How the West won

(The following first appeared as the lead Comment in Flight International, 19 February 2013)

US Airways stands poised to join the long list of legacy airline brands, including Pan Am, Eastern, TWA, Northwest and Continental, to pass into history.

But the proposed merger of American Airlines and US Airways upsets the typical post-deregulation narrative. For the first time, an airline launched since the Airline Deregulation Act of 1978 can buy the third-largest US carrier and become the largest airline in the world.

It all began in 1981, when airline consultant Ed Beauvais founded America West Airlines in Phoenix, starting humbly with three leased Boeing 737s and plans to expand to a booming Las Vegas market. Like many of its post-deregulation peers, America West introduced cross-utilisation to lower costs and onboard ticketing to attract more revenue. Unlike many of those peers, America West survived bankruptcy and reorganisation during the lean early ’90s. America West actually reached a high point in growth and profitability by the late ’90s, but the boom was short-lived. After 9/11, America West needed a government loan to survive.

Doug Parker, then America West’s chief executive, recalled last March an agonising flight back to Phoenix from Washington DC on an America West flight. Parker’s meeting earlier that day with the airline stabilisation board over the airline’s pending loan request had not gone well. Parker recalled hoping the flight attendants would not recognise him, because he didn’t think he could hide his concern about their company’s future. The following week, America West resubmitted its loan application, and this time it was approved.

Upon regaining its strength, America West tried to take over US Airways in 2005, pulling off a reverse-merger the next year. The new airline retained the US Airways brand, but was led by the America West team.

That achievement was followed by a series of missteps, including two failed attempts to merge with Delta Air Lines and United Airlines. The bankruptcy filing by American Airlines on 31 November 2011 offered the last chance for the original America West.

If regulators approve the pending merger, many questions await. For Airbus, it means having a friendly management team in charge of the world’s largest airline serving still the largest market. Parker’s team must rebalance the merged carrier’s domestic network, expand its international offerings and keep the unions on side.

But the US Airways victory is really the victory of the deregulation entrepreneurs of America West, now seated at the top of the global airline industry.

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