US Airways Dividend Miles (Pre-2005 America West merger) - Hubris May Cause HP Mangement to Be Doomed to Fail

:eek: deelmakur in another thread said it seems that HP management is like the return of "Dumb and Dumber". They think they "know" everything and are "right" about everything.

Whenever I go into a business as a bankruptcy trustee, I assume I know nothing and just observe what was or is going on. I assume initially that there is a reason to do things a certain way even if it does not make logical sense at first. Before I go to change everything, I want to see how things fit into a puzzle. You have to observe and not just take gut changes until you have time to educate oneself, since every situation is different.

Now here we have HP, who I assume is directing current changes at US, making changes before seeing how everything fits together. An eastern customer's thought process is generally more business-like than many westerners' who generally have a more casual approach. One is not right or wrong--just different.

In the arena of low cost carriers, jetBlue, SW, Delta's Song have differentiated themselves either through IFE or a simple transportation model.

HP claims it will be a hybrid, but what is it doing to differentiate itself. No pretzels (saves a cool $1million per year while looking cheap) and taking out the power ports which are especially important on trans cons (really couldn't care about the hour or so flights when a battery will suffice)-- All this before they take over and really know their "eastern" customers.

Now I assume part of increased use of the fleet will have more planes used both in the east and in the west on the same day. That means more trans cons and more of an opportunity to get the last minute business flyer who wants travel time to be productive time.

Now here I am as a customer. Nothing exceptional from the HP product and like the UA product now with no power ports in coach, but if I switch to UA, I have E+ seating which gives me more area to work. Really a struggle, which to choose--not. HP you lose a pax.

Maybe HP's mangement should hold off doing things that directly effect their customers until they get to know their customers. Otherwise their hubris, like prior US management, will cause US to fail again. It will not be the employees that are to blame, but rather management again.

Maybe its the name US Airways that is somehow contains a virus that makes mangers stop using basic mangement techniques and believe they are invincbible and know everything. :confused:

Let us not forget they are going back to banking the PHL hub as well which starts in November. The rolling hub was working much better for US.

Let us also not forget to give this team a chance to succeed and capatalize on the strengths of both of these companies, before completely blowing the move off as a failure.

Very well said

I agree completely that we should let the new mangement have a chance to prove themselves, but when they do something without properly evaluating the situation before they get out of the starting gate and take the time to get to know their new "eastern" customers that does not speak well of them.

It seems like the same prior US Airways management that throughout the years had a "they know better" mentality. Apparently it is still alive and kicking. (Is this Al Crellin's area--US Airways sole surviving upper manager in the merger?)

I think that it is a fair comment to criticize early on and is better to call HP management on it now, than let them go their merry way and everything goes into the dumpster a year from now and people wonder why.

Hopefully they read their frequent flyer comments. Let's see how responsive they truly are or how much they truly care about their business customers. This is their first test.

I don't think any of us are trying to unload on them for the sake of unloading, but Abeflyer and I are on the same page. This one is starting to look like folks getting into something they (a) don't comprehend fully, and (b) corporate arrogance. Before you can run any acquired business, you must understand its history. Otherwise, you don't know why they are where they are when you get there. I don't see any evidence they tried to find out what the USAirways customer thinks, prior to making what appear to be unilateral change decisions. All I know is that virtually every major trunk carrier, with the exception of AA and CO, is bankrupt. I'd say that meets Webster's definition of a slippery slope. As I look around at this deal, I haven't spotted any flashing yellow lights.

I think it's too early to tell how all this will shake out relative to other carriers. The power port thing is a horrible move for those of us who fly transcons and have gotten used to having computer power. It was one small, relatively cheap thing that gave US an edge over most other carriers and I'm sure there are a lot of us who spent good money for an adapter that would let us use the things. OTOH, they've also done a couple of things right -- dumping the IFC meals in F and reopening the LAX club. In the end, I think they're trying to do what I would expect management to do -- provide a differentiated product while spending the least amount of money possible to do it.

The big picture for the industry isn't very bright. With oil prices far exceeding anything anyone expected, I'm afraid we're going to have to brace ourselves for another round of diminished expectations for air travel. Every board here has people griping about something, be it RJs or the metastasis of TED throughout the UA system. I absolutely hate it, but there just aren't enough people willing to pay higher fares to maintain service levels. With the latest round of Chapter 11 filings, all of the legacy carriers save American have been in bankruptcy at least once. We can gripe all we want, but given the current state of things, the new US/HP may yet turn out to be as good, or even better, than the alternatives. Unfortunately, compared to the past, what we're faced with is not pleasant. The good old days of hot towels, warm nuts and ice cream sundaes are over and they're not coming back any sooner than hot breakfasts in coach are coming back to hour long flights. At least there's still free booze in F so we can numb ourselves while we reminisce about all the things we miss.

UGH. There are things I just don't understand. In my book, when one makes the same mistakes over and over again, and expects DIFFERENT results, it's called INSANITY.

Outside of some new routes, US is doing nothing to impress me about this new operation. The pretzel thing.....look, nobody NEEDS pretzels to survive an hour flight. But it's a metaphor for what's ALWAYS been the problem.....something to do with the customer.

Getting rid of pretzels. UGH. Remember Rakesh Gangwal's eliminating pillows and blankets to save a million a year? They still went bankrupt twice. Then it was airphones. Now it's powerports. The LCC's that are making money are giving people reasons, other than miles, to come fly with them. They make the experience about the journey...not just about the price to get to the destination. Satellite TV. Satellite radio. Even UA has gate-to-gate audio,. and even on their crappy 737's. Even WN.....they've never pretended to be something they are not, and they've never made seemingly random decisions at the expense of the customer. The long-term plan is always in focus.

And that's what bothers me about US. They've gotten so use to living "paycheck to paycheck", that they can't see the future. With each additional little bit removed from their planes, another segment of the customer base shrugs its shoulders and says, "maybe I'll try a different airline".

I remember a cover article in a magazine several years ago - I don't remember which one - which had a picture of an HP plane and the title, "Is this America's Worst airline?"
I'd like to think that the company that turned itself around to do great things with itself will have the same effect on US. In the initial stages, it seems like their most frequent statements to their core customer are more about what they won't have, rather than what they will.

edited to say that a Google search for the magazine and the cover article found it was "Airways" magazine from somewhere around May, 2000. The google search actually pointed to a VERY old discussion in the HP forum of Flyertalk!

Some earnest words offered as another point of view -- no more, no less.

We seem to go round and round with another thread with the same tendacious theme forcasting doom and gloom for US. Of course these threads are always prefaced with "facts" and "numbers".

Just to be clear, I do comprehend what the more informed are saying in this regard. I absolutely concede that valid concerns do indeed exist. If one goes strictly according to the books, US doesn't look too healthy. But is this what determines with whom we fly? -- I think not.

There remains another fact.

US is alive and flying. It is moving ahead with a reorganization plan which has US being absorbed into HP. It is a plan.

A large carrier and other investors have put their money where their mouth is and US, like life, will go on. It is rather breathtaking that they do so at a time when aviation in general is on the ropes.

Given the latest events in which NW and DL join UA and others in bankruptcy, I for one would like to suggest an entirely different perspective. Instead of saying that the US glass is half empty, let's admit that the US glass is half full, at least for the time being.

Bad or weak fundamentals do not necessarily a loser make. Economics and markets breath numbers, but a business lives on its ablilty to win consumer & employee confidence and turn that confidence into revenues which keep it afloat through good times and bad.

Indeed, the glass may still slip out of HP's hand & break. But thus far, it hasn't and that is what matters. Let's see how many folks fly the new US and whether it and other airlines can survive the gasoline shocks.

I too watch the numbers and the fundamentals. But what ultimately drives my flying decisions are whether an airline gets me where I want to go at prices I can afford and if I'm treated like a valued customer. I'm anxious to stick with US as thus far, it has done a decent job. Consumers help to make the numbers which pundits like to point to. Give us a chance to do our thing.

Barry

what ultimately drives my flying decisions are whether an airline gets me where I want to go at prices I can afford and if I'm treated like a valued customer.

Your comment is well taken, but the crux of what I'm looking at, you have summed up very well. When ticket prices are the same on trans cons, I'll go with someone where I can work the entire flight. The new US is just showing me in my opinion that I'm not considered a valued customer.

That is not a good business decision and seems to be one done in a vacuum like US management of olde, who always knew best at what their customers wanted or what was valuable to them without asking. It's like the doctor who said that the surgery was successful, but the patient died. We kept US alive, but lost our best customers and a year from now may be facing the death of the airline.

I'll give them a chance, but their moves so far aren't doing anything to keep me or make me want to stay.

I found this comment in the Washington Post bankruptcy emergence article disturbing
After Friday's hearing, Bruce Lakefield, chief executive of US Airways, said he is confident that the merger will succeed despite record fuel prices and tough competition in the industry."Ticket prices are going up," he said. "You've got to face the fact that customers will have to pay for the product."

I found this comment in the Washington Post bankruptcy emergence article disturbing



Mmmm. Maybe a little too straightforward, but not disturbing, IMO. He speaks the truth. The airlines just can't keep eating the high fuel prices (especially US, which has 0% of its fuel hedged for 2005). We're just going to have to start paying more, and that's a fact.

Mmmm. Maybe a little too straightforward, but not disturbing, IMO. He speaks the truth. The airlines just can't keep eating the high fuel prices (especially US, which has 0% of its fuel hedged for 2005). We're just going to have to start paying more, and that's a fact.

IMHO if you care about pretzels, real food in F, upgrades, power ports... basically anything and everything that makes flying different than Greyhound at 34,000 feet, then a rise in overall ticket prices would be the best possible thing that could happen. Airlines' lack of pricing power has meant that in this period where they're bleeding from every vein, the only thing they can do is cut services.

I'd be much happier if prices settle into a more rational structure that's on average significantly higher, and that the airlines start to try and differentiate themselves by service level (as they used to).

Unfortunately I feel like I'm a tiny minority... sometimes I feel like your average flying public would ship themselves FedEx if would save themselves $1.99 on a transcon.

Some people can never read a negative comment, without complaining that others of us won't give the company a chance. They are missing the point. The company has announced discontinuance of a number of features, which apparently the customer base wants, and which probably reduces the number of incentives which could bring passengers over from Southwest, etc. You need to be different, to bust the customer cycle at a competitor. The troubling thing is as follows. As a CP since the program began, if they had sought the opinions of their regualr customers, I would expect that such a survey would have been sent to me. It wasn't, and I don't recall seeing anyone else commenting on a poll such as that. Therefore, I must reluctantly conclude, they did all this on their own. That's dumb, especially given the shape USAirways is in at the moment. No rant..no dumping...just wondering out loud how the hell they can get into a toxic situation like this, and move ahead without input from the customer base.

NOTE TO LAKEFIELD: If you push up ticket prices substantiallly, you'll have to remove the "L" from LCC. ADDITIONAL CLUE: You are in an industry where you can only go where your dumbest competitor takes you. So long as there are hungry airlines (Independence, ATA, and don't forget all the bankrupt ones, NW, DL, UA), who create too much capacity, and sell cheap to raise cash, you can't raise your fares, and make it stick. You'd have to be brain dead not to have seen the majors try to raise fares all summer (at least 4 times), and none of it ever took. At the new America Worst/ US Scareways, you can't control the pricing paradigm. You are not large enough.

abeflyer,

Thanks for your comments. I also share your concerns about US's ability to maintain a value-based product with a standard of service that engenders customer satisfaction.

The degradation of service and ammeneties in F & the reconfiguration of planes decreasing availible F seats for elites makes one question how things will work in our favor -- though even on a transcon, my own goal is more the more comfortable seat than food and drink. Likewise Club closings create yet another issue for frequent travelers.

I've also noticed a subtle change in moral among the FAs as many seem to go through the motion, and they seem more absorbed by the reality of pay and benefit cuts. It's a tough world out there.

I guess that we'll all learn in the coming months what the new US will look and feel like.

Barry

. . . Some people can never read a negative comment, without complaining that others of us won't give the company a chance . . .

Sorry deel, that's simply not the deal and you misrepresent my words.

I clearly note that I do not take issue with the fact that US is in trouble. Indeed, as you and others consistently note, the company's fundamentals are shaky. And as a US flyer, it concerns me greatly as I don't relish a failure which forces me to hit the street in search of a new carrier.

I simply point out that from a consumer point of view, we could care less who is running any airline so long as we are satisfied with the product. And from a market point of view, I point out that life goes on, even when things aren't perfect -- numbers are only a part of the story given the plethora of shaky businesses out there in the world.

I'm not a star gazing optimist nor am I a squeamish complainer. I do however like to give life a chance to do its thing, or in this case, US. I think that others who have also committed to US also get a little tired of arguments which prophesize doom and gloom and gripe about specific managers. We all know that US is troubled, but all we want is an airline to take us someplace.

I read the posts and I simply offer an alternative view from your own, and this seems to upset you. Being a long-term CP gives you perspective, but not necessarily an irrefutable prescience.

So let's move on with life here in FT.

Respectfully,

Barry

:eek: deelmakur in another thread said it seems that HP management is like the return of "Dumb and Dumber". They think they "know" everything and are "right" about everything.

Whenever I go into a business as a bankruptcy trustee, I assume I know nothing and just observe what was or is going on. I assume initially that there is a reason to do things a certain way even if it does not make logical sense at first. Before I go to change everything, I want to see how things fit into a puzzle. You have to observe and not just take gut changes until you have time to educate oneself, since every situation is different.

Now here we have HP, who I assume is directing current changes at US, making changes before seeing how everything fits together. An eastern customer's thought process is generally more business-like than many westerners' who generally have a more casual approach. One is not right or wrong--just different.

In the arena of low cost carriers, jetBlue, SW, Delta's Song have differentiated themselves either through IFE or a simple transportation model.

HP claims it will be a hybrid, but what is it doing to differentiate itself. No pretzels (saves a cool $1million per year while looking cheap) and taking out the power ports which are especially important on trans cons (really couldn't care about the hour or so flights when a battery will suffice)-- All this before they take over and really know their "eastern" customers.

Now I assume part of increased use of the fleet will have more planes used both in the east and in the west on the same day. That means more trans cons and more of an opportunity to get the last minute business flyer who wants travel time to be productive time.

Now here I am as a customer. Nothing exceptional from the HP product and like the UA product now with no power ports in coach, but if I switch to UA, I have E+ seating which gives me more area to work. Really a struggle, which to choose--not. HP you lose a pax.

Maybe HP's mangement should hold off doing things that directly effect their customers until they get to know their customers. Otherwise their hubris, like prior US management, will cause US to fail again. It will not be the employees that are to blame, but rather management again.

Maybe its the name US Airways that is somehow contains a virus that makes mangers stop using basic mangement techniques and believe they are invincbible and know everything. :confused:


No, I think it's the name America West that contains a virus that eliminates comfort and luxury. As I said before, America West is like cheap wine. In one word, awful. At least when US Airways had money, it offered an industry leader Envoy Class. HP has never had an award-winning Premium Class.

Barry, I wasn't aiming at you. You are right, however. I am on my soapbox, and just because I have flown with them a long time, doesn't mean I know everything. It's the frustration of seeing these characters come in, and probably squander another opportunity to save the company, after it has had more reprieves than anyone could have expected. Where I was really going, was with the trickle of HP folks migrating to this site. They seem to project the same assuredness AWA is, and I am concerned we not see what has to be one of the better boards in the Internet World, degenerate into a discussion about how smart the new guys are. We'll find out quickly, and I for one, will be only too happy to dine on crow, if we get a new deal that works. I just don't want to spend time arguing about various superiorities. I'm not saying some of those people are on Kool Aid. No evidenece of that, but the grape smell you are experiencing is suspicious. :D

I'm not saying some of those people are on Kool Aid. No evidenece of that, but the grape smell you are experiencing is suspicious. :D

Lakefield is coming awfully close. For a man whose yields have been in complete free-fall for over a year, it sounds awfully cyanidey for him to be saying "Fares are going up". they most certainly ain't, especially at PHL and PIT.

. . . It's the frustration of seeing these characters come in, and probably squander another opportunity to save the company . . .

Deelmkr,

You're right, FT is a great forum for bouncing thoughts off of each other ( and other virtual objects ;) ). As you suggest, most of us are indeed here because we care. It's a good thing.

Actually, today's Wall Street Journal (http://online.wsj.com/article/0,,SB112709298798244508,00.html?mod=home%5Fpage%5F one%5Fus) has an article which basically touches upon some of the points that both of us make. The article is a good read for anyone who is interested in the airline industry.

It says the airline industry is moribund because of loans and subsidies from investors, government, banks, and aircraft manufacturers. Management in turn (mis)utilzes the funds for ill-fated buisness schemes ( US is specifically mentioned as a culprit regarding Southwest in PHL ) while government focuses upon industry deregulation and prices. Consumers in turn simply want less expensive fares and travel choice.

The WSJ portrays the entire industry as a mess because it is not behaving like a classic competitive market as the competing interests of all of these groups each have their own warping effect. The result is bankruptcies which don't let sagging airlines die and tendencies which force airlines to slash prices to sell seats that will make the journey empty or with a person in it even if it's not priced according to the real market around it.

So HP's acquisition of US is a daunting task. Yet their idea of trying to turn US into a hybrid discounter is intriguing. Will the market and gasoline prices cooperate? I guess we'll soon see.

As they say, it's a jungle out there. It's kind of a game of musical chairs where the chairs are upside down and the real winner is the guy without a seat when the music stops. Bizarre indeed.

Barry

. . . It's the frustration of seeing these characters come in, and probably squander another opportunity to save the company . . .

Deelmkr,

You're right, FT is a great forum for bouncing thoughts off of each other ( and other virtual objects ;) ). As you suggest, most of us are indeed here because we care. It's a good thing.

Actually, today's Wall Street Journal (http://online.wsj.com/article/0,,SB112709298798244508,00.html?mod=home%5Fpage%5F one%5Fus) has an article which basically touches upon some of the points that both of us make. The article is a good read for anyone who is interested in the airline industry.

It says the airline industry is moribund because of loans and subsidies from investors, government, banks, and aircraft manufacturers. Management in turn (mis)utilzes the funds for ill-fated buisness schemes ( US is specifically mentioned as a culprit regarding Southwest in PHL ) while government focuses upon industry deregulation and prices. Consumers in turn simply want less expensive fares and travel choice.

The WSJ portrays the entire industry as a mess because it is not behaving like a classic competitive market as the competing interests of all of these groups each have their own warping effect. The result is bankruptcies which don't let sagging airlines die and tendencies which force airlines to slash prices to sell seats that will make the journey empty or with a person in it even if it's not priced according to the real market around it.

So HP's acquisition of US is a daunting task. Yet their idea of trying to turn US into a hybrid discounter is intriguing. Will the market and gasoline prices cooperate? I guess we'll soon see.

As they say, it's a jungle out there. It's kind of a game of musical chairs where the chairs are upside down and the real winner is the guy without a seat when the music stops. Bizarre indeed.

Barry

Barry, by chance--could you post the text of the article? I don't subscribe and already threw out the WSJ I grabbed at the hotel this AM.

Thanks in advance!

Over the years, I've run my share of turnaround businesses, as an owner, CEO for someone else, and as a trustee when the courts have had to move in. I've had a number of good results, but a few have tanked....and they were doosies. They say that people who do OK usually do so because they learn from their mistakes. The common denominator for most failed enterprises is that there was a good reason for the failure. To reverse that, you have to figure out what went wrong. In that regard, history is everything. You have to know how it got there. You also have to find out what your customer disliked about the place, as well as what attracted them to a competitor. You need to ask them. The term, as I recall, is marketing research. If you thumbnail USAirways, you have the Colodny/Schofield regimes, where they squanderd the PSA acquisition, and to enjoy labor peace after the Piedmont combination, simply raised everyone's pay to the higher of the two merged lines. Wolf was brought in to sell it, and almost did. To keep peace, he didn't watch costs either, on the assumption they would be United's problem. Woops. Then Gangwal who hung on for his life, and finally figured it was a suicide gig, placed a lot of bandaids, and left for a buyout firm. Siegel, at best a middle manager, terribly impressed with his Harvard degree (which may result in the first known instance of an institution of higher learning placing a bag over its campus) informed the world he would chop every route that lost money. They were on their way to reducing the system to a PHL-PIT shuttle, flown by Mesa, when somebody realized what his capability was, and he left, to head a catering company which works almost exclusively with an industry which has virtually eliminated food service. Dr. Bronner, who managed to put several hundred million of pensioner's money in this company, then took a more foreground role, which consisted primarliy of opening his ample mouth at generally the wrong time ("fool with me, and we'll rename the place 'Bama Air"). He may have been the most prolific leader to emerge from the state of Alabama since Bear Bryant (my vote is actually with Jefferson Davis...another guy who saw a political future in Alabama).The place bled like the offspring of two first cousins (with apologies to West Virignia), but Lakefield, a member of Bronner's board, and an experienced Investment Banker, helped craft a combination with America West (I'm holding my tongue on that one). Along the way, a naif in the world of air transport, he seems too have taken direction on industry protocol from B. Ben Baldanza (see: offspring of two first cousins), who, by himself, could probably shut the whole industry down. A few weeks ago, the company quietly announced it was now bleeding 5 million bucks a day. Lakefield & Co., said little, sold planes to raise money, and somehow got the government to OK the latest merger, before the thing shut down. Enter Parker, who seems to think all of the above was a little run of bad luck...and happy power ports to you.

It is true that US Airways is goign to be different, but the old business model did not work.. at least not making it profitable. Yes, you are going to lose some things, but you will have a more profitable airline. And unlike alot of us, many companies only care on who can get its employees from point a to point b at a certain time and a certain price.

I know HP is not great.. I really hate Mesa Airlines and everythign RJs stand for... but the mainline carrier treats me well... no power ports, but it is ok for me... and I get upgraded over 70% of the time...

Overall, a new airline is coming.. with a different business model. I think people will still fly the airline, because they need to go from A-B.

Overall, a new airline is coming.. with a different business model. I think people will still fly the airline, because they need to go from A-B.

Well, let's take a look at that for a second.

It works, if you assume that the primary competition is Southwest--you have a front cabin and assigned seats and whatnot. Well, on mainline you have a front cabin. That's going to be (numerically) about half of your fleet or less at the end of the day.

In the east, the primary competition is not southwest (entirely/yet). NE-FLA? Sure, you are up against the B6s of the world and the LUVs. The problem is that even on these "so-called" (lest I offend deelmakur) leisure routes, one can still take another legacy--most of which have not shrunken back to the hubs like US has, and all of whom typically offer better amenities to VFFs (and in the case of your Jetblue and Song, better amentities to the non-VFFs).

From generic transit from A to B where neither A nor B is a huge metro area (in the east, anyway) you get better amenities on other legacies, and you don't have to subject yourself to PHL.

As I see it, the HP model will only work in the east if it's implemented right now. Yeah, it's going to piss off the VFFs, but the pricing sanity might inspire some loyalty. Then, if the LCCs do start to move into non-trunk markets (think Jetblue and it's E-190s and Airtran) you might retain some share. The other thing that needs to be addressed are the operational shafts that US tends to give it's VFFs--I don't want to wait until the day of departure for an upgrade on a flight that they can't even fill the front by selling upgrades.

The route network is going to continue to be dsyfunctional. I give you PSA as an example of why "barbell" is something you should hit your nearest "analyst" with rather than build a route network to look like. Further, HP has already tried a few things in the east--notably the defunct CMH hub and transcons out of NY and BOS (and yanked these back after losing the race to the $29 transcon R/T with Jetblue and every legacy). Running to the Carribbean and Mexico won't save the route network yield indefinitely--Airtran and Jetblue are already making a beeline for the islands, and it's probably only a matter of time until they head to Mexico and Central America. Europe requires expensive aircraft, but every other domestic legacy is already expanding like mad over the pond and almost all have premium cabins that are superior to Envoy and none of whom require a connection in PHL.

I like the hybrid (legacy/LCC) play a little bit out of PHX and LAS where LUV is basically the only real competition. I don't think it's going to play so well in the East. Parker seems like a bright guy, but he may very well have bitten off more than he can chew--he may very well burn thru the cash pile trying to fix this half of the barbell.

Oh, and most of this is from the VFF's standpoint--I challange anyone to defend the current "difference" between the rear cabin on US/HP and any LCC. To the "average joe" it's still about price (or perceived value proposition--don't even get me started on the "old" US in this regard).

Oh, and most of this is from the VFF's standpoint--I challange anyone to defend the current "difference" between the rear cabin on US/HP and any LCC. To the "average joe" it's still about price (or perceived value proposition--don't even get me started on the "old" US in this regard).


Actually, as a former HP PLT who defected to UA , I would have to say that the difference between US/HP in the back and WN is won by WN :(. I spend too much time on US metal because of what my standard commute is. NOrmilly my space available upgrade clears - but when it doesnt I would rather be on WN :td: I believe there is actually an inch or two more space in the back there. All my short hops from PHX-LAX or PHX-LAS have been moved to WN . What a choice - an RJ on UA, crammed in the back for a non ontime arrival on HP, or an exit row on WN if I check in from home. Their simple method for earning free tickets that I can pass on to my daughter gives me one free for every 4 $79 round trips to LAX ( thank you SWABIZ). vs a big 4K miles on HP. Its a no brainer.

The trick here is to come up with a strategy that provides real differentiators, not a "me too" strategy. US/HP will never "out-southwest Southwest". With the combined fleet you've got at least one of almost every aircraft out there - and all the problems with training, scheduling, equipment, spare parts, etc... associated with it. And that's just one legacy problem, there are tons more...

US has tried to follow the vacation market - the carribean, central america, VCE, BCE, etc... not exactly central business hubs. With decisions like that you're not going to get the frequent business traveler paying full fare - so you're going for the vacation market.

UA at least has come up with a novel approach - E+, reinstalling perks for FF, etc..., rather than following the pack and trying to cut every corner and every pillow in the fleet. Whether it works or not will have to be seen.

I do admit that every survey shows that price is by far and away the #1 factor in choosing a flight, however other factors do play a roll. FF miles, upgrades, type of jet, time of departure/arrival, # of connections, etc...

US/HP will claim that they've got both worlds - a F product (maybe not as good as competitors, but at least a shot of upgrading for FF) and a low cost product. The question is: are you really getting the benefits of both or just the liabilities of both?

I'd try thinking out side of the box, perhaps:

(1) Not sure if *A allows it, but lower F first fares. You've got Z, A, and F to work with - perhaps try to price the first class seats so you sell some of them AHEAD of time, rather than try to find buyers or giving them away at the gate. This would utilize the revenue yield formulas and dynamic pricing like they do in coach. Why should every flight, every day be $2,300 coast to coast? Tuesdays mornings are less travelled - make it priced accordingly. By setting aside a bunch of seats at full F fares will ensure that there are upgrade seats to go around.
(2) Work with the *A carriers. LH heads to Dulles, and C (or F) customers to LAS have to grab Ted for four hours in coach. Even if they route through ORD, they still have a long flight in coach. Why not refit the 757's with 24 seats, time the flights for LH connections, and offer LH a cheap "F" through fare?
(3) Work with the LCCs. If Southwest wants to make PHL a hub, don't fight them on it - work with them. Get travel agents to sell SW to PHL and put in a 'transfer counter' and then take them overseas os US. Obviously because of *A you can't code share, but there are work arounds.
(4) Do the same thing, but in Europe. RyanAir's hub is Dublin. US flies to Dublin. Work with RyanAir to create 'transfers' with RyanAir via travel agents.
(5) Re-evalutate *A? Does it makes sense now that there is much greater overlap with UA? Perhaps OneWorld, SkyTeam, or even something radical like Virgin (which is looking desparately to get a foothold in the US). Maybe Mr. Branson would pony up some investment cash too...
(6) Spend some dollars on modelling point to point vs. hub and spoke models and try to determine what makes sense. Tough to compete if you're a one stop and they are a one stop (both hub and spoke). Especially with the shrinking majors, there may be hidden opportunity creating point to point flights or even tapping recently underserved markets due to cut backs. If you're scared about these markets only sell three months out of inventory at a time - that gives you three months to shut down a flight and rarely are you getting bookings much farther than that out.
(7) Move some aircraft maintenance to Mexico or Central America.
(8) Work to sell lounge access to flyers outside the US/HP FF network. Perhaps for a commission, Southwest would allow US to market their lounge access to Southwest PHL based flyers. Likewise, it could be a competitive product. The trick is to ID the clubs locations, gate locations of competitors, and home base of competitor FF. Once their in the club, you can do more marketing to try to convert them to be loyal US/HP customers :-). I think they can work in this area to raise more money. Make drinks 'cheaper' or add an after work happy hour to try to get passengers to come to the club earlier. Perhaps offer an express food outlet in the club to create additional income.
(9) While thinking of clubs, why not expand purchase of a club membership to include additional benefits - perhaps one or more confirmed in advance upgrade (like UA's CR1) that allows a space available upgrade to be confirmed domestically provided there is availablity. This may inspire GMs, US1s, etc.... to join.
(10) I'd go back to paid for upgrade certs, with top members (US2, US1, CP) getting banked certs. This is a money maker. Let GMs buy certs and if available, they can upgrade just like anyone else (albeit last in order). But make them reasonable. UA does $50 per 500 miler. Too much. Make 'em $50/1,000 miler.

Just a couple of off the cuff ideas. I'd like to see US/HP not just survive but thrive, but I think it will take some creativity. It's too competitive a market to have a 'me too' product.