A Boring US Airways Media Day

From the title, you might think that last week’s media day that US Airways held in Phoenix was a total US Airways Unpluggedbust, but that’s not true. It WAS boring, but that’s because US Airways is running a good airline these days. There were a couple of announcements about expanding wifi and new Washington service, but for the most part, it was another chance for US Airways to tell its always-consistent story. For those of us who go to US Airways media day every year, it was another affirmation of a strategy that has served the airline well. Boring? Yes, in a sense. But it was refreshingly boring.

Consolidation
CEO Doug Parker and the team weren’t stupid. They knew that many of the questions of the day would revolve around consolidation and whether a US Airways-American merger was in the cards. Of course, there was no way that Doug could comment on anything like that despite repeated questions asking the same exact thing. Doug did address it right at the beginning, however. Doug reiterated his belief that consolidation has been very good for the industry, and he is not averse to participating. He was, however, quick to make the distinction that consolidation is now “no longer a strategic imperative.”

In other words, while the industry needed consolidation to get healthy in the past, there has been tremendous benefit from what’s happened to date and US Airways doesn’t need to participate to remain viable. That being said, US Airways isn’t shying away from it. You know that it was difficult for Doug to say “no comment” every time someone mentioned a certain AAirline, because he would have loved to talk about it. But he just couldn’t. We’ll have to wait to see how that plays out.

Five Goals
Back to running the airline at hand, we were given five goals for the year, and as it was noted, they haven’t changed must from past goals. Consistency was certainly the theme of the day. The goals were:

  1. Ops: Industry leader in operating reliability
  2. Revenue: Maximize value of existing assets
  3. Costs: Maintain strategic cost advantage
  4. People: Actively engage employees
  5. Long-term strategy: Control our destiny through sustained profitability better than our peers

In short, US Airways needs to continue to run a great operation and keep its costs lower than other legacy carriers because its network will continue to produce less revenue than the other guys. To do that, it needs to make sure to keep explaining this strategy over and over to employees so that everyone understands the situation at hand.

Fuel
Much of the discussion of the day touched on the cost of fuel. The point was made that in 2008, US Airways actually paid a little less for fuel than it did in 2011 ($3.11 per gallon vs $3.09). In 2008, however, the airline lost over $800 million while in 2011 it made over $100 million. The difference? The airline could pass along over 85 percent of the increase in 2011 while 2008 saw demand crash so quickly that it was a bloodbath. Some of that new revenue is from fare increases, but ancillary revenue plays a big part as well. In fact, nobody seemed to think that the industry would exist today in its current form if it weren’t for ancillary revenue, of which US Airways brought in $537 million in 2011. Oh, and let’s not forget the benefit that comes from the industry collectively keeping capacity under control.

Operations
The operations discussion was an easy one. On time percentage is way up, baggage mishandling is way down, and complaints are way down as well when looking back toward the dark days of 2007. This year, thanks to benign winter weather, things have been going even better. On January 31, US Airways hit an all time record for the airline with 96.1 percent of flights arriving on time. The airline also has already had more days without a cancellation in 2012 than in any previous FULL year.

Irregular Operations Recovery
While the mantra used to be about reliability, convenience, and appearance, the latter has now been switched out to “recovery.” The airplane interiors are in much better shape these days and a lot of work is underway to create more opportunities to fix problems when things go wrong. One tool that we were shown was Sensis Aerobahn, which is a real-time ground radar program that shows where all airplanes are while on the ground at an airport. It will help identify short connecting opportunities where there is risk of misses, and it will allow the airline to more easily switch gates around to help make connections. This is being rolled out to all the hubs.

US Airways Sensis Aerobahn

 

Capacity and More DC Flying
This year effectively marks the end of the US Airways transition to focus its flying on its Phoenix, Charlotte, and Philly hubs along with its Washington/National focus city. In 2006, only 83 percent of flying touched these cities, but with the completion of the LaGuardia slot swap with Delta that gave US Airways more slots in Washington, it’s now up to 99 percent. All non-hub flying from Vegas is gone. Same goes for LaGuardia except for the Shuttle to Boston along with Pittsburgh flights. Nearly all Pittsburgh and Boston flying is gone with the exception of a few random markets like Boston to Buffalo and Pittsburgh to St Louis. In its hubs, US Airways is the number 1 airline, so it’s playing to its strengths. The comparison to American’s weaker position at three of its five hubs was not lost on anyone.

As part of this discussion, US Airways announced what it would do with the remainder of its Washington/National slots that it acquired from Delta. It will begin flying to Augusta (GA), Minneapolis, Northwest Arkansas (Wal-Mart), Montreal, Quebec, and Toronto. In addition, it will use its newly-earned long haul flight exemption to start a San Diego flight. This comes at the expense of a DFW flight. Interestingly, San Diego will be operated with an A320 – I really didn’t think that airplane could make it that far off National’s short runway, but apparently, it can.

The Fleet
US Airways has effectively committed to no fleet growth in the near future. It will take delivery of 12 new Airbus narrowbody airplanes this year, but those will all be replacements for old 737s. The 737-300s will be gone by the end of this year with the 737-400s being gone a year or so after. Meanwhile, fleet refurbishment is going well. All the big regional jets now have First Class seating onboard, and the A330-300 Envoy (business) Class upgrade to the flat bed will be completed by the summer.

US Airways Envoy Suite Transformation

 

Employees
There actually was a really interesting discussion about everything US Airways does to communicate with employees. There are a surprising number of tools in the arsenal. Some are publicly available, like an employee Twitter feed. Others, like webcast employee group discussions, are not. But it’s safe to say that US Airways does invest a lot of time into trying to communicate. (I’d be curious to know how current employees feel about its adequacy.)

US Airways Communications Efforts

 

While I was live-tweeting the event, the one tweet that got the most action was one talking about one of the employee-support programs that the airline offers. For every 50 hours an employee donates to charity, US Airways will donate $500 in travel to that group. I like it. There are a myriad of other incentive and award programs that the airline puts out for employees to be able to benefit personally as well.

PreferredAccess
US Airways has now started to sell premium services as an ancillary revenue benefit. So you can buy PreferredAccess for your flight, and that includes premium check in, security lines, and boarding.

Wifi
US Airways also announced that it will expand wifi from just being on A321 aircraft to being on the entire Airbus narrowbody fleet. In addition, it will put it on the Embraer 170/175/190 fleets as well. The 737s won’t get it, but they’ll be gone soon enough. More interestingly, the only other large regional jet in the fleet, the CRJ-900s operated by Mesa, won’t be getting it either. I asked why that was the case, especially since those just got First Class along with the others, and the official line was that it’s easier to pick one new fleet type at a time. So we might see it later. But I will note that the contract for those Mesa jets comes up in just a couple years. Maybe there’s not enough certainty about whether they’ll be kept around or not.

As part of this, US Airways will also add GogoVision, the onboard offering that allows you to watch movies directly on your device. This, along with a better antenna, will be added to the fleet. Completion is expected by the middle of next year. Unfortunately, during that time there will be no indication of whether or not your flight has wifi so it will be a crapshoot until the fleet is done.

Like I said, not a ton of news, but just more of US Airways doing what it does best these days – run a good, profitable airline. With any luck, next year’s media day will be much more exciting. Maybe it’ll be in Ft Worth . . .

34 Responses to A Boring US Airways Media Day

  1. Kilroy says:

    Good to see NW Ark get some more flights (is it still the most or 2nd-most expensive airport in the nation, as everyone there claims?). It will still be a royal PITA to get to, but at least there will be another option, and I’m sure USAirways will be able to charge through the nose for that flight and still fill its planes.

    MSP isn’t the cheapest place to fly to either.

    • Sanjeev M says:

      Agreed. XNA needs more flights, and more that are not expensive. But the DCA connection is good, otherwise it takes 5 hours with a connection.

      It was speculated elsewhere that Embraer jets are getting wifi cause Republic has already paid for prepwork because of the Delta contract. So US is basically being cheap…

      Sensis Aerobahn looks SWEET! Is there a stalker version for us public?

      • I think NW had DCA-XNA flights previously so I was surprised to see this was a new destination from DCA but agree that this should be a no-brainer success for US.

  2. Yup, my guess is that the AA situation will definitely make next year’s US media day more interesting!

    I am curious though about the expansion of wifi across the fleet. From what I heard (and thanks for your tweets), I think Kirby said something like wifi usage is only about 5%, and that you need about 15% to make money. Oh, and that people like the wifi option. But given these economics, how does the gogo expansion get funded? I’m assuming US isn’t interested in investing much in a product that doesn’t pay for itself. Does gogo bear all or most of the entire financial risk?

    • CF says:

      Kirby did say that usage isn’t enough to pay for the systems, but he did say that people are making choices based on wifi. So, if someone is actually choosing not to fly US Airways because it doesn’t have wifi, that hurts a lot. I think the justification was made because of customer choices, not actual usage. On top of that, there is still an expectation that usage will continue to grow.

  3. So all their pilots are one big happy family now so they feel they can take on the pilots and other workers at AA?

    This Sensis Aerobahn thing could make a hub airport look like a scene from the movie ‘Airplane’. “Flight 123 will depart gate A4. No wait, B12. On second thought A22. Oh wait we see a couple wants to take a baby in first class so make that gate C75. Yeah C75, they’ll never make it and miss the flight so those in first class can have quiet.”……lol (sorry couldn’t resist that) :-)

  4. You still couldn’t pay me to fly US Airways. I’d rather stay at home.

    • Wow. I think that’s your loss. From a customer’s perspective, US is about as good as any other major US airline to fly now. I can’t imagine wanting to avoid taking a US flight if it were the most convenient and/or economical travel solution.

      • Sanjeev M says:

        I thought like Matt until I boarded a US A321 redeye SAN-CLT. So much legroom, so clean, new plane, really great flight. And CLT is a fabulous hub to connect in.

        I understand the US Airways brand is not the best since going from the PIT/BWI airline it was to the PHL/DCA/Piedmont/AmericaWest/AA? that it is now. But they have changed and they are reliable. Give it a try.

  5. Ron says:

    If Mesa goes, what happens to Long Beach? They already have one daily 319, but can they support five?

    • CF says:

      If Mesa goes, they just backfill it with another provider. That’s exactly what they did with Mesa’s smaller jets. US Airways took it away from Mesa and hired SkyWest to fly instead.

  6. I’m beginning to think US may ultimately bring more to the table than American in a possible merger between the two. US has really gotten its act together (kudos to the employees who, in the main, haven’t let the pilots’ dispute affect their professionalism). It’s become a better version of America West (which was pretty darned good in my experience, even if the FFOCUS cry babies don’t think so, but I digress …). If there is a LCC / AMR merger, I hope their next media day is still in Tempe. But that’s my home town bias showing.

    On the wi-fi issue: I really wonder why airlines haven’t gone to a satellite based delivery system which can be used over water. And I also have to wonder if or when US is going to provide power to the seats (I understand it’s a maintenance headache). But I also realize that I’m buying transportation when I fly, not entertainment. So I’m not being critical at all here, just wondering.

    • CF says:

      Why haven’t airlines gone with satellite-based systems? Money. Bandwith to the sky is much more expensive than it is to the ground… for now. But I think everyone realizes that ground-based systems are probably just temporary solutions. Gogo is well aware of this, and if the day comes when satellite is cheap enough, you can be sure that Gogo will have something to offer its customers.

    • David M says:

      The Row 44 system that Southwest and Norwegian Air Shuttle use is satellite-based. The ViaSat system that JetBlue is supposed to start installing later this year is also satellite-based.

      • CF says:

        Yes, those are satellite-based but they are more costly than ground-based systems and they are already using older Ku band technology. The new one that JetBlue and ex-Continental airplanes will have uses newer Ka band technology and that’s supposed to bring the cost down while improving speed. We’ll see how it turns out.

    • I just got thinking that the session was called “unplugged” because US Airways, generally speaking, doesn’t have power on its aircraft. One thing about technology; if you don’t like the current state of the art, just wait a couple of years. I don’t think it’ll be too long before an inexpensive satellite based system is installed on aircraft. It may only require a change of antenna (or whatever the receiving device is called).

  7. aeronathan says:

    I flew US Air for the first time in a while for vacation this last week and I have to say I was impressed. First class to and from Punta Cana, DR, cabin crew was very polite, attentive and even engaging in conversation, and on the way back were giving a very detailed explanation for the whole process of going through immigration and customs in CLT.

    On top of that, all 4 of my flights not only left on time despite some bad weather in the SE US, but 3 out of the 4 arrived early. Can’t hardly beat that…

  8. Odd, US Airways’ awful 3/21 press release has been replaced on their website by an slightly less dreadful version of the same press release. To wit:

    – The original version specifically stated that a 319 would be flying DCA-SAN but CF says 320 above? The current version of the press release is silent as to a/c type.

    – Neither version of the press release bothered to include service frequencies to any of the new DCA destinations except SAN.

    – The original version of the press release was very confusing regarding the destinations. Some media outlets actually reported that “Quebec” was among the new destinations from DCA. However, the city of Quebec, as in Quebec City, QE, is NOT a new destination. Quebec was included in the list of destinations as a descriptor for Montreal, the same way Arkansas was included for Fayetteville, Arkansas. The revised language in the new version is somewhat clearer but IMO it is still quite poor from a consistency point of view:

    “Business, government and leisure travelers in San Diego, Augusta, Ga., Minneapolis, Fayetteville, Ark., Montreal, Quebec and Toronto, Ontario will have direct access and convenient flight options to the nation’s capital’s downtown airport.”

    For two of the destinations, no state is included after the city. For two other destinations, the state is included but one uses a two letter abbreviation (Ga.) and the other uses a three letter abbreviation (Ark.). That is very strange. For the two Canadian destinations, the province’s name was spelled out in its entirety. Holy inconsistency Batman! Has anybody in Tempe (or at their PR firm) ever heard of standard postal abbreviations?!

    To CF – Other than the 319/320 question above, where did you see that a DFW flight will be dropped for SAN? This does not seem like it would be a viable option for US as IIRC each “big 4″ airline was allowed to drop a flight from DCA to one of its hubs for a flight to any city outside the perimeter. In fact, that is why I thought they were dropping a LGA flight (as indicated on your spreadsheet a few weeks ago) but I could have drawn an incorrect conclusion.

    DFW is obviously a hub airport but not a hub airport for US. That being said, if it is an allowable exchange, it is somewhat brilliant because US’ one daily CRJ700 flight to DFW always seemed baffling in light of AA’s 12 daily mainline flights from DCA to DFW.

    • Andrew says:

      The press release wasn’t that bad.

      To your question about the DFW flight being dropped for SAN: “Under 49 U.S.C. § 41718(g)(3)-(5), the use of the exemptions are conditioned upon, among other things, that the incumbent carrier (1) discontinue the use of a slot for service between DCA and a large hub airport within the perimeter and operate, in place of such service, service between DCA and an airport located beyond the perimeter…”

      All it says is “a large hub airport within the perimeter” It does NOT say “YOUR large hub airport within the perimeter.” So by reading this, DFW definitely qualifies, as it is certainly a large hub airport within the perimeter.

      Also, pretty sure that route is flown with an E170, not a CRJ700.

      In terms of your question about a 319 vs 320 for the DCA-SAN route, I believe a 319 is loaded into the schedule for the first month until the schedule changes (from the redeye to the mid-day departure), and then it’s a 320 after that July schedule change.

      • Thanks for your help! I should have looked up the exact language but thought that, even if I did so, I would probably be able to interpret it either way due to my lack of expertise in such matters. IMO it’s a great opportunity for US to be able to trade that flight for SAN. I totally goofed on the CRJ700, it is definitely an E170. At least I had the “7” part right! :-)

        I was annoyed by the press release for three main reasons. First, it would seem that they have to know the daily frequencies for the new destinations by now, especially since DCA is slot controlled, so omitting that information is absurd. Second, is it too much to ask for a junior high school level of grammatical correctness for abbreviation and comma lists? Third, US obviously realized there were fundamental problems in the press release because they changed it ex post facto (a PR no no in and of itself) and yet didn’t really solve any of the problems. Press releases are not blog posts, they are the official public statements of a company and yet this one, even after sneaking in edits after its release, remains incomplete and amateurish.

        • Arcanum says:

          Don’t worry Bill, I also thought the grammar was off!

          I’m not an English major, but I think the proper form would have been “San Diego, CA; Augusta, GA; Minneapolis, MN; Fayetteville, AR; Montreal, QC; and Toronto, ON”.

          • Exactly! I guarantee if that’s how either of the pressers were written, some media outlets wouldn’t have erroneously reported that “Quebec” was a new destination!

    • David M says:

      US Airways’ filing with the DOT states that the slot is coming from the DFW flight, and that it starts out as the A319 before switching to the A320: http://www.regulations.gov/#!documentDetail;D=DOT-OST-2012-0029-1050

      • super… thanks to you as well!

      • LOL, the pleading US signed and submitted to the DOT misspelled “establishment” in the header!!!!!! Copied verbatim below:

        In the Matter of
        ESTABLISHEMENT OF SLOT EXEMPTION
        PROCEEDINGS AT RONALD REAGAN
        WASHINGTON NATIONAL AIRPORT
        PURSUANT TO 49 U.S.C. SEC. 41718

        Uh, wow! So the PR people can’t punctuate correctly or write clearly and the attorneys can’t spell. I know that these are very small potatoes in the grand scheme of things but nevertheless such easily avoidable mistakes cast an unnecessary negative light on an entire company.

  9. Stu says:

    Any update on the east/west rift among the pilots?

  10. Pingback: US Airways 2012 Media Day - Johnny Jet

  11. PF says:

    Was anything mentioned about a timeline to finally combine the East/West operation into one?

    • CF says:

      Not sure what you mean. Everything is combined into one except for the pilots which still fly separately. (I guess the flight attendants are still separate for now but they’re voting on a tentative agreement.) So if you’re just talking about when they can combine pilots, you’ll have to ask the union when they plan on adopting a valid seniority agreement.

      • PF says:

        Do they do plan and maintain two crew schedules – East and West ? If so, that must be challenging when creating a system wide schedule. I would think operations would be much smoother with one pilot group to schedule.

  12. mirabella says:

    The Transition Agreement governing the US Airways/America West merger precludes combining the respective pilot groups until a new collective bargaining agreement is ratified by pilots of both former entities. No tentative agreement has been constructed by US Airways and USAPA, the pilots’ certified bargaining agent, despite ongoing negotiations. The Railway Labor Act allows amendable agreements to remain in place for years and years. Many observers feel that the Transition Agreement has had a collateral effect of providing a “fence,” not unlike that in the Northwest/Republic merger.

Leave a Reply

Please use your real name or nickname instead of your company name or keyword spam.