Top 5 Ways US Airways Might Increase Revenues or Reduce Costs

Ever get the feeling US Airways is a sinking ship that’s throwing off as much weight as it can to stay afloat? This week we’ve seen the airline drop inflight entertainment on domestic flights and ditch all the onboard equipment. They’re also getting rid of ovens in the coach galleys. Yep, that means they’re really, honestly, trying to get as much weight off the plane as they can to save gas. But it’s not just on the plane. They’re also getting rid of ticket jackets. I always thought that ads made those profitable, but I guess not.

You might think that I’d be flinging a Cranky Jackass award for this move, but actually, I’m not. Surprisingly, I have to give them credit here for actually following the strategy they’ve laid out, right or wrong. This is the strategy that was outlined for us at media day back in March. In their eyes, all that matters is price and schedule as long as the appearance is clean, the flights are on time, and it’s convenient. They’ve held their own when it comes to on-time performance, and I think they’ve been cleaning up their planes (though I haven’t flown them in quite some time).

In other words, though many people bemoan the direction the airline is taking, US Airways is actually delivering on its promises. With that in mind, I started thinking about what they’re going to spring on us next. No matter what it is, there’s a very good chance people will hate it, but at least it’s not false advertising.

Here is my list of the top 5 ways I’d expect to see US Airways increase revenues next, in no particular order. And no, this isn’t a joke or some snarky post about “gee, what could the airlines possibly charge us for next.” There have been far more than enough of those floating around.

  • Overhead Bin Ads – Ah come on, they’ve already done tray table ads, so why not just go to the overhead bins as well? It’s worse, yes, because you can’t actually hide those from sight, but it wouldn’t surprise me if they could make some decent money off of it. And that means it could actually happen, even if it does somewhat degrade the “appearance.”

  • Charge for Advanced Seat Assignments – I know, this is a little late to the game with Spirit already setting the bar, but why not jump on the bandwagon? If someone is really going to choose you because of price and schedule, then advanced seating assignment fees won’t really alter the decision, right?

  • Remove Window Shades – This takes a page out of the Ryanair playbook. No window shades = less weight and fewer things that can break. Ryanair also doesn’t do seatback pockets, but there’s too much money in the magazine and Skymall to take that away. Would US Airways actually do this? I’m not sure what the savings would really be, but if they are real, then I don’t see why not.

  • Sell Products Onboard – They already pimp their credit cards, so why not follow the Skybus model and start selling products, like duty free in the international world? True, that would technically add weight to the plane, so it would have to generate good revenue to make sense, but they might think it’s worth a shot.

  • Charge for First Class Upgrades – I’ve saved the most controversial for last. If you think there have been objections to the latest round of changes, just wait until something like this happens. All hell will break loose. I’d argue that free First Class upgrades are by far the most important reason someone desires elite status with the airline. But, would people walk away if they had to pay $25 for the privilege on a domestic flight? It’s a risky move, and it would absolutely piss off the elites, but at some point they may consider it for the revenue it would raise.

Some of these are pretty risky moves, but with fuel where it is right now, I’m sure everything is in play. Would any of these moves stop me from flying the airline? Nah, not more than anything they’ve already done. (I haven’t flown them in almost 18 months, or at least that’s what my Dividend Miles expiration notice tells me.) The reality is that they’re right about a lot. Price and schedule do matter most in the domestic world, and they rarely if ever have a price or schedule advantage from my home in the LA area.

The airline has made it clear that it is racing to the bottom when it comes to amenities being included in the fare. At some point, passengers will revolt, that is, if they actually have a better option to choose. With all the legacy airlines following similar paths, there aren’t many options left for someone who wants to protest. But one of these moves will cross the line, and passengers will start to defect. Until that happens, you can expect to see airlines continuing to push the envelope on what they’re willing to try to reach profitability.


41 Responses to Top 5 Ways US Airways Might Increase Revenues or Reduce Costs

  1. Phil says:

    > At some point, passengers will revolt, that is, if they actually have a better option to choose.

    And that’s the big ‘IF’.

    Many business travelers don’t get an option. When making a reservation, we input departure time and the corporate CRS finds the cheapest flight within two hours. If we don’t choose that flight, there are notices sent to our managers.

    Reality is that we’ll have to revolt against the corporate CRS before revolting against the airline’s declining amenities.

  2. bryan in san francisco says:

    off topic: Now the no-frills airlines are starting to merge http://travel.booklocker.com/2008/07/11/europes-vueling-and-clickair-to-merge/

  3. Frog man says:

    If you combined the upgrade charge with an additional amenity (you know like the “BJ’s in First Class” we heard about from O’Leary?), then you may assuage the anger of the elites and possibly drive more out and out first class ticket sales.

    Win win all around.

  4. Chris K. says:

    Or, and I know this sounds crazy, but they could, quite possibly, raise ticket prices to cover their costs.

    I think after the dust settles, most airlines will realize that most passengers would rather pay a few bucks up front to the avoid the hassle of being nickeled and dimed when they get to the airport. People won’t be paying attention at first, and will be caught off guard by the ancillary revenue schemes, but they will learn quickly and adjust. Southwest will help speed up this process by pointing out their competitors extra charges in their advertising.

  5. BThicke says:

    Outside of the window shade idea which would be difficult to validate monetarily, the other suggestions are not bad. Clearly UScareways is on a path to presenting a proletariat product, so go all the way.

    Problem is of course, what to they do for a third act, when oil hits $175? With their hub structure and geographic bias toward non high-rev business travelers, even Ma & Pa Kettle will eventually draw the line (whether it’s too high of fares, or recognition that Southwest offers a superior no-frills product).

  6. Wonko Beeblebrox says:

    As a Phoenix native, I don’t think taking out the window shades is a good idea unless you really like cranking up the A/C (which is much more expensive). In the summertime, planes without window shades deployed that are sitting in PHX get very hot very quickly…

    I might expect to see reclining seats go away next. How many of those break when the pax behind you use your headrest for their stabilizer as they try to get out of their seat? What’s the cost to fix a broken seat (or fly around with it unoccupied until it gets fixed)?

    I actually think getting rid of the TVs was correct. Most of the times, those movies are not worth watching anyway. Southwest knows this. Northwest knows it too. Alaska and Midwest had the best solution figured out a long time ago (with their rentable digiplayers).

    Heck, JetBlue jokes about it on their PTVs: “without you we are just a bunch of TVs flying around the country…”

  7. Zach says:

    1 question, 1 comment:

    1. Other miles accrual, why would somebody fly US Airways domestically when, at this point, you’re paying less and getting (significantly?) more with Southwest to many of the same destinations? I hate to make this yet another discussion abut Southwest–and I agree that in-flight “entertainment” is worthless on an A320 or 757 with those antiquated overhead screens–but I’m not sure I understand how US thinks it can compete as a domestic specialist (based in Phoenix, no less!) when there is a clearly better, cheaper, more expedient option out there.

    2. I fully support all of your revenue-generating suggestions and have wondered for some time why airlines in this country haven’t adopted those strategies. If you’re going SAVE money by taking food and entertainment out of the equation anyway, why not take some strides to actually MAKE money on something other than pax, especially when you have to compete with a product (Southwest) that just about everyone agrees is superior?

  8. John M. says:

    I think it’s time for us to realize that the golden age of air travel is well and truly dead. It was an aberrent, short term era sandwiched between the founding of petroleum-based aviation and the depletion of that commodity. I think we’re going to have to get it out of our heads that flying should somehow be more comfortable or enjoyable than taking the subway, or a bus. Here’s hoping we can make the transition to trunk rail or airships quickly.

  9. Xnuiem says:

    Wonko…thank you! I live in DFW and man does it warm up. Especially in those WN planes that are “canyon blue”.

    As a business traveler that does get to pick my airline, i would avoid an airline that didn’t have window shades.

  10. CF says:

    Wonko – Very good point on the window shades. Not sure why I failed to realize that one.

    Zach – When US Airways and Southwest go head to head, my guess is that most people aren’t choosing US Airways unless they’re elites or for some reason, Southwest is significantly more expensive. But US Airways serves a lot of smaller cities and some very big congested airports that Southwest doesn’t touch, and there will always be good connecting flows for them on those as well.

  11. Benji says:

    Delta already took away ticket jackets…

  12. Frank says:

    They should also consider weight restrictions on carry-on baggage. Ma&Pa kettle really do bring everything, including the kitchen sink with them.

    Limit carry-ons to 15 pounds and charge through the nose for every additional 5 pound. And put a weight limit on those laptop bags and purses as well.

    And maybe incentivise those with no carry-on bags — like a dicount coupon for free drinks or 100 extra FF miles.

  13. Sue says:

    Yay Frank–I rarely have a carry-on bag when I fly (usually have a layover between LA & Cleveland and don’t want to be bothered toting it around) and would LOVE to be rewarded for NOT being one of those people who stuffs everything into the bin, holds up boarding, rearranges the previous boarder’s belongings in the bins, and generally annoys those of us who REALIZE we have too much stuff to carry it on. Yes, my bags have been mis-routed a few times but then again, I NEVER pack anything in checked baggage that isn’t replaceable. The things I absolutely need fit into one small backpack that easily fits under the seat in front of me.
    So yeah, give us bonuses! We deserve it! I shouldn’t be the ONLY one patting me on the back, hahaha!

  14. grrr says:

    I’ve always flown US Air, mainly because that’s the only airline at my small town airport. I’ve been a silver member for years. This year (2008) I’ve flown ONCE and that was only to use up some miles. They charged me $35.00 for that “award” trip to boot.

    I’ve defected not only from US air, but from the entire flying fiasco. I’m sick of being violated by TSA’s security theater and our border agents. I’ve had it with US air’s decrepit, dirty planes, rude fight attendants, no services, etc, etc… I’ve had it. I still travel, but now I drive or take a cruise. No more air for me — ever. The other airlines aren’t any better either.

  15. Dan says:

    The deleted ticket jackets will also help in the “keep it clean” effort. But, where will the checked luggage stubs be stapled for easy access when you have to file your claim for lost bags? :D

    @Frank – great idea about the carry-on limits, but the airlines don’t enforce the existing size limits now. Maybe a revenue stream would encourage that. Just don’t give me any more FF miles that I can’t use anyhow.

  16. CF says:

    Dan – Stick ‘em on the back of the boarding pass!

  17. Oliver says:

    Recently flew my first trip on US in a long time (four legs total, cross-country even). I don’t think it really wasn’t terribly different from any other economy class product out there, except UA’s E+ (which I usually fly being based at SFO). Sure, they (US) had advertisement on the tray tables, but that didn’t really bother me. Service was decent by economy standards. Credit card pitches were a bit annoying, but ultimately not a big deal.

  18. L1011 says:

    YX sticks them to the back of the boarding pass. I flew them recently and was quite impressed, thought it was a great idea

  19. Million Miler says:

    If all that matters is “price and schedule, as long as the planes are clean and arrive on time”, why would you even have first class on a domestic flight?

    It seems to me that if this is really where they want to be they need to go “all in”. Removing antiquated entertainment systems sounds like a very tentative baby step compared to where they need to be to meet their stated goal.

    Besides, over the long term wouldn’t they generate a bunch more revenue from the extra seats gained in an all coach configuration than they will ever see from all the nickel and dime measures they have taken to date.

  20. Yo says:

    I was at the headquarters the other day.

    They have unplugged some lightbulbs.

    Its ugly.

  21. mechanic x says:

    i got a question for cranky.

    our ceo came and had a meeting last night to give sort of a “state of the company” address. the question was posed to him about raising ticket prices, lemme see if can remember how he worded it. something like…..fifty percent of the people who don’t care about prices rising account for about 25 percent of profit from sales. so the other 75 percent of sales profits come from people who might not be able to afford a more expensive ticket. or something like that. anyway, he went on to say that when they’ve tried to raise prices, say, on a friday, they can actually watch the number of ticket sales drop the next friday. my question is this. is five or ten dollars for an airline ticket really that big of a deal. and second, everyone’s slashing capacity anyway, so they’re expecting fewer passengers. is this because they’ve already snuck in some fare increases? i know about the couple of airlines charging extra here and there for baggage and such, but have actual ticket prices gone up any? and if they haven’t really gone up any substantial amout (certainly not enough to help curtail the money hemmoraging caused by fuel prices), and they’re already cutting capacity and dropping routes, grounding planes, why not bum rush the passengers with a decent fare hike. i’m sure you’ll get the group that’ll get pissed and go on tv and complain, but (and i’ve always said this) people are going to fly no matter what. if they can get on a plane after watching sept. 11th unfold in front of their eyes, they’ll get on a plane for a little extra money. the airlines just need to pull the trigger on this one, deal with the onslaught of pissed-offedness it will bring (is that even a word?), and get on with it. long winded, i know, but if you had some insight, cranky, it’d be great to hear.

  22. Wonko Beeblebrox says:

    I’m not cranky, but… my two cents.

    Airfares have gone up.

    Do a check JFK->SEA for a week Thu->next Fri in early August and the cheapest airfares are in the $500 range. Transcon faes used to be cheaper than that.

    PHX->ORD/MDW is now $300+ for a summertime advance purchase of a weekend getaway.

    And there aren’t any sub $200 r/t transcons anymore.

    Once the minimum stays really come back in force, then airfares will go up again. Basically because it is/was easy to mix carriers and do a one way out on Airline A and a one way back on Airline B, cheaply, even at the last minute. The same airline did not have to have cheaper/empty seats _both_ going to _and_ coming back: It was a “win” for everyone- I got a cheap fare where I was going at more or less acceptable times; both airlines got some money for seats now filled on flights that were otherwise empty (and thus last-minute discounted). That’ll all go away once a round trip is no longer more-or-less priced at 2x one-way.

  23. CF says:

    mechanic x – Wonko is right. Airfares have gone up. In addition to airfares rising, all these ancillary fees are increasing overall revenues. But fuel has doubled in the last year and the increases have yet to make up for the difference.

    Airlines have a real problem. While there are some people who will travel no matter what, there are plenty of discretionary travelers who will not. And that is why capacity has to be cut so dramatically. It’s all about supply and demand. If the supply is too great, then it will require low fares to stimulate enough traffic to fill all those seats. When you have fewer seats out there, you can charge more and fill them.

    So, the airlines have done a good job of trying to raise fares so far, but it’s a tall task to recoup all that money now going to fuel. The capacity cuts are the only way to start this whole process. Fares will have to rise more.

  24. mechanic x says:

    good.

    sitting here at work eating peanuts off the plane cause i’m too broke to eat a real meal makes me think one thing…..i’m screwed if they take the snacks!!!!!!!

  25. I wrote a post earlier about this on my site. You are right on. I get to fly them tomorrow, or today I should say. We’ll see how they fair at PHL…

    -Jonathan

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  27. AN says:

    I was on USAir over the past two days from LGA to CLT and back. Plane was packed, but reasonably clean. The attendants were fine and smiling, and everyone was sleeping. It was even on time both legs, even with storms in CLT on the way down and LGA on the way back.

    Sometimes miracles DO happen.

  28. myriam says:

    I am a long-time USAirways elite and just a day ago purchased my first non-USAirways (or codeshare) ticket in about ten years. The reason? Was it because a USAirways ticket would have cost more to my destination? It would have — by about $100 — but that’s not why…

    It was due to my attempt a few days ago to book some award travel using 100,000 miles I’ve squirreled away. I wanted to get two roundtrips to Europe and all my previous research (I’ve looked at doing this off-and-on for a couple of years) lead me to believe that each ticket would be 50,000 miles each. A few days ago I discovered that 50,000 is applied EACH WAY — meaning I have somehow lost half the value of the miles I thought I had. What I can’t figure out is if they actually changed the policy at some point in the last year, or if I didn’t understand it correctly somehow previously. I looked up my records of the old arrangements, and on all the old charts, 50,000 miles is listed as the fare cost; however, nowhere does it actually state what this *buys* you — a one-way or a roundtrip. The only time you find this out is when you go through the motions of fake-booking a ticket — when you get to the “confirmation” section you learn it will cost you the full 100,000 miles.

    I am curious to get to the bottom of the mystery… but in the meanwhile, I am disgusted to learn that all my faithful flying has resulted in pretty much no noticeable benefit to me. I have paid slightly more to use code-share tickets for years, believing that the eventual benefits would be worth the $40 extra here or $35 extra there. For years, they have been. (I’ve booked cross-country award travel numerous times, always at about 35k per round-trip.) But now… what’s the point? I may as well save myself the money on the fare if I’m not going to get anything else in return.

    I wonder if this is the final demise of the elite programs…

  29. Wonko Beeblebrox says:

    I’ve always used my Usair FF miles for redemptions on US codeshare partners like UA. UA tends to have more seats open than US does for redemption.

    According to:
    http://www.usairways.com/awa/content/dividendmiles/usemiles/awardchart.aspx

    the award level for Between North America** or Hawaii and Europe is 50k. All US awards are round-trip. Sounds like you got hit with capacity controls: there are 50k awards out there- just not anymore left on your flight. So, you were at 100k for the “premium” award level….

  30. Darkwater says:

    One comment on the windowshade issue – whenever I flew AWA through PHX or LAS midday during the summer, the FAs were quite insistent that we lower the shades before departing the A/C.

  31. CF says:

    Million Miler – Oops, I forgot to respond to your comment about eliminating first class. I asked US Airways if they were going with the same strategy regarding first class, and they said no, it was different. Domestically it’s effectively a way to keep frequent fliers happy with upgrades. The big question, however, is whether or not there would be mass revolt if a $25 fee was tagged on to it. I think there’s probably uniform agreement that eliminating first class entirely would be a big blow to their ability to draw elites.

  32. Kate says:

    Personally, I don’t see much difference between Southwest and US Air, so I have no clue what people are talking about when they say ‘superior’ product on Southwest. If US wants to become the Ryan of America, go for it!

  33. CF says:

    Kate – I agree that if they want to try to go downmarket, that’s their prerogative, but in domestic coach, I think you can now argue that Southwest has a superior product. In general, Southwest has more legroom with 32 to 33″ of pitch compared to 31″ on US Airways. Southwest hands out snacks, water, and soda for free while US Airways makes you pay for all of those. US Airways will charge you an additional amount to sit in desirable aisles and windows whereas on Southwest, if you check in early, you have your pick of the plane.

  34. Wonko Beeblebrox says:

    I totally agree with Cranky.

    Usair will also charge you to check 2 bags, and Southwest won’t.

    Granted, Southwest’s planes have one fewer restroom on them than similarly sizes US planes do. But US reserves the forward lav for first class only, so coach on WN and coach on US both have 2 lavs for almost the same number of total coach pax…

    And can I mention… no RJs on SW?

  35. myriam says:

    curious — which airline has the *least* legroom in standard coach? my guess is going to be United (non-upcharged seats). I can’t even cross my legs in theirs.

  36. Wonko Beeblebrox says:

    Careful how you define it.

    Measuring the same point from one seat to the same point on the seat behind it will hide the thickness of the seat. United mainline in coach has thicker seats.

    seatguru says Airtran’s 717s seat pitch is only 30″ in coach. Since I’m in Phoenix, I am normally only on their 737s (which have 31″), so hard to say…

  37. CF says:

    myriam – You can look at sites like seatguru.com which will give you specifics. In the US, I believe AirTran has the least legroom overall, but some planes (like the US 737-400) are just as bad. In Europe, you see airlines with 28 and 29″ pitch, and that is brutal. For the best in the US, look to JetBlue.

    As Wonko says, set thickness has something to do with it, but until someone puts out a better metric, this is all we can do to compare except for just getting personal opinion.

  38. Alex C says:

    myriam–it looks like what happened is you US Air quoted you the rate for a standard (term?) award ticket. This is essentially paying double miles to book an available seat when award inventory is otherwise unavailable. You should be able to ask about award inventory on other Star Alliance carriers, as they are, in general, a bit more generous than US Air.

    Finding award seats to Europe can be a tricky business, but it helps to be early to make plans, flexible about the routing and possibly dates, and persistent in terms of trying available routings.

    I don’t think elite programs are dead, I think it may just be the end of them on US Airways. The award availability in first class and number of non-revs relative to elites on a couple of recent flights I took seems to indicate that many of them have simply jumped ship.

  39. Casey says:

    > Overhead Bin Ads

    ROFL! Something tells me US Airways is going to start looking a lot like a metro area bus!

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