About those change fees: Last week we reported from the US Airways Media Day and among the topics was that of change fees. US Airways matched United Airlines to charge $200 if you change your ticket. Here’s an article about how to deal with these fees.
Here’s another article about change fees, and how they’ve soared in recent times. If you think fees in the US are bad, look at the table and note in particular Ryanair’s fees–this carrier is notorious for charge for everything, and at steep prices, something subject to this funny video:
Why are fees becoming so prevalent? Because this is where airlines are largely making their profits. US Airways said last week it expects to earn $600m from fees this year. This is more than its entire profit from 2012. This means airline operations lose money and profits come from the fees.
Also on US Airways: we also reported last week about some outstanding labor issues between the IAM at US Air and the TWU and American Airlines. An agreement over the weekend was reached about merging these two workforces under one union banner, according to Terry Maxon at the Dallas Morning News.
Ex-Members Rap FAA, NTSB: We bet they won’t be invited to a reunion. James Hall and John Goglia, former members of the National Transportation Safety Board, had harsh words to say about the FAA, Boeing and the NTSB over the certification of the Boeing 787 and the subsequent fix. Hall said the FAA needed to recertify the airplane, not just the battery.
Ethiopian Airlines resumed service with the 787 over the weekend, while Japan’s ANA engaged in a proving flight. This Wall Street Journal article (via Google News, so everyone should be able to read it) references additional measures required by Japan.
We had the opportunity to sit down for a one-on-two interview with Scott Kirby, President of US Airways, and Derek Kerr, EVP and CFO, during the annual media day. We covered labor, fleet planning, change fees and the new American Airlines livery.
When we talked right after the merger was announced, you indicated that all the labor problems at US Airways were solved and you had agreements with American’s labor groups. Yet I read about continuing labor issues. Bring me up to date about this.
Derek Kerr: I think what we’re talking about is we have a road to solve all the labor problems. The contracts have a methodology for the pilots and flight attendants for who we’re going to get there. The only thing we have right now is our ramp and mechanics. We don’t have a deal with our ramp and mechanics and we’re negotiating that today. That is in normal negotiations. We’re going through with a mediator. That really is the only area where we are working on from a stand-alone perspective to try and get a deal done with our group. It’s a little complicated because we are trying to work the two groups (TWU represents American Airlines, IAM represents US Airways-Editor.) From the standpoint of where we are today, we have to road to get the pilots done. We have the road to get the flight attendants done. We have the ramp and mechanics on [the American] side complete. We have a six year deal. We’re trying to get our group together with that.
American is taking about 65 A319ceos. US Airways has a large fleet. You indicated when we talked right after the merger was announced that you expected to use some of US Airways’ 319s on American routes, but at that time it was too soon to draw any conclusions about the integrated fleet plan. What is your thinking today?
Bev Goulet, SVP and Chief Integration Officer, American Airlines
Robert Isom, EVP-Chief Operations Officer, US Airways
Elise Eberwein, EVP People, Communications and Public Affairs
- Merger benefits flow to shareholders and stakeholders, employees, customers, and communities.
- This will be subject to a lot of scrutiny. Delta-Northwest, Continental-United, Southwest-AirTran all had skepticism.
- We’re taking a different path.
- You go through a period of time where the public sees intense integration. People forget everyone has issues with reservations integration.
- Mergers are difficult, but we can’t take a break. We operate through the merger.
- Customers won’t threat us as one airline until we act, look and feel like one airline.
- Media will never let us live it down if we screw up.
- 110,000 employees have to be motivated. Enough people to fill Michigan stadium.
- 6,700 flights serving 41% of world’s population.
- AA-US will have more than 1,500 aircraft, more than Airbus and Boeing combined delivered in 2012.
Robert Isom, EVP-COO
- 2012 had more zero flight cancellation days than the prior seven years combined.
- Best operational performance metrics since the US-HP merger.
- 2012 topped on-time performance of legacy carriers (Hawaiian tends to be better-Editor).
- US Airways ranked #2 in 2011-2012 after Delta is four key metrics. Was last in 2007.
- The more compliant you are with safety will translate to reliability, efficiency, service. It serves all your goals.
- The distinguishing factor is what happens when things don’t go right.
- We want to build on momentum from record-setting 2012.
Andrew Nocella, SVP Marketing and Planning
- Phoenix equals 24% of flying; Charlotte 36%; Philadelphia 34%; Washington DC 6%; other 1%. Dramatic change from 2006 when core flying was 83%; now it is 99%.
- Now have 243 slots in Washington DC, from 193 from pre-Delta transaction.
- London Gatwick may be a great airport but London Heathrow is a more profitable airport. Began CHL-LHR March 30 with A330-300.
- 16 A321s coming into fleet this year to replace and up-gauge the airline in 2014/15. 767s start leaving the fleet this year.
- Contracts for 159 USAirways Express aircraft up for renewal, or 2/3rd of US regional fleet. Too small to be profitable now.
We’re at the US Airways Media Day and we’ll provide updates throughout the day.
First up is Doug Parker, CEO of US Airways and the new CEO of American Airlines when the merger is consummated.
- This media day is a little bitter-sweet. It’s the last one we will do here in Phoenix. (This is #13.)
- We’ve talked about consolidation over time, how US didn’t have to participate but would be better if it did. We talked about what the industry needed to do to be better. We talked about a lack of focus on labor, which was dysfunctional, a lack of discipline. The industry was improving on all fronts. Today the industry is much better with the exception of government policy.
- In 2010 I talked about the lack of profitability with oil a problem.
- In 2011 talking about how the recovery was real, in good and bad. Oil prices was as high as in 2008. US made over $100m, a $1bn turnaround from 2008.
- In 2012 we talked about how we were in a position to make a choice for a merger, not because we had to.