Dave's Weekly Message & Thoughts

[Art at ISP]

I do not want to continue to beat up Dave but I feel the problem lies in the revenue side of the equation.

Employee cost are down, productive is up. But they can not get a hold of the revenue steam???

Why???

The answer is simple. They REFUSE to fix the fare structure which is broken. They could easily improve revenues with some modest adjustments to the fares.

America West did it, and they made a profit.

American did it in key markets and they made a profit (which disproves the excuse that it wouldn't work because our costs are so high).

Remember that the LCC's are not always the least expensive, but they create the impression that they are. It's called good marketing. I have colleagues traveling to the east coast from California next week-one from SAN the other from SNA. Both of them are on UA because they were considerably less that Jetblue!!

Stop catering to the low end of the market, or the "Priceline" flyer. They do not sustain the airline-they fly maybe once or twice a year, and they are the first ones to cause a scene when something goes wrong. Instead market to your core customer-the frequent business traveler-your Preferred customer. Most of us WILL pay a little more to stay on line but NOT $500 or more! For example, the days of the $2000 round trip transcon are gone forever. While $99 or $149 is definitely way too low, I think that a "full" fare of $299-$399 each way would be fair.

Which brings me to my next point--the product. To be honest, it's terrible. And I don't mean the employees--you all know that I think you're absolutely the best. You do an amazing job with the tools you're given. Other airlines' coach product is better than US First--I upgrade for the seat and the preboarding more than the service. Remember it's more the PERCEPTION rather than the substance. In some cases the LCC's provide a better product at an equal or lower cost. You have to give us a REASON to pay more--we expect some VALUE for our money.

On the point of perception, I saw the picture of the 767 galley on the other thread. Regardless of the fact that the missing panel was cosmetic, just imagine the PERCEPTION given to passengers who are not knowledgeable or easily impressionable. I would NEVER allow that aircraft to fly revenue in that condition.

A final note on fares, and I know I have said this before--I had been told by a member of management (very senior I might add) that if they could increase the bottom fare bucket by about $20, they could lower the top level by $300! My suggestion: DO IT ALREADY. As a loyal and frequent customer who often pays M Class or higher, I resent subsidizing Mr. and Mrs. Priceline, and I do not think it's fair to expect me to do so.

Revenue could easily be improved by simple rationalization of the fare structure. They have already cut more than they should have, and we're all suffering for it--the wonderful employees have less to work with, we have less choices in service let alone the poor product offered.

What we need is a marketing team who knows what they're doing and can promote the advantages of this wonderful airline---YOU THE EMPLOYEES, rather than spending all their energy creating spin for the negatives...

I am sorry to rant, but I am frustrated. Even though I am not an employee, I fly the line almost as much as some of you do, and I care very deeply what happens here-I feel I have a somewhat vested interest in US.

As always, my best to you all, and let's hope someone starts listening soon.

 

[USA320Pilot]

In respect to Siegel's comments about LCC expansion and the drop in revenue due to purchasing changes, as well as the unit cost comparison, he is accurate.

The LCC/US Airways CASM is Jetblue 6 cents, Southwest 7.5 cents, AirTran 8 cents, and US Airways 9.5 cents. Furthermore, American and Untied have lowered there costs below US Airways and in fact now have lower labor expense than US Airways employees.

Do I like it? Nope, not one bit, but it's a fact. Can somebody tell me where I am wrong here?

The problem is principally the route network stage length for a mature carrier and that cannot be easily changed, however, I believe the company is attempting to address this issue with Caribbean, Central American, and European expansion and cost cuts. In addition, if a corporate transaction occurs, this could help the situation as well by increasing stage length.

However, the current network is under attack and management is lowering the CASM and increasing the RASM, but US Airways needs to compete on costs in LCC markets and grow into markets the LCC's cannot fly.

The challenge is getting there.

Regards,

Chip

 

[IAM1776PHL]

I do not want to continue to beat up Dave but I feel the problem lies in the revenue side of the equation.

Employee cost are down, productive is up. But they can not get a hold of the revenue steam???

Why???

Because they think there are to many employees on the payroll to make a profit !
Watch they will take another % of employees from each group and put them on the street ( for good this time ) then istitute the rest of the work rules WE AGREED upon and that will take care of the rest of US $ problems for the meanwhile ....
Its the big picture we all seem to ignore...

and many of us are not in it

 

[PITbull]

This is just plain crazy.. a nightmare on "Elm Street", somekind of twilight zone.....


Not only does this mangement want to compete against the LCC carriers with our wages, but now U is trying to force labor to have the Lowest costs in the entire Industry. Everytime a carrier gets a labor concession; he comes to us to get lower.... like he's playin some Chess game on a board with the big wheels. Meanwhile his salary stays at $600,000 which is the 5th highest CEO paid of the carriers.

My time is valuable and what I provide in service is of great value. Just as the CEO believes his value needs compensated. I will NOT give up everything I have worked for these past 23 years in order for a company to survive, in mangement 's view, so that only senior mangement will GAIN, and these "knuckle heads" have only been employed with U for 1 1/2 years. Flight attendant stock is 58 shares. God help us if this is considered compensation. Senior mangement is the most junior on the property , with no seniority...furlough them!

See ya in the trenches. We are at war with this managment. If Bronnerhead gives a damn about his investment, he needs to rid us of this present managment plague. This CEO has just elimianted 20,000 employees, billions in concessions from labor, knived two bail outs from the gov. and still working on PA for a Bil. breaks contracts language as if they don't even exist, Hammers employees to terminations in an expedited manner, exaggerated the assumptions to the PBGC on the pilots pensions and got them terminated, and he still can't run an airline.


THE SERVICE IS POOR, (not enough folks to provide good service) the product sucks, the fares are ridiculous, to much mangement and not enough labor is the problem. Folks hate those kiosk machines, and they hate waiting on the phone to book a reservation or get info so they can make a decision about which carrier they want to fly. Planes are filthy and smell, long lines every where, and too much hassel with U. Period.
Dave and team goes, or no talky, talky with labor. ALL of labor needs to demand this.

 

[Teflon]

Dave has shown us his incompetence, just as his executives around him.

AA's concessions have not fully been implemented as well as UA's. All the established majors have higher costs then us but they turn a profit and US can't. NWA has not gotten one penny in concessions and they turned a profit. Just shows you Dave's business plan is the cause of all of our problems. He wants to turn us into ValuJet and be a virtual airline with minimal employees.

Seems Dave never looked at our history. Seth Schofield tried to shrink us into profitability and it did not work, the analysts told Dave the same thing. You take big airplanes and but them on short flights and it increases your costs.

US' longest flight it PHL-FCO, 365 flights a year, UAL has LAX, SFO to NRT, SYD, AUK. Two flights a day to each city. Dave needs to understand that we need to increase our stage lengths to supplement the domestic route structure. If Dave has his way we will be the next Mesa for UAL and the star alliance.

Dave has lied to employees, stolen their work from them and his management team goes out of their way to create hate and discontent and not a happy cohesive work place.

Time has come for the employees, passengers and shareholders to tell Bronner and the BOD that Dave has failed and he and his management team need to be replaced.

 

[PITbull]

AA has already started recalling furloughees, and so has United...

WHAT'S THE PROBLEM HERE???????????

 

[mlt]

My first thought when I read Chip's comments regarding our labor costs at 13% higher than other carriers was: Good, then let your group give 13% because my group is done.

Immediately, my next thought was: Hold on; never before has labor been united (thanks to the IAM). Is this another strategy to start the infighting again? Each group pointing fingers and saying take from another group.

This is a call to stay together. Not one group will give another penny!

 

[USA320Pilot]

Let me clarify a point, American employees have W-2 wages on average that are 13% less than US Airways.

Delta and Northwest employee expense is greater than US Airways and United and Continental is about on par with US Airways.

In regard to LCC's, these companies have employees who are much more productive than US Airways' employees, which lowers their overall employee expense.

In summary, to compete with all of the competition US Airways needs to further lower its total costs, with multiple efforts, to about 8.5 cents per ASM. At this point, I believe the company's RASM advantage, coupled with increased revenue from MDA, RJ deployment, and the alliances, will close the gap towards sustained profitability.

However, the big issue remains stage length, which is being addressed with Caribbean, Central American, and European expansion. But, from US Airways' perspective more long-haul flying may need to be obtained, which is the real motivator behind the UCT/ICT, a derivative of these plans, or an asset acquisition, financed by RSA.

Could this be why US Airways senior executives have been spending a lot of time with their United counterparts during the past few weeks.

Regards,

Chip

 

[mlt]

Chip, If it happens, (and that is an unlikely if) so be it. But please stop speculating. What is business to you, very well may be personal to others. When people speculate about U's demise, to many people it means losing their homes, cars, the ability to feed their families, etc. The same is true for the employees at United.

Out of decency to our fellow peers, please stop.

 

[N628AU]

:

Average Network Carrier - 34.1%
Highest Network Carrier - Northwest – 37.9%
Lowest Network Carrier - US Airways – 30.4%
Average Low Cost Carrier - 30.6%
Highest Low Cost Carrier - Southwest - 37.6%
Lowest Low Cost Carrier - ATA – 21.2%

Source: Aviation Daily

In regard to LCC – network carrier comparisons, JetBlue’s CASM is 6.0 cents, Southwest’s is about 7.5 cents, and AirTran’s is about 8.0 cents. US Airways is about 9.5 cents, excluding fuel.

Well there it is in black and white for everyone to see. The problem with costs does not lie in labor, and the next time Dave comes to labor for more savings, I hope the unions throw this back into his face. Labor as a percentage of overall costs lower than the average LCC? It is not your employees Dave, it is the other expense that this company continues to bleed through it's nose. You want to complain about productivity? Get some longer freakin flights. Then you don't have planes sitting on the ground all the time instead of making money (you can probably find our aircraft utilization is well below the LCCs) It is also solely mangement's fault for failing to adjust themselves to the new revenue environment.

If I see one more comment about "revenue is not growing at the rate we would like", I think I am going to puke. Stop complaining about and do something. Simplfied fare structure, treat customers and employees as valued assets. Restore service. Clean the planes. Offer IFE on more than routes to LAX and SFO. Put glass back in first. Adjust schedules to fly when people want to fly. Institute rolling banks in PHL to improve the ATC problem and increase aircraft utilization. If you do something and it does not work, at least if the company goes down we can say we tried, rather than sat idly on the sidelines watching this once proud airline crumble from within.

 

[Twicebaked]

Chip, If it happens, (and that is an unlikely if) so be it. But please stop speculating. What is business to you, very well may be personal to others. When people speculate about U's demise, to many people it means losing their homes, cars, the ability to feed their families, etc. The same is true for the employees at United.

Out of decency to our fellow peers, please stop.

With all due respect...this is OUR forum. I believe it says US Airways on it. If you don't like the heat..stay out of the kitchen.

I agree that "they" don't want to hear it about their company, but this is OUR forum. Don't come in here and read it then.

I wouldn't expect Chip or anyone else go into their forum and post this stuff, but I should be okay to speculate or whatever in your own.

 

[Teflon]

Pay rates:
Mechanics Base Pay Rates:
AA: $25.25
US: $24.26
UA: $25.00

Cleaners:
AA: $17.27 (AA has vendored out most of their cleaning functions)
US: $17.13 (US only has utility at eight stations- three shift, 10 stations one shift)
UA: $16.85 (UA has vendored out most of their cleaner functions)

Ramp:
AA: $19.94
US: $19.49
UA: $20.35

Stores:
AA: $19.65
US: $19.16
UA: $20.35

Seems US employees are for the most part lowest paid so where does Dave get his labor cost numbers from?

 

[High Iron]

Actually the US mech base pay rate doesn't seem right: The figure seems more like a total rate, depending on the shift and assignment maybe. My paycheck shows my base rate at $24.26.

 

[Teflon]

Thanks, High, I read the wrong line in the contract, base rate is $24.26 and I corrected it in the above post.

 

[robbedagain]

CHIP: WOULD ADDING MORE LONG HAUL FLIGHTS AND OPENING OF NEW STATIONS OUT WEST HELP TO BRING DOWN THE COSTS?