|At any airline, the principal pursuit of most employees is to provide on-time operations. At US Airways last year, on-time performance was spectacular. Just not as spectacular as the rise in oil prices.|
On March 14, US Airways CEO Doug Parker sent an ironic letter to employees. "We did everything right last year: record revenue performance, seven first-place finishes in the Department of Transportation rankings and we kept our costs competitive," Parker said. "However, the reality of this business is we made less in profit in 2011 because the price of fuel was $1.2 billion higher than it was in 2010; therefore our profit-sharing checks are smaller." At any airline, the principal pursuit of most employees is to provide on-time operations. At US Airways last year, on-time performance was spectacular. Just not as spectacular as the rise in oil prices.
Everyone knows bad weather diminishes airline operational performance, but few realized good weather can diminish financial performance. At the recent JPMorgan ( JPM) transportation conference, executives from JetBlue, US Airways and Southwest ( LUV) all mentioned that February's high completion factors led to lower revenue per available seat mile. At JetBlue, passenger RASM was 6%, a point below guidance. At US Airways, RASM was 7%, three points below guidance. US Airways President Scott Kirby says 1.5 points of the RASM decline was due to the high completion factor. In the two days since the release of US Airways' February traffic report, which included the RASM number, the airline's shares fell 6%. U.S. government policy is anti-airline
Also at the conference, United ( UAL) CEO Jeff Smisek discussed government policy toward airlines, which are among the country's most heavily taxed businesses. According to trade association Airlines for America, the cost of a $240 round-trip between Raleigh-Durham, N.C., and San Francisco soars to $300 because taxes add 25% to the fare. A4A has said a national airline policy is needed to rationalize the regulatory and tax environment, force action on long-stalled improvement to an anachronistic air traffic control system and ensure U.S. airlines can compete globally. Smisek says Mideast carriers, such as Emirates Airlines, have the backing of their governments, which is "just the opposite of what we do here." In the United Arab Emirates, it is safe to say the national airline is a widely respected symbol of the country's wealth and capabilities. In the U.S., by contrast, many residents, encouraged by negative media reports, suffer from anti-airline feelings -- which translate into antagonistic government policy. "Having a national airline policy is important unless the policy is destroying airlines, which I believe is the policy