NYTimes.com Article: US Airways Is Reversing Some Changes Made Recently

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US Airways Is Reversing Some Changes Made Recently

September 7, 2002
By JOE SHARKEY






Reacting to a barrage of e-mail messages from business
travelers, US Airways backpedaled yesterday on some aspects
of its recently announced restrictions on nonrefundable
advance-purchase fares.

With the reversal announced yesterday, mileage earned on
cheap nonrefundable tickets will continue to count toward
qualification for the various tiers of elite-level
frequent-flier status, US Airways said. Under the airline's
change announced last week, mileage earned on those tickets
would no longer have counted toward qualification for elite
frequent-flier tiers that airlines use to award free
upgrades to first- and business-class seats.

But the main component of the change announced last week,
and subsequently adopted by other major carriers except
United Airlines, remains in effect. That is, effective Oct.
1, nonrefundable tickets that are not used lose their value
unless an alternate flight is booked on or before the
travel date.

For nearly a decade, travelers who bought a nonrefundable
fare but failed to actually take the flight were able to
reuse that ticket, for up to a year, by paying a penalty
fee. In recent years those fees have been $75 or $100.

A US Airways spokesman, David Castelveter, said the
airline, which is currently operating while in
bankruptcy-court proceedings, dropped the tier-status
restriction after receiving "thousands of e-mails from
frequent fliers" protesting the move. None of the other
airlines matched US Air's now-abandoned restrictions on
so-called tier-mileage status.

In another reversal yesterday, US Air said that effective
Jan. 1 people holding nonrefundable tickets could try to
fly standby on an alternate flight under certain
conditions, including payment of a $100 fee; last week it
had eliminated that standby option.

Staggered by mounting losses - and startled further as it
became clear last week that air-travel statistics for the
peak flying month of August would show a continuing
deterioration in revenue - the big airlines are desperately
trying to raise fees and cut costs. They remain afraid to
actually raise fares and possibly lose even more customers
to rapidly growing low-fare competitors like Southwest
Airlines and JetBlue Airways, analysts said.

Business travelers, who account for the bulk of revenue at
the major airlines, have been engaged in a revolt against
high walk-up fares, the fully refundable fares with no
restrictions that had usually been used for corporate
travel. Starting about 18 months ago, large numbers of
business travelers began using the more restrictive, and
cheaper, nonrefundable fares that were intended for leisure
travelers.

The shift has flabbergasted airline executives, some of
whom admit that they can no longer tell their leisure
travelers from their business travelers.

Among corporate travel executives, the current crackdown on
nonrefundable tickets was widely regarded as a desperate
and risky attempt by the big airlines to herd business
travelers back into the higher-priced business-fare market
by making the cheap tickets less flexible.

"The airlines were already nickel-and-diming their best
customers" by raising fees on things like extra bags and by
cutting back on food and other amenities, said Michael
Sommer, a New Jersey-based consultant on airline
technology. "They're in desperate financial straits and
trying to grab every possible penny. But I think with these
moves on nonrefundable fares, they've now shot themselves
in the foot."

The airlines moved against nonrefundable fares "to slyly
increase revenue while not having to raise ticket prices,"
said Kevin P. Mitchell, the chairman of the Business Travel
Coalition. "They thought they could slip it through without
anybody noticing it."

The major airlines, on the other hand, insisted that with
accumulated losses of about $10 billion since last
September, there is a great need to quickly increase
revenue.

In addition, several airline executives said, on condition
of anonymity, that the shift to nonrefundable fares among
business fliers had been accompanied by an equally
unanticipated increase in the use of so-called back-to-back
bookings. Such bookings, which use multiple nonrefundable
tickets to circumvent various restrictions built into the
fare, like Saturday night stay requirements, "game the
system" in a way that airlines are finding increasingly
unacceptable, one executive said.

John Kennedy, a spokesman for Delta Air Lines, pointed out
that while the airlines are losing billions, average air
fares are now the lowest they have been in 30 years,
adjusted for inflation. Limiting nonrefundable fares and
other measures merely constitute "an attempt by us to at
least break even," he said.


http://www.nytimes.com/2002/09/07/business/07AIR.html?ex=1032444962&ei=1&en=204347fbd846944e



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