PHLAirline.com
News Article - October 27 2006

US Air Seeks a Philadelphia Fix
  Philadelphia International Airport was a problem for the old US Airways, and it remains a problem for the new US Airways (LCC - commentary - Cramer's Take - Rating). "Our number one strategic issue is to get Philadelphia working better," President Scott Kirby said on a conference call Thursday.

   Kirby, who personally heads a team that is seeking to improve baggage-handling at the airport, said the airline will spend $2 million for new equipment, on top of $20 million to $25 million already committed to a series of equipment and personnel improvements over the next few months. Additionally, US Airways is meeting resistance from airport authorities as it seeks gate space for new flights to Athens, Brussels and Zurich. CEO Doug Parker said that in most cases, airports encourage airlines to add international flights, which are a point of pride for many cities.

   But in Philadelphia, in an effort to provide Southwest Airlines (LUV - commentary - Cramer's Take - Rating) with more room, the airport wants to move domestic flights on Delta Air Lines (DALRQ - commentary - Cramer's Take) to some of the few gates designated for international service. "We've tried every way we can to convince them they shouldn't do that," Parker said. "It's a little harder than we would think." The issues are not new. The old US Airways had suboptimal baggage-handling in Philadelphia for years, culminating in a meltdown over the 2004 Christmas holiday, when thousands of bags were not turned over to passengers at the end of their flights.

   In a recent story, The Philadelphia Inquirer detailed the difficulties, saying that "a demoralized workforce, decrepit and scarce equipment, and revolving-door management have combined to cripple the simple task of getting bags on and off planes." As for Southwest, US Airways officials have felt that airport authorities favored the carrier in allocating resources, despite US Airways' decades of serving the city. Southwest began flying to Philadelphia in May 2004, bringing low fares to a hub airport. US Airways still dominates, with about 440 daily departures compared with Southwest's 65.

   Parker said Thursday that airport officials appear to be "planning for a world without US Airways," which not long ago he said was "a rational thing to do." Early in 2005, US Airways came close to shutting down after it fell out of compliance with loan covenants from its lenders. But it has prospered since a September 2005 merger with America West Airlines, which Parker headed. Airport spokesman Mark Pesce said the airport treats all carriers equally and that he expects the gate dispute to be settled in the next few weeks, possibly by expanding the capacity of some international gates. "We appreciate that US Airways is willing to work with us constructively on this challenge," he said. "We are happy with US Airways' presence and their international service."

   Kirby said that the airline will add bag-screening equipment and upgrade baggage-tag reading equipment, hire 60 new managers and 200 new ramp workers, and change its staffing model so that planes are met by a dedicated crew rather than by workers dispatched from four different locations. "We are getting Philadelphia fixed," Parker said. "There was a bigger hole there than we thought, so it's money well spent. There is nothing more expensive than running a bad operation."

Source - The Street

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