Fuel impact: US airlines jettison freebies, slash routes and jobs

With the price of oil shooting up by the day, the number of US airlines now beginning to charge for items that were traditionally free is increasing. US Airways and United Airlines have now joined American Airlines in announcing that they will charge customers $15 for their first checked bag. United has taken matters further by saying that it will increase other baggage fees, including those for overweight bags and bags that require special handling.

Such is the cascading effect of the surging price of oil that charging for baggage is already beginning to sound like yesterday's idea. Starting 1 Aug, US Airways will add nonalcoholic beverages to the growing list of amenities not included in a flight's base fare. Soda and juices will now cost $2, while the cost of alcoholic beverages goes up from $5 to $7.

Wry air traveller association representatives now say that they expect every service that the airlines provide, other than using the lavatory, to be the subject of fees and charges.

For passengers, fare add-ons are only part of the increasing woes, however. They will now have a shrinking roster of flights to chose from. US Airways starts reducing flights after a couple of months. Continental Airlines yesterday released details of flight reductions announced last week, which will lead to a mainline system capacity reduction of 6.8% year-over-year in the fourth quarter.

Among other routes, Continental will discontinue flights between Dulles International Airport and its hubs in Houston and Cleveland.

For US Airways significant flight reductions will take place at its Las Vegas base, where it will reduce daily departures to 81 by 3 Sept., from a high of 141 last year.

The carrier will also close its lounges at Baltimore and Raleigh-Durham in addition to three arrivals lounges in Europe and three domestic cargo stations.

"Our industry is profoundly challenged by the dramatic increase in fuel prices and we must write a new play book for running a profitable airline," US Airways chairman and CEO, Doug Parker, said.

The carrier said that it will return 10 mainline aircraft through next year, cancel leases on two A330-200s scheduled to arrive in the 2009 second quarter and is "planning to reduce additional aircraft in 2009 and 2010."

Returned aircraft will include six 737-300s this year and four A320s in the first half of 2009.

Industry analysts point out that the combination of added fare and fuel charges will cover less than 15 per cent of the industry's fuel costs increases. US Airways said its 2008 fuel expense will increase by $1.9 billion from the previous year.

US Airways has also announced job cuts of up to 1,700 staffers. The cuts will include approximately 300 pilots, 400 flight attendants, 800 airport and ground employees and 200 office and management staff.