Us Airways' True Problem Created By

[openview]

MMWorks

thanks for the welcome. Yep. new to the systems. Great forum for discussion. Too bad its not on thehub or somewhere more avail to all. Communication, logic and facts are the only keys to success of U. I have been in, and seen both sides of union and mgmt. And there is a frightening, age-old disconnect and mentality.

 

[ITRADE]

MMWorks

thanks for the welcome. Yep. new to the systems. Great forum for discussion. Too bad its not on thehub or somewhere more avail to all. Communication, logic and facts are the only keys to success of U. I have been in, and seen both sides of union and mgmt. And there is a frightening, age-old disconnect and mentality.

Actually, not being on the Hub makes it more available. The Hub is password protected and restricted to US employees. This way, employees, passengers, investors, and employees of other carriers may post.

 

[openview]

Itrade

Thanks, I relize that. I guess I meant for the folks without home PC's or internet conx.

 

[PITbull]

MMWorks

thanks for the welcome. Yep. new to the systems. Great forum for discussion. Too bad its not on thehub or somewhere more avail to all. Communication, logic and facts are the only keys to success of U. I have been in, and seen both sides of union and mgmt. And there is a frightening, age-old disconnect and mentality.

Hmm, "disconnect"? Where have I heard that word before.

New, are ya???? h34r:

 

[openview]

well new here to this site, but not to many of the problems and relations at UAir I guess

 

[MrAeroMan]

Aeroman,

I will admit that at one time, we had decent contracts that provided for a "quality of life" that made us secure as workers. As far as the business model, it was sustaning through all types of enconomies. When there was a "downturn", we stepped up to the plate as labor, when their was an "uptick" in profits, our managments thought of us, and we negotiated back what we gave. There have been no "real" improvements since the early 90's to all of our contracts. What management is going after is long sustaining language that basically made these jobs attractive in all groups.

So, I pose the question, with all the "give backs" to the tune of $1.2 billion, NOT counting pension terminations (credit was not given to the pilots for that), all the furloughs (no group got credit for that and pilots and f/as gave up furlough language) where do you see the present" waste" or shall I phrase it.....provisions that just don't allow the company to compete? Keep in the forefront of your mind if you ARE a U pilot that our "duty rigs" have at present ONLY a 3% penalty. Which is now insignificant to c/s thanks to the automated "optimizer". Keep in mind also, that this 7th largest carrier has only 27,000 employees left; down from approx 47,000 in Sept, 2001.

In other words, what's stopping this company from competing?

I wait for your response.

Pit,

There isn't "one" item that is keeping the company from prospering. Just like any major airline "accident" there are several things that go wrong that contribute to the "snowball" effect that results in the accident. This is no different.

First of all there is the productivity issue. It's a fact that the LCC do more with less employees. I believe the figure I heard is Luv has 75 or 80 employees per a/c while U has over 100. I'm not saying my figures are "fact" but even so the LCC's are doing more with less. U has to increase productivity in this area to compete.

Secondly is the LCC's have a very young and growing work force. It costs less to have a younger workforce than it does to have a "seasoned" workforce. Seasoned employees are paid more, get more time off, cost more (on average) to supply health insurance and the list can go on and on. One way for U to counter this is to offer an early out for those seasoned workers. While it is expensive to do that they should look at it very closely as a way to bring some younger, less paid people back on the property and let the more senior people leave that want to.

Thirdly the LCC's are constantly adding aircraft and destinations and their revenue is growing each year while the legacy carriers are seeing their traffic drop as well as their revenue. Interestingly, the drop in traffic at the legacy carriers is the same as the increase in traffic that is being reported at the LCC's. Fact of the matter is people are leaving the legacy carriers for the LCC's in droves and that trend will not be ending anytime soon. U has dropped service and a/c as well as employees as you have stated. Cutting destinations, frequency and a/c is not the answer. They need to grow the airline but if they do with the current cost structure the losses will widen. Honestly they are caught between a rock and a hard place.

Fourth, the LCC's are constantly innovating and the legacy carriers always seem to be in a reactionary mode. They keep defining their competitors product rather than airlines such as U out in the forefront defining what their product is. Luv says (not directly but in many indirect ways) airlines such as U are overpriced and expensive to fly. Fact of the matter is that is true in many markets but in many other markets U is in fact cheaper than Luv point to point. U needs to let the public know that in some way. Marketing is absent and has been for several years so until they get the cobwebs dusted off of their suits this will continue no matter how cheap U offers up its fares. U might want to do some hedging of fuel. It doesn't take a rocket scientist to see how it cost U millions in additional fuel expense than Luv and that cost isn't being made up with additional revenue.

Last, they need to redo the stinking route map. Hubs are too close together and underperforming. Years ago they gave up point to point flying to shuttle pax through the hubs to cut costs. Big mistake. They need to do more point to point out of NYC, Bos, Dca, and fix Phl.

One last thing the LCC's have that U doesn't is a management team that seems to communicate well. U's team does not communicate at all unless it's with doom and gloom. If that doesn't change it doesn't matter how much in concessions or give backs or right sizing or whatever the word of the day is, it'll be curtains for U.

 

[BoeingBoy]

MrAeroMan,

You make many valid points - especially the first point that there have been a "chain" of events that has gotten us to our presend position.

The "headcount" issue is one that we can't hope to win as long as we stay with the traditional hub & spoke model. And just as an aside, JBLU's Neeleman said just the other day that they will have to hire 100 people per new plane added to the fleet.

Article

The early-out would probably work great for most of the workgroups. For us pilots there are two problems - the new pension plan means we pretty much have to work as long as possible to make up for what was lost when the old plan went away, and we would need to recall about half the furloughed pilots (assuming they all wanted to come back) before we got to those that wouldn't be at top-of-scale.

You're right about growth & the route map. We shrank more than anyone else and we're paying the price for it with the older workforce and little point-to-point flying.

Three hubs (2-1/2???) in close proximity is not good if we ever aspire to be a truly national carrier. Of course, being a true national carrier is probably not in the cards for us anytime soon. Given our "core market", our hubs are in pretty much the best cities available.

Closing PIT (without someone's "westward move") would probably cost revenue. Customers from western PA, WV, western VA, Ohio, and the like would possibly fly someone else rather than fly east to PHL to go west or southwest. Of course, the revenue could be offset by the airplanes freed up for other flying.

PHL, while having good O&D traffic, underperforms for the size of the metropolitian market for two reasons. First is the proximity to NYC and DC - we have to compete with auto and rail for the traffic to two of the biggest business markets in the country. Second, WN has had an impact on PHL yields since long before they announced PHL service. Once their BWI operation got into full swing, they have been competing with us for the connecting N-S traffic. It's no accident that PHL has the lowest yields of our three hubs.

Jim

 

[Beef or Chicken]

Quote by Mr. AeroMan:

First of all there is the productivity issue. It's a fact that the LCC do more with less employees. I believe the figure I heard is Luv has 75 or 80 employees per a/c while U has over 100.


Beef or Chicken responds:

This is an interesting point. It seems that whenever the subject of employee overages are addressed, the implication is that there should be changes made to the staffing levels, pay or work rules of the front line employees.

But who determines staffing levels in the other departments of this company? How many people's jobs have been audited and/or justified in, say, the Accounting or Marketing Departments? And speaking of marketing, why not just eliminate that department altogether and hire an ad agency?

I would like to see the unions come together and retain an outside firm to study the management and departmental structure of US Airways as compared with that of other carriers, including LCC's. And likewise, as a goodwill gesture, the company could hire an ourside work/productivity consultant to see where other inefficiencies lie within the CCY organization.

Everyone wants to see the company improve its bottom line results. Why not explore all of the avenues to get there.

 

[MrAeroMan]

Jim,

You make a lot of good points and I agree. One thing about Neeleman's 100 people is they would all be new hires vs more of a senior workforce. New hires are always cheaper no matter how you look at it so he can afford to hire 100 people to serve his planes while his costs in doing so would be significantly lower than what U could ever hope to achieve for the same number of people. So is it fair to ask the U people to take a cut in pay to make up the difference? No, I don't think so. Is it fair to ask them to be more productive? I say absolutely but only if you're willing to help them be more productive. The way the schedule is now there is no way they can wring out much more productivity from the employees. If they roll the hub at PHL they may have a chance.

As for the hubs I think they really need to get off this broken record of resisting to change the fare structure. They have repeatedly said the models indicate a severe drop in revenue. Well duh!! Sure you would have a drop in revenue if you charge less for the tickets but haven't they also repeatedly said the model is broken and needs to be adjusted? If that's the case how can you make the point you'd have a drop in revenue from your models if the model is broken? Isn't that bad information not to mention bad judgement? I don't think the models are taking in the effect the additional pax that would flood the planes. I honestly believe if the fares are dropped you'd see a huge increase in pax boardings especially in CLT and PHL. PHL is like the 7th largest metro area in the country yet only 18th largest in pax boardings. While the proximity to DC and NYC as well as the effect Luv is having from BWI is a factor it isn't the lone reasons. If you drop the fares and roll the hub PHL traffic would make huge increases and might even cause U to increase frequency in large/popular destinations. CLT is probably going to stay as it currently is given the cost structure of the airport. What is interesting though is the same thing could happen in CLT as would happen in PHL if the fare structure is lowered. There is a huge population pool around CLT that would take full advantage of lower fares and they'd drive there to get it.

Maybe they have this in "The Plan" but until they reveal it no one will know except for the select few that have seen it yet are bound to silence by the confidentiality agreement. Either way I would hope they come out with something soon for you guys.

 

[BoeingBoy]

MrAeroMan,

I couldn't (and didn't) say it better.

Jim

 

[MrAeroMan]

I agree that there isn't only one problem that keeps US lagging along.

But to everyone out there what do you think is the ONE thing that holds US back the most?

Piney,

I hate to say this and I promise to keep this short but honestly I think if you want one answer it would be "Attitude" from all involved. The reasons are many on both sides and most are valid while others are not. Just my take.