ATW Daily News

US Airways expects soaring ancillary revenue

Wednesday March 25, 2009

US Airways expects to generate $400-$500 million this year in ancillary revenue, according to President Scott Kirby.

Speaking yesterday at the airline's media day in Phoenix, Kirby said that after initial negative reaction, there has been "very little consumer pushback" to the new fees. Ancillary revenue contributed $165 million to US last year, with $116.5 million coming from the first-bag fee, $37.6 million from the second-bag fee, $5.3 million from the Choice Seats program and $5.7 million from increased beverage fees.

US Airways was the only American major airline to charge for soft drinks, a policy it dropped this year owing to both consumer complaints and lack of competitive match (ATWOnline, Feb. 24). Kirby and Chairman and CEO Doug Parker expressed regret that those charges were not matched. Executive VP and COO Robert Isom told ATWOnline that the soft drink fees could have brought in $10 million this year and also helped reduce cabin clutter and waste.

Parker noted that passengers are checking approximately 20% fewer bags, and "with 20% fewer bags in the belly, we can do a much better job connecting people with their bags."

Kirby also said US has not seen any share shift to Southwest Airlines, its closest competitor, as a result of the new fees. SWA does not charge for checked bags or other ancillary products. He said last week that the carrier expects rising ancillary revenue to compensate for falling yields (ATWOnline, March 18).

by Perry Flint

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