub.
At some point high costs overcome old loyalties. That's why Charlotte fliers welcomed ATA's service to Chicago and now Independence's service to its hub at Washington Dulles.
The inescapable fact is that US Airways and other big carriers are tied to a business model that no longer works. Their costs are out of line with their competitors', and they're locked into situations that make it hard for them to change.
Yet low-fare airlines now compete for 70 percent of US Airways' revenues. The airline has to offer competitive prices or lose business. Neither choice is good. Losing passengers costs money, but so does selling tickets at prices that don't cover the cost of a flight.
US Airways problem is well-known: Its costs are the highest in the industry, far greater than those of its upstart competitors. One comparison found US Airways spending 10 cents to fly a seat a mile, not counting fuel, while Southwest and America West spend roughly 6 cents.
The company is trying to avoid a second bankruptcy by complying with the requirements of more than $700 million in federally backed loans. Executives say the airline can become a low-cost carrier if it can cut $1.5 billion from its annual costs, including $800 million in labor costs. They've set the end of September as a deadline for new labor cuts. CEO Bruce Lakefield, in a July 15 statement urging employees to cooperate, spoke the unpleasant truth: "Given our current cost structure, we can't preserve any jobs with any certainty, and we certainly cannot grow."
For our region, this isn't just a case study of an aging industry undergoing a rough but inevitable transition. US Airways employs nearly 6,000 workers here. They're our friends and neighbors, and they've taken big cuts already.
For them, the failure of US Airways would bring hardship. For Charlotte, the failure would mean disruption but not disaster. As Jerry Orr, aviation director at Charlotte/Douglas, has said, an efficiently run airport in a well-populated area will always attract airlines.
Many in our region are rooting for US Airways. But to make it, the airline must be competitive. Its employees will have to cooperate in the cost-cutting or take their chances in bankruptcy court.
No business can bank on customer loyalty overcoming the lure of a better price. After all, N.C. textile workers are among the shoppers at Wal-Mart, a company that can offer lower prices because it buys goods produced by cheap labor overseas. There's no escaping the reality of the marketplace. US Airways must change or die
