|We Love To Fly Cheap, and We Hope It Doesn't Show|
|Subject||Fixed and variable costs|
|Topic||Production and costs|
|Key Words||Money, economy, costs, fees, cost-cutting|
The major airlines are losing money due to the weakening economy and rising costs. In reaction they are attempting to cut costs and increase fees. For instance, United and American are each trying to save $200 million.
The cost-cutting measures are designed to be transparent. United has terminated its practices of offering grapefruit juice and hot-towel service. In first class, linen tablecloths are no longer offered on short flights. A McDonald's kid's meal has been replaced by United's own version. Northwest will only offer first-class passengers one glass instead of two at dinner, arguing that passengers rarely drink both water and wine. The airline expects to save $150,000 a year. Another $100,000 will be saved by reducing oversupplies of miniature liquor bottles in international business class. Delta will wait to introduce new varieties of wine until all the stocks of the current varieties are finished. Southwest will print only 30,000 copies of its annual report, instead of 250,000, saving $200,000; stockholders will have to request a report if they want one.
American has introduced a $10 fee for paper, but not electronic, tickets, except where bought through travel agents. Full-fare and top frequent fliers are exempt. This is because paper tickets are more costly to issue. Overnight delivery of travel documents for trips starting more than seven days after booking will cost passengers $25.
(Updated June 1, 2001)
|Source||Chris Woodyard, "Airlines rein in passenger frills to cut costs," USA Today, April 12, 2001.|
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