May Counters Airlines Are Still Hurting, Despite Recent
Windfalls
On the heels of its story about
so-called "dropped" fuel surcharges, USA Today
also took the airline industry to task for adding still-more
confusing fees when fuel prices were rising, then failing to share
falling fuel costs with customers.
The op-ed piece notes a nationwide survey by AAA finds regular
unleaded auto fuel averaging $2.30 per gallon this week. Jet fuel
has followed suit, at $2.16 cents, down 45 percent from its peak in
July.
USA Today says fees for a traveller's first checked bag should
be dropped in response, but notes Delta just announced it will
become the sixth major carrier to do so, effective December 5.
The paper states, "We're sympathetic to the industry's financial
plight after a year of soaring fuel costs, which have created steep
losses. And customers' obsession with finding the lowest base fares
on the Internet makes it hard for carriers to cover costs on
competitive routes. But it looks as though some airlines have
become addicted to the money the surcharges and add-ons bring in,
and they're not about to let go.
"If airlines expect customers to put up with surcharges and
pesky add-on fees blamed on high fuel costs, both should bear a
strong relationship to fuel prices. That's no longer the case.
Passengers deserve an explanation, or better yet, a break."
In his reply to the USA
Today editorial, James May (right), President and CEO of the Air
Transport Association, counters that airlines, "...have not come
close to earning back what they lost, and their fares have not been
able to keep up with the overall rate of inflation. Unfortunately,
US airlines have been profitable only in two years since 2002.
"Even if prices stabilize and the industry is marginally
profitable in 2009, it will take much more than a year or two of
profitability to recover from prolonged losses and to restore badly
needed financial stability."
As for the ala carte fees which have become the industry norm in
the past year, May echoes the findings of Robert Buckman, Director
of Airline Distribution Strategy for Amadeus IT Group.
In an ANN Feature Aero-Cast last month,
Buckman told ANN while the media has decried the separation of
optional services into ala carte fees, consumers find it
advantageous. May agrees, saying customers have shared with the
airlines that many prefer a menu of services they can pay for
separately in return for lower fares.
May adds that airline tickets sold months in advance must allow
for unpredictable costs, and permit the airlines to make necessary
future investments.
"Ultimately, it is competition in this marketplace that will
best determine how airlines price their products."
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