Us Airways Merge with America West: A Statistical View

Background

Since the announcement of the merger between US Airways and America West Airlines in September 2005, several systems issues have become apparent. The management team agrees that the largest issue currently facing the new US Airways is the ineffectiveness of the new vacation booking system available to online customers. Despite over 6 months of transition time, US Airways and America West Airlines continued to hold onto separate websites. Having separate websites wreaked havoc in the online booking world. It has been observed that the separate website addresses has aided to the customer confusion, both customer and employee frustration, and ultimately causing a significant decline in overall sales. Annual data collected from US Airways/America West Airlines shows a steady decline equaling 33% from 1st quarter 2005 to 1st quarter 2006.

Managerial Problem Statement

Is the decrease in sales directly related to the US Airways Vacations online booking tool?

Research Problem Statement

What are the main issues associated with the decrease of online vacation bookings through US Airways Vacations?

Secondary Research

The study of several other successful mergers provided some possible answers to the US Airways/America West Airlines apparent struggle. Sprint and Nextel, JP Morgan Chase Bank and Bank One as well as the Wrigley Company and Kraft Foods supplied numerous options to consider. Successful corporation mergers are not only contingent upon the increase in sales, but also customer service and employee satisfaction/retention. The marketing strategies will also play a vital role in the overall merger success.

Sprint and Nextel are both very well known names in the wireless communication business. During the merger, both companies agreed to the importance of a strong marketing department as well as the streamlined website and network access. The successful purchase of Bank One by J.P. Morgan Chase is largely due to the gradual change over. J.P. Morgan Chase maintained an open communication with all of their employees as well as their customers. Like the Sprint/Nextel merger, Chase/Bank One focused on the seamless transition for employees and customers alike, this kept employee sentiment predominately positive. Wrigley’s purchase of Kraft Confections is definitely the least advertised merger of the three. Although both Wrigley and Kraft are icons in the food business, the general public is not concerned with the merger. Wrigley made their employees their main focus throughout the entire merge. Even though Wrigley has decided to close three existing facilities, they have maintained nearly all of their employees. They focused much of their attention on transferring them to other facilities. They offered very attractive severance packages to those deciding to leave, including job placement assistance. Wrigley also worked effectively to insure the merger was seamless to the consumer.

These three examples show the effectiveness that strategic planning and communication can influence a successful outcome in launching a successful merger. Focus on employee satisfaction, maintaining open communication throughout the process, setting aside money for marketing, and streamlining the entire transition were all aspects contributing to the success of the mergers reviewed in the secondary data. With this information unknown to US Airways, these options to assist in the merger transitional phase, much of this information will be utilized going forward. One of the most important elements will be to incorporate the customer and employee base through strong communication so that the development can be adjusted if needed as immediate feedback is received, rather than to wait and see major declines in revenue.

Tools that will be adopted from the secondary information going forward as Vacations continue to merge the product will include improvement on communication to the employee and customer, including travel agents, base. Improvement will also be executed to create a seamless product for the customer.

Hypothesis

Prior to the merger, America West Airlines measured their customer service through a report card utilizing a rolling scale of satisfaction ranking 1 to 5 with 1 as very unsatisfied and increasing satisfaction to 5 which represented very satisfied. For the last 4 years, America West Vacations has averaged a ranking of 4.1 or higher. After the merger and redesign of the online booking system, the levels of sales have declined. Have the service levels for the new online booking system for Las Vegas vacations dropped below four on the overall satisfaction scale?

Scope/Needs Assessment

Seventy-five percent of the overall bookings of US Airways Vacations are to the destination of Las Vegas; which is why the survey questions specifically focus on this market. It is due to this fact that the primary focus will be on Las Vegas sales performance and then a category for all other markets for US Airways Vacations. To further probe into the managerial problem statement and the research problem statement, the team conducted a telephone survey that focused upon the satisfaction with the online booking tool. The demographic for this survey was the top 200 travel agencies with the largest decline in sales since the launch of the integrated website, January 1, 2006 (100 to the Vegas market and 100 to “All Other” markets). This survey incorporated questions specific to the overall agency satisfaction regarding the use of the new online booking website. The results of the survey have produced an ordinal result which have been applied to the satisfaction level.

The survey results have been broken down into regions within the domestic United States in order to narrow the spectrum of symptoms causing the immediate decline in sales as of January 2006. The survey was administered within two weeks of management approval. The next step would be to forward the survey results to be analyzed by the finance and marketing departments. The negative results would be addressed immediately by setting up individual interviews with those agencies posting the most unsatisfactory answers from the survey. The results of these interviews would be used to help re-evaluate the systems ability to provide customer satisfaction. After forty-five days, the sales figures would be rerun and based on the results; more extensive interviewing would be required for those agencies that are still producing below required sales.

Descriptive Analysis

After referencing the attached graphs (Appendix),