US Airways Dividend Miles (Pre-FlightFund Merger) - Businesses pledge to fly Frankfurt route

"Nearly 50 Pittsburgh-area businesses that have financial ties to Germany and western Europe say they'll purchase $10 million worth of airline tickets if German airline Lufthansa will serve the Pittsburgh-to-Frankfurt flight that US Airways plans to cut next month" - PIT Tribune Review (http://pittsburghlive.com/x/tribune-review/trib/newssummary/s_260771.html)

Perhaps this is a viable route after all

"Nearly 50 Pittsburgh-area businesses that have financial ties to Germany and western Europe say they'll purchase $10 million worth of airline tickets if German airline Lufthansa will serve the Pittsburgh-to-Frankfurt flight that US Airways plans to cut next month" - PIT Tribune Review (http://pittsburghlive.com/x/tribune-review/trib/newssummary/s_260771.html)

Perhaps this is a viable route after all

How would that work at PIT for ground crew, staff, etc..?

Would LH use US ground staff, gate agents, etc for the flight to keep their own costs down?

..

I posted this in the "Early demise of the Bayer express thread" I would link to it if I could. :mad:

Actually, $10 million is 4,000 tickets at $2,500 each.


I sat next to a person the other night who flies 2x a month PIT-FRA in paid J. He said that LH was looking at the PIT-FRA route. He was at an informational meeting in PIT where it was said they need 5000 paid J a year to make the commitment. Bayer was also there and they supposedly can do 1000 a year. He said another city was in competition with PIT for the LH route.

The thread "Earlier demise of 'The Bayer Express'" can be found at:
http://www.flyertalk.com/forum/showthread.php?t=357009

Hope that helps. :)

-Chris

Its daunting to think about a $10MM guarantee not being 'enough' to sell a route. I'm not saying LH is greedy - just reacting to the sheer magnitude on the table and it not being enough for someone to grab the offer - I mean this is 10+ guaranteed J seats per day throughout the year.

Look - we all know that the main reason US is abandoning the LGW and FRA routes in Pittsburgh is primarily due to centralizing staffing/etc - its not about profitability. But it makes you wonder what the public reaction is going to be if LH comes in - people here in PIT are going to say "if its good enough for LH, why isnt it good enough for US?"

I wonder why cargo isnt part of the package. I forget who the big users of the US 330 to FRA were, but I'd think they would be on the map with this offer. Sure, filling the seats is nice, but making money on the route is nice too.

Last thing - I am a bit surprised that US isnt even considering a one-stop from PIT through PHL to not lose this $10 MM. They did the same for Paris in the past.

I think US needs to pick up the 10MM bid and keep the "Bayer Express" in service.

I think US needs to pick up the 10MM bid and keep the "Bayer Express" in service.

I don't believe it's being offered to US. I believe the ACAA and the businesses in question are only making these incentives available to "new entrants."

I, for one, have no problem with this. US deserves a screwing on this issue if LH comes in.

Provided LH does fly the PIT-FRA route - this could potentially mean some additional revenue for US getting people to PIT to connect. That is...if they don't drop the rest of the PIT flights :D

OTOH, I totally agree with Cx4 that US deserves to get screwed on this one.

-Chris

It's called cutting off your nose to spite your face ... either they want the service or they don't, but not offering it to US is asinine, and if there was a government agency involved (ACAA) in such things and I were a taxpayer I'd be even more concerned.

It looks as if this is open to any carrier http://www.post-gazette.com/pg/04267/383838.stm

Having said that, as an Allegheny County taxpayer, I can't help feeling we've done enough for US Airways.

Did US look into serving the route perhaps 3 or 4 times per week with a 762? Would that have been enough to keep the contracts and also cut costs enough to make it profitable?

I think US has explicitly made up its mind already by dropping the route.

While I am all for the "screwing" to happen - I dont think anything would make them change their mind (if you believe their publicly stated rationale). And the money these companies had already been spending on their employee travel was already "on the table" when they walked away. If they want to let US reconsider I am all for it, but I dont see it happening. I cant imagine these $10MM guarantees are significantly better than the situation they had before they yanked the route.

Ironically, US will make money if LH comes in - both from possible connecting flights and also the fact that PIT-FRA would be a codeshare. They could make money booking people on the flight without operating it themselves.

To them, they probably see this as a best case outcome. Shortsighted perhaps.

Btw, havent seen anyone respond to my cargo comments above - anyone have any data or info on who the big contract users were?

Would it be possible for LH to operate the PIT-FRA flight as an intermediary stop in the USA? For example, FRA-PIT-IAH? This would certainly justify the route.

I thought that there might be a funky international law about stopovers.

My suggestion is self serving since we lost PIT-IAH service. :D

It's called cutting off your nose to spite your face ... either they want the service or they don't, but not offering it to US is asinine, and if there was a government agency involved (ACAA) in such things and I were a taxpayer I'd be even more concerned.

As a taxpayer (but not full time resident, oddly) of the jurisdiction in question, I'm more concerned about the white elephant that the ACAA erected for US which in turn (despite verbal and written communication to the contrary) was dumped 1 hour before exiting bankruptcy the first time.

I'm further concerned that US then suggested a statewide hotel and car tax to lower the debt on said airport.

I am therefore not concerned that the local businesses and governmental authority trying to provide a financial incentive to regain transatlantic service did not decide to target US.

As a taxpayer (but not full time resident, oddly) of the jurisdiction in question, I'm more concerned about the white elephant that the ACAA erected for US which in turn (despite verbal and written communication to the contrary) was dumped 1 hour before exiting bankruptcy the first time.

Precisely. I try not think about this, because it's not good for my blood pressure, but every time I drive to the airport, I want to wring someones neck.

Agreed. I'm a resident AND taxpayer AND often affected by airport woes (I live ten minutes from the airport). USAirways is a lost cause (at least in Pittsburgh, it remains to be seen elsewhere). It's best to move on.

I doubt Pittsburgh would side with US after the travel headaches caused by cutting the hub. Once other airlines fill in at PIT the mileage will be split and business will pick a new hometown airline. US jest left a bad taste in many folks mouths, and I'm not referring to brown limes.

Being a PIT native that has lived in ORD and ATL, I never really understood, after flying non-US airlines to PIT, why they built such a big airport...

Maybe there were grand plans and visions for the future, but C and D terminals are lightly used by the other big airlines. They usually seem to be pretty empty whenever I would fly to PIT on DL or UA.

Hindsight is always 20/20, but its too bad they just didn't add a few extra gates onto A and B and forgot about building the C and D concourses altogether.

Are there any international flights going out of PIT after the dehubbing?

..

Would it be possible for LH to operate the PIT-FRA flight as an intermediary stop in the USA? For example, FRA-PIT-IAH? This would certainly justify the route.

I thought that there might be a funky international law about stopovers.

My suggestion is self serving since we lost PIT-IAH service. :D

I believe they can do this for routing, but cannot as a foreign carrier sell tickets that are wholly within the US, so they can sell IAH-FRA and PIT-FRA but not IAH-PIT. Could US codeshare those? I don't know.

Personally, I was averse to the whole new airport thing. It says something about the gullibility of our local leaders that they could be persuaded into something like that by a company who seems unable to manage their way out of a paper bag. I'm afraid they allowed tax avarice and dreams of prestige to cloud whatever judgement they had, although to be fair, US threatened to pull out if they didn't build the aiport. I was never terribly keen on US anyway, but after that point, it was hard to have any brand loyalty. Another nail in the airport's coffin was the increased security. Since you now can't get to those airside shops without tickets, revenue has decreased.

As for international flights - well I think there are still some flights to Canada. Does that count? :rolleyes:

Being a PIT native that has lived in ORD and ATL, I never really understood, after flying non-US airlines to PIT, why they built such a big airport...

Maybe there were grand plans and visions for the future, but C and D terminals are lightly used by the other big airlines. They usually seem to be pretty empty whenever I would fly to PIT on DL or UA.

Hindsight is always 20/20, but its too bad they just didn't add a few extra gates onto A and B and forgot about building the C and D concourses altogether.

Are there any international flights going out of PIT after the dehubbing?

..

The airport was build for US Air, specified by US Air and paid for by the taxpayers of Allegheny County. Yes, it's a much larger facility than the PIT market can support alone, but the facility was meant to be a major hub for a major airline.

After the demise of the steel industry in the 80's, US Air was one of the few companies who paid a living wage to hourly employees. It wasn't hard for the political leadership to justify building the airport since the old facility was outdated and US Air promised to increase employment.

The investment paid off until late 2001 when the industry collapsed. ACAA held it's allegiance to US Airways in not pursuing LCCs. PIT was a fortress hub with high fares as a penalty to having multiple non-stop flights everywhere.

There is no Monday morning quarterbacking on this issue. Building the new airport wasn't a mistake. Trusting US Airways to keep it viable was the only mistake made.

Building the new airport wasn't a mistake. Trusting US Airways to keep it viable was the only mistake made.

I'm afraid I disagree with one part of this statement but agree with the other. Guess which is which. :)

Perhaps my perspective as an "incomer" is different from someone who remembers the city as powerhouse. This was always a far too grandiose airport for what is no more than a small mid-west city. Sure, it's a nice airport, but did we really need to spend $1 billion on it?

I lived in PIT for four years during the "boom." The airport was VERY well utilized and was/is a huge source of pride for native Pittsburghers (or as we called them "yinzers"). It still is a beautiful airport.

What people don't realize is that it was built specifically to US Airways' standards. Every last piece of it. PIT was told it was going to be a major international airport and and an important hub. US screwed PIT over.

The airport was VERY well utilized and was/is a huge source of pride for native Pittsburghers (or as we called them "yinzers").

ROTFLMAO..... ^ ^ ^

I'm afraid I disagree with one part of this statement but agree with the other. Guess which is which. :)

Perhaps my perspective as an "incomer" is different from someone who remembers the city as powerhouse. This was always a far too grandiose airport for what is no more than a small mid-west city. Sure, it's a nice airport, but did we really need to spend $1 billion on it?

You are certainly entitled to your opinion, but facts are facts. Pittsburgh isn't "a small midwestern city", the metro region is considerably larger than most of the cities that you'd assume to be more viable. The economy here is strong, but has changed from the heavy industry days.

The airport made sense at the time, to give the area significant access to hational and international destinations. This has brought, and kept, many businesses to the region. Low cost of living, skilled workforce AND easy travel throughout the US are important issues for a business. Prior to 2001 the question as to if the airport should have been built, even for $1B, was never an issue.

Since 2001, with the airline industry in a state of chaos and decline, airports such as PIT (there are others) have been downsized and are now considerably larger than the current usage would justify. Unfortunately the facility exists, so the ACAA must now find new uses...other airlines and/or cargo companies.

When the next transformation in air travel happens, facilities such as PIT with out congested airspace and within 500 miles of over 50% of the US population, would figure nicely into the new genre of air transportation providers..........whatever that will be.

Ironically, US will make money if LH comes in - both from possible connecting flights and also the fact that PIT-FRA would be a codeshare. They could make money booking people on the flight without operating it themselves.


I think that's only half true. Even if the flight is flown with a US flight number, I don't think they actually make any money. Where they make money is funnelling people into PIT to on US metal to connect to the flight - people that would have flown a different airline from their city direct to FRA or to a gateway of an airline that does fly there.

I use the "build-no build" decision on the airport in my fall course as a case study. Its interesting - I give the students all of the pertinent data on cash flows, revenues, costs, debt, etc. Including passenger projections up a few % a year forever. Time is 1990 - do we build this facility? Of course the trick is I dont tell them what the facility is. In 2 years, not a single student (50+) has thought not to build it. Then I drop the bomb - this is the PIT airport. They all groan and realize its doomed.

The key assumption that makes you build it, and which inevitably causes the downfall, is the number of facility users (i.e., passengers). When they take the huge hit post 9/11, the cash flow model goes haywire. But people dont consider such drastic changes in these numbers to be plausible and thus never consider them as possible scenarios/outcomes. (In fact if you look at the recent data, we're roughly at the same traffic numbers as 1986 - BEFORE the new airport was built.)

I wont add anything to the ongoing "was it a dumb idea to build it thread" because I think all the relevant points were made. But in reality the decision really came down to "could we afford NOT to build it?". Agree or not whether this project paid itself off - public projects are often not done to have a positive net present benefit themselves. They are done to cause spillovers, etc including employment, business generation, tourism, etc. Its not hard to show that the airport for the first 10 years likely produced benefits that far exceeded its internal cost by supporting the tax base, etc. Cities dont build convention centers to pay themselves off either. The new crop of sports facilities that are "given" to teams wouldnt pass any normal financial decision model.

Last, one should note that PIT isnt/wasnt the only city to do this - look at DEN and its 4x pricetag. DEN is in worse shape than PIT at this point - and UA hasnt even pulled out yet. Does anyone expect that DEN will recoup its $4 billion cost??

IMHO the real debacle was the ACAA being caught flat footed at the end of the 1st bankruptcy. Sure, US hit them below the belt with the last minute lease rejection but to have been so utterly oblivious to and unprepared for the possibility was pretty negligent on their part. They should have seen it coming and they should have had a "plan b".

There once was a farm that became an airport....that became a farm again. Pittsburgh is one of only two major metro areas (I believe Detroit is the other) that has lost significant population in their MSA (5% decline).

This is unlike Philadelphia where the city has lost population, but the MSA has grown.

This airport was always too big for the Pittsburgh market. Other than the US Airways terminals, the rest of the terminals were like ghost towns.

I have to always correct people who think we're a ghost town. The change in the last census was -1.5% not -5%. Source: http://www.census.gov/population/cen2000/phc-t3/tab03.txt

On top of that misinformation, Detroit GAINED 5% in its MSA. I guess it's just popular to mock the rust belt cities these days!

IMHO the real debacle was the ACAA being caught flat footed at the end of the 1st bankruptcy. Sure, US hit them below the belt with the last minute lease rejection but to have been so utterly oblivious to and unprepared for the possibility was pretty negligent on their part. They should have seen it coming and they should have had a "plan b".

I don't think that ACAA was mistaken when they "trusted" the commitments that US gave to them regarding their lease and plans for PIT. It was US who, undercover of darkness (and 20 min before BK was lifted), reneged on the lease.

Since then, ACAA has actively pursued every company with a couple of regularly scheduled jets. Firstly, none were ready to commit to PIT until US's intentions were made public. Secondly, there aren't many choices among other legacy carriers (not in much better shape than US) or LCC's who are careful with expansion.

Now that US's plan for PIT is public, ACAA will have a better chance to bring alternatives to PIT. I'm sure hoping for LH.........I have a flight coming to India, which sure would be nice to take through FRA with only one stop!

They were obviously "mistaken".

Trusting is ok, admirable even. Being cheated is forgivable and even worthy of sympathy. But not having a contingency plan in the face of such obvious need is negligent and nullifies any possible admiration and sympathy -- it shows them to be idiots -- much as Wolf & Gangwal squandered their credibility with "no plan B."

Scrambling around after the fact doing all the things that they should have started doing at least 4 years ago while blowing a bunch of hot air about how awful the airline is for having done this dastardly deed is pathetic.

They were obviously "mistaken".

Trusting is ok, admirable even. Being cheated is forgivable and even worthy of sympathy. But not having a contingency plan in the face of such obvious need is negligent and nullifies any possible admiration and sympathy -- it shows them to be idiots -- much as Wolf & Gangwal squandered their credibility with "no plan B."

Scrambling around after the fact doing all the things that they should have started doing at least 4 years ago while blowing a bunch of hot air about how awful the airline is for having done this dastardly deed is pathetic.


Should have done something 4 years ago? Why? What would they have done with US Airways employment rising, passenger traffic at all time highs and the agreements made were honored by all parties.

Maybe Nostradamus (sp?) could have predicted what happened on 9/11, but nobody could have anticipated what was to become of the US airline industry after September, 2001. The catastrophe certainly accelerated any decline that may have already been happening.

There can be no contingency plan for PIT made until US either completely pulls out of PIT, or goes Ch7. No carrier will make a major commitment to PIT prior to a long term view of what will happen to US. This fact is out of the ACAA's control.

In business, you make agreements, shake hands and TRUST your partner. ACAA did this, but were absolutely screwed over, lied to and p1ssed all over by US Airways (sort of like what they have done to their employees). I pay Allegheny County taxes and do not fault ACAA for their activities with US Airways prior to the lease cancellation.

For a minute, I thought I was on USAviation with all of the malcontent, we got screwed, life is so unfair, and US is evil comments :rolleyes:

If anyone saw 9/11 coming and the changes in the airline industry that followed, please link to your pre-9/11 post now.

Hscottm hits the nail on the head. If you run the PIT airport scenario over again and again, it was, AT THE TIME, the logical move. Not so long ago, US was a rather profitable corporation that had the means and seemingly the future to fully utilize PIT and pay its fare share of PIT debt.

But guess what folks, things change--it may be unfair, mean and a cruel world out there, but US had to do what it needed for survival. No sentimental attachments, just the cold hard reality that it just didn't make sense to have two major hubs less than 300 miles away from each other. In addition, when it costs $10 approx in fees to connect a pax through PIT and $2 approx for CLT, the numbers speak volumes of reality.

US may not have been nice about the way that they cut-down PIT and I have personally been affected by it, but hey, that's life.

The airport was build for US Air, specified by US Air and paid for by the taxpayers of Allegheny County. Yes, it's a much larger facility than the PIT market can support alone, but the facility was meant to be a major hub for a major airline.

Sounds like a lot of the sports stadiums that get built these days.

4 years ago -- pre 9/11 -- the airline industry was in obvious trouble. 9/11 certainly hastened things but, management excuses not withstanding, cannot be blamed for the situation.

The good times for airlines peaked in '99. By 2000 it was no secret that the landscape had changed.

US' attempted merger with UA should have been reason enough for the authorities in PIT to have started seriously looking for a plan B.

I have not argued that building the airport was a mistake. I think it made sense for the situation at the time. But sitting there fat dumb and happy while the tenant who is for all intents and purposes is your sole tenant is in chapter 11 is simply negligent. If those guys ran a public company they'd be defending themselves from shareholder suits and government investigations.

You can think the airline treated PIT outrageously but don't pretend that your public servants are blameless saints.

A different perspective on ACAA management -- a senior employee in the (airport-consulting oriented) firm I worked for at the time visited the Airport Director a few months after 9/11 to propose some ideas about contingency planning and identifiying alternative future plans should US fail. The Airport Director would have none of it -- he somewhat naively was convinced that US would be in for the long haul, and had no interest in developing plans for an airport should US fade away...

I'm not saying we could have done anything to "save their a$$es," just that the Director wasn't focused on something that should have been a top priority at the time.

A different perspective on ACAA management -- a senior employee in the (airport-consulting oriented) firm I worked for at the time visited the Airport Director a few months after 9/11 to propose some ideas about contingency planning and identifiying alternative future plans should US fail. The Airport Director would have none of it -- he somewhat naively was convinced that US would be in for the long haul, and had no interest in developing plans for an airport should US fade away...

I'm not saying we could have done anything to "save their a$$es," just that the Director wasn't focused on something that should have been a top priority at the time.

What could they have done pre 9/11? US Airways controlled 95% of the flights through PIT. Many thousands of good paying jobs were tied to US Airways. It would not have been prudent for government officials to jeopardize those jobs by negotiating with other carriers. For better or worse, all eggs were in US Airways' basket. (yes, now we have the WORST)

The road is littered with many carriers who attempted to increase service or lower prices on certain routes. Invariably, US would drop pricing to match the alternative carrier. It never took long for US to drive the alternate carrier's price up, or out of PIT. This scenario played out again and again.

With US's presence diminshed, the void will be filled by other carriers who will assume much less risk since US will not be in a position to push them out of PIT.

What could they have done...

There was apparently at least one firm offering ideas. But ACAA wasn't interested in listening. :rolleyes:

A few thoughts of my own:

1) Court action or legislation for unfair competitive practices.

2) Complimentary carriers rather than competitive carriers -- i.e. a cargo operation.

3) Preparation for the RJ invasion (physical plant stuff like positioning gates, baggage handling, jetway positioning etc.)

4) Attracting an RJ affiliate of US' such as Mesa.

5) Proactive cost savings initiatives.

6) An action plan for converting the terminal into a casino.

If taking any steps at all somehow "threatened" all of those cushy jobs then they were never secure to start with -- which is yet another reason that ACAA management should be viewed as negligent.