Greg Gerber posted on June 03, 2008 17:43
NEW YORK -- Imagine two scales at the airline ticket counter, one for your bags and one for you. The price of a ticket depends upon the weight of both.
That may not be so far-fetched.
``You listen to the airline CEOs, and nothing is beyond their imagination,'' said David Castelveter, a spokesman for the Air Transport Association, a Washington, D.C.-based trade group. ``They have already begun to think exotically. Nothing is not under the microscope.'' He declined to discuss what any individual airline might be contemplating, including charging passengers based on weight.
With fuel costs almost tripling since 2000, now accounting for as much as 40 percent of operating expenses at some carriers, according to the ATA, airlines are cutting costs and raising revenue in ways that once were unthinkable. U.S. Airways Group Inc. has eliminated snacks. Delta Air Lines Inc. is charging $25 for telephone reservations. AMR Corp.'s American Airlines last month became the first U.S. company to charge $15 for one checked bag.
After U.S. airlines reported combined first-quarter losses of $1.7 billion and crude oil jumped to a record $133.17 a barrel on May 21, almost double from a year earlier, fares based on a passenger's weight may be a logical step, said Robert Mann, head of R.W. Mann & Co., an aviation consultant based in Port Washington, New York.
``If you look at the air-freight business, that's the way they've always done it,'' he said. ``We're getting treated like air freight when we travel by airlines, anyway.''
``Laughter aside, the airlines are just in a desperate situation,'' said David Swierenga, president of consulting firm Aeroecon in Round Rock, Texas, who dismissed weight-based ticket sales and steep price increases as unrealistic.
Since December, eight companies have ceased flying, largely because of fuel costs -- MaxJet Airways Inc., Big Sky Transportation Co., Aloha Airlines Inc., ATA Airlines, Skybus Airlines Inc., Eos Airlines, Silverjet Plc. and the charter- flight operator Champion Air. Air Midwest, a division of Mesa Air Group Inc., is ceasing operations this month.
Airlines may report combined losses of $6.1 billion this year, the worst since 2003, the International Air Transport Association said yesterday in Istanbul. Swierenga said the only meaningful way for them to reach profitability is to idle a portion of their fleets, which would allow them to reduce costs associated with fuel and labor.
``The solution lies in capacity cuts,'' he said.
SOURCE: Bloomberg