With the government tightly regulating the airline industry, Allegheny was limited to routes in the Northeast. But the company had a solid market. The government was generous in setting fares, and most airlines could make a profit with planes that were half empty. Then came the revolution, the deregulation of the airline industry in 1978. Allegheny was freed to compete for national routes. It began flying to Phoenix, Tucson, New Orleans, and Raleigh and changed its name to USAir to get rid of the small-time image. Because it did not have the critical mass that the big carriers had, USAir had to buy other airlines to grow. The company’s chairman, Edwin I. Colodny, was a visionary who understood that under deregulation an airline had to be big to survive. He bought Pacific Southwest Airlines in 1987 to get a toehold in California and then merged with North Carolina-based Piedmont Airlines in 1989.
But those mergers gave USAir indigestion that lasted for years. Colodny misjudged the difficulty of combining three very different companies, which created a mishmash of cultures, airplane types, and offices that took years to sort out. The Piedmont employees resented the swiftness of the merger and the way their friendly Southern company had been swallowed overnight by a bunch of Yankees. In defiance, many pilots continued to wear their Piedmont wings and drew graffiti of the Piedmont logo in USAir cockpits. Likewise, USAir was unprepared for the brutal competition on the California routes, where Southwest Airlines and America West were slashing fares. USAir soon made an embarrassing retreat from California, conceding most intrastate routes to its competitors.
Airlines have always been especially vulnerable to changes in the economy. When the economy is bad, people don’t fly. And once it improves, people are slow to resume flying. The airlines are both a leading economic indicator and a lagging follower. They feel a recession sooner, and it takes them longer to recover. But USAir felt the dips even more than its competitors did because it had such high costs and the mergers made the company so inefficient. It had an expensive mix of nine different airplane types, which meant more spare parts, more training, and more maintenance hangars. Even before the mergers, USAir had higher costs because it was heavily unionized and it operated in the most expensive region in the country. The mergers added an extra layer of complications. Other airlines had two or three hubs spaced across the United States, but suddenly USAir had five clustered in the East. The company had too many reservation centers, too many crew bases, too many hangars. It was a recipe for red ink.
USAir had lost money every year since the 1989 Piedmont merger, for a total loss of $2.5 billion. The company chairman, Seth Schofield, had taken steps to shrink the fleet and close hubs, but the airline was still so inefficient that its operating costs were far and away the highest in the industry. The back-to-back crashes in Charlotte and Hopewell dealt a painful double whammy, scaring away thousands of customers. The airline lost $10 million in bookings because of the Charlotte crash and another $30 million in just three weeks after the Hopewell crash. Its stock price had fallen by 35 percent two months after the crash, down to just $4.25 a share. Some airline analysts were predicting that the company was headed for bankruptcy court.
USAir had tried to rebuild its image. Schofield and senior vice presidents held meetings with big corporate customers to reassure them about the airline’s financial health and commitment to safety. In a letter to more than a million of the airline’s frequent fliers, Schofield wrote: “I want to reassure you that your confidence in the operational integrity of USAir is of paramount importance to us.”
By mid-November, it seemed the campaign was paying off. Bookings had rebounded almost to normal levels. It appeared the airline had turned the corner.
Then came the story in the New York Times.
TROUBLES AT USAIR: COINCIDENCE OR MORE? asked the front-page headline on Sunday, November 13, 1994. The story painted a picture of sloppiness and cost cutting at the beleaguered airline, where pilots departed without enough fuel and where a maintenance supervisor tried to save money by letting a plane fly with an inoperative stall-warning system. The Times followed the classic formula for a blockbuster investigative story—scary anecdotes, lots of statistics, quotes from worried experts, and weak-sounding denials from the airline. The newspaper said it had obtained “a previously undisclosed report” from the FAA and quoted federal officials who “spoke on the condition that their names be withheld.” A front-page chart showed that the risk of dying on USAir was 5 deaths per 10 million passengers, compared with 1.5 deaths for other major airlines. Once again the USAir name was being linked with death.
The story ricocheted around the country. Newspapers that subscribed to the New York Times News Service published shorter versions of it the same day. It was picked up by the Associated Press and became the lead item on TV newscasts in many cities. Sunday is the slowest news day of the week, so producers were happy to get a story with some pizzazz. “Shocking discoveries raise questions about safety procedures at USAir,” said a Detroit news anchor. “USAir is under attack for its safety record,” said one in Philadelphia. The New York Post said, “USAir’s future is in doubt after revelations that it skimped on safety precautions to cut costs, airline industry experts said yesterday.”
USAir officials had tried last-minute damage control, but to no avail. General counsel James T. Lloyd sent a letter to the Times two days before the story was published that read in part: “It is possible to look through the tens of thousands of reports that accumulate over time and build a picture that distorts the fundamental truths.” His argument got a brief mention in the story, but it was overshadowed by a mountain of evidence that said the airline had a safety problem. When USAir officials saw the story, they felt they were victims of a hatchet job.
Rick Weintraub, a former Washington Post reporter who had just been hired to be the airline’s chief spokesman, quickly put together a fact sheet that criticized the Times for making sweeping allegations that were incorrect or misleading. It said the anecdotes about nine planes leaving without sufficient fuel were correct but that most of them returned before taking off. It disputed the Times’s claim that pilot mistakes were a common thread in three of the five crashes and another claim that said the airline was in such dire straits that it was losing $2 million per day. The fact sheet pointed out that the Times buried more-favorable comments about USAir toward the end of the story.
The Times story was correct in reporting that USAir pilots were having difficulty adhering to company procedures. That was the whole point of Operation Restore Confidence, which had begun before the Hopewell crash. The NTSB found notes from August 1994 meetings that showed pilots often did not follow company procedures. When FAA inspectors observed one hundred USAir pilots, only forty-six followed the company’s Pilot Handbook. Nine days before the Times story, USAir 737 flight manager Jim Gibbs held a meeting on the problem of pilots not flying by the book. “We must have failed to either train or enforce the standardization,” he said, according to notes of the meeting. “Now we must find a way to correct the problem.”
But the Times story exaggerated USAir’s troubles by giving the story so much space, putting the most damaging evidence on the front page, burying the more balanced comments inside and relying on easy dial-a-quote comments from people who didn’t know the intricacies of aviation. (Ralph Nader: “The problem was that these mergers came with a price. They diverted management attention and took a lot of revenue that could have been spent on safety.”) USAir was correct in saying that it was easy for reporters to pluck incidents from the FAA’s databases to distort an airline’s safety record. Indeed, it is difficult to measure the vague concept of safety. The FAA databases are designed so the regulators can spot problems before they cause a crash—not to see which airline is most likely to kill you. Accidents are so rare that it’s usually unfair to use them to draw conclusions about a single airline. The Times made that point deep in its story, but it also used a chart on the front page that showed the likelihood of dying was more than three times higher on USAir than on the other carriers. And while the lengthy Times story was somewhat balanced, the abbreviated versions used by other newspapers around the country were more one-sided. The long, detailed Times story got boiled down to a simple message: USAir was unsafe.