Us Airways & Industry Analysis

[ClueByFour]

We have full agreements now with 4/5 unions, and the remaining union's members will still be working, and get to vote upon thier future rather than walking and closing the doors like so so many have said would happen.

Under bankruptcy protection. I can train a monkey to beat unions into submission in Chapter 11. Southwest got agreements from it's major unions in 2 years, outside of Chapter 11.

The tough issues of retiree costs and pensions have been settled now as well.

By ditching them. You cannot possibly be callous enough to consider that to be a positive development.

We have been told a POR is coming soon, in about a month. While others languish in Bankruptcy, we are getting done what needs to be done, and moving on out.

Note how well the last "sprint" thru Chapter 11 worked--right back in bankruptcy!

The ATSB, GE, Embraer, BoA, and Bombardier have all come to agreements with the company, and support our effort/future.

Right. It's called sunk money--except in the case of the ATSB. GE is taking aircraft back. The votes of confidence are overwhelming!

Doubt all you want, but as one who witnessed the CAL turnaround, and as one who has studied both the Valujet/AirTran and AWA turnarounds... Things were just as or more dark for them before it got better.

CAL had much better management, and turned it around at a time when a monkey could have made money flying airplanes. AWA has a management team that thinks outside the box, and the Airtran folks are probably second/third to LUV and B6 in their thinking.

US has (largely) the same crew of people in CCY who drove the place into the ground. Twice.

Good luck. I hope you take those rose colored glasses off before each pushback.

 

[mrman]

Or, in another scenario, mainline would stop subsidizing fares to all the little "cities" served by those airplanes/carriers and let those folks either pay their own way or drive to a big-city airport. Notice that SWA, JBLU and the other LCC's don't serve small cities, but skim the cream off the large markets that have high traffic numbers.

[post="236431"][/post]​

[/quote]


Huh, WN flys to AMA, BHM, CRP, HRL, JAN, ISP, SDF, MAF, MHT, RNO, LBB, GEG, PDI just off the top of my head. And they compete very nicely as their competiton in most cases is RJ's

Ah MAF now that is one "cherry picked" route

 

[WorldTraveler]

I know this is late in the topic but a few corrections are in order.

DL's new fares are no more complicated than WN's fares which also has 1 night minimum stays. DL's new fares have the same minimum stays as FL's. AA, DL, and US have all offered similar rules to the LCCs in the markets they have introduced them. More significantly, try to fly AirTran or any of the LCCs to more than the 60 or so cities they serve. Combined, the LCCs don't serve more than 100 cities in the US. The legacy carriers serve multiples of that number. Don't get too worked up about the differences in fare structures until those carriers come to the same airport and offer similar services.

320pilot is right that getting costs down is important but building a viable business model is more important. Cutting costs multiple times and alienating employees is not the method that turned AA and DL around. If US and UA want to survive, they have to revamp their business model. In US' case they have to aggressively fight for their survival. Sadly, US is so wounded that everyone can smell, if not taste the blood.

Finally, DL's management has stated in the press that the Merrill Lynch estimate of the negative hit of their fare initiative is far less than what ML predicts. I'd read all of the other negative impacts with just as much caution.

 

[JS]

Because Jamestown to Erie drive is about 1 hour. Jamestown to PIT drive is 4 hrs. Jamestown to BUF drive is 2 hrs. I think a 1 hour drive is not unreasonable. I think people are probably already driving Jamestown to BUF and maybe CLE to get good fares, and if they could drive less, like to Erie and still get a good fare, it gives them a reason to pick US Airways from Erie vs someone else from BUF or CLE. Furthermore, it increases loads at ERI and eliminates the expense of running a station at JHW.

I think US Airways should stop trying to fly turboprops to every small town, and focus on a few of them... This will allow US Airways to fly larger aircraft, which customers prefer and have lower CASM... A win-win. The only "hitch" is that you have to convince the some folks to drive... But I think it can be done... I think US Airways could "consolidate" operations in the following areas:
ELM/ITH/BGM can be consolidated at BGM
JHW/FKL/ERI can be consolidated at ERI
SCE/IPT/DUB can be consolidated at SCE
MGW/CKB/LTE/AOO/JST could be consolidated at PIT
EWN/PGV/OAJ could be consolidated at EWN

I think people would be willing to drive, IF <big IF> the fares for the remaining service at BGM/ERI/SCE/PIT were consistently low like an LCC. If Southwest can do this at MCI (people drive in from Topeka and Wichita), and SDF (people drive in from LEX and CVG) and at BHM (people drive in from HSV and MGM), then US Airways should be able to replicate it on a smaller scale using ERJ-170s or CRJ700s and smaller airports like BGM, EWN, and ERI. This is the kind of outside the box thinking that US Airways needed to do several years ago.

Imagine how different US Airways would be if they had simplified their fleet to A330/A320/A319/B757/ERJ-170/ERJ and had consolidated some of the smaller markets into smaller low-fare regions with a competitive Southwest-style service at the smaller airports (by which I mean flights in almost every direction N/S/E/W with ample connecting opportunities nationwide). If that described US Airways, you'd have a much healthier company right now, in my opinion.

[post="236481"][/post]​

There is a flaw in your analysis, and that is that you are assuming everyone flying out of those small airports lives there (and drives a car, which most do).

What if someone is visiting? Expecting a business contact, friend or relative to drive 2 or 4 hours roundtrip instead of 15 minutes is a bit much. Even worse, taking a taxi 100 miles is out the question. Southwest notwithstanding, the whole point of the airplane is to save time!

US pulled out of Latrobe PA, Hickory NC and Kinston NC. NW has since started service to Latrobe and Delta will soon start service to Hickory and Kinston. Let's see, bankrupt carrier retreats while relatively healthy carriers expand. I don't think it's a coincidence.

 

[RowUnderDCA]

Right, U should focus on being the hometown airline for LGA, BOS, PHL and DCA ... and PIT and FLL, too I guess and create a connection network over those 'hometown cities'... with CLT as a traditional hub.

 

[USFlyer]

Funny... On my road map I-90 goes through GEG and ends in SEA.

[post="236398"][/post]​

Try it, it's a bit** of a drive.

 

[mweiss]

Try it, it's a bit** of a drive.

[post="236563"][/post]​

Only the part through Snoqualmie Pass...and mostly in the winter. But, yeah, it's pretty rough in the winter.

 

[Rico]

Haha Clue, you are one of the first to have said we would be dead long ago.

You are

WRONG

 

[ClueByFour]

Haha Clue, you are one of the first to have said we would be dead long ago.

You are

WRONG

[post="236577"][/post]​

Uhh, you are still in Chapter 11, have no financing, just had an operational meltdown of epic proportions, and are staring down the barrel of pissed-off machinists. Oh, and LUV justed showed up in the last of the fortress hubs/focus cities. The bankruptcy judge is not sure that U can make it. I guess wrong is relative.

Again, I hope you take the rose-colored glasses off before push.

 

[mweiss]

Clue,

It's like the junkie who, after the fifth time waking up in the hospital being treated for an overdose, assumes that he'll never die.

 

[RowUnderDCA]

Now THAT's a good metaphor and no need to refer to guns, drugs or sex. Well..... drugs.

 

[funguy2]

There is a flaw in your analysis, and that is that you are assuming everyone flying out of those small airports lives there (and drives a car, which most do).

What if someone is visiting?  Expecting a business contact, friend or relative to drive 2 or 4 hours roundtrip instead of 15 minutes is a bit much.  Even worse, taking a taxi 100 miles is out the question.  Southwest notwithstanding, the whole point of the airplane is to save time!

US pulled out of Latrobe PA, Hickory NC and Kinston NC.  NW has since started service to Latrobe and Delta will soon start service to Hickory and Kinston.  Let's see, bankrupt carrier retreats while relatively healthy carriers expand.  I don't think it's a coincidence.

[post="236545"][/post]​

Wait just a minute here... It is US Airways' management stated goal to transform itself into an LCC... I am just stating how it should be done, in my opinion. DAL is a high-cost legacy airline. High cost legacy airlines fly to smaller markets with their regional partners...

Regardless, people visiting can't rent cars? Or have their family come pick them up? This system has worked remarkably well for Southwest Airlines. Remarkably. So much so, that they named the "Southwest Effect" for them. Of course, the "Southwest Effect" refers to the idea that when Southwest lands at an airport, the "driving radius" of that airport's users increases. AirTran even put out a few press releases refering to the "AirTran Effect", siting the same principles at locations where AirTran added the first Low-Fare service.

Furthermore, there have been real impacts of the Southwest effect in larger metropolitan areas than Kinston, NC. Lots of folks drive from Wichita to Kansas City or OK City. So much so, that the local politicians lobbied and won an extension the Wright Amendment (I believe named Shelby) in order to woo Southwest. The Wichita area has lured other low-fare airlines to its facility, namely AirTran, Mesa (as Frontier JetExpress) and Vanguard. It seems to me as the folks in Wichita has some hard evidence that people are driving to other airports instead of flying out of ICT. The airport is certainly funneling money into the cause of recouping "lost" passengers.

Now, that doesn't mean ICT has no service. But this is where we get to the difference is size and proximity to a major airport of places like Johnstown, and Kinston, etc.

Furthermore, there are a lot of examples from history where this "phenomenon" has already happened: Wilmington, DE, Owensboro, KY, Jackson, TN, Anniston, AL, Hutchinson, KS, Waterloo, IA. Now, despite the fact that these airports no longer have air service, I presume that people (locals and vistors) still find a way to get there. Now, what is also true, is that many of these examples were not the impact of LCC's, but rather legacies offering better service and fares from the nearby large airport (like PHL, DSM).

Will Delta and others try to recoup the service? Maybe. But when LCC's drive down the fares and increase nonstop options at nearby airports, many folks will choose to drive, making service at many of the smaller airports no longer viable. That's my opinion. US Airways could have been on the fore-front of this trend in its markets, but it chose not to be (by inaction). That's my opinion.

 

[JS]

OWB, MKL and ALO still have air service. In fact, I flew to MKL a few months ago (Jackson, TN).

 

[funguy2]

OWB, MKL and ALO still have air service.  In fact, I flew to MKL a few months ago (Jackson, TN).

[post="237652"][/post]​

You are correct and I was wrong with those examples... The scheduling database I used to check my info excluded these cities although they do have service... ALO from NW/MSP, MKL and OWB from AA/STL.

But the point is still that this is not low-fare service, like what US Airways says its aiming to provide. I am sure there are nuances and subtle problems with my examples, but the point is that Altoona does not have low-fare service, and the legacy airlines which fly there are likely not to be able to provide it .

I went and looked at Great Lakes Aviation's webpage and financials. I chose Great Lakes because they are one of the few all-turbo-prop airlines left in the USA, who happens to post their financials online. They are probably one of the few publicly owned all prop operators... The others (like CommutAir, Colgan, and Gulfstream) are probably privately owned.

Anyway, Great Lakes showed their 3Q04 CASM at 22.6cents. This compares to most LCC's at less than 8 cents, and US Airways mainline below 12cents. There is one LCC which has turbo-props in its fleet, that I can think of, and that's America West. This seems to be a hold-over from their pre-LCC days (prior to their fare structure change a few years back). Otherwise, no LCC uses props. The LCC model involves high-volume markets and low-cost service methods. The turbo props are best situated for extremely low-volume, relatively uncompetitive markets, and while they may be the most cost effective method of service these types of markets, they are not really low-cost providers in the same sense as Southwest and jetBlue's aircraft.

I think if you can get people into their cars and meet them at a consolidated service point, where you can offer them multiple options on RJ or better equipment, you can lower your total costs of business (by operating at less locations) and add value to the customer (by offering more flights/day, more destinations, jet equipment, and lower fares through lower costs). That is just my opinion, based on the fact it has worked on a larger scale for Southwest and other LCC's.

 

[BoeingBoy]

funguy,

I wouldn't call it quibbling with your analysis - more like adding a little info....

Given equivalent seating capacity, the turboprop has lower CASM than the RJ - primarily thru lower acquisition and fuel costs. Great Lakes has a mix of 19 and 31 seaters.

As some have posted here, the Dash 8-400 has better financials than either the CRJ-700 or Emb-170. The biggest problem is passenger perception and speed/range.

Jim

[added by me] I assume that Great Lakes' 22.6 cent CASM is not all inclusive, since they code share with Frontier and United - no reservations/sales cost plus possibly some other costs picked up by the code share partners.