US Airways Targets Biz In Sales Org. Overhaul

<B> US Airways Targets Biz In Sales Org. Overhaul</B>

By Jay Campbell

<I>New York</I> - Catching up on a model he called "10 years old," US Airways vice president of global sales Steven Tracas expects to generate an additional $100 million in annual net revenue by dramatically changing the carrier's sales organization.

Tracas re-interviewed and let go six directors and 40 of the carrier's 500 sales personnel in recent weeks. He then hired four new directors to handle telemarketing sales/support, sales analysis/systems, travel agency national accounts and corporate accounts. Eight sales spots remain open.

Tracas is streamlining responsibilities so that account managers in the field no longer are spending their time on administrative duties, but rather "what they're good at, which is selling."

"US Airways' sales activity was not focused on the high-yield business traveler," Tracas told 200 airline analysts here at a June 3 meeting lead by Rakesh Gangwal, US Airways' new president and CEO, and Stephen Wolf, chairman of the airline's parent, US Airways Group. "We were fragmented and unfocused," Tracas said. "Our people were performing administrative, not sales functions, and they were lacking direct responsibility and accountability."

US Airways hired five new sales managers devoted to large global accounts, reporting to Paul Leyh, the new director of corporate programs (<I>BTN</I>, April 13). Tracas said these folks are empowered to negotiate quickly, using a new decision module built into their laptops. The software enables managers to run variables, such as seat share in certain markets, to determine what discount the company may earn, "rather than going back and forth to headquarters," said Tracas.

Administrative functions for large accounts such as NationsBank and IBM now are handled by centralized support desks, which opened June 1 and are manned by 17 new employees dedicated to corporate accounts. An additional 15 employees will administer agreements with large travel agencies. Tracas said such employees would deal with specialized needs; for example, seeing what the carrier can do if NationsBank is having a hard time getting seats in a certain market. "The support desks now are a little green, but they have a great attitude," said Tracas.

Smaller accounts will deal with the airline's new telemarketing sales group, staffed by 12. Tracas acknowledged some customers may not be too comfortable with a downgrade of sorts to telemarketing, but those accounts previously were getting very little attention from the field sales force. In the field, Sales managers had been "expected to be jacks of all trades," Tracas said, dealing with corporate and agency accounts of all sizes, wholesalers and distributors at a ratio of 1 sales manager for every 300 accounts.

Account managers were spending 60 percent of their time on administrative duties, 20 percent on preparation and 20 percent on sales calls. The largest of those agency accounts (20 percent, producing 80 percent of revenues) now will get the attention they need, said Tracas, at a ratio of about 1:40. Now, managers will spend 30 percent of the time on administration, 20 percent on preparation and 50 percent on sales.

Also, Tracas pointed out, the carrier for the first time ever can now negotiate the US Airways Shuttle as part of its corporate deals, having purchased the Shuttle, which it previously operated under contract, last winter from a consortium of banks.

Other US Airways officers updated the analysts on various components of the airline's financial prospects and competitive position. Describing where US Airways is at, and where he believes it should be, senior vice president of planning Bruce Ashby said the carrier needs to exploit its position as the top airline on the East Coast. Of 56 East Coast airports with jet operations, Ashby said, US Airways has the highest share in 35 of them and the second-highest in nine. While the airline does well in intra-East Coast traffic, commanding 73 percent market share, Ashby said it is vying to improve its position in transcontinental and transatlantic markets.

US Airways said it had made substantial gains this year and last in performance rankings, would realize the benefit of "significantly improved yield management" under its outsourcing contract with Sabre and plans to reduce its fleet from six types to just three within the Airbus family.

The moves are designed to counter what Gangwal described as a "depressing" reduction in the airline's size by 4 percent between 1990-98, while other U.S. carriers as a group grew by 33 percent. Metrojet, the low cost airline-within now operating out of Baltimore/Washington, will be key to that growth if it can hold off Southwest for Northeast-Florida traffic, on which US Airways lost $648 million between 1990 and 1996.

US Airways said its costs are competitive with Southwest's in labor rates, productivity, aircraft utilization and meals. Southwest's advantage in distribution costs and employee benefits should be outweighed by what US Airways believes is a revenue premium it enjoys because it has seat assignments, a larger frequent flyer program combined with American's AAdvantage, and better corporate and agency relationships.

The distribution equation also is changing US Airways' cost makeup. It said it's saving $3 million by reducing agent passive segment abuse in the CRS; also, its average commission rate is down 20 percent between 1994-98, to 7.48. Between 1996 and '98, US Airways said, electronic ticket usage has increased from 10 to 38 percent.