New fee at US Airways: $2 soda

You want a Coke at 30,000 feet? It's going to cost you $2.

US Airways yesterday became the first major airline to announce that it would charge for soft drinks, among other sweeping initiatives that include layoffs, to offset spiraling fuel costs.

The region's dominant airline, which transports two-thirds of the passengers at Philadelphia International Airport, also followed the lead of American and United Airlines in charging $15 for a first checked bag.

US Airways said it would cut domestic capacity - seats and flights - 6 percent to 8 percent this year and next.

The moves came after the board of directors met Wednesday and yesterday to discuss ways to offset nearly $2 billion more in fuel costs in 2008.

To break even, US Airways said it needed to get an average $650 to $700 per passenger per round trip from a combination of higher fares and fees. Chief executive officer Douglas Parker said the airline was "nowhere close" to that.

The airline said it hoped to achieve some of the 1,700 job cuts by attrition and voluntary leaves. Six hundred customer-service jobs in Las Vegas will be eliminated.

"It will be a minor reduction [in flights or routes] here," said Bob Ciminelli, the airline's executive vice president of Philadelphia operations. "All the gates we have here will still be needed."

Ciminelli said, "There will be some domestic reductions," but "internationally, there will not be."

Whether capacity cuts here will entail reductions in flight frequency or route elimination is not known yet, he said.

"Even with the announcement, we still plan to grow internationally" in Philadelphia, said Ciminelli, who works in Terminal B.

What passengers will start noticing is increased fees for everything from soft drinks to booking telephone reservations to buying a ticket at the airport. Once-complimentary sodas, juices, water and coffee will cost $2 on domestic flights.

Travelers who use Dividend Miles travel awards to get tickets for flights will pay a processing fee: $25 for domestic flights, $25 for tickets to Mexico and the Caribbean, and $50 for Hawaii and international flights.

On Aug. 6, US Airways is eliminating its bonus-miles program for Preferred Status Dividend Miles customers, who currently get mileage bonuses based on their status level. Travelers after that will be credited one point for each mile flown, and no bonus points.

The cost of buying a ticket from a call-in reservation center, which had been $15, will rise to $25 for domestic tickets and $35 for international tickets. The cost of buying a ticket at the airport, now $20, will be $35 for domestic and $45 for international flights.

US Airways expects to generate $300 million to $400 million annually with the new revenue and fee initiatives.

The airline also plans to return 10 leased aircraft this year and next and to cancel leases of two A330 aircraft that were scheduled for delivery in 2009. The fifth-largest U.S. carrier plans to continue reducing its fleet in 2009 and 2010.

US Airways' job cuts, out of 36,000 systemwide, will include about 300 pilots, 400 flight attendants, 800 airport employees, and 200 staff and management. Philadelphia's Ciminelli said any customer-service cutbacks here would be through attrition.

John McCorkle, president of the Association of Flight Attendants in Philadelphia, said 200 flight-attendant cuts would come from the ranks of those who worked for America West before the merger with US Airways in 2005. The other 200 will be among former US Airways attendants. The two airline unions' contracts have not been merged.

US Airways has told employees that it would offer voluntary leaves before furloughing flight attendants and pilots. "We knew this was coming," McCorkle said, "in light of what some of the other airlines have done."

Effective Sept. 3, the Las Vegas night operation will have only limited night service to the East Coast. Daily departures from Las Vegas, which were 141 last September, will drop to 81 with the Sept. 3 schedule change and will drop to 74 by the end of the year as aircraft are retired.

US Airways said it would close US Airways Clubs in Baltimore, Washington International Airport and Raleigh Durham, effective Aug. 6. It will no longer offer arrivals lounges in Munich, Rome and Zurich. The airline will close its cargo stations in Burbank, Calif.; Colorado Springs; and Reno, Nev.

US Airways joined United and American in charging $15 for a first checked bag. The fee will go into effect for tickets booked on or after July 9 for domestic flights.

The bag fee will be waived for frequent-flier passengers in Silver, Gold, Platinum and Chairman's Preferred programs, and first- and envoy-class passengers, as well as some other passengers, including military passengers and unaccompanied children.

US Airways' fuel cost per roundtrip passenger averages $299 this year, about double the $151 cost last year, CEO Parker said. Fuel costs represent only half the airline's per-ticket expenses.

Airlines have been scrambling to cut costs and increase revenue as jet-fuel prices have soared.

Merrill Lynch analyst Michael Linenberg projects that the airline industry will lose $5.3 billion in 2008.

Since December, eight U.S. airlines have gone out of business. Analysts said that if airlines did not find new revenue sources, several more would go into bankruptcy.

Airlines must "find the courage to transform now and impose higher fares and fees" that directly match revenue with operating costs, aviation consultant Darryl Jenkins said.

"It is time for fundamental change in the way the industry flies," Jenkins said. "It's also time for passengers to radically adjust their thinking on what flying really costs."