US Airways was established in 1939 and its services were mainly provided around Ohio River with its headquarters at Pittsburg. After ten years of mail service, it transformed into a passenger service and was renamed All American Airways (Straszheim & Brookings Institution, 1969). The name Allegheny Airlines was formulated in 1953 and exported to other regions. It was during this time that Allegheny made an agreement with Henson Airlines to operate Allegheny’s commuter flights – the first code-share agreement in the industry. The government enacted some regulations over the airlines freedom in 1978 stated in the Deregulation Act. The USAir then came into being after the act was enacted to rebrand Allegheny. The newly rebranded airline acquired two airlines in the West Coast and the East Coast expanding its routes and establishing itself in these regions. That was a very competitive move that left them at the top of all existing airlines at that time.
The two acquisitions gave the USAir a strong presence in their respective bases (San-Diego and North Carolina) (Williams, 1994). For the USAir, the Deregulation Act brought a flourishing market in Florida. As a way of tapping this market, the USAir acquired aircrafts with a larger carrying capacity after negotiations with Boeing failed. Previously, the USAir offices were scattered all over the US, which lead to wastage of space and time. To economize on these two resources, the offices were consolidated into the headquarters and moved to Crystal City, Arlington County in Virginia. However, the technical operations remained at their then main hub, Pittsburgh International Airport. Such move was economical, as well as provided a perfect centralized structure for the USAir operations. In the late 1990s, the USAir was again rebranded to US Airways that repositioned it to high class by ordering new airbuses to replace their old aircraft with more efficient ones.
US Airways has more than 3000 daily flights to over 100 destinations in 24 countries. It has destinations to Europe and the Caribbean. According to courtesy of the Code Sharing Act (CSA), US Airways operates in the Midwest, Rocky Mountains and the Great Plains. Through the CSA, US Airways serves Asia, Australia and South America regions. After the merger with America West, it was decided that US Airways will be the name of the airline due to its major establishment in North America. It is a characteristic that can be associated with an ability to acquire non-stop flights to one of the busiest airports in the world – Heathrow airport in London (Lehman, 2013).
There are limited alternatives to airways services. The airlines industry is very competitive and it offers few alternative services to US Airways. Therefore, the difference is very minimal making it a difficult task to acquire uniqueness in the industry. In such situations, a company may spend much time in attaining differentiation as an airline.
The costs associated to flying with US Airlines are relatively lower compared to other airlines. The low costs can be associated with the airline’s economy and its way of reducing costs while quality remains the same. US Airlines also has a variety of prices that suit the customer’s needs depending on their personal choice and preference that suits their travel. The benefits, however, compliment the costs. Travelling with US Airways has several benefits such as access to the airport lounges owned by the airline across most of the airports in the US (Lehman, 2013).
Fixed costs remain altered for a period despite changes in other business-related levels of activities such as depreciation, interests, salaries and wages. In the airlines, fixed costs are equivalent to short-run cost. For example, US Airlines incurs fueling costs and renting costs which do not vary – it makes them fixed costs. Costs that are only affected by the output of an activity can be referred to as variable costs. The input in such undertakings is the main cause of the costs, e.g. labor and capital, since they are the main resources. For example, in US Airlines the number of flights made during a specified time will be the major determinant of such costs. Controllable costs are the costs that a departmental manager can limit regarding the plan in the industry to spend on a given business activity. The US Airlines fix costs on a commercial activity such as direct labor and the sum to spend on promotion of the business via the media (US Airways, 2002).
Product differentiation is a key to every industry and success. US Airlines could achieve it by having more different destinations other than the common ones. The world has several opportunities and several destinations that have not been ventured. There are several airports that it could use to make new hubs, while at the same time investing in the return of Pittsburgh as their hub. However, being one of the two airlines that has Embraer 190 is a major win as far as differentiation and competition are concerned (Lehman, 2013).
There are various airline departments which work independently to attain a collective outcome of quality service provision by US Airlines. The airline operations department is in charge of flights. It includes flight deck crew, crew planning, cabin operations, flight support, in-flight service, documentation office, flight dispatch and ground operations (Bazargan, 2010). All airlines aim at providing the best customer service to maintain loyalty. During flights, the flight deck crew ensures that high quality services are offered until the customers alight at their respective destinations. Any flight is founded on service, protection or safety and punctuality priorities. Flight support crew comprises individuals who guarantee all necessary information is documented and prepared forms so that the airline could runs efficiently. There are different classes in a plane which the customers can choose to satisfy their needs. The onboard services are provided by the in-flight attendants. On the ground, the flight dispatcher ensures that there are no incidences or accidents that may occur while working together with the coordinators of flight operations. The documentation office updates, maintain and revises all flight documentation and changes that may occur. The ground operators are responsible for smooth running of processes on the ground (Belobaba, Odoni & Barnhart, 2009).
The technical department deals with production, logistics and engineering. The people in charge of production ensure that all aircrafts are maintained to the highest level where maintenance checks are done and any defect rectified. The logistics department is responsible for ordering, shipping, purchasing and proper storage of machinery needed for airplane maintenance. The engineers are responsible for the overall efficiency of the US Airline aircrafts. They are the main assessors of the airworthiness of the aircrafts (Belobaba, Odoni & Barnhart, 2009). The commercial department is large and has sub-departments like sales, marketing, cargo and many more. The sub-departments work together to ensure that all activities and the personnel, that handle them, are at their best capacity.
In the network information division, existing routes are analyzed and traffic flows evaluated. The network planning department then develops and designs the route network. The marketing team ensures that the information about ticket offices is provided appropriately by using the modern websites and working with travel agencies. The E-business division is in charge of online communication, while the cargo department mostly deals with safety of the cargo. The sales team is in charge of direct sales, customer relations and executive sales (Belobaba, Odoni, & Barnhart, 2009).
The support department is only divided into three sections: finance, information technology and human resources. The finance section is responsible for delivering accurate and important financial reports to the stakeholders. The information technology department provides all IT services for US Airways. Developing and implementing people strategy that is consistent with the company’s mission through appropriate recruitment of employees is the Human Resource’s responsibility (Belobaba, Odoni & Barnhart, 2009).
The airline cost structure is simple and complicated at the same time. It is simple in the sense that costs incurred during all operations that take place to ensure efficient running of the airline are all laid out. Complications are faced when such operation costs start shifting, and there are several variations that forecasting cannot predict. Aircraft purchases, wages and fuel take the largest percentage of the cost structure, while the rest of the operations take less than 50% of the structure (Zeni, 2001). Dependence on oil production, duopoly in the manufacture of airplanes and labor laws hinder airlines from having control of costs. Therefore, many of their costs are fixed, while most are variable leaving fewer costs controllable. However, US Airways has been able to maintain sustainable cost advantage by having a larger percentage control of its costs than most airlines. Transferring the pension of pilots left them in control of the wages that is commendable considering the difficulty in control of wages.
US Airways has used several methods of revenue management since it was founded. The airline uses the code-share agreement not only to deliver service to clients but also venture into new business. Such method has enabled them stay ahead and maintain a strong presence in the US and especially in its main hubs. Code-share has specifically helped US Airlines access the Rocky Mountains, the Midwest and the Great Plains, areas that would be unreachable without it (Zeni, 2001).
US Airlines sells a defined number of seats for specific rates to identified market segments. The revenue management of the company has a difficult task of selling the right price to the appropriate customer at the most appropriate time. It is on the basis of the principle that a lower fare cannot be sold at a higher rate, since it would be parallel to the revenue management (Yeoman & McMahon-Beattie, 2011). It ensures that all customers with different experiences and at different economic types are taken care of. Such methods of revenue management relate best to the hotel industry which the airline offers. It has helped growing to two industries that are distantly related to each other. The US Airlines owns airport lounges that can be used by any passenger who travels with it.