Yesterday, American announced its new post-US Airways merger senior management team, and the result is pretty much as I had expected. Actually, scratch that. It’s as I had hoped it would be. Let me explain what I mean by that.

See, I figured that the new team would look a lot like US Airways today, but I wasn’t sure how many of the quality existing American folks could be convinced to stick around. With this announcement, we see that some of the best in American’s senior ranks have decided to stay. That says to me that they are buying into the merger plan and want to be a part of it, and that is a good sign.

Some of the early headlines screamed how there were 5 people from US Airways and 3 from American, so it was a more balanced approach. But all you need to do is look at the positions to see that’s not true. The top leadership positions are all filled by US Airways people. Here’s the org chart they posted in a company newsletter yesterday.

Looking at this chart, it looks a lot like America West back before it took over US Airways. You have Doug Parker at the top (which we already knew) and Scott Kirby as President. Robert Isom will run operations, Steve Johnson will be on top of corporate affairs, Derek Kerr will head finance, and Elise Eberwein will be in charge of the HR and communications groups. The team that made US Airways what it is today will continue to lead the new American.

What about on the American side? Well, Bev Goulet is going to be in charge of the integration, but that’s obviously not an ongoing position. I would assume she’ll stick around for a couple of years to facilitate the process and then retire. Then again, that company newsletter said Bev flew 50 flights between Dallas and New York last year alone as part of her restructuring role. How she isn’t sick of all this and dreaming of sitting on a beach with a fruity drink in hand is beyond me. That’s dedication to the cause.

The one American employee who will report to Doug Parker on a permanent basis is Maya Leibman as Chief Information Officer. Readers of the blog know that I’m a fan, so I’m really glad to see that she decided to join the new team. I think US Airways and American have somewhat different views on the role of IT, so it will be very interesting to see what this organization looks like a year down the line. I would like to think that it will be a good thing.

Lastly, we have the legendary Will Ris running government affairs. (He’ll report to Steve Johnson.) Will has been with American for over 15 years, and he knows his way around Washington extremely well. Will is a regular at the Phoenix Aviation Symposium, and he cracked everyone up this year. When Doug Parker snuck in the room before his panel, Will was on stage and immediately started commenting on how Doug Parker was the best looking CEO in the industry. He knows how to work a room, and he’s been a huge asset for American over the years. Great move getting him to join as well.

All of this means that very few US Airways folks are out at the top (though that’s probably not comforting to current US Airways CIO Brad Jensen). On the American side, however, it’s a major house-cleaning. Of course, Horton is out as soon as the next board meeting occurs. Chief Financial Officer Bella Goren is gone, as are Denise Lynn (SVP People), Gary Kennedy (SVP, General Counsel), Jim Ream (SVP Ops), and Virasb Vahidi (Chief Commercial Officer). We also know that longtime American exec and current president of American Eagle Dan Garton is losing his job.

While I would imagine that most of these people weren’t offered roles in the new airline, that’s not true for everyone. Jon Snook, VP of Customer Service for American was offered a job in the new organization and walked away. In the letter he wrote to his team, he said he had an offer “to take a different role,” but he didn’t want it.

So now the top management team is set, and it’s time to start rolling this down to lower levels. I’m particularly interested to see what they decide for Scott Kirby’s direct reports. US Airways doesn’t really do much marketing at all, and both airlines duke it out for least-liked sales organization. Those are roles that I’m particularly interested in seeing filled. It wouldn’t surprise me if we see people come in from the outside.

Once we get to middle management levels, I would assume we’ll start to see a lot more people coming from both airlines. The top leadership sets the tone, and people underneath will have the opportunity to follow, regardless of which side they’re on today. But at the top, the vision is clear, and it’s coming from Arizona.

The Contrarian View: Why Phoenix Could Become An Even Bigger Hub And LA Could See Big Changes – PlaneBusiness Banter ($Subscription Required$)
This week I joined Holly Hegeman over at PlaneBusiness as a contributing editor. This look at Phoenix was my first piece for the site, and there should be many more in the future. It is a subscription site, so if you don’t subscribe, I highly recommend it. I believe I started subscribing in college and have gladly paid for it every quarter since.

In the Trenches: An Easy Email Migration – Intuit Small Business Blog
We did our email migration over the weekend and it ended up being so easy. We had no problems.

I’m feeling pretty lucky to be living in Southern California these days. Oh sure, it’s the beautiful sunshine and all that, but it’s also about to become a nice little hub of cheap flights. I say that because airlines are starting to get into an old-fashioned turf war here. That inevitably leads to stupid decisions pushing too much capacity into the market. And you know what that means… cheap fares to try to fill all those seats.

While we really can’t forget about Virgin America’s decision to become the sixth nonstop carrier in both the LA to Vegas and San Jose markets, the bulk of the brawl has been between American and Delta. United seems to be sitting and watching the others fight it out while Southwest probably can’t grow much even if it wanted to until it gets more gates. Though I do have to note that Alaska and Delta have been slapping each other a little as well.

Reminiscent of World War I, this fight started from seemingly minor events. Consider American’s launch of nonstop flights between LA and Raleigh/Durham to be like the assassination of Archduke Ferdinand. (Yeah, yeah, it’s a stretch. Work with me here.)

Last December, American announced it would start a daily nonstop between LAX and Raleigh/Durham on April 2 of this year. That’s a market that Delta had to itself. So it wasn’t a surprise when just a few days later, Delta announced it would begin flying from LA to Nashville on April 8.

Yes, American flies the LA to Nashville route, and it’s the perfect way for Delta to say, “Hey man, if you’re going to make this already marginal route horribly unprofitable by adding unnecessary capacity, then we’ll do the same for you.” At least, that’s how I read it.

In the meantime, Delta quietly started adding random routes here and there from LA. To me, most of these looked like a bunch of unrelated moves that were trying to take advantage of pockets of opportunity. But at some point, Delta realized that it had added enough service that it could position this to look like a big LAX expansion. On March 6, the airline put out a press release lumping all these changes together:

• Daily to Nashville on April 8
• Thrice daily to Seattle on April 8
• Daily to Boston on June 10 (summer only)
• Thrice weekly to Anchorage on June 21 (summer only)
• Weekly to Bozeman on June 22 (summer only)
• Four times daily to San Jose (CA) on July 1
• Daily to San Jose (Costa Rica) on July 1
• Daily to Spokane on July 10
• Additional flights to Guadalajara, New Orleans, Oakland, Phoenix, Puerto Vallarta, and Sacramento

American apparently got jealous that Delta was growing in LA and decided to launch an expansion of its own. I call it the “Let’s Lose a Bunch of Money Before New Management Comes In Tour – Summer 2012.” This round of growth was announced on April 10.

• Twice daily to Eugene (OR) on June 12
• Daily to Redmond/Bend (OR) on June 12
• Daily to Columbus on August 27
• Daily to Indianapolis on August 27
• Daily to Hartford on August 27
• Daily to Northwest Arkansas on August 27
• Daily to Pittsburgh on August 27

After that move, Delta quietly bumped up its nonstops in Columbus and Indianapolis to be daily year-round. As someone with in-laws in Indianapolis, I support this move. If the airlines want to lose a bunch of money on routes I use, then that sounds great to me. Stupid, but great.

But wait, there’s more. Though it doesn’t center around LA in the same way, there have been some interesting moves between Delta and Alaska as well. Did you notice that Delta flight from LA to Seattle? That seems strange considering how closely the airline is tied with Alaska Airlines, but it’s just one of many moves where the airlines are stepping on each other’s toes.

Last November, Alaska announced it would start Seattle to Salt Lake. Delta announced LA to Seattle was coming back in December. In February, Delta announced its LA to Anchorage flight and it upped capacity on the LA to Seattle run. Later that month, Delta decided to fly from Seattle to Anchorage and Vegas. This month, Alaska decided it would fly Portland to Atlanta (and Dallas to the home of its other major codeshare partner). Then in the last week, Delta added yet another couple flights in the Seattle – LA market. It also announced service from LA to Portland. Fun stuff, huh?

Am I really suggesting that these moves are all meant to target each other as tit-for-tat moves? Of course not. But on the broader spectrum, this is definitely a fight. No airline dominates LA. In fact, you have a big presence from just about everyone in LA, and from time to time the airlines jockey for position. This is one of those moves where Delta and American are both trying to be “LA’s carrier.”

In its press release, Delta noted that this “positions Delta to be Los Angeles’ preferred carrier.” American said the “Los Angeles hub plays a vital role in our domestic and international network strategy,” and then it even included a quote from the Mayor of LA to give the airline even more street cred (or lack thereof). As for Alaska, the airline has already made a claim for LA by moving to a new terminal and strengthening partnerships with both American and Delta (despite the little network fights).

In the short run, there will be a clear winner – travelers. Fares will drop as the airlines realize that they can’t fill all these seats. But that will only be a near-term victory. Eventually, the airlines will abandon the excess capacity and we’ll go back to where we were before. Nobody is going to win this battle for LA. But that apparently doesn’t prevent these airlines from trying.

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.

Yesterday, I posted the first half of my interview with current US Airways CEO Doug Parker. We talked most about employee communication, but today, I post the second half which is more about the customer experience, and what we might expect from the new American Airlines when he takes the helm of the merged carrier. Keep reading to find out which product features he thinks are most important, how the airline is going to compete in Asia, and a little bit more about the oneworld transition.

Cranky: When you are looking at the combined airline, a couple years down the line, there’s obviously a lot of integration that has to be done. But when you’re looking at the other two most similar competitors in the US, do you look and say, “this is an area we’re going to need to do a lot of work in to be competitive”? Or is it just a matter of getting the network together?

Doug: You know this stuff as well as I do. The big value is getting the networks together. Our biggest disadvantage at two carriers is scale. No ifs and or butts about it. You have to get that done. Are there others? I’m sure there are, but you know, I don’t think we at US Airways are losing customers to Delta and United because of the inflight product differential. If we’re losing customers, it’s because of scale.

Having said that, what I do think is once we get to the same scale… if the classic airline people care about schedule and price, you’re gonna have three airlines that pretty much have similar schedule, value proposition, and we always have the same price proposition because we have to match each other, or close to it. So then the other product attributes you’re gonna start seeing become more important again. You’re gonna see us start competing more on those other things. We do a lot of it now of course, but it becomes more important as we get to three airlines that are competing for those high value customers.

Cranky: Are there specific parts of the product that you see as being particularly important? Not the olive you put in the salad, but the seat, the service, the meal or is it everything?

Doug: No, it isn’t everything. Some things matter a lot more. Certainly for international, lie flat seats [in business class]. If you don’t have it, you’re gonna lose customers. It’s incredibly important. We have it now. Domestically, you know, we have a lot of anecdotal evidence, including ourselves, of people switching airlines because of whether or not there’s wifi on the airplane. That’s one of the things that will drive share if you’re not there. We’re all gonna be there for that reason, but that’s what happens with these things. We all have to do it or we’ll lose share. Those things are incredibly important.

Other things are important but hard to actually identify if you’re losing share or not from things like an extra inch of legroom or the olive or slightly better meals… but if you’re not competitive, you don’t have something that’s close enough or in the same ballpark, maybe I don’t have quite as much room but the seat is more comfortable. If it really feels different, you’re going to lose customers. So we can’t get in that position. And we think we’re going to be a position where we’ll have a product that’s as good or better than what the other guys have out there, the other guys being Delta and United.

Cranky: Do you consider premium economy, similar to Main Cabin Extra on American, is that something you have a view on right now?

Doug: Yeah, but I don’t think we’ve announced it yet but it’s one of the things we’re going to look at. Certainly the other guys have it, and there’s no doubt that customers will tell you for certain it’s one of those things that really matters. The offset to that is whether there’s enough [benefit to justify] the fewer seats, of course. Those are decisions we’re going to have to make, but it’s definitely a product attribute that matters to people.

Cranky: I’m probably getting a little more into the weeds for you, but how do you view Asia? We’ve talked today about how that’s the hole in the route network. How do you view that? Is there a way to adequately serve everything that needs to be served?

Doug: Adequately, of course. I think we will have a lot of growth opportunities with the bigger and stronger network with more hubs to serve more spots on American to Asia. When you add them all up, it’s still not going to be as big as what Northwest brought to Delta or what United has because they’ve had those things since a treaty in 1952 or some such thing. So that’s not something that can be replicated, but they can’t replicate our Latin America network. What really matters is when you add it all up, how does it compare? And we feel really good about our network versus either of those in total.

Agreed they’re going to have a stronger Asia network, but then what really matters is making sure you don’t lose customers throughout the rest of your network because you can’t get them anywhere in Asia. Of course, we don’t have that problem because of oneworld with JAL and the other partners, Qantas etc. We can get people anywhere in the world on really good airlines. I don’t view it as an issue. I think there’s a lot of growth opportunity; I’d probably describe it more as tactical than strategic. But we’re not gonna go try and build something we can’t build. We just need to make sure our customers that want to get there can use the miles they earned flying around our network and they can do that with our partners.

Cranky: And with oneworld, do you think this is going to be a difficult transition for you and your management team? I know you have this anchoring, I guess, with Star Alliance and your partners’ hubs and operations, and now to switch like this. Is that not really an issue?

Doug: I don’t know… Go ask Andrew [Nocella, SVP Marketing and Planning] or one of those guys who knows better than I do, but I haven’t heard it described that way. It’s the anchoring term where I kind of looked at you funny. I don’t think we view them as anchors. There are airplanes that fly into there that can fly to somewhere else. There are other airplanes currently flying around oneworld that can be flying into our new hubs. They are movable assets that’ll move. They’re not anchored at all. We certainly haven’t gone and built immovable structures around the Star network and Star partners haven’t built them around our network. To the extent Lufthansa is flying to one of our hubs and now we’re not in Star so it doesn’t make sense for them to fly there, which may or may not be the case, but my guess is that it makes sense for BA to fly there. Those kind of things might happen. But it’s as simple as that; an airplane stops flying to Frankfurt and begins flying to London.

Cranky: I’ll end on a personal note. Are you gonna be sad to leave Phoenix?

Doug: Yeah. We like it here, man. The kids have all grown up here. That’s one of the bad things, but it’s not about me.

Cranky: It has to be done.

Doug: Exactly. And Dallas is a good place. Gwen and I met there; she has family there. It’s not a bad place. It’s a good place. For the record [laughs], we like Dallas. Dallas and Phoenix are both great cities.

Cranky: And Ft Worth [laughing]?

Doug: Ft Worth, great city.

Cranky: Well I want to be mindful of your time, so I’ll end it here.

Doug: Thanks, Brett.

And that’s a wrap on my interview with Doug Parker. Click to read the first part where we talk about employee communication.