Charlotte Is Now King At US Airways

Among all towns served by US Airways, the Queen City is king. Proof of its importance to the nation's fifth-largest airline was evident last week in the choice of gathering spot for the first shareholders meeting since last fall's union with America West Airlines.

It was no accident that US Airways Chief Executive Officer Doug Parker landed in Charlotte, flying cross country from his office in Tempe, Ariz.

Nor was it random that Mr. Parker began the meeting on Wednesday morning by praising this sunny southeastern city, its government officials and local business boosters, saying he was "extremely impressed" with their attentiveness to the importance of air travel.

There is perhaps no better symbol of US Airways' resurgence and hope for long-term survival than the once-sleepy and now-vibrant Charlotte. Named after the wife of King George III, it is one of the fastest-growing cities in the Southeast and the nation's second-largest banking center, a place teeming with young, smartly dressed workers, many of them employed by hometown giants Bank of America, the nation's second-largest bank, or Wachovia Corp., the fourth-largest.

A four-year-long retrenchment in Pittsburgh has left Charlotte as the largest hub in the US Airways network, with more than 500 daily departures and 121 nonstop destinations -- also more than US Airways strongholds Philadelphia, Phoenix, Las Vegas and New York. Charlotte is central to the airline's long-term, post-bankruptcy survival strategy, ferrying passengers every day from the big coastal cities of the Northeast south to more than 20 vacation spots in the Caribbean, and the airport is planning a fourth runway and a new parking deck to accommodate the demand for space.

"There is a real resurgence here in Charlotte, which will drive more and more opportunities for us," said Chuck Allen, who is in charge of government relations and city affairs for US Airways in Charlotte.

The sunny story of Charlotte acts as a foil to Pittsburgh, which lags the rest of the country in job growth, continues to lose population and, at Pittsburgh International, has seen its status as an air transportation hub decline dramatically.

It was only five years ago that Pittsburgh, not Charlotte, was king of the US Airways network, with 517 daily departures and more employees -- topping 12,000 -- than any other city.

Then came 9/11, two bankruptcies by US Airways and a change in strategy -- away from the heavy reliance on Pittsburgh connections between big cities in the Northeast and the rest of the country -- to more north-south connections along the East Coast, and to Florida, the Caribbean and Latin America.

US Airways now has 170 flights per day out of Pittsburgh, down from 236 last May, when the America West merger was announced. It has no flights overseas to Europe, and Mr. Parker said the chance of that returning was not good, with the airline not able to "make the numbers work" despite "inducements" offered by local officials.

Mr. Parker said last week that US Airways lost "lots and lots of money" in Pittsburgh over the last five years, as low-cost competition around the country drove down fares and profit margins.

But he said the carrier's service reductions at Pittsburgh International -- US Airways now accounts for just 55 percent of all flying at the airport -- took out the money-losing routes, making the local operation "marginally profitable." That's a far cry from when US Airways accounted for more than 90 percent of all airport traffic and the operation was a "cash cow" for the carrier, recalls local airline analyst Bill Lauer. But it does suggest further cuts are unlikely, a conclusion that Mr. Parker made in an interview last Wednesday.

Less likely are hopes held by some that US Airways will revive the Pittsburgh hub, perhaps as a way of alleviating congestion at delay-prone Philadelphia International Airport. "What I have heard through the grapevine," Mr. Lauer said, "is telling me that US Airways route network planners are in fact looking at reviving a lot of that transcontinental flying out of Pittsburgh as a transit point for [the airline's] East Coast operations. That was always very profitable for US Airways."

Mr. Parker dismissed such talk, saying Philadelphia, being a much larger city, could draw from a larger base of local air travelers. That is a message, he knows, that is not popular with Pittsburgh-area employees -- 3,000 of whom remain. "It is so emotional there still," he said.

Charlotte, he said, has not suffered from the same retrenchment because it is virtually the only option, other than Atlanta, for travelers in the Southeast hoping to make connections to the Caribbean or Latin America, the West Coast or the East Coast, whereas Pittsburgh has more geographic competition, occupying a denser part of the country.

"We connect all the Southeast here," said Mr. Parker, speaking from the Charlotte Convention Center, where the annual shareholders meeting was held.

And Mr. Parker has already proven he will fight for that prized turf.

When low-cost upstart JetBlue Airways announced plans for the start of Charlotte-JFK International service July 12 and JetBlue Chief Executive Officer David Neeleman said in a news release, "Until now, the people of North Carolina have overpaid for substandard service," Mr. Parker responded with three daily flights to the New York airport starting in September and a promise to "compete aggressively" with JetBlue.

In a letter to his 35,000 employees, Mr. Parker cited JetBlue's poor performance recently in on-time arrivals and the New York-based carrier's prediction that it would lose money in 2006. US Airways predicts a profit this year.

"It doesn't appear that our customers are overpaying; rather it appears that passengers aren't willing to pay JetBlue enough for them to be profitable," Mr. Parker said in the letter. "US Airways is going to be here long after JetBlue."

In Pittsburgh, though, US Airways made no such statements after JetBlue announced plans to fly from Pittsburgh International to JFK and Boston's Logan Airport starting June 30. When asked earlier this month about JetBlue's Pittsburgh incursion, Mr. Parker said, "We think our service is adequate."

As long as Charlotte continues to grow -- the city added an estimated 68,000 inhabitants and the six-county area, 184,000 in the past four years, pushing their population to 648,000 and 1,595,000, respectively -- and to emerge as a corporate center (it is home to nine Fortune 500 companies compared with seven in the Pittsburgh area), US Airways will do what it can to keep competition out.

At least for now, Pittsburgh can still claim the more popular airport.

Pittsburgh International still has twice as many shops as Charlotte-Douglas International, and passengers like the shopping options, spending twice as much on retail purchases while at the airport than do passengers in Charlotte.

But Charlotte is gaining in that area, too. It recently added an airport wine bar and a spa, where anxious passengers can receive a massage, a manicure or a pedicure before their next flights.

Copyright (c) 2006, Pittsburgh Post-Gazette



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