US Airways Madness!

I’m in utter shock right now. Call me naive, but I never thought I’d see this day. I’m scared. I feel like crawling up in a corner and polishing my elite cards, because this might be the end. I think I need professional help, as I fear I’ll have nightmares after today’s news.

As we all saw, USAir announced massive changes today (outlined by Gary at View From the Wing). Two changes in particular shocked me. I used to think “Hey, it’s USAir, who cares?” (after all, their ticker symbol is “LCC”), but not anymore. I’ve sat on the sidelines as the airlines have instituted fee after fee (understandably, the industry is in the gutter right now with fuel prices, so they need to get creative) and nodded my head in semi-approval. When US announced they wouldn’t count the minimum of 500 miles per segment anymore I laughed, stuck out my tongue at the people that fly US, and figured no other airline would be stoo-pid enough to follow. Then UA matched. Ouch!

First, let’s start with the stuff I can live with, and in a way something that I view as semi-good news, as outlined by Gary:

An “award redemption processing fee.” American recently announced a minimum $5 fee for redemptions made online, and that crossed a line for me — a fee to use your miles for a free ticket. US Airways takes this to a new level beginning on August 6th: $25 to redeem for US domestic and Canada tickets, $35 for tickets to Mexico and the Caribbean, and $50 for Hawaii and international. (No word yet what this would mean for a Star Alliance award intra-Japan, say. Is it $50 for Tokyo-Nagoya?)

Why is this semi-good news in my opinion? Well, the speculation for a long time has been that airlines in the US would start charging fuel surcharges on awards. When they say fuel surcharges, for those that don’t participate in any non-US based FFP’s, they’re talking $400+ for an international award, making you think twice about even taking advantage of a “free” ticket. In a way I’m happy to see a $50 fee, since it likely means we won’t see outrageous fuel surcharges for a while. I have no problem paying $25-100ish for an award, especially for an international premium cabin one, but as soon as we’re talking about $300+++, I shake my head. So thumbs sideways on that one from me.

Furthermore, as The Flying Critic reports, US will start charging for the first checked bag. You can find all the details on his site. That’s not really surprising, especially since UA beat them to the “punch” on this. In a way I think charging for checked bags is a good idea from the persepctive of the airline assuming they enforce their carry-on restrictions, since there’s quite a bit of cost involved in transporting a bag from one side of the country to another, let alone two. What I fear, sadly, is that people will be carrying on kitchen sinks and SUV’s, which means departure times could get pushed back a bit, not to mention make boarding extremely hectic. Worst of all, it would eliminate the benefit of boarding via the “Red Carpet” on UA at our leisure, since we’d basically be forced to board early in order to secure overhead bin space.

Now, let’s make me cry. As Gary reports:

They’ve also announced that they are “Introducing a new in-flight beverage purchase program.” I love the description. It sounds exciting, new and improved, now 25% larger!

“US Airways will begin selling all non-alcoholic beverages (including sodas, juices, bottled water and coffee) in its domestic coach cabins for $2 effective Aug. 1, 2008. Alcoholic beverages will be available for $7 (currently $5). …

Complimentary beverages will continue to be served in domestic First Class, US Airways Shuttle flights, trans-Atlantic Envoy and trans-Atlantic economy class. Unaccompanied minors will also receive complimentary non-alcoholic beverages.”

I know this is very common in Europe for the LCC’s (they actually have ridiculously low fares though!), but I never expected to see it in the US. Heck, I’m betting we’ll see some lawsuits from people that dehydrate (of course never actually telling the crew), and then later sue the airline for emotional distress or what not. For me this is just an all time low, something I never wanted to see happen. What does it cost an airline for a can of soda, 25 cents at most? I guess they can potentially generate some revenue from this, but that doesn’t take into account all the passengers they piss off and that take their business elsewhere. I’m really hoping no other airline even thinks about following.

While I’m at it, isn’t it kind of funny how the US airline industry has transformed? The legacy carriers used to be the full service, luxury airlines, and now the “low cost carriers” are the ones offering full services. Heck, I’d go so far as to say that Southwest is our nation’s premium carrier right now! Never thought I’d see the day…

Now, here’s what scares the hell out of me– US eliminating bonus miles for their elite members!!! What the frog? This is an incredibly stupid move on their part. If they had reduced the bonuses a bit I might be able to see that making sense, but eliminating them entirely? You’ve gotta be kidding me!

I think this move specifically will hurt US a ton, since bonus miles are very important to almost every frequent flyer I know. By association, less people will be loyal to US (as a large chunk of the incentive is gone), and as a result I’m betting their US-branded credit card spend will go down as well, as members choose other programs to earn miles with. Those programs are utter cash cows, the only think in the industry that seems to be making any money nowadays, so I think they’re shooting themselves in the foot on that one.

As much as I’d love to think no other airline would be dumb enough to follow US’s initiative, I’m scared, I really am! I thought the same thing when US eliminated 500 mile minimums, and we saw how that ended up. So I’m desperately hoping that no other airline matches. If UA matches this (as in completely eliminates bonus miles for elites), I will without a doubt switch airlines, assuming the other airlines don’t follow as well.

The one thing which makes me think there’s a decent chance UA will follow is the fact that those flying US and crediting to UA are still earning elite bonuses, so that’ll most likely stop. So let’s hope that UA would only eliminated the 100% bonus when flying US, and NOT when flying UA.

To wrap it up, I think the US airline industry might be going where it has never been before, specifically for elites. While elites have stayed relatively immune to most of the recent changes, this one hits them right where it hurts. If other airlines follow, this might totally change the game for many of us, and if others match, this won’t be the end of creative cost saving measures related to mileage programs. Who knows, maybe the only perk by the time that this is done will be first class check-in and priority boarding?

The industry is going places, and I don’t like it one bit…

Comments

  1. I think it is a given that UA will stop awarding the mileage bonus for UA flyers on US flights. Why should UA keep encouraging UA elites to fly on US if US isn’t encouraging US flyers to fly UA anymore?

  2. Well suposedly because UA is getting paid by US for having flights credited to them. Similarly, other Star carriers haven’t changed their policies re: mileage accrual when flying US as a result of US’s 500 mile minimum elimination, so I wouldn’t be so sure.

  3. Well clearly if UA is contractually obligated to award the bonus miles (and is getting paid) they aren’t going to drop it. But if US was able to stop the bonus for US elites flying UA my guess is there is no such obligation.

  4. What I would like to know is will the TSA now allow outside beverages into the airport? Or will airports be required to sell beverages at “street” prices? Would this be fodder for an anti-trust lawsuit based on the amount the airports and now airlines are charging for beverages and other necessities you can’t bring past security? So what, when you fly you now can expect to get fleeced? I can buy a 20oz bottle of Coke for a $1.20 and less if I buy a case. My local airport charges $2.50 which is over a 100% mark up!

  5. Its like the movies: “no outside refreshments allowed”

    If you’re thirsty – you have to buy something (or hit the oh-so-nasty water fountain).

    This can only be good news for the airpot vendors. When I was in college, I was cheap enough to wait for the free drink when I got on the plane instead of buying one one at the airport.

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