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US Airways to employees: “The competition blows us away”

November 12, 2008

Airlines almost never tell their customers the truth. But from time to time, they tell their own employees — more or less.

Here’s a memo sent out to US Airways employees a few days ago. It’s formatted as a “FAQ” and is an apparent effort to help them respond to outside criticism and questions about their company.

Here’s the memo in its entirety:

Q: When is the company going to realize how bad of a reputation we have service wise? Even with the upgrade in Envoy this spring the product is not competitive with our peers in either cabin, regardless of any press releases stating otherwise. Have you actually sent people out to see how we compare? The competition blows us away.

A: We regularly review our international product attributes with those of our competitors to confirm our market position. A recent review resulted in the new food service that we now offer onboard.

We also survey our frequent flyers to determine what they see as areas we can improve. While there are always areas we can improve in, the reviews from the recent changes in Envoy have been positive. New higher quality blankets and pillow will be introduced in Envoy soon.

Q: At point do we hurt our product enough (Dividend Miles cuts, onboard fees, ticketing fees, etc.) that we see demand decreasing below the benefit (revenues) of the new fees?

A: In many respects, the process of introducing fees or adjusting frequent flyer benefits is similar to the process of adjusting fares. After any change is made, analysts attempt to isolate and measure the impact of that change. In some cases, it is clear that the benefit outweighs the cost incurred.

So, to make a long story short, we are watching bookings closely, however haven’t seen an indication of book away.

Q: It seems like Southwest is doing a pretty good job of educating consumers via advertising on bag and other fees. Do we expect a drop-off in reservations as consumers begin to understand that fees need to be considered when determining the cost of a reservation? Do we have any plans to counter their advertising?

A: We are watching our market shares versus Southwest and others very carefully as the industry adapts to new challenges. The product we provide has always been different than Southwest and will continue to be so – those differences drive how we price, distribute and market our services. So far we have not seen a need to launch new promotional advertising.

Q: Any idea what year we will fly additional European flying out of CLT with the new A330-200′s coming on line?

A: We recently announced new CLT-Paris (CDG) service using a B767. We’ll evaluate additional opportunities as they become available.

Q: Have we been able to hedge fuel and if so, has it had a negative impact on the lower fuel prices?

A: We actually suspended our hedging program in the middle of 3Q due to concerns about the impact of fuel hedge collateral requirements could have on our liquidity. We are in the process of reevaluating our strategy to make sure the type of hedging we were doing continues to make sense in this volatile market.

Q: I flew Air Canada full fare to Honolulu earlier this year rather than use a pass. After purchasing the ticket online, a menu of other options came up including the option to select and purchase onboard meals in advance at a discount of $2-$3 off the aircraft prices. Once aboard the plane the flight attendants had a meals list showing who had already bought. Are we considering adding this easy option?

A: Great thinking! As it so happens, we are working to develop technology to allow for pre-purchase of some a la carte items (particularly bags and Choice Seat sales) on the Web. Vice President, Reservations and Customer Service Planning, Kerry Hester reports, “We’re thinking we may even provide some incentive for customers to use this channel. The challenge is making sure that we tie the payment to the customer’s PNR (passenger name record) in a way that will survive changes to the ticket. Stay tuned, though, we’ll get there!”

We’d like to someday provide our customers with the option to pre-purchase buy-on-board meals through different automation channels (e.g. on the Web, travel agent, kiosk, etc.) however we have no plans to offer this service at this time. In the mean time, our new GuestLogix handheld devices are starting to appear on mainline flights offering our customers the ability to use a credit or debit card for onboard purchases.

I find this memo deeply disturbing on many levels.

US Airways basically admits that it’s pushing the envelope on fees until its passengers scream. And according to the memo, they haven’t screamed loudly enough yet.

It all but acknowledges that its product is inferior, that it refuses to compete with Southwest Airlines, and that it is deeply committed to deceptive a la carte pricing.

Well, can’t say we weren’t warned.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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14 comments

  • aliasbuck

    I’ll save them the corporate speak in their answers (slightly tongue in cheek, but sadly, probably closer to the truth than I’d like):

    Q1: No, we don’t evaluate competing products because we know they’re better. We just ask if people like the changes we’ve made to our own, because if we improve anything, they’ll have to say they like us in the survey and then we can pretend we’re competitive.

    Q2: We don’t know the point where people cry uncle and just give up on us, but we’re trying hard to find it and paying people a lot of money to find it.

    Q3: We don’t really offer a different product than Southwest, but we shall keep our heads in the sand and not try and operate like the only profitable US airline. We don’t think it’s a good idea to have a simple price structure so that customers and employees can figure out when to buy tickets or what a good price is, nor do we want our employees to treat our customers like people, because people will only come back again and again. Who wants that hassle when we can swim in our empty bank vault like Scrooge McDuck, except that it’s empty of cash?

    Q4: No idea – we don’t have the cash to buy into other destinations.

    Q5: Did we mention we don’t have cash and can’t get credit?

    Q6: We don’t know how to add an extra column keyed to a customer name to our lousy booking database so that we can make it easy for us to make money (see our too many rate planners strategy as proof), but we’re trying to find someone who does know.

  • http://www.ExpertCruiser.com Anita Dunham-Potter

    Hi Chris,
    I am currently in the Charlotte airport between flights. While US Airways isn’t horrible it is losing my business starting next year. I made Platinum and I am going to walk away. Additionaly, I am canceling both my US Airways Visa and Mastercard and switching to Starwood.

    Simply put, since US Airways changed frequent flier mileage accural — I am losing out big time.

    Doug Parker and Scott Kirby are smoking weed thinking frequent flier members would rather get upgraded to First Class rather than accuring bonus miles. I do get upgraded most of the time, but they offer nothing other than a ‘free drink’ and a very boring snack basket full of junk.

    If US Airways changed their myopic view of mileage I’d stay and keep the credit cards. In this day and age flying is a chore and you might as well get the most miles for your misery.

    Later,
    Anita :)

  • Jasper

    Don’t you love a management that is watching, studying and comparing all these items seriously?

    The problem is that they’re blind, incompetent and comparing apples and pears.

    Airlines have wined for years about administration costs and customer-processing rates (i.e. the time it takes them to check you in). Then why are they introducing all these new fees that take administration, and extra time to check in?

    And worst of all: Why do they keep lying to their customers and personnel, even though it obvious that nobody believes them?

    Time to pull the plug on these folks. But I bet they’re watching GM and Ford, and preparing to be next in line for some extra government money.

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  • Michael Rowan

    As a Chairman Preferred member I am surprised that they didn’t notice me “book away”. I won’t be able to renew this year (only hit Platinum for 2009′s renewal).

    Their cuts to the miles earned was too much, I can put up with the staff, the planes, but changing it from a free flight every 5 weeks to a free flight every 12 based on my travel level – that was more than enough to stop me.

    The best this year was Sheraton – a $75 “early departure fee” when I had a death in the family, there goes 200 room nights from me alone at their La Jolla location.

  • http://www.nomadicmatt.com Nomadic Matt

    I dont think any of the US carriers have good service. Virgin has good service but that’s because that is Branson’s focus and they know how to do it right. AA is the worst though, I don’t think they blow US air out of the way.

  • Steve Meyer

    I had a USAir Visa card for about 12 years, charging about $3,000 per month. But, due to their crummy frequent flier program, I just declined to renew.

  • Kathleen

    USAirways used to be a reasonable substitute for United (neither very good, but I’m a UAL Premier Executive flier) on my frequent flights SJC>AUS, as they were a partner airline. They lost me as a customer when they started their new limited mileage accrual, no pillow, no food, no seat priority, and baggage charge policy for anyone who wasn’t an elite member on USAir.

    They should offer elite benefits to their partner airline elites, or they will lose even more of us. My husband swore off USAir more than a year ago. I refuse to reward them for treating me badly.

    I recently saw an airline survey that asked if I would pay extra to get my bag in the first cart off the plane, to select a seat, or to reserve space in the bin for a carry-on bag, among other things. NO NO NO. I expect service, not new fees. USAir doesn’t understand this.

  • http://cestbeth.wordpress.com Elizabeth Smith

    I finally made my complete break from US Airways in October after earning Silver Preferred this year (a drop from Chairman’s in 2007 to Platinum in 2008.) The primary reason I earned Silver was to avoid fees if I were to have the misfortune of flying them again.

    I, too, have been upgraded over 90% of my flights this year as Platinum. But it is NOT just about the upgrades. And as Anita mentioned above, the only difference these days between coach and first class is a larger seat, a snack basket, and free drinks. I am a short-haul flier and the loss of the 500-mile minimum and Preferred bonus miles HURT. Furthermore, the product and service remain inconsistent.

  • Hari

    US Airways gets the reputation as the worst airline that i have ever flown. Being based out of Philadelphia, my choices for travel are unfortunately limited to this airline. As expressed by the other travelers, my biggest frustration is around the nickel and diming around the dividend miles without a 500 mile minimum and the charge for basic items such as water !

    It’s highway robbery for someone to have to pay $2 for water

    With fuel prices at a reasonable level now, why are we not seeing these measures being reversed ?

  • Joe Farrell

    USAir is rather an interesting company.

    Last Friday, I was scheduled for an early AM out and back the next day trip. Due to a mechanical, they canceled the flight after they boarded up and collected Boarding passes. Rather than wait until they got around to reaccomodating everyone, I called the airline Premium flier service center and canceled my trip – basically since I would have missed my meeting and traveled to a city for no reason.

    USAir was timely and professional and took my info and told me that they had canceled my trip and refunded my money. I then received an email telling me my cancellation request had been denied. When I called them I was told that because I used a portion of my ticket, the entire ticket was non-refundable. The portion that I ‘used’ was the canceled flight.

    This of course required another phone call – and this time I was sent to the ‘refunds desk’ where they tried to convince me that I flew on a flight that they canceled. I asked the woman to check the flight history. She did. She said it was canceled. I asked her how I could have used a flight coupon for a canceled flight. She told me to standby. Yet another person came on who needed to needed the story explained to them – and they tried to tell me that ‘the system indicated that I had used one of my flight coupons.’ I again sai: “on a canceled flight? How is that possible?”

    “Please stand by sir.’ she comes back and transfers me to the director of revenue accounting for that office. We again go through the dance and she finally says, ‘Sir, you must have flown that day, the computer says so.’ I said ‘ma’am, does that make any sense? USAir canceled by originating flight to one of your hubs – how could I only travel there after misconnecting with my other 2 flights = plus there is no return. Commons sense tells you what happened here.”

    “Please wait sir.”
    ‘
    She transfers me to ‘Special Refunds’ who looks at the record and tells me “no problem, I have refunded your fare. Only this department has the authority to refund when a boarding passes have been collected and entered since we can verifiy that the flight never leeft the ground.”

    I did not even ask any other questions except to get her first name, employee number and direct dial.

    Like Chris says, they have lots of ways to take your money, but only one way to give it back and its never easy.

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  • Brian Chow

    I have been flying US Airways quite a bit since I started interviewing for a new job–mostly because they have the most economical flights from where I live (interesting since I live in a Continental hub city). I am underwhelmed by their level of “service.” Plus, I can’t even pay for a drink coupon or meal up front. Last I checked, ATMs don’t give out $1 bills.

    Now that Southwest has implemented the new boarding procedure, I find them a fantastic way to fly–boarding is now orderly (and rewards people who are OCD and check in exactly 24 hours before boarding), you get free drinks, free checked baggage, large overhead bins (unlike on the US Airways Embraer “jets”), and plenty of legroom.

    I was Gold on American, and haven’t flown them in a year because I was treated poorly in Miami. If it weren’t for the lower upfront fares, I would never fly US Airways again.

  • jro

    US Airways SUCKS.

    I have a $646.19 credit for a flight. I want to use my $646.19 credit towards a new flight that only cost $300. I was told that I would be stuck with a $150 change fee but my credit was large enough to cover that. US Airways now wants me to pay an additional $150 on a credit card and forfiet the remaining balance. How does that make sense? A $300 flight is now going to cost $800.

    Now I know why I prefer to fly Southwest.

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