US Airways has little runway left in efforts to remake airline
Struggling US Airways needs more competition from low-fare carriers just about as much as it needs angry customers and negative publicity. In the past two weeks, it's gotten both. For US Airways employees, and many of those who depend on the airline for travel, that is not good.
News reports of exasperated holiday travelers complaining about US Airways' delays and foul ups with flights as well as mountains of lost luggage had some people vowing they would never fly the carrier again. Some extra efforts at kindness and customer appreciation from airline personnel the following weekend helped, but some travelers will never forget their Christmas 2004 travel nightmares.
The news for US Airways did not improve this week when Southwest Airlines, the pioneer or low-fare airlines, announced it will begin serving Pittsburgh, one of US Airways major markets, in May.
Southwest's announcement of a Pittsburgh presence is not unexpected, but it comes sooner than expected - and at the depth of US Airways' struggles with labor contracts, employee relations and increased competition in many markets.
Another competitive threat to US Airways came this week as Delta Airline's announced it was simplify its fare structures and will slash ticket prices by as much as 50 percent. Delta is also dropping the once-standard requirement for a Saturday night stay to earn lower ticket prices. Other airlines are expected to make similar moves to match the competitive threat from Delta.
Delta, which narrowly avoided bankruptcy in October, has also imposed pay and benefits cuts for most of its employees to cut its operating costs and make it more competitive with Southwest and other low-cost airlines such as JetBlue and AirTran.
But it is Southwest's plan to begin service in Pittsburgh and expand in Philadelphia that suggests a shark sensing blood in the water. An already-weakened US Airways has had to cut most fares at its Philadelphia hub to compete with Southwest, which entered that market last spring. The same fare cutting will have to occur in Pittsburgh this spring if US Airways intends to keep many of its customers from switching to Southwest.
While fare cutting by US Airways might keep people in the seats, it also reduces revenue.
The past several years have been tumultuous for US Airways and its employees. The airline is operating in Chapter 11 for the second time and desperately trying to reduce costs in order to survive.
Things are happening at a fast and furious pace at US Airways. The flight attendants union agreed to yet another contract of concessions. The company was negotiating with the union representing mechanics and baggage handlers at the same time a federal judge agreed to let the company tear up the existing contracts with those two groups of workers.
The arrival of Southwest Airline in Pittsburgh will benefit air travelers in Southwest Pennsylvania by offering lower fares, but it will make things that much tougher for US Airways. And if US Airways is liquidated, as some analysts predict, the convenience offered by many different US Airways flights to many different destinations will make flying out of Pittsburgh much more troublesome. Southwest will never replace the flight options offered by US Airways.
As the weakest of the so-called legacy carriers, US Airways is desperately trying to remake itself and restructure its costs to compete with newer and lower-cost competitors. This week, it has become clear that time is running out for that transformation, as competitors such as Southwest and Delta further limit US Airways' options.
Pittsburgh's dominant airline has been staggering under a combination of high costs and management missteps. Southwest and Delta might just be delivering the final blows. Most US Airways deserve credit and sympathy for agreeing to major reductions in their pay and benefit packages in order to save the company and their jobs. At this point, it is quite possible a case of too little, too late.
