US Airways Strategizes To Safeguard Future

Doug Parker became chief executive officer of America West and later US Airways Group Inc. 10 days before Sept. 11, 2001, when planes crashing into buildings forever changed air travel, and made flying more of a hassle.

Now just getting to the gate can be an ordeal: lines at screening checkpoints, body scans, removing shoes, surrendering all but 3 ounces of liquids.

After the Sept. 11 terrorist attack, Americans' fear of flying spurred a shakeout in the industry that continues today: 159,000 airline employees, or 29 percent, lost their jobs since 2001. Others lost pensions and pay in bankruptcy reorganizations. Some airlines disappeared.

The 9/11 attack accelerated fundamental changes in "an industry that had never been really financially strong," said Parker, 49, reflecting on his decade as CEO, his thoughts about Philadelphia, and why rival Southwest Airlines Co. is shrinking here.

A big proponent of consolidation, Parker said that whether US Airways goes it alone, or merges - he cited as potential merger partners American, Delta, and United - "Philadelphia is extremely important to us, and will be important forever."

US Airways' Charlotte, N.C., hub has more daily flights - 600 compared with Philadelphia's 444 - but Philadelphia generates more revenue "by a pretty large margin," Parker said.

"We fly bigger airplanes out of Philadelphia to bigger markets, and there's more business in Philadelphia so you can get higher yields. So the revenues are higher."

Growth in Philadelphia will be international, Parker said, although international travel now "is a little soft."

"Internationally, we think there are additional opportunities over time. Nothing to announce yet, but we are working all the time with the Convention and Visitors Bureau and others to come up with places that make the most sense to fly and where we can get the most traffic."

US Airways has successfully beaten Southwest back, able to match fares and with fuller planes on routes Southwest said were unprofitable. Southwest has been downsizing operations here - from a peak of 71 daily nonstop flights to 20 cities to its current 55 daily flights to 18 cities. Four of those 18 destinations, including Pittsburgh, will disappear in January.

"I think Southwest came into Philadelphia in a large way because they anticipated US Airways might be going away. It was not an illogical assumption," Parker said. "Without the America West merger, US Airways would have gone away."

US Airways is able to fill planes, called "load factor," and charge more per seat, known as "yield," because it connects passengers from its Philadelphia hub to dozens of cities, including 34 destinations in Europe, the Caribbean, Mexico, the Middle East, and Canada. Southwest does not fly internationally.

Southwest flies Boeing 737s, with 137 seats. US Airways' fleet is varied, and includes smaller regional jets.

"We have a competitive advantage in places like Philadelphia, where we have a lot of connecting traffic," Parker said. "We can match Southwest's local fares, but we don't have to fill up the airplane with the local fares. We have a lot of connecting people, and Southwest doesn't have that ability. We can take people from Pittsburgh on to Frankfurt or London."

"Southwest's model is fantastic, but it doesn't work as well in another airline's large international hub."

After the 2005 merger, US Airways had a reputation for baggage mishandling, operational unreliability, customer complaints, surly service workers, decrepit equipment, and revolving-door management.

"And most of that problem was focused in Philadelphia," Parker said.

"I remember a board meeting where one of our management people, head of operations at the time, said, 'Philadelphia is an issue that can't be fixed.' "