THE MIDDLE SEAT
By SCOTT MCCARTNEY
For US Airways Fliers, Bigger Isn't Better
Post-Merger, Carrier Is Mired
Far Down in Service Rankings;
Taking Cost Cutting Too Far
October 2, 2007;
The two-year-old merger of America West Airlines and US Airways Group Inc. has been good for shareholders, employees and airline executives. But this year, it has also been a mess for travelers.
US Airways had the lowest on-time arrival percentage in the first half of this year of any of the 20 airlines that the Department of Transportation tracks. It has been worst among major airlines in baggage handling for more than two years. Complaints about flight problems quadrupled in the first half of this year. Customers have been angered by mechanical problems, dirty planes, credit-card hassles, ticketing problems and higher requirements for redeeming frequent-flier award tickets.
The US Airways experience this year shows both the power and the peril of airline mergers. Tying two networks together has been a financial success, saving thousands of jobs at two distressed airlines and creating a nationwide low-cost carrier. But almost every airline that has bought another has suffered service declines while workers, equipment, facilities, computer systems and aircraft try to mesh. Reservation systems proved a particularly difficult problem for US Airways, leading to many customer problems.
The trouble also shows how aggressive cost-cutting by airlines has played a part in eroding customer service across the U.S. this year, contributing to long lines, late and lost luggage, flight delays and cancellations. That cost-cutting has been a critical part of the airline industry's plan to move onto firmer financial footing. And it has worked: Earnings were up at many carriers in the second quarter as fare increases, full airplanes, strong international profits and continued cost-cutting overcame higher oil prices.
US Airways had the lowest on-time arrival percentage in the first half of this year of any of the 20 airlines that the DOT tracks.
Perhaps no carrier cut more deeply than US Airways, and the airline has admitted it went too far in some areas. In the past several months, US Airways has been beefing up staff, buying new equipment and attacking stubborn problems like poor baggage handling in Philadelphia.
Last week marked the second anniversary of the pairing of US Airways and America West. The company also achieved a significant milestone last week in the ongoing integration of the two airlines: The Federal Aviation Administration awarded US Airways a single operating certificate, the license all airlines need to fly. Labor groups still remain largely separate, and US Airways is grappling with a serious problem because many pilots from the original US Airways are bitterly upset over an arbitrator's determination of how seniority should be merged.
Two years later, the company is still going through the transition toward becoming one airline, said Chief Executive W. Douglas Parker. US Airways worked out quickly what it wanted to keep and what to discard in terms of airplanes, gates and other facilities and even headquarters staff, giving it quick financial benefits. But it takes a lot longer to work out systems that affect passengers, like reservations.
In the first half of this year, problems trying to move to one reservation system created most of the service problems, Mr. Parker contends. Reservations were lost, flights were delayed and many customers fumed in long lines. For many months, US Airways had two separate check-in lines depending on whether your reservation was made through the old US Airways system or the America West system.
In addition, the company still has problems with baggage service at its big Philadelphia hub. "That's something we inherited that we have not yet been able to fully resolve," Mr. Parker said.
The company is spending on its equipment, facilities and staff, Mr. Parker says. The dismal on-time record and baggage problems have been the driver of complaints, he noted, and increased staffing, coupled with schedule changes such as spreading flights out more in July, helped improve on-time performance in that month. But US Airways still ranked only 15th that month out of the 20 airlines DOT tracks.
It has done far better at generating profits. Enjoying very low costs from bankruptcy reorganization, US Airways posted the fattest second-quarter operating margins of any major carrier, including earnings stalwart Southwest Airlines Co. Like all airlines, higher oil prices have ratcheted financial pressure even higher, however. US Airways earned $329 million in the first half of this year, down from $370 million a year earlier. And its stock, like other airlines, has fallen sharply this year, starting the year over $55 a share and now trading at close to $25 a share.
Mr. Mueller, the Phoenix doctor, says he was left stranded in Washington, D.C., at 2:30 a.m. because of a mechanical breakdown on a US Airways flight. He lost a day's work because of the problem, and US Airways gave him only a $250 voucher. The merger forced him to get a new credit card to keep accumulating airline miles -- a hassle to change account numbers at merchants who do automatic billing. He suffered through the problems with the two parallel booking system, and he's found it much harder to get free upgrades on the merged US Airways. So, now, he's flying more often on Southwest. "US Airways hasn't completely lost me as a customer, but I'm less loyal," he said.
By SCOTT MCCARTNEY
For US Airways Fliers, Bigger Isn't Better
Post-Merger, Carrier Is Mired
Far Down in Service Rankings;
Taking Cost Cutting Too Far
October 2, 2007;
The two-year-old merger of America West Airlines and US Airways Group Inc. has been good for shareholders, employees and airline executives. But this year, it has also been a mess for travelers.
US Airways had the lowest on-time arrival percentage in the first half of this year of any of the 20 airlines that the Department of Transportation tracks. It has been worst among major airlines in baggage handling for more than two years. Complaints about flight problems quadrupled in the first half of this year. Customers have been angered by mechanical problems, dirty planes, credit-card hassles, ticketing problems and higher requirements for redeeming frequent-flier award tickets.
The US Airways experience this year shows both the power and the peril of airline mergers. Tying two networks together has been a financial success, saving thousands of jobs at two distressed airlines and creating a nationwide low-cost carrier. But almost every airline that has bought another has suffered service declines while workers, equipment, facilities, computer systems and aircraft try to mesh. Reservation systems proved a particularly difficult problem for US Airways, leading to many customer problems.
The trouble also shows how aggressive cost-cutting by airlines has played a part in eroding customer service across the U.S. this year, contributing to long lines, late and lost luggage, flight delays and cancellations. That cost-cutting has been a critical part of the airline industry's plan to move onto firmer financial footing. And it has worked: Earnings were up at many carriers in the second quarter as fare increases, full airplanes, strong international profits and continued cost-cutting overcame higher oil prices.
US Airways had the lowest on-time arrival percentage in the first half of this year of any of the 20 airlines that the DOT tracks.
Perhaps no carrier cut more deeply than US Airways, and the airline has admitted it went too far in some areas. In the past several months, US Airways has been beefing up staff, buying new equipment and attacking stubborn problems like poor baggage handling in Philadelphia.
Last week marked the second anniversary of the pairing of US Airways and America West. The company also achieved a significant milestone last week in the ongoing integration of the two airlines: The Federal Aviation Administration awarded US Airways a single operating certificate, the license all airlines need to fly. Labor groups still remain largely separate, and US Airways is grappling with a serious problem because many pilots from the original US Airways are bitterly upset over an arbitrator's determination of how seniority should be merged.
Two years later, the company is still going through the transition toward becoming one airline, said Chief Executive W. Douglas Parker. US Airways worked out quickly what it wanted to keep and what to discard in terms of airplanes, gates and other facilities and even headquarters staff, giving it quick financial benefits. But it takes a lot longer to work out systems that affect passengers, like reservations.
In the first half of this year, problems trying to move to one reservation system created most of the service problems, Mr. Parker contends. Reservations were lost, flights were delayed and many customers fumed in long lines. For many months, US Airways had two separate check-in lines depending on whether your reservation was made through the old US Airways system or the America West system.
In addition, the company still has problems with baggage service at its big Philadelphia hub. "That's something we inherited that we have not yet been able to fully resolve," Mr. Parker said.
The company is spending on its equipment, facilities and staff, Mr. Parker says. The dismal on-time record and baggage problems have been the driver of complaints, he noted, and increased staffing, coupled with schedule changes such as spreading flights out more in July, helped improve on-time performance in that month. But US Airways still ranked only 15th that month out of the 20 airlines DOT tracks.
It has done far better at generating profits. Enjoying very low costs from bankruptcy reorganization, US Airways posted the fattest second-quarter operating margins of any major carrier, including earnings stalwart Southwest Airlines Co. Like all airlines, higher oil prices have ratcheted financial pressure even higher, however. US Airways earned $329 million in the first half of this year, down from $370 million a year earlier. And its stock, like other airlines, has fallen sharply this year, starting the year over $55 a share and now trading at close to $25 a share.
Mr. Mueller, the Phoenix doctor, says he was left stranded in Washington, D.C., at 2:30 a.m. because of a mechanical breakdown on a US Airways flight. He lost a day's work because of the problem, and US Airways gave him only a $250 voucher. The merger forced him to get a new credit card to keep accumulating airline miles -- a hassle to change account numbers at merchants who do automatic billing. He suffered through the problems with the two parallel booking system, and he's found it much harder to get free upgrades on the merged US Airways. So, now, he's flying more often on Southwest. "US Airways hasn't completely lost me as a customer, but I'm less loyal," he said.
