A shocking bit of news today as United Airlines (UAUA) reported $252 million in red ink, not counting its unrealized losses on underwater fuel hedges: The fees are here to stay, at least on United, just as the golden era of loosy-goosy bargain fares is dead. Here’s John P. Tague, United’s COO, responding to an analyst query on any customer resistance over baggage fees and other revenue-boosting changes:
They are ubiquitous amongst the legacy carriers now. Certainly customers are frustrated in becoming accommodated to this but at the end of the day, we’ve got to run this business to make a real margin, and the revenue model has been broken around contributing an appropriate amount to the margin. And if that means the business has to be smaller in order to drive to that outcome, so be it. So I mean, these are just things that are going to be necessary if we’re going to be a real industry.
A real industry. We could argue for eons whether U.S. airlines can, should or ever will be a real industry — if anyone could even agree on what that means. But at least I think we can lay to rest the illusion that the revenue hunt has any fundamental connection to Jet A prices.
http://businessweek.com/lifestyle/travelers_check/archives/2008/10/airlines_to_pub.html
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