August 28, 2002 News & Views » Citizen Servatius

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This Is Your Wake-Up Call 

The real deal on USAirways

Charlotte's leaders can pose for all the photo ops they want with USAirways officials, but it won't change a thing. Local media can, as usual, report half to a quarter of the real story about USAirways's bankruptcy and its staggering implications for Charlotte's future, but it won't stop the inevitable from happening.

Outside the borders of Mecklenburg County, we're not fooling anyone. Charlotte's days as a premier hub location on the East Coast are over, and every business executive and financial analyst in this country who is worth a damn knows it.

Most of the local reporting on the situation has consisted of the repetition of a single mantra: USAirways will emerge from this bankruptcy financially stronger than it currently is. This is true. But it is largely irrelevant to the future of our hub, our one remaining asset that gives Charlotte an edge over every other carbon-copy, mid-sized, ho-hum city in America.

Unlike the local media and Charlotte's leaders, the Wall Street Journal appears to fully grasp the situation. In an August 21 article entitled "Rebirth of Troubled USAirways Will Just Delay the Inevitable," the paper lays out the reasons why even a financially stronger USAirways has virtually no hope of competing in an industry increasingly dominated by low-cost carriers.

As it currently stands, many more flights arrive at and leave our airport than the size of the local economy alone can justify. Most of the people on them aren't arriving or leaving here, they're just passing through. But it means that Charlotte business people can fly out of our hub to almost anywhere they need to go by jumping onto one of these flights. But airlines like Southwest and Jet Blue, which are very active in other cities, are now choking off those incoming, "passing through" flights by offering direct, low-cost flights from point A to point B. In other words, they're eliminating the need to waste time and money flying into our hub, and others like it, to catch connecting flights.

Competing with these non-unionized, low-cost carriers is a struggle for USAirways. To even purchase enough of the types of planes it would need to preserve its place in the market, USAirways must do prolonged battle with its employees' unions. On top of that, its wage structure was the highest among major airlines pre-bankruptcy. To adjust that will take years of wrangling with its unions, years during which Southwest, the only major airline to make a profit last year, will continue to steal more and more of its routes.

It's not that our hub is in trouble because USAirways is in trouble. It's that our hub and USAirways are in trouble because in an industry increasingly dominated by low-cost carriers, both are dinosaurs. And USAirways has little to fall back on because its West Coast network isn't broad enough to compete with other big carriers and its East Coast network, its only strength, will continue to be eroded by low-cost competition.

Over the next few years, one of three things will happen. USAirways will shut down completely, USAirways will be consumed by another carrier that will operate it more realistically, or USAirways will reorganize in some manner and hold on by carving itself a much smaller, more realistic niche in the market. In the meantime, low-cost carriers will likely come to dominate Charlotte's airport, providing point-to-point service that reflects the size of the Charlotte market rather than the number of gates in its hub.

No matter how it plays out, large, no-longer-needed portions of our airport will be mothballed. The endless menu of flight choices to anywhere in the world from Charlotte will be scaled back to a fraction of what it once was.

For once, just once, the leadership of Charlotte needs to face the coming reality and be ready with a plan for dealing with it. When the fateful announcement comes in the next year or so about USAirways' future, we need not suffer a period of chaotic uncertainty that will ripple through our economy. We need to begin talking to the gamut of low-cost carriers now and courting them. We need to fight for every gate at the airport now and exhaust the possibilities for filling each one. And ugly or not, we need to know exactly where we stand. Can Bank of America, which appears to be slowly relocating the heartbeat of its operations from San Francisco not to Charlotte, but to New York, survive here long-term with fewer available flights? What impact will this have on the other banks and on local business? Long-term, should we focus our business recruitment and retention plans on maintaining large corporate entities or on sector building through attracting small, specialized businesses? Oh, wait a minute. Silly me, I forgot. We don't have well-thought out, organized, effective recruitment or retention plans.

As the low-cost carriers who are toppling the airline giants know, innovation, not desperate clinging to a dying past, are the keys to survival and prosperity in a rapidly changing future.

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