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United Follows American’s Lead in Checked Baggage, Will Charge for 1st Checked Bag June 12, 2008

Posted by Andrew in Airbus, American Airlines, Boeing, United Airlines.
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United Airlines announced two amendments to its checked baggage policy this morning. United, following in the steps of competitor American Airlines, disclosed today that it will begin charging those flying domestically (or to Canada) in economy class $15 for their first checked bag. The fees are waived for passengers flying internationally in all classes or domestically in either First or Business class. Those that hold Premier Status with United or within the Star Alliance are also exempt from these new fees.

John Tague, executive vice president and chief operating officer of United Airlines, attributed the new fees to the current difficult operating climate of commercial aviation, writing in a United  press release that “with record-breaking fuel prices, we must pursue new revenue opportunities, while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for.” United predicts that the new fees, which will be levied to select customers who bought their tickets after June 13, will generate an estimated $275 million a year in revenue. With United Airlines following rival American’s suit, expect other legacy carriers in the coming days to adopt charges for the first checked bag as well.

Source: United Airlines Press Release

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United Vows to Ground More Aircraft– Across the Atlantic, British Airways Looks to do the Same June 4, 2008

Posted by Andrew in Airbus, Boeing, British Airways, Commercial Aviation, Qantas, Ryanair, United, United Airlines.
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United Airlines announced its intent today to ground one hundred of its least efficient aircraft and slash over one thousand jobs as it works to combat the high price of jet fuel. Across the Atlantic, British Airways dispelled any notion that they were immune to the same market forces dogging their American counterparts. Citing high oil prices, British Airways CEO Willie Walsh said: ‘It doesn’t make sense with oil at $130 a barrel to operate flights that have not made a contribution to our cash situation. We have a healthy balance sheet. But we can’t afford to be complacent.’

While British Airways is framing their decision as proactive, the situation at United Airlines is more dire. United is slashing mainline domestic capacity by seventeen percent, and even cutting international operations, traditionally its most profitable segment, by four to five percent. Such measures include laying off an additional one thousand employees, dismantling United’s all coach offshot TED, and even mothballing Boeing 747 aircraft. Ultimately, United Airlines seeks to reduce its fleet size by twenty percent,  and will slash the size of its workforce to reflect the size of its diminished fleet.

Meanwhile, the rhetoric coming from British Airways chief Willie Walsh  is cautionary– for now. But the carrier is evaluating each route on a “route by route basis”, and contemplating grounding aircraft after the busy summer season– on the heels of recent similar announcements from  competitors Qantas and Ryanair. Further cost savings will be accrued as British Airways alters its method of repainting its aircraft. The carrier plans to entirely strip planes of their former paint jobs when they are brought in for refurbishment, a costly process, but one capable of knocking off as much as eight hundred pounds of weight.

US airlines are experiencing a time of downsizing akin to the aftermath of September 11, 2001. However, their troubles are hardly isolated to North America, and with high oil prices worldwide becoming the norm, and not an exception, worldwide airlines are taking a closer look at the efficiency of their aircraft and profitability of individual routes.

Sources: Chicago Tribune, UK Airport News.