How to Save an Airline
The merger of US Airways and America West is predicated on keeping processes and applications simple -- and cutting $100 million in IT costs.
Wed, February 15, 2006
CIO — Joe Beery compares the job of merging US Airways, a national airline, and America West, a low-cost, predominantly regional carrier, to creating a three-humped camel. Sitting in his ninth floor office in Tempe, overlooking the Arizona desert, the CIO of the new airline that began operating under the US Airway name in September 2005 seems to have found an appropriate metaphor.
It’s apt because 1. there’s no such thing as a three-humped camel and 2. successful mergers in the airline industry are nearly as rare. But if there’s ever going to be one, chances are it will look a lot like the carrier Beery, formerly CIO of America West, and his fellow US Airways executives are trying to build right now: a low-cost, full-service airline—a seeming contradiction in terms.
Beery’s first hump represents the consolidation of the applications currently running the two airlines. The second hump represents moving the entire airline onto a single reservations system. And the third hump represents the complete integration of both airline’s IT systems and the award from the Federal Aviation Agency (FAA) of the all-important single operating certificate that will allow the new airline to operate as a single entity. (Until then, it must run separate fleets, flight crews, maintenance and operations control centers—which pretty much defeats the purpose of the merger.)
As the camel is being assembled, executives at the new US Airways are envisioning a traditional carrier with a fully developed national route network and such amenities as first-class seating and a loyalty program that simultaneously supports the lower prices that U.S. consumers have come to demand. In order to get there, says Beery, "we have to figure out how to do things differently. In some cases IT will be a big part of enabling that low-cost model and in some cases IT itself will be a part of the cuts." At the core of this new airline will be simplified business processes supported by the low-cost IT infrastructure of the smaller but more successful of the merged airlines: America West.
"There’s not an airline around today that wouldn’t want to simplify their processes further," says Robert Goodwin, managing vice president of Gartner. With this merger, US Airways is hoping to find synergies between traditional airlines and the newer low-cost carriers in order stay aloft in a viciously competitive market (see "Another Turbulent Year").
"All airlines have been reexamining their IT strategies and expenditures and strategies," says Henry Harteveldt, vice president of travel research for Forrester. "US Airways is certainly going to be watched with great interest."