Is SNA going away??

[ITRADE]

Hmmmpf.....I thought that the idea behind the ERJ-170s was to reallocate bigger jet capacity to tacke not only increased Caribbean flying, but also flying to cities that US had only a marginal presence - or none at all. Often cities like SNA, SJC, PDX, and SLC were mentioned as cities that would benefit from the availibility of A-319s and A-320s being freed up. Guess not.

Another use for those ERJ-170s would be to fly them from the hubs to the Caribbean islands on routes where US only has weekend service. Say, fly the mainline jets on Saturday and Sunday, and have the 170s fly on Monday, Thursday, and Friday.

 

[USA320Pilot]

The US restructuring plan has many aspects that labor will not, which may be necessary to return the company to profitability. In this case, the 24 effected SNA employees may not like their station closure.
The SNA service had high load factors, however, according to the company was unprofitable. In the case of this service being eliminated, I see three points here. The airline can still earn some SNA revenue after the station is closed by code sharing with UA, the company can re-deploy A319s to the Caribbean or other markets to generate more revenue, and this is part of the incremental reduction in labor expense to further cut its unit expense(s).
Best regards,
Chip

 

[USFlyer]

Can someone explain how the CWA and IAM contracts read with regards to staffing new stations? I seem to recall reading somewhere that US can open a new station (e.g., PDX, SLC, AUS) and staff it with contract employees for a period of time or up to a certain number of flights per day. So, if so, just because SNA went away, don''t assume new stations won''t open.

 

[USA320Pilot]

USflyer:

USflyer asked: "Can someone explain how the CWA and IAM contracts read with regards to staffing new stations?"

Chip answers: Usflyer, the CWA contract created a new job classification called Mainline/Express where up to 2 daily flights into Express cities can be operated where Express agents from other companies will do the mainline work. In addition, up to 4 daily flights can be operated into a new city without giving those jobs to mainline employees, giving those jobs to contractors.

The implication for labor is simple, the company can take high cost mainline labor positions and convert them to Express positions or contractors, in an on-going nation wide corporate effort to reduce labor expense, then return mainline flights to the abandoned city with Express employees working mainline flights – at much lower pay and benefits.


Every work group is seeing this with MAA (new MidAtlantic acronym) productivity enhancements, and job/procedure changes. The CWA has the Kiosk/internet reservation IT changes, the IAM with the loss of Utility/Mechanic pushbacks to Fleet Service, F/A aircraft minimum staffing, the A320 and possibly EMB-195 heavy maintenance being outsourced, ALPA furloughees permforming simulator training instead of Check Airman, etc.

The historical problem for US Airways' employees is that prior to the reorganization the airline had the highest labor expense as a percentage of revenue and management is addressing this issue across all work groups. Much of this problem is due to mature carrier work-rules with a primarily short-haul route network, however, the problem exists for one reason or another.

From a competitive position JetBlue (and for that matter other los cost competitors -- LCO's) has 70 employees per aircraft whereas US Airways has 110 employee per aircraft, which is about 50% higher than JetBlue and is non-competitive. This illustration clearly illustrates the problem at hand and why management is reducing headcount for the same number of ASMs.

I believe a major part of management's restructuring plan, agreed to by all labor groups, is a systematic dismantling of labor pay and work rules, which will reduce the corporate labor expense and move the company's cost structure more towards that of the LCC's. In my opinion, US management is creating a contingent work force within all of the employee groups that I define as contingent workers who are: Consultants, Part Time Employees, Contractors, Temps, and Express employees.

Best regards,

Chip

 

[Cosmo]

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On 6/25/2003 841 AM libertybell wrote:

This is just on more sign that forces our business traffic to the door of some other airline.
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It sure didn''t take long for another carrier (Midwest) to see the value in SNA. Here is the press release that came out earlier this afternoon, for new twice-daily service in the MKE-SNA market (one-stop via MCI). These flights might even be using the former US slots at SNA.

 

[JS]

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On 6/17/2003 11:42:39 PM PineyBob wrote:

This is dog crap! The lowest currently published fare with a Friday departure is $462.00 my 2 most recent R/T''s had exactly 1 open seat.   Compare this to PHL-LAX @ $406.00. Remember these are the rock bottom fares and not even US Airways is stupid enough to sell ALL the seats at the lowest fare.

I really wish the senior management would level with the customers. If this is part of route structure realignment due to the code share with UA then I can support that somewhat. But what I read is insulting and assumes that I am mindless,  a sheep led to slaughter. That kind of thinking is what has gotten US into this position and the same could be said for the other large carriers.

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I disagree. The lowest published fare for PHL-SNA is on HP or CO for $332+tax roundtrip, valid Monday noon to Thursday noon and Saturday noon to midnight. The lowest US fare is $40 higher than that and is only valid Tuesday and Wednesday plus Saturday noon to midnight.

Also, PHL is not the only market in which US sells fares to SNA. Take DCA-SNA for example. Lowest published fare is on F9 for $164+tax one way with no restrictions. Next is HP, and then everyone else, including US, for $455+tax roundtrip with hefty restrictions.

 

[phllax]

There was a big article in the Metro section of the Los Angeles times on Tuesday, June 24, about the planned expansion of flights at SNA. MX and F9 are using NEW slots that became available.

 

[Seatacus]

Sounds like the "Left Coast" is histoire....hey!!! all you lemmings go this way... the cliff is over here

 

[tadjr]

With SNA, you''re talking1city with 2 flights a day. It wouldnt surprise me to see it added back again at a later date with US metal and contracted ground personnel. I dont think there are any other cities currently served out West that would fit into the same category as SNA did. As for US starting flights to other Western cities, they''d be able to use the new contract language to the companies advantage so a couple of flights a day wouldnt require 24 new agents to open a new city with UA or someone else handling us. That is (hopefully) one of the reasons the company negtiated the contract the way they did. If they dont open new cities it isnt because of customer service or ramp labor costs involved.

 

[USFlyer]

For what it''s worth, US will lose a ton of revenue if they drop the west coast cities and let UA handle the flights. Unless you live in PIT, PHL or CLT, for US to get any revenue you would need to double connect. For example, I fly out of DCA. Right now I fly, for example, DCA-PIT-SEA or DCA-PHL-SEA. If US drops SEA, I could either fly DCA-ORD-SEA on UA (as a US coded flight) or fly DCA-PIT-ORD-SEA. In the former case, UA gets all the revenue. In the latter case, US gets some of the revenue. But no way I''m doing the latter -- it''s a waste of time.

 

[USA320Pilot]

Tadjr's comments and analysis is correct.

In addition, when evaluating whether or not it was a correct decision to keep SNA a mainline city, another important factor that has not been discussed is SNA has airport operational limitations and aircraft restrictions, which directly effects profitability.

US operates Airbus narrowbody aircraft in and out of SNA and the PHL flights require heavy fuel loads, unlike other destinations like MKE, DEN, etc. The US Airbus aircraft have maximum gross weight, takeoff noise abatement, and operating limitations due to local environmental concerns and SNA’s extremely short 5,700’ runway. Often times these limitations prevent US from filling its aircraft and the company is forced to leave high yield revenue passengers at the gate with open seats.

Obviously, in an industry with razor thin margins the loss of just a few passengers can make a flight unprofitable.

Also noteworthy, by eliminating SNA from its route network, US can keep much of the East Coast to SNA revenue and eliminate virtually all of the passenger processing/operational expense by code sharing with UA through DEN. For example, if a passenger wants to build their US FTP account and is travelling from Harrisburg to Orange County, they could fly from MDT to PIT & PIT to DEN on US, and then DEN to SNA on UA.

The decision to close SNA also keeps much of East Coast to SNA revenue within the domestic alliance, can increase system wide load factor (with asset reallocation), and permits US to eliminate all of the SNA cost. The SNA station closure will undoubtedly effect the 24 station and commuting employees, but with asset reallocation, station cost elimination, and code sharing, the move will likely help US return to profitability.

Best regards,

Chip

 

[Pacemaker]

"The decision to close SNA also keeps much of East Coast to SNA revenue within the domestic alliance, can increase system wide load factor (with asset reallocation), and permits US to eliminate all of the SNA cost. The SNA station closure will undoubtedly effect the 24 station and commuting employees, but with asset reallocation, station cost elimination, and code sharing, the move will likely help US return to profitability."

Hi Chip. Using this logic, why not shut down LAX/SAN/SFO/SEA/LAS/PHX and hand that over to UAL too...think how much overhead we''ll save while still keeping some of the revenue. Let''s keep going...DEN/MSP/DFW/MCI/IAH...just send ''em to ORD and put ''em on United. As a matter of fact, why have airframes and employees at all? Why not simply retain the US Airways brand as figurehead and contract out 100% of the operation to UAL, Star, and Express, realizing huge cost savings yet retaining some of the revenue. It would undoubtedly effect the 30,000 employees who work for US Airways, but the move would help US return to profitability, wouldn''t it?

 

[DLFlyer31]

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On 6/26/2003 1206 AM Chip Munn wrote:

Also noteworthy, by eliminating SNA from its route network, US can keep much of the East Coast to SNA revenue and eliminate virtually all of the passenger processing/operational expense by code sharing with UA through DEN. For example, if a passenger wants to build their US FTP account and is travelling from Harrisburg to Orange County, they could fly from MDT to PIT & PIT to DEN on US, and then DEN to SNA on UA.

Chip

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Chip (or should I say Pollyanna), that''s a very naive way of looking at it. While I''m sure there are a few business that might want to beef up their accounts, most just want to get to their destination quickly and conveniently. US is no longer offering that. Why fly MDT-PIT-DEN-SNA, when you can fly MDT-ORD-SNA or either AA or UA?

Your routing requires a double connection..something most people would rather avoid. More connections just means more running through terminals, more chances of delays/misconnects and more chances of baggage being lost.

Sorry, but US will not keep most of the SNA traffic. It will shift to other airlines who are more convenient.

 

[ITRADE]

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On 6/26/2003 6:52:13 AM PineyBob wrote:


I would seriously like to know exactly when as a interested third party, namely a customer this airline will take a testosterone injection or 4 and grow some nutz and compete for business.

Right now they should change the name to US Girly Man Airways.

NOTE TO BEN AND DAVE: In business you win by eating the other guys lunch! not by being the others guys lunch. Thought I''d remind you in case Ben was to busy with his board games. Also if you could break away from those games you would discover that buying a ticket on a US flight from UA under the code share results in about a 20% savings for this loyal Cockroach. Since my company hasn''t picked up on that yet I haven''t done it.

See the problem I have with this "Just call me Dave" is that this is yet another example of the clueless marketing department costing US Airways money. You cry about cost, yet you leave money on the table. It is very clear to me that your organization has NO SELLING skills whatsoever. Perhaps I should become a consultant and teach your organization how to sell. But you''d cut my fee by 5% so I think I''ll pass.

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Yah. This was a very, very stupid move. I understand the cost thing. However, in order to offer the kinds of services that you want to offer a customer - you need a full network of cities for them. If you have to take a loss on a couple cities to offer the full service, so be it.

 

[Cosmo]

I would take DLFlyer31''s comments a step further. Not only would a US customer in MDT be more likely to take UA flights on an MDT-ORD-SNA routing rather than double connecting at PIT and DEN, thus giving all of the revenue to UA (per the UA/US code-share agreement). But to add insult to injury, that customer would then be able to accrue about 4,600 US frequent flier miles for a round trip, which would add a $92 non-cash liability for future transportation to US'' balance sheet (4,600 miles @ 2¢ a mile, which I believe is the current rate according to GAAP rules).

So let''s see -- US no longer gets any revenue from this MDT passenger, the carrier''s MDT-PIT load factor drops slightly, and a non-cash liability is added to US'' balance sheet. It sounds like a helluva deal! But multiplied by thousands of passengers each month from cities all over US'' route system, dropping service to SNA might have a bigger impact on US'' operational and financial results than is currently contemplated.