Faulty Rj Business Plan

[OldpropGuy]

The following is one opinion of why the current plan for RJ's will not work!

Dave Siegel's plan seems to be for MDA, with RJ's, to go head to head in many markets where the competition is using larger mainline type aircraft. These customers will, of course, choose our product over the larger often cheaper product of the competition! I ask why?

When the RJ's appeared ten years ago, they were introduced as replacements for the aging, disliked turboprops. The competition was very successful using this concept. Most have continued to grow their fleet of feeder RJ's and larger mainline aircraft while ours has shrunk. Chances are if you see a turboprop commuter these days, it will have US Airways Express on it!

Not to beat a dead horse, but we're way behind here at US Airways for several reasons. The one notion which appears to be the most devastating is the old school of thought which was around ten years ago. Mainline ALPA stubbornly held their position that "Any jets on the property must be flown by mainline." They would not allow the wholly-owneds to operate RJ's and remain competitive even though it was rumored that RJ financing was available, at least at one of the WO's! Predictably, our passengers increasingly chose the competition’s RJ’s over our turboprops. I'm aware that not all mainline pilots shared this opinion, but in the end it won out. We can continue to blame it all on former management, but that does not lessen the past pilot influence. Sadly, the past is water under the bridge and can't be changed now.

Just as our previous passengers chose our competition's more desired RJ's over our inferior turboprops, devastating our mainline feed, the passengers of the future will chose a larger Airbus or Boeing over our RJ's if there is a choice. These small jets are needed but as replacement for current commuters, not mainline jets!

As usual, the only markets in which US Airways will prevail are those without competition. But, just maybe if we outsource enough flying and maintenance to outside contractors we will be able to turn a profit anyway!

 

[TBONEJ4J]

Exactly.

Siegel and his team have a faulty Business Plan.

If this airline is to survive, somebody with some common sense and a vision that doesn't just rehash 10 year old rj insight/wisdom will be needed.

Get rid of Siegel and his team and find somebody who wants to build and run a real airline, with a real business plan.

Funny how both Northwest and Continental are showing such good numbers. Two airlines that didn't use 9/11 as an opportunity to beat the living hell out of their employee groups and they are now poised to take on the future as robust carriers.

Could it be that once again, Labor costs are not the fundamental problem, it's BAD and VISIONLESS management?

 

[ITRADE]

Dave Siegel's plan seems to be for MDA, with RJ's, to go head to head in many markets where the competition is using larger mainline type aircraft. These customers will, of course, choose our product over the larger often cheaper product of the competition! I ask why?

This is not necessarily true. Consider the ROA market. US used to fly a good deal of mainline service to ROA - F-28s, 737-200s and some 737-300s. Since then, ROA has been downgraded to turbos and 50 seaters. The competition at ROA is using nothing but RJs and turbos - NO mainline service at the airport. The introduction of a 70 seat ERJ-170 would continue to serve as US's service and would add the benefit of having a F class cabin whereas Mesaba, UA Express, and Continental service is all coach.

Moreover, there is no guarantee that another carrier's service is going to be cheaper.

When the RJ's appeared ten years ago, they were introduced as replacements for the aging, disliked turboprops. The competition was very successful using this concept. Most have continued to grow their fleet of feeder RJ's and larger mainline aircraft while ours has shrunk. Chances are if you see a turboprop commuter these days, it will have US Airways Express on it!

RJs had more functions than simply turboprop replacement. Form the get go, they were used to explore new routings and to explore routings that were thin and beyond the range of a turbopropped aircraft.

There are more than one reason why you see lots of US turbos. 1) many of US's markets are tiny. Who would even think of flying a RJ or a mainline jet to DUJ, SHD, or HGR???? 2) US and ALPA could not agree on a RJ deal. So, while DL and CO were adding RJs by the fistfull, US was still haggling over 35 RJs. You correctly pointed that out in your next paragraph.

Just as our previous passengers chose our competition's more desired RJ's over our inferior turboprops, devastating our mainline feed, the passengers of the future will chose a larger Airbus or Boeing over our RJ's if there is a choice. These small jets are needed but as replacement for current commuters, not mainline jets!

I don't think that there is a rush to increase aircraft size by the main, full-service competitors. Airlines are still deferring deliveries on aircraft and any expansions that you see in press releases from airlines are usually RJ growth or international expansion.

Look, if the 70 seater idea is so damned awful, then why did jetBlue decide to order a flock of them? Why is Southwest considering them? Clearly, if the darlings of the airline industry have opted for them, something must be meritorious in them.

 

[USA320Pilot]

I disagree with this thread.

US Airways operates in an environment where two of its three hubs have very low O&D traffic and its spokes are the key to success. The spokes are small markets and the 50-seat RJs will provide an appropriate trip cost to match capcity with demand.

With the EMB-170 and EMB-175 operating under the mainline certificate and representing 23% of the mainline aircraft by September 2003, this will increase US Airways Group ASM's at a much lower unit cost, further matching capacity with demand. With a break even load factor of about 50%, the company believes MDA will be very profitable.

This plan approved by the ATSB projects a $300 million revenue improvement per annum.

Today Bruce Ashby, US Airways' senior vice president of corporate planning, told analysts MDA would start its first revenue flight on February 4.

Incidentally, when asked by an analyst about its 2004 business plan and mainline route network, chief executive officer Dave Siegel hedged and said it would be "discussed at a later time", obviously referring to the UCT.

Regards,

Chip

 

[TBONEJ4J]

"...Look, if the 70 seater idea is so damned awful, then why did jetBlue decide to order a flock of them? Why is Southwest considering them? Clearly, if the darlings of the airline industry have opted for them, something must be meritorious in them. "


Of course they have merit. There CSM's are tremendous, and the associated Labor costs make them a surefire hit - For Southwest and JetBlue. By the way, JetBlue is getting the 190, not the 170. That's 90+ seats, in the 717/A318 league

US Airways is a different animal. The 70-Seater will not help this airline if not part of an integrated plan for a network/international full product carrier. US Airways cannot become Southwest or JetBlue with a network and lots of small jets. Thats a different product, and Southwest and Jetblue do it very well. If all Siegel et al. wants to do is compete with those guys, he is guaranteed to fail.

US Airways needs a visionary with a valid proactive business plan that all employees can get behind to make this a great operation that actually turns a profit. When motivated by a REAL leader, employees will give 110%.

 

[X-U]

If the 70-seater idea is so awful why did U get rid of them in the first place? U and PI made money "in the day" by flying BAC1-11s and F-28s against the competitions turboprops. As has been stated over and over. This is not about a certain aricraft type being economically superior to another. It is about outsourcing jobs and eliminating mainline employees. U could have bought RJs anytime time they wished and used them in the same role as the Fokkers and BACs with mainline employees.

 

[AOG-N-IT]

If the 70-seater idea is so awful why did U get rid of them in the first place? U and PI made money "in the day" by flying BAC1-11s and F-28s against the competitions turboprops. As has been stated over and over. This is not about a certain aricraft type being economically superior to another. It is about outsourcing jobs and eliminating mainline employees. U could have bought RJs anytime time they wished and used them in the same role as the Fokkers and BACs with mainline employees.

The BAC -1-11's , F-28's and F-100's were dropped because of age...and they were impossible to support in light of their respective manufacturers being bankrupt and useless. AA can't wait to shed themselves of the remaining F-100's as we did.

Acft are not durable products in the classic sense. They require logistical support just like you and I need oxygen , food , water and shelter to survive.

Airplanes are like any habit...to have a habit? One must have all the means to support it...and if the prime providers of said support are not there to do so? You don't need to hold on to the habit a day longer.

 

[ITRADE]

If the 70-seater idea is so awful why did U get rid of them in the first place? U and PI made money "in the day" by flying BAC1-11s and F-28s against the competitions turboprops. As has been stated over and over. This is not about a certain aricraft type being economically superior to another. It is about outsourcing jobs and eliminating mainline employees. U could have bought RJs anytime time they wished and used them in the same role as the Fokkers and BACs with mainline employees.

First, name me a single airline in the United States that flies F-28s today. You can't. Kinda says something, doesn't it?

Second, this crap about flying aircraft with only "mainline employees" is the same stupid, close-minded, troglodytic attitude that got US in trouble in the first place. Me, me, me.

Lets say, arguendo, that US did staff its RJs with mainline employees. Comair flies its CRJ 700s from ATL to ORF with a CASM of about 7.0. US would be flying its ERJ 170s with a CASM of 12.

A sure fire way of getting yourself into Chapter 7. But that's OK. You're emotions have overcome the accounting. Congratulations. Rah rah.

 

[justanadd]

"The introduction of a 70 seat ERJ-170 would continue to serve as US's service and would add the benefit of having a F class cabin whereas Mesaba, UA Express, and Continental service is all coach."

Correction: Mesaba's RJ's DO have 16 FC seats.

 

[RowUnderDCA]

If you give a pax more personal space, a jetway, a possibility to upgrade to first class seating, no middle seat, faster planing and de-planing and more overhead space per pax, do they REALLY care that the plane itself is smaller?

Finally, the major, obvious difference between U and other major network carriers is that their hubs are smaller (less O & D). U has been swamping its own yields for years.

I'll concede that pax might prefer a 737 to a Dash-8 or a Embraer 145 for flights up and down the east coast, but unless these new Embraers have a persistent odor of Brazilian dog pooh, I can't imagine all but the most unsophisticated, claustrophobic pax preferring a middle seat on a 737.

But I've never seen one of these planes in person.

 

[USA320Pilot]

US Airways cannot cost effectively operate RJs on the mainline and be competitive.

Last week I saw a EMB-170 first hand and I was very impressed with this product. With the AMR Eagle labor contracts, from a business perspective, the new mainline division should be very profitable.

Moreover, the passengers may enjoy this jet more than a B737 because the seats are wider and two by two seating.

By the way, the technical problems that stopped the MDA EMB-170 pilot training have been resolved and ALPA has been told Check Airman training will resume before the end of the month.

Regards,

Chip

 

[ITRADE]

"The introduction of a 70 seat ERJ-170 would continue to serve as US's service and would add the benefit of having a F class cabin whereas Mesaba, UA Express, and Continental service is all coach."

Correction: Mesaba's RJ's DO have 16 FC seats.

Not for long they may not. Mesaba and NW may be parting ways on RJs.

 

[shaka]

We can argue this until we are blue in the face, the reality here is Siegel and Bronner are going to grow this operation via regional jets. That business plan ain't going away.

The regional jets will allow this company to move forward and not backwards. While not being a fan of management and ownership for that matter, they are building a super regional airline that will be able to compete for the lucrative east coast customer. The airline landscape has changed dramatically, folks ain't paying the crazy walk-up fares they use to thanks to the LCC's and the internet.

The new jets are apparently very nice pieces of equipment and will be the profit center for the airline. All one has to do is take a look at Cincinnatti for Delta and see the growth and profitablility they have in that marketplace. On the conference call with analyst they mention Cincinnatti, this is a very important hub for them. Pittsburgh shares all of the same characteristics as Cincninnatti, this will be one of their cornerstones going forward.

The horrible part about this plan is it effects thousands of employees who I completely sympathize with because they are amongst the best in this business. But the airline had to change their strategy or most likely they would have perished via chapter 7.

Best of luck to the employees and the airlines financial viability, I do believe this airline will be very strong in the future.

 

[whatkindoffreshhell]

Please correct me if I'm wrong, but didn't Dave Siegal establish his industry reputation with the Continental ExpressJet operation?

Wouldn't you expectany veteran employee to act based on their experience.

Hey TBone-- you think CO is so great because they didn't "beat down" their employees post 9/11? Well, would you have worked for their lower wages in all the years before 9/11? Didn't think so. CO ain't in great shape either!

Hey Chip -- is this quote yours or please identify the analyst:

Incidentally, when asked by an analyst about its 2004 business plan and mainline route network, chief executive officer Dave Siegel hedged and said it would be "discussed at a later time", obviously referring to the UCT.

(and what makes the UCT referral so obvious??)

Good luck US employees!

 

[Light Years]

The RJ/Small jet scheme should only be a part of the plan-- I agree that deployed correctly, CRJS (on traditional "Express" routes and long-thin routes) and the EMB family in our traditional key East Coast markets (mainline comfort and product at Express costs, with more capacity and frequency) can protect and grow our position as the East Coast airline.

However, you cant have a network carrier with nothing to feed. Star Alliance/ United? Not much presence in our hubs,nor is there a reason to have much more. There needs to be mainline aircraft to bring passengers to other parts of the country and the world. We seem to do well in Europe, and we should with most of that traffic originating on the East Coast. We also do very well in the Carribbean and should expand that to select Central America destinations. With new brand recognition in other parts of the country through the UA tie-in, we should be able to start service to more destinations outside of the old "Allegheny/Piedmont box". We have a fleet of Airbus 320 family aircraft that suit our capacity and range needs perfectly.

There also needs to be a strong product and niche that is recognizable to the flying public. Our geographics dictate that we be a business carrier, and until some recent bad moves and atrocious service cuts, business travel is our specialty. Improve and promote the service and image, and run a classy, professional business. Buying a ticket is a business transaction and milage programs are an investment- we need to be a business that our customers want to do business with.

Most important to any business plan is having your team onboard with your plan. Before you can do that, you need to know your employee group- this one is a dedicated group that wants to be proud of thier work and be successful. This one is a group that wins great operational statistics, and even customer raves and rapport in a notoriously poor service industry. At the very least, include your employees in the plan instead of showing them the door while you replace them with outsourced workers who leave so much to be desired in the service department our passengers wonder about thier safety. Stop trying to divide a group that will not be divided, and work with them, not against them, and youll have the best airline in the industry.

Thats your da** business plan. <_<