Wharton alum helps U.S. Airways soar

When U.S. Airways President and Chief Executive Officer Rakesh Gangwal returned to speak in Steinberg-Dietrich Hall Tuesday night, the 1979 Wharton MBA graduate told the nearly 150-person audience that he didn't recognize Wharton because the school had changed so much. After listening to Gangwal's lecture, which was part of the Musser-Schoemaker Lecture Series, most in attendance agreed that the same might be said of U.S. Airways. For more than an hour, Gangwal spoke to an audience about how he managed to resurrect the financially troubled airliner into America's largest domestic daily carrier. When Gangwal took over as U.S. Airways' CEO in 1996, he explained that the company was "following a recipe for failure" with a high debt, increasing costs, outmoded airplanes and the inability to integrate its work force operationally and culturally. The airline also suffered from low worker morale and customer service that was so poor, he said, employees would occasionally tell passengers, "If you don't like us, [take] the bus." Under Gangwal's leadership, the airline developed a five-prong business plan to become a world-class carrier by changing the corporation's culture, improving customer satisfaction, lowering its costs, updating its airplanes and introducing new flight routes. U.S. Airways reorganized its corporate structure by separating into divisions, centralizing its maintenance, ticketing and corporate operations and moving its headquarters to Washington, D.C. It also changed its name from its old moniker, U.S. Air. "We see this as one big beast managed by one brain, with a lot of smaller brains inside," he said, referring to the airline's organization. Although corporate vice presidents and managers have the freedom to make suggestions and some decisions, Gangwal conceded that corporate headquarters makes all of the final calls. Responding to recent industry trends toward low-cost value carriers, Gangwal said that last year "U.S. Airways launched MetroJet [shuttle flights] as a product to take on airlines like Southwest, Delta Express" and other budget airlines. The airline refurbished its hub facilities -- including a terminal at Philadelphia International Airport -- and ordered more than 430 new airplanes to replace its outdated fleet. And it created an innovative marketing scheme with American Airlines that allowed customers to exchange frequent flyer miles and club member benefits between the two carriers. Gangwal said that improving customer satisfaction was vital to his effort to resurrect U.S. Airways, and he noted small steps the airline took to ensure that it met all of its clients' expectations. "We never disappoint customers with peanuts and beverages. We can't mess that up too much," Gangwal said, referring to the traditional airline fare which the company serves on all MetroJet flights. "If you serve steak it may taste great but the customers will say it looks like a hockey puck." And despite problems with a new ticketing and baggage information system that has caused some recent delays, Gangwal said the company has made significant efforts to become the top-ranked airline in delivering its customers on time and with all of their luggage. While Gangwal said it was a great feeling to return to his alma mater, he cautioned that "a Wharton degree only gives you confidence. Learning gives you the wherewithal and capabilities."