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US Airways SWOT Analysis
Customer service has always been a priority at US Airways, and we are committed to making every flight count for our valued customers. Our promise to you, the safety and satisfaction of our customers is a top priority for our airline. Customers first is the result of a joint effort of the airline industry, the US Congress and the US Department of transportation to address the key service elements that affects our customers.
New Mission Statement
Here at US Airways, we strive to create a modern travelling experience for our passengers. Our young fleet offers passengers the comfort and luxury of 21st century flight. From Wi-Fi, to satellite television to seats that reclines as beds, when u fly with us, you’re always connected to the modern world.
Strength of US Airways
US Airways has much strength as a major airline. After its merger with America West in 2005, it became the 5th largest airline in the US, combining the East Coast prominence of US Airways and the West Coast strengths of America West. US Airways operates more than 3,800 departures a day to 240 destinations in 32 countries and flies nearly 70 million passengers a year. The company has two subsidiaries, US Airways Shuttle and US Airways Express which provide hourly short haul flights in the high demand metropolitan areas of NY, BOS, DC. This in particular is a great strength of US Airways because business flyers frequently travel between those cities on a daily basis and tend to sell out those flights. Below is a picture of the aircraft which provides these short distance flights for the business class.
It also operates nonstop flights connecting business and pleasure travelers between Philadelphia and London. One of the biggest strengths that US Airways holds over all the other airlines is that it operates the largest fleet of Airbus aircraft in the world, particularly the Airbus A320 family which is considered the leader in the single-aisle jetliner market. The A320 family consists of four aircrafts (A318, A319, A320, and A321) which responds to airlines’ needs for optimized cabin layouts, better baggage and cargo handling, maximum operational flexibility on short and medium haul routes and most importantly lower operating costs that only a new-generation aircraft can offer. The Envoy Class and seats that US Airways flights have is strength in attracting business travelers. The Envoy Sleeper seats as they are known are seats on the A330-300 in business class that recline completely flat and form a bed as shown in figure 2 below.
Those other airplane models that do not have the envoy seats have an envoy class in which every seat is fitted with a personal on demand screen to watch movies, play games, watch syndicated television, and each seat has an EmPower outlet. Other airlines typically only have one outlet per every 2 seats in coach or have done away with the outlets altogether. US Airways is also adding the Envoy Sleeper seats to its transatlantic B767 models.
US Airways also have programs that give it strengths in areas other airlines lack. Dividend Miles is US Airways frequent flyer program which gives passengers who fly a certain amount of preferred miles perks such as upgrades, free checked bags, and early check in options. Many airlines have their own rewards program but US Airways has the advantage as it is part of the Star Alliance which is the largest airline alliance. Star Alliance is made up of 25 airlines and even if you do not fly US Airways as long as you fly one of the alliance airlines, your preferred miles are honored. The Star Alliance has their own premium levels for passengers enrolled in the alliance’s member programs. So regardless of the airline in the alliance, you’re still eligible for the upgrades. Star Alliance makes up 28% of the global market share and was voted best airline alliance in 2007 (the next page demonstrates the members of the star alliance and some key facts which was taken from the Star Alliance website). US Airways airport lounges are called US Airways Clubs and have 19 lounges in 14 airports across the US and can also be used within the Star Alliance. This is another perk that many other airlines have but unlike many including the larger airlines such as Delta, admittance to the US Airways lounge is free with your premium frequent flyer program
Star Alliance statistics
- Member Airlines: 25
- Number of aircraft: 3,740
- Number of employees: 458,332
- Passengers per year: 586.60 million
- Sales Revenue (in US$): 169.70 billion
- Daily departures: 19,534
- Number of airports: 1,071
- Number of lounges: 954
- Countries served: 171
The two overall strengths that US Airways has over many of its competitors are its “Do Crew” and safety rating. The Do Crew is made up of volunteer employees that participate in community based programs to help out the community on a monthly basis. The Do Crews set out through their local chapters which are located in many mainstream cities such as Boston, Las Vegas, New York, Charlotte, Philadelphia, Pittsburgh, Phoenix, and Washington, DC. Many of the airlines are regarded as only looking to achieve capital, although the ultimate goal of all airlines is to sell seats and make money, US Airways displays a sense of appreciation by giving back to the community each month. The company is a proud sponsor of Reading is Fundamental (RIF) which helps to distribute books and help children achieve literacy.
The strongest point that US Airways holds which most passengers would look for is they were considered the safest airline in the US. From January 1, 2002 to January 2, 2007 US Airways had the lowest accident rating of .89 accidents per 1 million take offs. The list below came from the website injury.com which shows the top 5 safest airlines in that period.
- US Airways (.89 accidents)
- Southwest Airlines (2.59 accidents)
- America West Airlines (2.96 accidents)
- Continental Airlines (3.17 accidents)
- Alaska Airlines (3.32 accidents)
Competition will always exist in the aviation world but these are some of the strengths that set aside US Airways from the other airlines.
Weakness of US Airways
As many strength US Airways have, it also have their weaknesses that lowers the airline popularity and name. Complaints are a common or daily situation that many customers have during the year. Many luggage claims have been filed by angry passengers. Like customers luggage getting lost and then appearing broken and with missing personnel items. Like in the case of some customers nicknamed “bigfogie” when he lost his luggage after making connections to another city. When he finally gets his suitcase, he found out that it was broken with all his family gifts and personal stuff damaged. Then after making a complaint and filing their forms for damages, US Airways decision was not to pay for the items. This is a loss of consciousness of the company because after committing the safety and trust of the customer’s luggage, it ended up like trash. This problem of people’s properties getting damage is very common because he is not the only one complaining for the same problem. People have passed by the same problem, which they end up giving their comments and similar experiences.
US Airways safety has been downsized causing a risk to the aircrafts maintenance and people’s lives. Lives haves been in risk because of the safety directives were not met during the period of October 2008 to January 2009. The procedure used was that the mechanics whould stuff shop towels into the aircraft engine, which can cause the engine to fail in any time. In that period there were 1,647 flights that could have been affected, causing any irregularity in the engine performance. This is why U.S Airways was fined 5.4 million dollars by the Federal Aviation Authority. When this was announced it could cause many customers to change to another airline causing losses to the company. This is a clear stage of lack of training and needs to be corrected.
“U.S Airways” will be changing their company structure by concentrating their service in Philadelphia, Charlotte and Phoenix and other cities. Due to the restructuring, the company will let go some markets and fire 1,000 workers and suspend service to Beijing. The restructuring will cause during the next 3 months reducing of 64 to 36 departures in “Las Vegas” and will be closing operation in Wichita, Kansas and Colorado Springs, Colorado. During the first 6 months of 2010, US Airways will be closing crew bases in Boston, La Guardia and Las Vegas. 25 Business Travel News reported that “US Airways also pointed to “weakness in transatlantic revenue” in its plan to cease service from Philadelphia to Birmingham, U.K.; London Gatwick; Milan, Italy; Shannon, Ireland; and Stockholm, Sweden.” This will reduce the customer’s advantage to get to their destinations directly and will become a hassle were they will have to look for new sources and leave US Airways Services.
There is a possibility that revenue will reduce but US Airways will be concentrating in their services which could be neutralized. Other companies will take full advantages of these departures being reduced and bases being closed. These will cause other airlines to gain new customers with less competence.
In 2008, US Airways faced an outstanding change in their company. US Passes through significant losses as they confront staggering increases in the price of fuel during that year. The average quarter cost per barrel of oil below in the diagram demonstrates the runaway of fuel prices during 2008:
US airways continue with this difficult economical confrontation, they were not able to increase the price of their tickets to at least pay their larger expense which was jet fuel. These factors help other Airlines to take advantage where they increased prices in their tickets and preserve liquidity.
US Airways’ Response
As described above, US Airways were profoundly challenged by the economic situation in 2008. They participated in the industry’s response to record high fuel prices and take action to operate a strong and competitive airline by implementing the following initiatives.
Capacity and Fleet Reductions
The company reduced the total mainline capacity by 5.9 percent in the fourth quarter of 2008 and the Express capacity by 1.3 percent on a year-over-year basis. Furthermore, US Airways plans to decrease the total mainline by four to six percent in 2009 and the Express capacity by five to seven percent from 2008. They anticipated that these capacity reductions will enable the company to lower the problem of reduced passenger demand on revenue and reduce costs.
US Airways have prepared some strategic methods to obtain their capacity reduction goals:
- Fleet Reduction: US Airways said that they will be returning 10 aircrafts to leasers, this includes four Airbus A320s that were returned during the first quarter of 2009 and six 737-300 returned in 2008. They further cancelled the leases of two Airbus A330-200 wide-bodies that were planned for delivery in the second quarter of 2009. Even more, US Airways is still planning to reduce additional aircraft in 2010.
- “Las Vegas” Flight Reduction: US Airways closed Las Vegas’ night operation in exception for limited night service to the East Coast in 2008. 141 flights that departed daily from Las Vegas in 2007 were reduced to 77 in 2008. In the end, the revenue produced from the Las Vegas night operation no longer exceeded an increment cost.
Opportunities of US Airways
While US Airways may not be the best airline in the world, it has the potential to be. Within the company lie many opportunities that it could use to its advantage. The company offers an attractive employee benefit. Within the package lie health insurance, prescription drug coverage, dental insurance, life insurance and many more.
We all know that there is a larger population in the eastern United States than the western and currently, US Airways has a large number of destinations and a greater hold on the Eastern coast of the United States. They go to major cities such as New York, Philadelphia, Charleston, Washington DC.etc. These are relatively large cities which could potentially mean more airline seat sales given the right strategies. This is in comparison to Delta Airlines whose eastern city destinations are New York, Boston and Washington DC. The map below shows the routes of the daily 3800 flights carried out by US Airways. The entire eastern seaboard is covered in black which demonstrates the overlaying of multiple flight paths.
With fuel efficient airbus aircrafts a large number on their fleet, the company could use this to go towards being a “green company”. Being a green company has its benefits, especially in the 21st century when many people are conscious of the welfare of the earth. This badge will give the company a good image and might possibly increase passenger enrollments.
On January 15, 2009, a US Airways flight bound for Charlotte, North Carolina hit a flock of birds on takeoff from La Guardia airport. The A320 aircraft, captained by Chesley Sullenberger ditched into the Hudson River in an attempt to save the lives of 155 passengers and crews onboard.
In the weeks that follow, the media, passengers and government officials all praised captain Sullenberger for his professionalism in handling the situation. The governor was quote calling the event “a miracle on the Hudson”. Although a traumatic event, this had brought much positive public attention to the highly skilled pilots within US Airways.
In 2007, US Airways ranked among the worst in on-time performance; however, a year later, the company went to having one of the best within the major airlines. Airport Business reported that “US Airways rallied its work force to focus on one goal — getting planes pushed back from the gate on-time — and began offering financial incentives to workers for better service.” This shows that the company has what it takes to improve on a number of their services and should use this example as a way in making their company more effective.
Threats towards US Airways
One of US Airways biggest threats is competitive airline tickets, of the three destinations that I have researched; US Airways had the most expensive tickets for two destinations. I visited the website expedia.com and found that from New York City to Boston, US Airways charged a low price of $215, Delta Airlines charge $201 and American Airline charges $202. From New York City to Las Vegas, US Airways charged $248; Delta and American Airlines charged $209. The last destination was from New York City to Miami. US Airways charged $168, Delta Airline charged $163 and American Airlines charged $173. On all three destinations, US Airways biggest threat comes from Delta Airline which offers the lowest airfares. This could be used as a factor which influences customers away from US Airways.
US Airways has the worst customer satisfaction out of 19 largest airlines in America. According to Phoenix Business Journal, “US Airways improves, but still trails in customer satisfaction”. In July 2008, the US department of transportation reported that US Airways had received customer complaints of 2.16 for every 100,000 passengers. The report went further to say 19,400 bags were lost or mishandled in July. Based on these finding, US Airways has more expensive airfares and bad customer satisfaction which is a bad combination for influencing customers to travel with them.
For quite some time, Delta airline offered in-flight Wi-Fi access. This had since been a threat towards US Airways which did not offer this service. In today’s world many people wanted to stay connected, especially when they are in an aircraft for many hours. However, US Airways has since responded to this threat by introducing Wi-Fi to its aircrafts within the first quarter of 2010. The Pittsburg Business Times reports “The carrier, which is the No. 1 airline at Pittsburgh International Airport, has hired Aircell to provide Internet access… Customers will be able to choose services from Aircell’s standard pricing structure, which currently ranges from $5.95 to $12.95.”
US Airways international service has a threat amongst the service that is offered at Delta. US Airways currently operates 3,800 daily flights to 240 destinations in 32 countries. This may seem like an impressive figure, however, Delta Airlines has 7,500 daily flights to 567 destinations in 112 countries. This numbers doubles that of US Airways and the company offers cheaper airfares than US Airways. So an expansion into other markets is required, for instance, African and Asian cities.
US Airways BCG Matrix
Stars for US Airways would include: Airline technology such as Business class reclining seats. The seats US Airways offer comfort ability to its business class passengers making it possible and reasonable for the airline to raise its prices. The Dividend Miles program offers passengers benefits each time they fly with US Airways. This gives much appreciation to loyal customers who would continue to support the airline. Every airline wishes to use less fuel to carry more passengers, with US Airways large fleet of Airbus, they do just that. The fuel efficient aircrafts gives much revenue to the company.
The new venture of introducing Wi-Fi technology into US Airways aircrafts will prove to be a question mark. Although it is expected to become a star, there is still some uncertainty to its future in the company.
US Airways have a relatively young aircraft fleet. Based on airfleet.net, the average age of the aircrafts are 11.9 years so the dogs in this company could be old unreliable aircrafts. It is always best to buy new aircrafts than try to maintain old ones. It takes too much time and money and there is a high chance it will be out of service again. Unprofitable destinations are another, every airline has this. An airline loses its influence in an area to competition and it’s just not making money. The only logical thing to do is just to discontinue services to that area.
Some cash cows US Airways has are its profitable destinations and shuttle destinations. These destinations are very profitable for the company and although they don’t expect much growth, they are still a very good asset for the company.
- On all three destinations from New York that I researched, I found that US Airways had the most expensive airfare. I think more should be done to lower the prices to be cheaper than Delta.
- Although US Airways has a .89 accident rating which is a significantly low number, they had been publicly fined 5.4 million dollars for lack of safety. This could affect them negatively so it is important that the company keeps up to date with its safety requirements and guidelines.
- In September 2008, Pittsburg Business Journals reported that US Airways trails behind 18 top Airline companies in America in customer satisfaction. This is because the airline frequently receives complaints about lost luggage and little is done to compensate these passengers. The company needs to be friendlier towards the customer on these matters or face drastic loss in passenger enrollment.
- The company should start an advertising campaign towards helping to save the environment with their fuel efficient aircrafts.
- US Airways could use a different image, an image that shows it cares. With the publicity of Captain Sullenberger, US Airways should organize a tour to aeronautical schools for the captain to inspire student pilots.
- More should be done to open new gates into the international markets. The company does not have much Asian and African destinations and we feel that they should atleast have one major city within these continents.
US Airways is the fifth largest airline in the United States after its merger with America West Airlines. The company’s mission statement gave an impression that it was dedicated to its customers yet the company has much room for improvement towards customer satisfaction to achieve that mission statement. The company’s focus is primarily on ways for cutting cost, they sometimes refuse to reimburse customers for their broken luggage and implementing costs to measure up to safety requirements. While they may not have many accidents, the company needs to bear in mind prevention. Overall, the direction the company is going signifies that it has a profitable and bigger future. We expect the company to increase its fleet size and further modernize to the level which it will be competing with the likes of airlines such as Cathay, Air France, etc.
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