US Airways 'aggressive' with fees; fliers react

— -- 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.

That leaves US Airways and other airlines with two main options: significantly shrinking the number of flights so they can eventually raise fares at a good clip; and boosting revenue through fees. The latter is the more immediate fix.

"Unfortunately, with oil where it is, fees are becoming an important revenue source for this industry," said Michael Derchin, airline analyst with FTN Midwest Securities in New York. "I know it's quite annoying to consumers, but it's going to be part of the system."

US Airways estimates the fees announced Thursday and other new charges will bring in an estimated $300 million to $400 million a year.

Phoenix business traveler Mandar Joshi, 34, understands costs are going up, but the soda charge in a hospitality business leaves a bad taste.

"I think it's a bit inhospitable," he said.

US Airways' flight attendants aren't fans, either. Their biggest worry is passenger backlash.

"It's going to put our flight attendants squarely in the path of that customer frustration," said Mike Flores, president of the US Airways unit of the Association of Flight Attendants. "I do not believe that the money that they will make is worth the ill will it will cause."

He said flight attendants will scramble to make change until the airline has the technology to go cashless.

"How many people walk around with dollar bills in their pockets?" Flores asked.

Joshi, who travels for his software job and was returning from Austin on Thursday, said the drink fee is not enough to make him change airlines. He would switch airlines, though, over the new baggage charge.

Mike Maloney, an assistant federal public defender, said he is turned off by the charge for the first bag and wonders if the government will switch traveling employees to airlines that don't have the fee.

He checked one bag on his business trip from Omaha, to Phoenix on Thursday.

"I think being allowed to check one bag comes with the ticket price," he said.

Other ways fliers will be hit:

Want to book a ticket over the phone? That is now $25 to $35 on US Airways, up from $15.

Buying a ticket at the airport or a ticket office? That now costs $35 to $40, up from $20.

Traveling standby on an employee pass? Get ready to pay more, effective immediately.

Airlines generally exempt their best customers, those in the so-called elite levels of their frequent-flier programs, from most fees.

US Airways, for example, won't charge them for the $15 first-bag fee or $25 second-bag fee.

Those who are upgraded to first class because of their status also won't be hit with the drink fee.

But they didn't escape unscathed in the airline's latest round of changes. They will pay the new fee to redeem frequent-flier miles and, most significantly, will no longer receive bonus miles every time they fly.

Earlier this year, US Airways did away with minimum mileage on short flights, drawing howls of criticism.

"The bonus-mile thing is crossing the line," said Art Pushkin, co-founder of watchdog Frequent Fliers Organized and Concerned about Unacceptable Service. "It's basically going to drive people away."

Pushkin said frequent fliers understand the business has to change. But the answer is higher fares, not "hurting your best customers," he added.

As expected, US Airways' flight cutbacks were not as severe as those recently announced by American, United and Continental.

The airline is restricted on what it can do by its labor agreements and its airplane leases. It also had a head start on flight cutbacks the past few years as it combined US Airways and America West.

US Airways plans to reduce its seat capacity in the United States by 6 to 8%, up from earlier estimates of 2 to 4%.

It also is returning 10 planes.

Its competitors have had double-digit reductions in capacity.

That's little consolation to the 1,700 employees whose jobs are being eliminated because of the reduced number of flights beginning in the fall. It breaks down into about 300 pilots, 400 flight attendants, 800 airport employees and 200 staff and management.

Labor union officials said they hope to blunt the impact by asking for voluntary leaves, buyout offers and related moves.

"In the past, we've had quite a few pilots that opted for a voluntary leave of absence, and that lessened the blow for the furloughees," said James Ray, spokesman for the US Airline Pilots Association.

Las Vegas will account for 60 to 70% of the cutbacks. The airline will have 74 daily flights departing from Las Vegas at the end of the year, half the level of a year ago.

About 600 of the jobs that will be lost are in the gambling capital, where the airline is ending a night-flight operation dating to the days of America West.

Las Vegas' McCarran International Airport was an America West hub along with its Sky Harbor home base.

The airline started flying red eyes out of Las Vegas to get more use out of its planes but said it's more economical to park them overnight now, with fuel prices so high and fares relatively low.

US Airways has not detailed other flight cutbacks, but spokesman Phil Gee said it is not expected to pull out of any cities but, rather, reduce the frequency of flights.

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