Time for my two cents.
US is in a real bind here. For a number of reasons.
While the company has made significant strides in reducing costs, its still not quite there yet. Business travel is returning (somewhat), but is still not there yet, and as is discussed below, may never return to what it was prior to 9/11. Throw in the market pressures and constraints and things only get worse.
US has significant core assets. It has slots at LGA and DCA. It holds leases to terminals/gates at at least two very desirable airports (PHL and CLT), at some not so desirable airports (PIT). US has a significant number of new planes that have lowish mileage on them (some are, of course, coming up on their first heavies). The company operates primarily into and around the most densely populated area in the country - an area with significant business and personal wealth is located. And, it is anticipated to become a large alliance member in the very near future.
Unfortunately, a lot of the positives are also negatives.
As everybody knows, the three hubs are all within a 500 mile diameter of each other. This create overlap and redundancy. As such, there are inherent losses built in the the airline's network. That being said, its quite difficult for US to part with one hub without damaging the two other hubs. US could lose PIT. But it would place strains on CLT and PHL by 1) increasing the flight burdens at already burdened airports, 2) further restrict and reduce the connectivity of east-west traffic, and 3) eliminate what is probably the one hub that can best withstand bad weather.
Another problem related to the hubs/routes is the close proximity of the cities. The fact that many of the routes flown by US are less than 300 or 400 miles in length creates significant problems. First, owing to the events of 9-11, it has become significantly more inconvenient to fly. The days of taking the taxi to the airport, checking in 35 minutes prior to scheduled departure and sauntering up to the gate are OVER. You must realisticly be there 55 minutes prior to departure and endure annoying processes including 1) pulling out your driver's license at least three for four times, 2) taking off your shoes, belt, watch, jacket, hat, or any other item that might concieveably contain metal, and 3) waiting in multiple lines. These annoyances have forced some passengers to completely forego some short trips entirely and simply resort to other methods including ....
Conference calls and video conferencing. While archane even five years ago, conferencing is big, big, big these days and has reduced a significant amount of discretionary travel. Where a deal required four or five trips, a deal may require as little as one or two trips (initial consultation and final consummation). So, these business travelers are lost and will not return to flying.
The security hassles and technology advances have affected the profitability of the once vaunted Shuttles. While you will certainly still get top dollar passengers, you're getting fewer of them. Toss in the fact that there are essentially four NE Shuttles (AA, DL, US, and Amtrak), and you've got a LOT of supply for a smaller quantity of demand.
You've also got interior problems. Work groups don't trust management. Management is not excited about dealing with militant work groups. Efficiencies exist in staffing, routing, management overhead, fleet utilization, etc.
Finally, you've got external forces in the name of competing carriers. JetBlue, AirTran, Southwest, and the like continue to pressure US. All three are either based on the East coast or are making the East coast their primary area of expansion. So you must deal with them. You cannot run as there is nowhere else to run.
So what to do. Just a few thoughts.
#1 On the cost side, you can do some things. As folks have mentioned, employ a rolling hub system at both CLT and PHL. The banks at both airports are huge and can be reduced. This will both increase aircraft utilization, reduce excessive headcount, increase gate efficiency, and improve costs. If the company is concerned that the rolling hub system will create connection breaks, consider operating smaller aircraft on the routes where smaller planes can operate with higher frequency. For those cities with only 2x or 3x daily service, you'll have to hold them in the middle or end of the bank. But others can work around those times to ensure connectivity.
#2 I don't expect the unions to give much in the way of further concessions. That has been made clear by the militants or the board. Frankly, I don't feel that they should be giving up items in the form of pay cuts or benes. If there are to be changes, you should consider streamlining work rules and improving productivity. And, unfortunately, if you find that you're going to cut heads, you'd have to cut where the outsourcing is possible - i.e. utility. Sorry guys, but the work can be done by most anybody for less money.
#3 On the revenue side, you will really want to look at what America West did to their revenue structure. You may already be testing this out by seeing who bites on the reduced F class fares in selected markets. If you find that this is working, stop doing what you're doing on the 757s and place at least 16 seats into them, and curtail any plans to reduce A319 and A321 F class seating. You're not only reducing potential F class revenues, you're also reducing the incentive for US1s and US2s for continuing to support your airline.
#4 Get out of CCY. Its time for US management to wear your hearts on your shoulder, tell it like it is and pray that the work groups accept your message as truth. You've got serious internal PR problems. Hiding in the Crystal Palace does nothing but create a besieged Hitler-in-the-Bunker attitude. Even if you think that the union heads don't want to hear it, you've got to get the message out to the rank and file.
#5 To the rank and file. I honestly believe that the folks in CCY are trying to run the company. They have had a lot of rubble and wreckage left to clean up from at least 10 - 12 years of prior mismanagement. If they seriously wanted to make millions of dollars, pillage a company, and retire to some sunny beach on Maui, then they certainly came to the WRONG company and the WRONG industry. These MBA types could have easily made more money and had a better lifestyle at consulting firms, top manufacturing firms, and other companies. The fact that many came to US Airways - knowing the troubles that it has faced over the past decade or so - clearly indicates that they believed that they could make things work and make the airline a success. Again, if they were in for a quick buck, then the airline industry would be the LAST place to make that quick buck.
#6 Court your passengers. The nickeling and dimeing that has been going on has done more harm than good. Your US1s and US2s bring LOTS of revenue to the airline, and while we are extremely supportive of US Airways, love the employees who work here, etc., we simply are getting tired of the unclean aircraft, the chincy service (primarily food/beverage), and continuous flip-flopping on policies and services. Take some time, pull up a mailing list, call together a group of your US1s, US2s, and US3s from the big geographic areas and listen to what they have to say. They are stock brokers, sales managers, attorneys, consultants, educators, and businessmen from every corner of the economy. They have a pulse on what passengers like, what draws them to a carrier, what repulses, them and what they know to make a entity successful.
OK, I'm typed out. Will ponder more later.
