US Airways Dividend Miles (Pre-FlightFund Merger) - US - Long term planning and short term reactions

Some of the long term decisions such as Carribean growth and creation of the codeshare are encouraging. I do not remember previous carriers that ended up in liquidation having a plan for future growth and revenue streams at the same critical juncture in their histories.

But is this effort being wasted?

Why expand the Carribean network if passengers in the southeastern states can no longer get home in one day due to the closing of the 10 PM CLT bank?

Why reduce trans-con flights when UA does not provide reasonable service to many US destinations?

How will US recapture DCA from competitors who are now serving traditional US routes that have been vacated or greatly reduced in frequency?

What short routes and smallest outstations can be closed to increase frequency on other routes? Just because PHL-ABE has a higher RASM than PHL-TPA, does not mean that it is more profitable. More flights to fewer destinations decreases overhead.

Why do we see our favorite and most energetic CSRs being furloughed without a corresponding decrease in the highest levels of management?

What has been done to reassure customers that the company will still be in business at any given time next year? If I'm delaying the purchase of tickets pending future announcements, there are probably others who are doing the same.

Does the esteemed membership of this Board have any answers or suggestions? Any questions that I'm forgetting?

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AtlanticBeach:
Some of the long term decisions such as Carribean growth and creation of the codeshare are encouraging. I do not remember previous carriers that ended up in liquidation having a plan for future growth and revenue streams at the same critical juncture in their histories.

But is this effort being wasted?

Why expand the Carribean network if passengers in the southeastern states can no longer get home in one day due to the closing of the 10 PM CLT bank?

Why reduce trans-con flights when UA does not provide reasonable service to many US destinations?

How will US recapture DCA from competitors who are now serving traditional US routes that have been vacated or greatly reduced in frequency?

What short routes and smallest outstations can be closed to increase frequency on other routes? Just because PHL-ABE has a higher RASM than PHL-TPA, does not mean that it is more profitable. More flights to fewer destinations decreases overhead.

Why do we see our favorite and most energetic CSRs being furloughed without a corresponding decrease in the highest levels of management?

What has been done to reassure customers that the company will still be in business at any given time next year? If I'm delaying the purchase of tickets pending future announcements, there are probably others who are doing the same.

Does the esteemed membership of this Board have any answers or suggestions? Any questions that I'm forgetting?</font>

Those are all excellent questions. If the measures in questions are very short term then they might be surviable. Beyond that it's a death spiral. Reducing flights is a very, very bad sign.

Industry loudmouths go on and on about "the need to reduce capacity" -- it's a bunch of bunk. There is no excess capacity. There is an excess of high priced seats. Price them properly and they sell. SWA, ATA, Jetblue and AWA all show that.

AWA is particularly interesting because they are very similar to US Airways -- they are both a full service semi-regional airline with two hubs that are very close together. AWA has taken the pricing problem by the horns and is doing something about it. Their results speak very loudly. But the other full service airlines are in 3 monkeys mode...

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by AtlanticBeach:
Some of the long term decisions such as Carribean growth and creation of the codeshare are encouraging. I do not remember previous carriers that ended up in liquidation having a plan for future growth and revenue streams at the same critical juncture in their histories.
</font>

Remember, TWA wanted a big SJU Caribbean hub as well.

INDEED! America West wins the balls award for sure. US Air absolutely NEEDS to be different in order to survive. To me the open question is how different. Pricing is one issue. Customer Satisfaction is another. US has the chance to kick some major butt and start ADDING flights.

The problem is right now they have to stop the bleeding long enuff to get the loan and emerge for BK. Then they can "Dare to Be Different" Once they get themselves positioned properly financially then they can 'Tweak" the product to leverage their east coast dominance and hopefully for them turn it into a stranglehold. The Customer Service/Satisfaction is another asset they can leverage. If they can improve to the point that they are considered the "Benchmark" in the industry CS/S wise they might be able to extract a small premium price wise AND attract the business customer in greater numbers. The Pricing differential between walk up and cockroach will be critical.
My plan goes like this for them.

Best Serviece in the Industry! Business & Family Friendly Fares!

I think it can work! Me I would go on TV and target SW's Cattle Car boarding with lines like "Why fly a Bus with Wings when for a few dollars more you can be treated like a human being. The copy would be read while the video shows a re enactment of a typical SWA Boarding, with the sounds of cattle mooing.

Another idea! Get the guy who did the fast talking guy from the old FedEx ads to be a competing Airline Res or gate agent who in rapid fire reads all of the ticket rules to while the PAX stares dumbfounded. Then the voiceover says. "US Air!!!! Fairest Fares to Anywhere!! fade to a soaring jet.

[This message has been edited by Thief Of Hearts (edited 11-13-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Thief Of Hearts:
Fairest Fares to Anywhere!!</font>

What a brilliant line! I love that. Ya know, sometimes I think a group of FlyerTalk regulars could actually run an airline.

Proud to be a FlyerTalker,
David

They need to give people a reason TO fly them and not an excuse not to fly them.

Be creative, be an industry leader.

Don't nickle and dime your best cusomers. They (we) generate more business then your marketing department.

"Remember, TWA wanted a big SJU Caribbean hub as well. "

That's one of the big reasons why AA wanted to buy TWA. It wanted to maintain its dominance (almost monopoly) in the Caribbean.

To be fair though, America West has a dramatically lower cost structure than US. CASM at AWA runs around 7.5 cents....US is currently around 11 cents. It makes a big difference because AWA can make money on many of the dirt cheap fares (which is what most people are buying these days) while US cannot.

As for reducing capacity, right now there still is a little too much capacity out there. If people were beating down the door for low-fares, then why are the lowfare carriers running such low loads? WN,FRNT and AAI all have LF's in the high 50s to low 60s. The only reason that the low fare carriers have been able to keep themselves in the black is their dramatically lower cost structure. If you gave AWA US's cost structure, they would bleed money like no tomorrow.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by ConnFlyer:
To be fair though, America West has a dramatically lower cost structure than US. CASM at AWA runs around 7.5 cents....US is currently around 11 cents. It makes a big difference because AWA can make money on many of the dirt cheap fares (which is what most people are buying these days) while US cannot.</font>

Most of US' flights are short hauls right? Average is something like 800 miles isn't it? So to break even they need about $175 per RT if the plane is full, $235 if the plane is 75% full.

My heart bleeds.

Especially when I shell out $720 to fly 290 miles.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">As for reducing capacity, right now there still is a little too much capacity out there.</font>

Capacity is like disk drives -- you need to make sure that you're looking at it from the right point of view. Bean counters see what you can hypothetically store on a given disk and flip out over "wasted space" if it isn't all used. But people that are into performance look at disks in terms of throughput -- and for that you need more disks regardless of the supposedly "wasted" space. Airlines have similar issues. If all you look at is load factors and profitability of indvidual routes you aren't getting the picture. From a capacity management point of view you're going to do a lot of damage to the system as a whole when you start micro-managing at that level.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">If people were beating down the door for low-fares, then why are the lowfare carriers running such low loads? WN,FRNT and AAI all have LF's in the high 50s to low 60s. The only reason that the low fare carriers have been able to keep themselves in the black is their dramatically lower cost structure. If you gave AWA US's cost structure, they would bleed money like no tomorrow.</font>

The cost structure is only part of it.

At 7.5 cents/mile they can fly US type routes half full for an average RT ticket price of $240 and break even. Looks pretty comparable to me.

Balance and predictability on the revenue side is another part of it. Sure, they have the eye catching $19 fares. But the bulk of their business is at a decent and profitable fare. They just don't have a habit of gouging their best customers. So their best customers keep happily coming back. Quite a concept really.

And another thing -- AWA is a "full service" airline. They have assigned seats, 2 cabins, a variety of aircraft, hubs & spokes, "airport lounges", a frequent flier program, dedicated phone lines for "elite" fliers, special express lines and the whole ball of wax. Yet they aren't saddled with US' cost structure? Nor do they feel the need to nickel & dime and gouge their customers over change fees, stand-by, "use it or lose it" and walk-up fares. How can this be? I thought all of those "perks" were terribly expensive -- Ben, Mike & Dave said so didn't they?