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Dark clouds, more turbulence loom in US Airways' future

To nobody's surprise, US Airways has taken a second descent into Chapter 11 protection. This time, the troubled airline's future is less clear and its emergence from bankruptcy seems less likely.

Low-cost rivals - with lower operating costs, new fleets of more fuel-efficient jets, few or no retirees receiving health or pension benefits - continue to take market share from US Airways.

US Airways is not alone in its struggles. The upstart competitors have had a dramatic impact on the entire airline industry, especially the older, so-called legacy carriers. Low-cost airlines have captured about 25 percent of the market and that figure will continue to grow.

United Airlines, until just a few years ago considered the most financially solid domestic carrier, is already in Chapter 11. Delta Air Lines, which recently announced the layoff of 7,000 workers, is likely to join United and US Airways in bankruptcy.

If the low-cost carriers weren't trouble enough for the old-line airline companies, rapidly rising fuel costs in the past year are making survival even more difficult. In stories reporting US Airways latest bankruptcy filing, the airline said that jet fuel cost the airline $300 million higher than projected this year.

While no dramatic action is considered imminent with US Airways' second Chapter 11 filing in two years, the forecast is not particularly good even from those taking a wait-and-see attitude.

Pennsylvania has plenty at stake in the future of US Airways. As the dominant carrier at both the Pittsburgh and Philadelphia airports, US Airways' troubles do not help economic development in the state. Companies looking to relocate or expand want reliable air service in and out of the cities in which they are based or have major operations.

The situation is even more troubling for nearly 40 smaller cities, where US Airways is the only carrier providing air service.

Cutbacks at Pittsburgh's airport, notably of the direct flights to Europe, have already posed challenges to business customers who must now make connecting flights to cross the Atlantic. US Airways' struggle to survive continues to complicate life for the international companies with offices in Pittsburgh.

From the convenience and service perspective, the continuing troubles for US Airways look like more dark clouds. Even before this past weekend's bankruptcy filing, US Airways announced it was reducing the flight activity into and out of Pittsburgh, as part of a transition from a hub airport to a "focus city."

On the fare side, however, the troubles at US Airways might represent signs of hope. With its near-monopoly position at Pittsburgh International Airport, the people flying out of Pittsburgh have for years paid fare premiums compared to flying out of Cleveland, for instance, where a more balanced, competitive environment exists among carriers, including Southwest Airlines, the pioneer low-cost carrier.

There are many stakeholders in the US Airways saga. The most obvious are the 8,000 men and women who work in Pittsburgh as pilots, flight attendants, mechanics, baggage handlers and gate agents. The company also employs 5,700 in the Philadelphia area. For these people and their families, the survival of the company, however unlikely, will mean more painful wage and benefit concessions to help the company reduce its operating costs.

Selling off some routes and gates is one option considered likely to help improve US Airways finances. So if the company survives, it will likely be as a smaller airline, offering fewer flights to fewer destinations.

If the company is liquidated, low-cost carriers might step in with cheaper flights. But the convenience and destination options will not match what US Airways once offered.

At this point, every possible outcome for US Airways will involve economic and emotional pain for its employees and uncertainty for the flying public. The latest Chapter 11 filing did not come as a surprise, but it is disrurbing news nonetheless.

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