America West A Model Airline

[Phoenix]

By BETH DeFALCO
Associated Press Writer

December 2, 2003, 3:33 PM EST

PHOENIX -- The Air Line Pilots Association on Tuesday narrowly rejected a proposed three-year contract with America West Airlines -- the second rejected contract in less than a year.

The agreement would have included 14 percent raises for 1,700 pilots over the life of the contract, an improved retirement package and enhanced job protections....

Notice that America West was the first company to go Chapter 11 after the WTC came down.

The pilots of America West rejected two contract TAs from mgt yet mgt was still able to make a profit. Seagul should have been going to Phoenix for remedial training.

Looks to me that USAirways pilots have two more TAs to reject before Bronner can figure out how to make a profit.

School in sessoin yet?

Respectfully,

Phoenix

 

[funguy2]

America West did not go bankrupt after 9/11/01. Their only bankruptcy was during/following the Gulf War in 1991-93-ish. They narrowly averted a 2001 bankruptcy with the ATSB loan.

 

[Phoenix]

America West did not go bankrupt after 9/11/01. Their only bankruptcy was during/following the Gulf War in 1991-93-ish. They narrowly averted a 2001 bankruptcy with the ATSB loan.

Indeed you are correct sir. AWA did not have the luxury of a bankruptcy.

I appreciate your point. Thankyou! It further highlights the utter incompetence of both Wolf and Seigel to run an airline.

Immediately after 911 the USAirways unions attempted to bring many HUGE concessions to Wolf yet he refused to hear, respond, or even explore the concession offers. He instead chose to let USAirways flounder like a fish out water sucking air until things were really bad 7 or 8 months later when he brought on the knight in shinning armor by the name of JCMD. It was a great prep job for the bad cop good cop.

Davey had the luxury of a bankruptcy (able to extort millions and millions from creditors, leasers, and vendors) an ATSB loan, reorg financing, and several billion dollars of givebacks from the unions of USAirways. Yet despite all of this he still could not make a profit.

Meanwhile AWA was able to make a profit even though the pilots were dissatisfied with mgt enough to twice refuse new contracts of 11% and 14% pay INCREAESES. Despite less than perfect labor relations mgt was still able to set schedules and fares in a way that was profitable.

Anyone who chooses to continue blaming USAir employees for the dismal failure, is either ignorant or intent on offending the hard working employees that have worked so hard to keep this baby afloat despite the schemes of the Wolf and Seigel.

Respectfully,

Phoenix

 

[BoeingBoy]

To try to answer your original question, these tidbits from AWA's annual report:

Revised Pricing Structure

In an effort to maximize revenue and increase business traffic, we eliminated our historic pricing structure in March 2002 and replaced it with a simplified structure, the primary components of which include reduced business fares (typically 40-75% below the walkup prices on major network carriers), elimination of Saturday night stay requirements and more fares available on a one-way basis. At the same time, we significantly reduced the number and level of highly discounted fares available through off-tariff channels. Immediately following the introduction of the new fare structure, higher-cost competitors placed extremely low prices in our nonstop markets and Continental Airlines cancelled its long-standing code share and frequent flyer agreements with us. Despite these actions, we believe our year-over-year domestic unit revenue performance has been significantly better than the industry average since the new structure was introduced and the net effect on revenue of our revised pricing structure has been significantly positive.

In February 2004, we announced another change in our pricing structure to make flying first class more affordable for both business and leisure travelers. This new first class fare structure features nonrefundable first class fares that are up to 70% lower than the industry’s traditional first class fares. We believe that the revised first class fare structure will exploit our competitive advantages over both the major airlines, as their higher cost structures may prevent them from reducing their first class fares to match ours in a profitable manner, and the other low cost carriers, as many of them do not have first class cabins.

Customer Service

In 2003, we continued to find ways to provide customers with choices and make it easier to travel:

• Our day of departure first class upgrade program provided a simple and affordable way to upgrade to first class just prior to departure.

• We introduced our “Low Fare Finder†application on our website, making it easy for customers with flexible travel plans to get the best fare available.

• We expanded the availability of self-service kiosks across our system and, in November 2003, opened a new state-of-the-art automation center for check-in at Phoenix Sky Harbor International Airport with 28 fully-integrated kiosks.

• Working with Arizona State University’s School of Engineering, we created a sophisticated group boarding protocol using back to front and outside-in logic to board passengers faster and in a manner which is more convenient to customers.

Regional Airline Alliance

In 2003, we restructured our agreement with Mesa. The amendment adjusted the firm number and mix of regional jets, reduced the firm number of Dash-8 turboprops, restructured Beech 1900 codeshare flying, created a new model for Mesa-handled station costs and settled outstanding disputed amounts associated with the previous codeshare arrangement. Designed to defer further growth of the regional fleet until 2004, the amendment accelerated five return rights on CRJ-200s to June 2003, eliminated the 15 firm CRJ-700 aircraft entirely by March 2004 and increased from 25 to 38 the firm number of CRJ-900 aircraft.

From 2004 1st quarter report:

• Aircraft rent expense per ASM decreased 6.8% due to the 7.3% increase in ASMs, which was accomplished through higher utilization rather than additional aircraft.

• Other rents and landing fees expense per ASM decreased 3.3% mainly driven by the 7.3% increase in ASMs in the first quarter of 2004 offset in part by increases in landing fees ($0.9 million) and airport rents ($0.7 million).

Jim

 

[motnot]

Well, the two main keys to AWA's success -- and it's hard right now to say which is more crucial, though both certainly are necessary and go hand in hand -- is the fare structure and the airline's LOW costs.

AWA's CASM excluding fuel actually was half a cent lower than LUV's in Q1.

The fact is that AWA's employees are paid less for more than most airlines, certainly the legacy carriers. Even after two rounds of concessions, UAIR employees probably still have much less productive work rules AND are paid a good bit more than AWA's.

AWA is offering decent raises to its employees because it has closed much of the revenue gap between it and other carriers. AWA can offer those raises and still keep its cost advantage, because its workers were paid a ways below industry average. Industry average has fallen a lot, and AWA pilots are paid more, but they still lag the average.

Now, if AWA, with its low costs, ekes out a tiny profit, the high-cost carriers -- especially UAIR -- don't have a chance. Maybe UAIR employees are worth more than they're paid now, but it looks to me like the company's survival depends on them being paid less.

 

[LGA777]

Currently Customer Service and Ramp/Ops agents at US top out in the $19-21 per hour range. Anyone know what the same work groups top out at with HP ?

 

[Phoenix]

Productivity whining is misguided.

Several years ago the unions rlaxed the rules governing productivity. (There was a time when the company had to pay crews for sitting in the airport waiting for planes. The rule "encouraged" effective scheduling and kept the airplanes in the air.) Now with the reduced incentive for the company to keep employees flying during the day (that is what there skill is, and what provideds revenue opportunity) the company now schedules LESS flying and crews sit around the airport for 4 or 5 hours a day FOR FREE (yet with an obvious lost opportunity to generate revenue)

DUH!

No productivity "enhancements" are necessary. Mgt is not even using the ones they have now.

 

[mweiss]

Of course, even without the cost of keeping people on the ground, there is a cost of keeping the airplanes on the ground. The airplanes themselves aren't free, so amortization is an important issue. So is the rent for ground space, especially at gates.

 

[700UW]

Currently Customer Service and Ramp/Ops agents at US top out in the $19-21 per hour range. Anyone know what the same work groups top out at with HP ?

Top out for ramp is $19 at US

 

[Winglet]

AWA is in a different market from U. Comparisons are not very useful.

 

[Art at ISP]

They still compete with the same LCC's and they are still profitable.

Also let's not forget that Alaska has costs which are not much lower than US and they have been profitable since rationalizing their fare structure.

The FIRST move should be to rational walkup fares, combined with productivity and non wage cost reductions, like improving utilization, schedule adjustments, rolling hubs, etc.

My best to you all....

 

[Kev3188]

Currently Customer Service and Ramp/Ops agents at US top out in the $19-21 per hour range. Anyone know what the same work groups top out at with HP ?

HP ramp tops out at $15.35/hr.

 

[JS]

Productivity whining is misguided.

Several years ago the unions rlaxed the rules governing productivity. (There was a time when the company had to pay crews for sitting in the airport waiting for planes. The rule "encouraged" effective scheduling and kept the airplanes in the air.) Now with the reduced incentive for the company to keep employees flying during the day (that is what there skill is, and what provideds revenue opportunity) the company now schedules LESS flying and crews sit around the airport for 4 or 5 hours a day FOR FREE (yet with an obvious lost opportunity to generate revenue)

DUH!

No productivity "enhancements" are necessary. Mgt is not even using the ones they have now.

The air crews do not generate revenue. Marketing and revenue management generate revenue.

 

[Phoenix]

The air crews do not generate revenue. Marketing and revenue management generate revenue.

I certainly agree that marketing is responsible to "sell" the product...

The fact is that planes moving is the product. Planes don't move without a competant person pushing the throttle forward.

A typical crew day is 15 hours long with 5 hours in the lounge. The planes could be in the air a lot more on average per day. It is one of the key reasons Southwest is profitable.

Crews in the lounge and planes on the ramp is a wasted revenue opportunity.

But then mgt is the one responsible to figure out when and where to send planes.

 

[JS]

You're assuming that when a crew member waits three hours in an airport, there is an aircraft sitting at a gate for the same three hours.