US Airways 'aggressive' with fees; fliers react

ByABC News
June 13, 2008, 11:51 AM

— -- US Airways is sparing no one to foot its staggering fuel bill, targeting frequent fliers, overpacked tourists, employees and even employees' families with a mix of new cost-cutting moves and fees.

The Tempe, Ariz., airline, responding to what CEO Doug Parker called a severe industry crisis, on Thursday more than doubled its earlier plans for flight cutbacks and said it will start charging for soda, frequent-flier tickets and every checked bag.

The reduced number of flights will cut 1,700 of the airline's 35,000 jobs. US Airways said it hopes to achieve most of the job cuts through attrition and voluntary leaves.

The airline went further than others on the fee front, becoming the first major carrier to charge for soft drinks ($2 for a soda, juice or bottled water) and for redeeming frequent-flier miles ($25 to $50). It will also have the highest price for alcoholic beverages ($7).

A little over a month after US Airways was among the first to charge $25 for a second checked bag, the carrier became the third major airline, after American and United, to also start charging $15 for the first.

"As is often the case, we've chosen to be more aggressive than our competitors with some of these programs, but these are changes that are wholly appropriate in this new world," Parker wrote to employees in a memo.

The new world: oil prices that have more than doubled in the past year.

Parker told shareholders Wednesday that the airline's fuel bill will be $2 billion higher this year if fuel prices remain at current levels. The airline's profit last year was less than half-a-billion dollars.

He told employees there is too much competition, especially in the United States, to raise fares enough to cover the higher fuel costs.

US Airways has a particularly tough time because it faces low-fare king Southwest at every turn, especially in Phoenix and Philadelphia, two of US Airways' hubs, and Las Vegas, one of the carrier's focus cities.

Southwest's costs are lower and it is paying substantially lower prices for fuel because it locked in the price through hedging.