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US Airways may not increase its Delta bid

US Airways CEO Doug Parker won't commit to increasing his airline's bid for Delta Air Lines, the AP reports this morning.

Read the full story here.

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Comments (2)

Robert Johnson:

FFOCUS is a group of concerned travelers who are very dismayed over the proposed merger and the cuts in service and customer satisfaction.

The FFOCUS response is as follows:

A recent statement by US Airways management in response to an employee question regarding First Class seating clearly illustrates one of the main disconnects between Tempe and the Frequent Flyer community based in the East. FFOCUS has examined these statements and has the following comments:

The company indicated that only 18% of First Class seats on Airbus 321 aircraft are paid F passengers. Let’s look at information that is not included in this statement.

The implication is that the low utilization of F fares is on trans-continental flights. Approximately one-half of 321 flights are not trans-cons, but east coast flights of one to two hours; flights that historically have low first class purchases . This fact dramatically skews the conclusion management would like the reader to make.
Historically, many first class seats on trans-cons are purchased either with Y/B fares by elites for immediate upgrades at a cost in excess of A fares. Also, elites and non-elites alike often upgrade on these flights using their Dividend Miles.
US Airways provides a first class product that is widely considered to be inferior to other carriers with multiple cabins. Most frequent travelers realize that this product is deficient, so fewer people are willing to pay ANY premium for First Class.
US Airways published first class fares are seldom equal to or below other carriers and are often 50% or more higher.
The comments also included, “In 2006 our Preferred members received free upgrades on about 50% of their flights, with Chairman’s Preferred members averaging over 70%.”

1. The high rate of Preferred upgrades is also due to t he significant decrease in Preferred members. While not officially released, internal documents indicate that there is a 30% reduction in Chairman’s Preferred me mbers and a net decrease in flying done by each Preferred member. The company cannot have it both ways. If it acts to dissuade Preferred membership, there should not be complaints about the results.

2. Due to the decrease in coach seat pitch, Preferred members manage their travel schedules, where possible, to maximize the opportunity for upgrade to a larger seat. In cases where that opportunity appears to be minimal, the Preferred members often select a different carrier.

3. US Airways eliminated corporate discounts during the past several years. Previously, many first class seats were occupied by Preferred members traveling on heavily discounted fares. Now, the upgrades are being made from published fares that often far exceed those paid by the prior corporate customers.

We believe US Airways management to be disingenuous in their comments and actions. For example, due to the excess weight now carried by Airbus 320s after seat reconfiguration, there is an increase in technical fuel stops. These aircraft are functioning in a manner than requires stopping on westbound trans-cons, when no stop was previously needed. Common sense dictates that the same result will befall the Airbus 321, which is already performance challenged, if additional weight is added to the cabin.

The statement indicating that the percentage of upgrades earned by Preferred members is “out of whack” is disturbing to us and does not match economical reality. While there is limited merit to this statement, it is shortsighted. This further illustrates the perception held by US Airways, but by none of their competition, that frequent fliers are a problem, but not a solution to cost effectiveness. Using space available upgrades to reward very frequent customers has minimal unit costs. Any added expenses are mitigated when that customer’s future business and loyalty brings far greater income to the airline. By reducing the Preferred members’ upgrade opportunities, the company is encouraging those customers to look elsewhere.

Most other legacy airlines are embracing frequent fliers and improving the service provided in both the First Class and Coach cabins. In contrast, US Airways continues to cut service and benefits. We ask, “Why are the fares not decreasing in a manner commensurate with the reduction in service at US Airways?” A failure to acknowledge and correct these deficiencies will encourage more Preferred members to move their business to other carriers, causing significant declines in income and yields. US Airways is removing VALUE from the proposition. If one removes value, what reason is there to remain a US Airways customer?

We call upon US Airways management to work with their Preferred members as soon as possible to provide comfortable, safe travel for passengers, while maintaining a profitable business model.

Bob Hall:

I was Chairman's last year but moved some of my business to another carrier and am back to Gold. I do think they are being short sighted in cutting the first class seats in the 321.

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Author

Tom Belden, a former Inquirer business writer, has written about Philadelphia International Airport, airlines, the travel industry, the conventions and meetings business for 25 years. He has traveled to all 50 states and extensively in Europe and Mexico.


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This page contains a single entry from the blog posted on January 23, 2007 12:08 PM.

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