What happened to USAir/USAirways?

[N702ML]

I am posting this question with all due respect.

I am not trying to initiate a "Let's bash US" discussion. So please...don't take it there.

My question, as an airline enthusiast is simple...what happened?

I am looking at a USAir annual report from 1988 that says: "Nineteen eighty-eight was a good year for USAir Group. We had our thirteenth consecutive year of profitability..." "Operating income reached an all-time high of $433.6 million on revenue of $5.7 billion. Net income of $165 million was the second highest in our history...."

Yet, I have spent the past few days reading all of the old posts in the "Dividend Miles Pre-Merger Program" thread and it seems it has been gloom and doom for a long, long time.

USAir was the first airline I ever flew as a child. I wanted to fly so badly, my parents let me save up money to fly from CLE to PIT to see my grandparents....This was in the 80s and the roundtrip fare was $90. So, I have nothing but fond memories of USAir.

My question is really....what happened to this once profitable, successful airline? Was it bad management? Overexpansion? Extreme overhead?

Reading the pre-merger Dividend Miles posts (which has taken several days) it seems like US has been in a continuous state of decline....layoffs, hub/res center/base closures....pay cuts...its NOT a recent thing. But, unlike other carriers (even those still in trouble) the cuts continue....closing bases...the LAS hub....

Again, I emphasize, I am NOT trying to bash this airline...not at all. I just wonder...where was the turning point? When did this continuously profitable carrier turn the corner into a continuously struggling carrier?

As a total airline geek and enthusiast, I just wonder...what happened and why can't this once-great airline recover?

I would also like to state....if I simply wanted to bash US...I would have done so on airliners.net where all of the "younger" crowd that knows nothing of the once great USAir would be quick to jump on the bandwagon. This question is posed as a legitimate question to those that know US the best...people like flight62. I am looking for real answers...not just complaining about the decline of meal service and inflight perks....people who have been there as long-time customers and employees.

What happened? What changed the tides from a constantly profitable carrier to one that is still (unfortunately) suffering even post-HP merger? Reading the old posts, it seems like so many things were done to save the company even before the merger with unsuccessful attempts.

So you long-time US flyers and employees...what do you think the turning point was?

[tommyleo]

At least one reason is that when the airline was profitable, management agreed to relatively generous compensation to its employees. But with deregulation -- and then the internet, which allowed price transparency -- fares dropped precipitously. And the profits dried up because US was still obliged to pay the union contracts to which it had agreed previously.

BTW, this story can be said about most domestic legacy airlines...

[Nicksta]

My first flight was on a USAir DC-9. I have found memories of the airline - especially of getting hamburgers in my 'kid-meals' in coach. We had airline loyalty as a family based solely on that!

Every legacy airline has fallen victim to the same fate. Deregulation appeared great at first, but the business model clearly does not work as is.

Its a shame for all of the legacies, because Southwest, JetBlue, and Virgin do not provide the universal service needed for the US. But, such is today. Hopefully US, by being relatively small, is nimble enough to adopt the best practices going forward someday.

[BoeingBoy]

A simplke question with a complex and multifaceted answer - there may be a book written or business course taught about happened to turn a once routinely profitable carrier into what it is today.

Jim

[Travels2mch]

I go back to the Allegheny days and US had a few peaks and valleys when it came to service, and much of it could be tied back to how the employees were being treated by management. From a pure service perspective, US started to decline post 9/11, as did many other airlines. However they kept pace with what the other airlines did, and in some respects still performed better.

Then enter America West......and that's when they turned this airline into the crap that it is today. Doug and his flunkies destroyed what was left of USAir.

Now I know some of the koolaide drinkers may flame me for this, but I don't care. As a former paying very frequent customer, that's how I see it.

[N965VJ]

Originally Posted by tommyleo

At least one reason is that when the airline was profitable, management agreed to relatively generous compensation to its employees. But with deregulation -- and then the internet, which allowed price transparency -- fares dropped precipitously. And the profits dried up because US was still obliged to pay the union contracts to which it had agreed previously.

IIRC, US was making record profits in the late 90s. Didn’t the company invoke force majeure after 9/11 for pay cuts?

[SS255]

Originally Posted by N702ML

USAir was the first airline I ever flew as a child. I wanted to fly so badly, my parents let me save up money to fly from CLE to PIT to see my grandparents....This was in the 80s and the roundtrip fare was $90.

I think you just answered your own question.

[BoeingBoy]

Originally Posted by N965VJ

IIRC, US was making record profits in the late 90s.

But only for 2-3 years following almost a decade of loses.

Didn’t the company invoke force majeure after 9/11 for pay cuts?

I can only speak for pilots, but no - the paycuts came as US was heading to BK1 in 2002. Force majeure was invoked to avoid the no furlough clause in the pilot's contract, leading to the furlough of about 30% of the pilots.

Jim

[formeraa]

BoeingBoy is right. Airlines were making money in the late 90's. With both investment and .com companies paying astronomical business airfares, the airlines were able to make money and actually added back Y meals and other amenities. Then, the .com bust and 9/11 combined to wreck havoc on all airlines. Airfares plummeted and businesses dramatically cut back on air travel.

[SOBE ER DOC]

US's performance as an airline in the 90's was based on it's model of focusing on business travelers willing to pay higher fares. They further solidified this with their fortress hubs in PHL, PIT and CLT...all of which had some of the highest average fares in the nation at that time. Sadly, when the bottom fell out after 9/11 and the LCC turned airlines into a commodity the bix model of the 90's just wasn't viable any longer.

When US started flights to Europe and offered three class-service on the A-330's they offered one of the best products across the pond (for a US-based carrier). They also let this not-so-much slip as they didn't keep up with the competition's innovations.

As other posters commented. US also suffered from the "less is more" approach to service and customer service which closed the gap between it and the LCCs...further solidifying the notion that air travel is a commodity.

Also, I think closing the PIT hub was a mistake. I get that PIT doesn't have as much O&D traffic as CLT and PHL but it was a fortress hub and a solid option to the variable operations seen in PHL. CO, DL and the former NW have all been successful with mid-tier (< 3 million people) hubs (CLE, SLC and MEM respectively). Shifting NE ops to PHL created too many operational issues that inserted a degree of unreliability that has seriously harmed their brand.

Add to this the labor strife from what has proven to be a failed merger and you have a 1-2-3 punch.

I'm quite nostalgic for the US of the 90's but think this is an airline that destined for the history books.

[TPA us ff]

Originally Posted by Nicksta

My first flight was on a USAir DC-9. I have found memories .

Fond . . . perhaps?

I found some memories too, not always pleasant!