=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/c/a/2008/07/23/BUG811TA84= .DTL --------------------------------------------------------------------- Wednesday, July 23, 2008 (SF Chronicle) Travel fees give airlines a solid revenue source/Industry believes cutbacks= also can help save money Chris Kahn, Associated Press (07-23) 04:00 PDT Phoenix, Ariz. -- New travel fees mean hundreds of millions of dollars a year for beleaguered airlines, and executives say they need them more than ever as fuel costs continue to suck profits out of the industry. Plane tickets, it seems, now come with only the bare bones promise of getting from Point A to Point B. United Airlines, US Airways and Jet Blue all posted big losses Tuesday, though all three beat Wall Street estimates. Airline stocks, which have been at historic lows for many carriers, shot up as oil prices dropped more than $4 per barrel at one point in Nymex trading. "We'll manage through this," US Airways Chief Executive Officer Doug Parker said of the continuing pressure to cope with fuel costs. "It's not outrageous to suggest that what's already been done is enough to get the industry profitable in 2009." Last week, Atlanta's Delta Air Lines Inc. reported a $1.04 billion loss for the quarter and AMR Corp., the Fort Worth, Texas, parent of American, posted a $1.45 billion loss for the same period. Continental Airlines swung to a $3 million loss. Amid the dismal profit numbers, airline officials told Wall Street analysts that the silver lining is that a la carte fees may eventually stem the bleeding. US Airways Group Inc., for example, expects to raise an additional $400 million to $500 million annually, up $100 million from earlier estimates. The Tempe, Ariz., carrier has added charges for bags, sodas and choice seats in coach. The airline announced previously that it will remove movie systems from many domestic flights to save on fuel. Meanwhile, JetBlue hopes to bring in about $40 million from customers buying seats with extra leg room this year. Its $15 fee for a second checked bag is expected to translate into about $20 million in additional revenue. A ticket change fee, which doubled to $100 in the second quarter, is part of a "basket of fee changes" expected to produce about $50 million in extra revenue in 2008. United, which expects a $3.5 billion fuel bill this year, said it could see $275 million from checked luggage fees as well as other baggage charges. "We're doing all we can to control our costs and to improve our revenue = to offset fuel," CEO Glenn Tilton said. Minneapolis airline expert Terry Trippler said the new travel fees are here to stay. If anything, Trippler said, airlines probably will look to include more fees like charges for carry-ons. "Whatever is going to cost them money is going to cost you money," he said. "You carry on a bag, the weight of that bag is going to cost the airline money; therefore, it will cost you money. You want a soda, well, to carry those sodas on a plane or to buy them will cost them money; therefore, it will cost you money." Consumers need to realize that air travel is no longer the luxury it once was, Trippler said. When people think of airlines, he said, they should imagine it like a big bus with wings. "You have no amenities on the bus," he said. "And guess what: They also ask you to pay for a second bag on a bus." Besides the extra fees, airlines are expected to make big reductions in the number of routes they offer. By parking planes and cutting seating capacity, executives hope to keep demand (and therefore fares) high for the remaining tickets. According to estimates by US Airways, any round-trip ticket needs to cost more than $299 to cover the cost of fuel. So US Airways said it will further cut capacity 6 to 8 percent on domest= ic flights in the fourth quarter, and then cut an additional 8 to 10 percent in 2009. United will trim overseas routes by 7 percent in the fourth quarter. Routes to be eliminated will include Denver-London, Los Angeles-Frankfurt and San Francisco-Nagoya, Japan. Tilton said United will close its Nagoya station. Tilton said fourth-quarter mainline domestic capacity will shrink 16 percent compared with the previous year. United dropped about 50 routes from its domestic schedule on Thursday alone as it takes 100 aircraft out of its fleet, including all of its 737s, Tilton said in a message to employees on Tuesday. JetBlue expects September capacity to be down 10 percent and does not expect to grow next year. JetBlue says capacity will slip 1 to 3 percent in the third quarter and fall 6 to 9 percent in the fourth quarter. US Airways and United also announced that they will cut their workforces even more than previously announced. United had announced plans to eliminate roughly 3,800 jobs through furloughs, layoffs and early retirement packages, including as many as 1,600 from salaried workers and management. But on Tuesday the company said it will aim to cut 7,000 jobs by the end of next year, with the additional reductions coming from front-line workers. US Airways said it cut more management jobs and will eliminate 2,000 positions, an increase from the 1,700 positions it previously announced. Despite the weak earnings reports, airline shares climbed in Tuesday's session as oil prices tumbled. At the closing bell, UAL was up $3.42 to $8.41; US Airways shares added $1.58 to $4.27, and JetBlue rose 61 cents to $4.50. ---------------------------------------------------------------------- Copyright 2008 SF Chronicle <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> If you wish to unsubscribe from the AIRLINE List, please send an E-mail to: "listserv@xxxxxxxxxxxxxxxxx". Within the body of the text, only write the following:"SIGNOFF AIRLINE".