How can this be when they pay their employee's so much more than LCC? Like BWI, we gave it to SW. Like all of the West Coast after PSA, we gave it to SW. Like Piedmont with the Florida Shuttle, we gave it away. Why do you suppose, the only thing this airline knows how to do is give things that make you money away?
I will speak to this: USAir's first mistake was that after they acquired PSA and then Piedmont, management (under Edwin Colodny...God love him) brought PSA's and PI's employees' levels of pay up to USAir's higher pay scale. Of course the rationale behind this was to create (buy) labor peace. Unfortunately however, the merger thrust USAir into the big leagues as a major national competitor. Having been a traditionally regional airline concentrated in the Northeast, US management quickly developed indigestion, having acquired and merged two airlines within a relatively short period of time. The higher pay scales that could be traditionally offset by higher revenue premiums from monopolized markets that US long enjoyed from PIT (you know, gouging the business traveler with a $600 fare from PIT to ABE, for example) quickly eroded as USAir's business model transformed. In other words, USAir wasn't able to command the same revenue premium (enjoyed in PIT) in its (then) broader markets and the business model became unsustainable. Shortly following the PSA integration, there were added costs as well with the introduction of First Class cabins into the former PSA fleet, as well as into the USAir fleet. (You may recall, that prior to Piedmont coming along, US was a single class cabin operation). Additionally, there were newly inherited operating inefficiencies such as trying to integrate and operate a combined fleet consisting of BAe-146's, DC-9's, 727's, F-28's, 737-200/300/400's, 767's, MD-80's, and for a short time, BAC-111's (they were on their way out), in addition to the wholly owned Express carriers' fleets (Henson, Allegheny Commuter, etc.).
Enter Southwest. Southwest blew into the Bay Area to L.A. corridor in 1989 with
ONE aircraft type and lots of frequencies (as AA was well on its way with their own dismantling of the former Air Cal routes). Furthermore, US management sent the PSA MD-80's back east and started operating PSA's traditional west coast flights on routings such as MDT-PIT-SAN-OAK-SEA or PIT-CMH-LAX-SFO-RNO...in 737-300's. Well guess what? When the winter weather in the East went south, it threw the intra-California operation into disarray. So USAir found itself with bad case of indigestion...with bloated labor costs, and operational inefficiencies trying to compete against the fun-loving hyper-efficient Southwest model of high frequencies, low fares, and a
ONE aircraft-type operation. It was a recipe for (financial) disaster. Of course, the final nail in the coffin was George Bush Sr.'s war in the Persian Gulf (Wars run in their family, but I digress...) and a spike in jet fuel prices. Well Stud, you know the rest of
that story...
The
ONE problem remained however: USAir retreated back east, but management never really learned how to (or was slow to adapt) to creating an efficient, cost-effective airline business model. The hodge-podge fleet remained until Stephen Wolf came along. USAir(ways) still suffered from a route network that was never strategically well-balanced or right-sized. With a sizable operation at DCA and now a full fledged international hub in nearby PHL, it most likely made sense to pull down the BWI hub, once SWA penetrated its way eastward and into Florida. I know that this history lesson is getting rather long-winded, but just to conclude, Mr. Safety Stud; the nature of USAirways' business model makes it more difficult to compete against good ole SWA, mostly because of the inherent efficiencies that are built into their (SWA's) business model: They aren't as bogged down with costs such as having a dual-class cabin product, frequent flier club rooms in its airport locations, and most importantly, they have remained true to their original operating niche with
ONE aircraft type. These inherent cost-savings allow them to compensate their employees at a higher rate of pay while also at the same time, allowing them to operate in their markets profitably (like BWI and PIT) when USAirways cannot.
Capisci?
