Merger On The Fly

Can a failing legacy airline be welded to a low-cost carrier? The new US Airways is about to find out.

Tony Kontzer, Contributor

February 25, 2006

4 Min Read

The new US Airways' effort to merge its sites into one rivals the reservations system migration as one of the top integration priorities. "It's arguably as important," sales and marketing VP Travis Christ says. "And in some ways, it's just as complicated." The sites accent the two carriers' divergent IT strategies: America West's site was built in-house, while Sabre built and hosted the old US Airways site. But an investment made recently by America West to rebuild its site on .Net will make it easier to incorporate features and data from the existing into by separating the interface from the underlying application. The original America West site "is well positioned for this activity--probably better than at any previous time in our history," Fernwalt says.

Still, there have been wrenches in the works. Because the two airlines recognize revenue differently--the old US Airways system logs sales based only on origins and destinations, while America West does so by flight segment--a setup that would enable both sites to sell the entire combined ticket inventory has proved impossible. For now, passengers using US Airways' site are able to find any America West flight, but the same isn't possible on America West's site. Doing so would have resulted in problems with accounting procedures.

Frequent Fliers Rule

A single site is due to be ready this spring. The reason for the aggressive schedule comes down to frequent fliers. Those highly valued customers are clamoring to combine their miles from the two original airlines.

Because America West has long placed an emphasis on what Beery calls "buy-and-fly applications," or those related to selling tickets and managing the passengers' flying experience, the frequent-flier program ranks right behind reservations and the Web site on the integration priority list. In order to unify those miles, the IT team is integrating the program in lockstep with the Web site effort. It mirrors the larger merger strategy in that America West's homebuilt system will survive, but it will assume the name of US Airways' program, Dividend Miles. Fernwalt and his crew are in the process of moving a billion records from the US Airways system, also hosted end to end by Sabre, to America West's mainframe-based system.

America West still embraces the mainframe even though it was a beta customer for a low-cost booking engine built by ITA Software, a challenger to the big reservations systems that's developing a next-generation airline technology stack that would replace mainframes. The mainframe focus reflects the airline's desire to stick with what's working. "Mainframes aren't necessarily bad," Beery says. And consultant Mann agrees, but he also sees the value in America West keeping on eye on emerging technologies like ITA's.

The airline's leadership still has big decisions to make. One is to pick which of the airlines' System Operations Control centers to keep open. The choice is between centers in Phoenix and Pittsburgh, from which flights are monitored and controlled. They're going with US Airways' mainframe-based flight-dispatch system, which is slated to be replaced in a few years by a more modern service-oriented architecture, but haven't picked which applications the airline will use to manage communications, provide real-time data on weather conditions, and monitor aircraft flight paths. Those decisions could hinge upon which operations center they choose. All these decisions are expected to be made later this year.

Given how actively intertwined IT is with so many areas of US Airways' business right now--from the buying and selling of tickets to the management of customers and aircraft to a wide variety of back-office systems--it's not surprising that CIO Beery occupies an important seat at the executive table. IT will play a highly visible role for the next four years, two of which will be spent wrapping up the integration of the two airlines, and the final two of which will see the airline catch up on the numerous projects put aside because of the more pressing merger-related work. IT then will return to its more traditional supporting role.

It will be well into 2007 or beyond before it becomes clear whether US Airways' efforts to create a full-service, low-cost airline have succeeded. For now, however, Beery will enjoy the wild ride and the prominent role IT is playing in building a new airline within what promises to be a new airline industry.

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