PSA Adds a New Airline Boss to Share Load With Barkley

Early this year Paul Barkley, PSA Inc.’s president and chief executive officer, promised to hone Pacific Southwest Airlines’ marketing and advertising efforts.

The San Diego-based company took a step in that direction last week when it appointed Russell L. Ray Jr., a senior vice president of marketing at Eastern Airlines, as president of its airline subsidiary. Barkley is now chairman of both the airline and PSA Inc. and remains president and chief executive of PSA Inc.

“Given all the problems with deregulation, the marketplace is running our lives,” Ray said during an interview last week. “We agreed that (Barkley) and I would share responsibilities. I’ll work on the operating side of the airline, and he’ll work on financial planning and equipment as it relates to the future.”

Barkley, an accountant by training, and Ray, a marketer by trade, agreed that PSA, with its fleet rebuilding program nearly complete, is ready to increase its share of travelers along the “California Corridor” between San Diego and San Francisco.

Coming from Eastern, Ray is no stranger to the complexities of competition in a heavily traveled corridor. There are obvious similarities between Eastern, which for years dominated the skies between New York and Florida, and PSA, which once flew rings around West Coast competitors.

Both airlines were hard hit by the appearance of new low-cost competitors that took off after the airline industry was deregulated in 1978. Eastern was severely rattled as competitors attacked its markets up and down the East Coast.

Deregulation “gave birth to PeoplExpress, Air Florida and Northeastern,” Ray said. “We had to make major adjustments to compete with them in our own backyard.”

Although Eastern “did well in some areas, we ate our lunch in some others,” Ray said. A revitalized Continental Airlines, maneuvering from Chapter 11, eventually drove Eastern out of the Houston market. “We couldn’t compete with their low costs,” Ray said.

PSA, which at the same time was replacing a fleet of fuel-guzzling jets, was drawing increased competition from a blend of new and old competitors, including Southwest, America West, Air California, Western, United and American.

Both Eastern and PSA subsequently pressured employees to trade wage concessions for stock ownership in the beleaguered airlines.

PSA also concentrated on replacing its fleet with a newer generation of jets. That took “time and financing,” Barkley said last week. “We’re now starting a (service) expansion program that’s fairly ambitious, so we’re off and running on our second wind.