Notes from US Airways Media Day

I’m still here in Phoenix after finishing up the first day of the Phoenix Aviation Symposium, US Airways Media Dayso I thought this would be a good time to dump all the remaining bits and pieces of interest from the US Airways Media Day. Let’s get going.

If you see something that interests you in particular, leave it in the comments and I’ll try to write a longer post on it if enough people have interest.

Consolidation

  • No surprise that Chairman and CEO Doug Parker started by talking about the rumored talks with United. He opened with “Last week we announced we were breaking off talks with United. That took a little creativity since we never announced we were in talks with United.” You can read more on his opening talk on BNET.
  • Later in the Q&A, when asked why US Airways didn’t handle the leaks about the merger discussions with United better, Doug got visibly agitated.

    We didn’t leak anything. And we think that’s the way you should do business. And I don’t know who did, but the way we do it, we have confidentiality agreements with the other party that we don’t violate. I’m happy to tell you that we were disappointed by how much information about the potential transaction was in the press. These talks went on for a long time and it never got out. I don’t know where it came from, and it’s not the way we want to do business.

    I think we all know where the leak came from. If it wasn’t US Airways . . .

Financial Performance

  • US Airways has a 12% unit revenue disadvantage versus other hub and spoke carriers because of its weaker network, but it offsets that with a 12% unit cost advantage.
  • US Airways has a 23% unit revenue advantage versus low cost carriers, but that’s more than offset by a 29% unit cost disadvantage. Why? Because, as Scott Kirby says, “running a hub and spoke operation is intrinsically more expensive than running a point to point operation.”
  • Prices are up and corporate revenue is improving. Things look good, but they are only cautiously optimistic. You never know what else can go wrong (like a volcano).

Operations

  • 2009 was a very good year for the airline with high on-time performance, a low number of cancellations, low lost bag rates, and lower complaint levels. This is primarily because they ran a better operation.
  • They’re running this operation with relatively tight block times. This chart was in their presentation:
    US Airways Block Time Comparison
  • April is a record month for performance so far. For April through the 26th, on time performance is at 88.8%.
  • They launched the Aircraft Appearance Audit Program to make sure that airplanes are clean and the interiors are all functional. Over 1,400 have been done this year with good results.

Customer Experience

  • The new Envoy Suite in business class is getting excellent reviews. It is on 5 of the A330-200s now with the last 2 completed in October (after the summer peak). The A330-300s will get it next year.
    US Airways Envoy Suite
  • Cushions and covers, overhead bin extensions, sidewalls, and inflight entertainment are being spruced up on the 757 fleet that goes to Hawai’i and Europe. The 737-400s are getting cushions and covers as well.
  • Wifi is on 38 of the 51 A321s with the rest finished by June 1. If this goes well, they’ll expand to other airplanes. (In other words, if enough customers use it, they’ll expand the program.)
  • An agreement was just signed with Continental and United to allow reciprocal access to each other’s clubs regardless of who the customer is flying. Up until now, you could only visit those clubs if you were flying those airlines.

Star Alliance

  • US Airways is completely committed to the Star Alliance and is “deepening” ties.
  • More than half of US Airways capacity into Europe flies into a Star Alliance hub. The connecting traffic numbers are staggering and show why Star is important to their international network.
    US Airways Europe Connectivity

    Without Star, or some other type of partnership, many of these flights simply wouldn’t be sustainable.


19 Responses to Notes from US Airways Media Day

  1. Adrian says:

    Why didn’t you boycott Arizona?

  2. Sanjeev M says:

    Interesting.
    1. I’m glad that US is looking at their interiors, cause Jaunted really grilled them over it recently.

    2. With American (and possibly JetBlue) in the oneworld realm, unless US Airways creates a 4th global alliance (which would be interesting), then Star is the best option for them. US Airways needs to relocate some terminals and consolidate lounges to make this relationship better.

    3. Brett, can you go into the blocking thing more? I think you mean it’s the difference between flying time and scheduled time (padded schedules) but I’m not sure. (I’m only in high school, so still learning)

    • Jason H says:

      To point 3; this is already occurring in some markets. In Denver they moved out of C Concourse (95% a WN Concourse now) to the B Concourse with United and Continental. Now the B Concourse is the Star concourse with the exception of foreign flagged carriers that must use A since it has customs facilities.

    • CF says:

      3. Yes, block time is the total time from when the airplane leaves the gate to when it arrives at the next gate. So it’s the same thing as scheduled time.

  3. iahphx says:

    Thanks for the detailed report. It’s almost as good as being there!

    Was there anything more said about US’s cost advantage over other legacy carriers? How do they achieve this advantage? I presume some of it is wages? I presume a lot of it is just tight-fisted management?

    For what should be a largely inconsequential airline, US is very interesting. And it’s almost all due to their management team.

  4. Craig says:

    “US Airways has a 23% unit revenue advantage versus low cost carriers, but that’s more than offset by a 29% unit cost disadvantage. Why? Because, as Scott Kirby says, ‘running a hub and spoke operation is intrinsically more expensive than running a point to point operation.'”

    What low-cost carriers is Kirby comparing US to in this instance? Southwest, Airtran, Jetblue, and Frontier all run networks that are (at least largely) hub-and-spoke oriented.

    • Craig, I did a comparison once for wikipedia. Southwest, Airtran, and Jetblue all do some hubbing, but nowhere near the amount that network carriers do. (Frontier does hubbing out the wazoo.) Thus the difference.

    • CF says:

      This included JetBlue, AirTran, and Southwest. While Southwest has large focus cities that approach hubs, they are primarily there to serve local traffic. Then they just take advantage of the connecting opportunities. The legacies fly to those tiny cities which are specifically meant to come in and feed the hub and aren’t designed for local traffic, so it’s a different dynamic.

  5. oldiesfan6479 says:

    @ Adrian – I’d rather boycott Frisco instead.

    Speaking of SFO, the block time comparison chart doesn’t tell the whole story. (Did they go into more detail at the presentation?)

    What time of day was the PHX-SFO 1:59, and was the OAL 2:12 around that same time? And how did the x-number of other flights in the market compare to “the leakers” ;-) and Herb in block time?

    • CF says:

      We didn’t really get into full details there, but we can easily look. I just picked a random date in June. United has a 715a blocked at 2:16 while US Airways has a 745a blocked at 2:09. Southwest has a 7a blocked at 2:05.

  6. The photo of the Envoy Suite looked nice, but I still can’t think of US being an international carrier. I wonder how many other people think the same way and avoid them for that reason.

    • JayB says:

      To some of us seniors, US Air will always be Allegheny, actually All American Airways.

      I still remember All American flying a Stinson into old Lancaster, Pa. airport, coming down low, almost touching the grass runway, snatching the mail sack from the line stretched between two poles, and back up the plane went. Now that was impressive! (No, I never did get to see the Pony Express. Probably pretty impressive, too!)

      My image of them may be troubling to US, because that does cause me to book around them and for all practical purposes, never even consider them for international. However, I don’t think we are that much of the market for US management to get too concerned.

  7. I’m kinda interested in any additional details on operations, and the customer audit piece.

    I remember US Airways saying long ago that the most important details were to run and ontime operation with clean airplanes…

    • CF says:

      Yeah, they’re still going with the RCA strategy (Reliability, Convenience, Appearance) and they’ve made great strides. Things are going quite well in all areas. I’ll try to get at more details if I can.

  8. Andrew says:

    I can state that 2009 was 2009 was a very good year for the airline with high on-time performance, a low number of cancellations, low lost bag rates, and lower complaint levels. This is primarily because they ran a better operation.I think it is a real progress!

  9. Tom says:

    CF is an ASSHOLE!!! don’t bother reading anymore of his/her articles

  10. Pingback: Arguing For the United Continental Merger Part 2 | The Airline Service Guru

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