Last week, US Airways had its sixth annual leadership conference for every manager and above in the airline’s system. Each day for four days, a few hundred managers gathered to get the scoop from top management, and I was able to attend on the third day, Wednesday, courtesy of the airline.
Most of the presentations were the same as what we saw at media day a week earlier, but there were some differences. Most notably, the tone was different. Senior leadership was visibly more relaxed, especially during the Q&A session when they were often found playfully roasting each other. There were members of the American leadership team in the room each day, and they must have been completely bewildered by something that I couldn’t even imagine being done at American today.
But in addition to the difference in tone, this event had more slides that what we saw at media day. They took more time to talk through much of the rationale for the merger and the benefits it would bring. My favorite slide of the day was this one:
It was last March when I wrote about Jamie Baker’s discussion about the importance of an American/US Airways merger to “small to moderate East Coast cities.” But I think this slide shows it best.
All of these cities lie east of American’s big hubs in Dallas and Chicago. If you’re a resident of these cities, that makes heading west easy. But what if you need to go east? Some of these cities have limited service to Miami in order to connect to South America, but it’s not realistic to use that service to connect throughout the east coast. On this list, only Cincinnati has a flight to New York, but that’s a single daily flight to JFK meant to connect to Europe. It’s in the middle of the day and won’t work on a business schedule.
On the flip side, US Airways serves all these cities from its hubs in the east. (I’m not sure when they officially started calling Washington/National a hub, but we saw that mentioned multiple times at the events over the last couple weeks.) You can connect up and down the east coast and into Europe with ease. But you can’t go west. None of these cities have enough demand to support a flight to the only US Airways hub in the west, Phoenix.
When you bring the two networks together, you gain the ability to get people in all these cities (and there are plenty more not mentioned here) wherever they need to go. That allows the combined airline to compete with Delta and United, both of which can already go both ways from these cities.
Why does that matter? Well, it means the new American will be more competitive for corporate contracts in those cities. By providing a legitimate third option to United and Delta, it should increase competition in those place. That bleeds over into leisure demand as well. If people become loyal American fliers for work, it increases the likelihood of them choosing American for leisure. That’s particularly true if the AAdvantage program remains structured well and continues to draw people to it in droves.