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United Airlines: In shambles, but remain optimistic on fuel and on reducing carbon dioxide emissions

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Nelson Alcantara  Jun 12, 2008

HONOLULU (eTN) – As expected, United Airlines is following American Airlines’ lead and will soon begin to implement two changes to its domestic checked bag policy. The service fee to check one bag for domestic travel will be $15 each way and the fee to check three or more bags, overweight bags or items that require special handling will increase from $100 to $125 or from $200 to $250, depending on the item.

According to United, these changes apply to customers who purchase a ticket on or after June 13, 2008 for travel within the US and to/from Canada, Puerto Rico and the US Virgin Islands on or after August 18, 2008. The $15 service fee does not apply to customers who are flying in United First or United Business or who have premier status with United or Star Alliance.

“With record-breaking fuel prices, we must pursue new revenue opportunities while continuing to offer competitive fares, by tailoring our products and services around what our customers value most and are willing to pay for,” said United Airlines executive vice president and chief operating officer John Tague.

United estimates that the new $15 service fee will apply to one out of three customers, and the potential revenue from baggage handling service fees, including those for checking a first and second bag, will be approximately $275 million a year.

The fee to check a second bag is $25 each way and applies to customers who purchase Economy tickets for travel exclusively within the 50 United States, Puerto Rico, US Virgin Islands and Canada, and who do not have premier status in Mileage Plus or Star Alliance.

For itineraries that include international flights (except Canada), checking a first and second bag will continue to be free, and the cost to check more than two bags or items that are overweight or require special handling varies by destination.

Customers may pay these service fees at an airport check-in kiosk with a credit card or at the check-in counter with a credit card, check or cash. To ensure smooth operations at the airport, later this year, United will have developed the ability for customers to pay for baggage fees via united.com when they check-in online.

Worst airlines?
Ironically, the move comes as United was lambasted yesterday by Joe Brancatelli in a Washington Post article citing the airlines as “the absolute worst” airline in the industry.
“Just 29 months removed from the longest, costliest, and least-effective bankruptcy in aviation history, the nation's second-largest airline is once again facing a financial abyss,” Brancatelli wrote. “United's first-quarter net loss of $537 million was more than its two main competitors combined. Last month it paid a huge premium to avoid a default on its loan covenants.”
Accoriding to him, United’s “4 percent decline in passenger traffic in May was twice as steep as that of any of its competitors.”
He added, “Last week's announcement that it would ground 100 aircraft, reduce capacity by 10 percent, and shed thousands more workers was startling given the huge contraction it already experienced while in bankruptcy. A 19-month search for a merger partner resulted in rejections from Continental Airlines and US Airways, a carrier that was desperate to sell itself to United just eight years ago. The airline's shares slid into single digits last week from a 52-week high north of $50.”
Brancatelli also pointed out that United's day-to-day operations have also deteriorated markedly. He said, “Its no-frills Ted sub-brand is being closed, the airline's second expensive failure in the low-cost arena this decade. Travelers are furious about service cuts - the airline has eliminated some meals and some luxurious perks - on United's high-priced PS (for premium service), which runs in the high-profile Transcon Triangle between New York, Los Angeles, and San Francisco. And in April, United's overall on-time performance slumped to 72.7 percent, five points below the industry average and 18th among the 19 carriers tracked by the US Department of Transportation.”

Climate change trailblazer?
But, bad news isn’t all that’s coming out of United Airlines’ camp; the company has some positive things to report as well. As part of the company’s ongoing efforts to conserve fuel and improve environmental performance, United Airlines said that it has signed a multi-year agreement with Pratt & Whitney for their patented environmentally friendly EcoPower® engine wash system offered by Global Service Partners, a unit of Pratt & Whitney, a United Technologies Corp. company. United projects a 3 million gallon savings in jet fuel annually, reducing carbon dioxide emissions by approximately 28,000 metric tons.

“With unprecedented fuel costs, United continues to look for innovative solutions to save on jet fuel,” said Rick Wysong, vice president – Engineering, Materials and Planning. “In addition to saving fuel and improving engine performance, this system has the added benefit of being a faster, safer and more environmentally friendly way to clean our engines, enabling us to reduce our overall carbon dioxide emissions.”

United said it expects the washes to reduce fuel burn, eliminate hundreds of millions of pounds of carbon dioxide emissions and improve exhaust gas temperature margin, which will enhance engine performance.

“With regular washings, we expect United’s fleet and their customers’ engines to operate more efficiently, burn less fuel, stay on-wing longer, and cost less to maintain,” said Jim Keenan, senior vice president and general manager, Pratt & Whitney Global Service Partners.

United Airlines said it will implement the engine washes on all aircraft in its fleet by this fall and will begin offering the service to third-party customers. United will perform washes at several airports worldwide including San Francisco, Los Angeles and Washington.

United Airlines: In shambles, but remain optimistic on fuel and on reducing carbon dioxide emissions



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