US Airways on March 1 will reverse course on its fees for non-alcoholic beverages on domestic flights, the company said today.
Chairman and CEO Doug Parker in a statement today said the carrier was the only legacy competitor to institute a fee for nonalcoholic beverages last year, charging customers $2 for water, coffee and soda. Parker said that move has put US Airways at a "disadvantage."
US Airways in June last year announced capacity reductions, job cuts, aircraft withdrawals, lounge closings and a slew of ancillary fees, including a $15 first-checked-baggage charge and the beverage charges, to offset last year's seemingly intractable fuel costs
(BTNonline, June 12, 2008).
The carrier in August last year began charging coach customers for all beverages onboard domestic flights, raising alcoholic beverages from $5 to $7 and charging $2 for previously free nonalcoholic beverages. Alcoholic beverages will maintain the $7 price tag.
Though the carrier is reversing course on the beverage fees, Parker said US Airways remains "committed to the a la carte model and believes it's the right one for our business."
The carrier held firm to its estimate that its remaining portfolio of unbundled options—from checked-bag fees to charges for pillows and blankets—will help net the carrier between $400 million and $500 million every year. Executive vice president and CFO Derek Kerr during the carrier's fourth-quarter earnings call last month showed ancillary revenue targets to be on track, as US Airways "recognized approximately $100 million of a la carte revenue," he said.