jfhscott

The latest, quoted from an email I received from UA today:

I am writing to notify you that the United Red Carpet Club(R) at the following airports will be closing: -- Atlanta International Airport -- Baltimore/Washington International Airport -- Dallas/Fort Worth International Airport -- Minneapolis/St. Paul International Airport With record-breaking fuel costs, we are continually working to better allocate our resources to provide the products and services that matter most to you. The decision to close the clubs was based on a number of factors including customer usage, operating cost and strategic alignment.

What gives? (Rhetorical question).

Just how much in added costs and reduced service can be fairly blamed on fuel costs? It seems that UA and others have made a fuel costs a Trojan Horse through which no end of unrelated additional costs and downgraded services jave been excused.

I can see the relationship between fuel costs and decreased frequencies, and perhaps even bag fees, but who will call b******* when higher drink prices and decreased amenities are blamed on fuel costs?

WBurcham

Higher fuel costs = higher expenses
increasing fees = additional revenue
cutting services/amenities = less expenses
raising ticket prices only meets some of the additional costs as trips are booked in advance and not all airlines will take the increases.

ryan182

we need two or three more airlines to go under and WNs fuel hedges to get thinner and then everyone can just (and here's a shocking idea) charge customers a price for their services that at minimum covers their costs.

ctstan

To me although I understand the frustration --- it is just economics. We could debate forever why fuels costs are up and what was the cause. Simple fact is that cost are sky high - and other than some higher than should be exec salaries (which is true in many industries) there isn't alot of fat to cut without decreasing service, charging more for the same service, or a combo of both.
I don't like paying higher ticket fares, being nickel and dimed to death, or having services cut, but ..... if they are bleeding red ..... whats the alternative?

genesmasher

They say that raising fuel costs translate into everything being more expensive, even those stale muffins they have in RCC's

Stanford_1K

I'm sympathetic to what the OP says -- the RCC e-mail today rubbed me the wrong way too. The perception of the customer is that when different goods/services are priced separately, they ought to go up and down in price or availability based on their own actual expenses, not based on the overall expenses of the company offering them.

Look at it this way: If United offered free drinks and free lounge access as part of the ticket price, then it would seem reasonable to cut back on lounges and free drinks when the price of gas goes up. But it seems less reasonable when they're priced separately: a $5 drink doesn't get more expensive when gas goes up, nor does the cost of operating 38 RCCs become prohibitive (requiring a cutback to 34).

What's really going on is a subsidy: RCC members (and those drinking in Y) are subsidizing the cost of gas for all passengers flying on planes -- they pay the same amount (or more) for fewer benefits (or the same drink). It's not totally unfair, in that people using the RCC and buying the drinks are also the ones flying. But consider this: What about the RCC patron who flies short flights out of BWI, versus a long-haul passenger who flies out of IAD? Is it "fair" to visit the higher cost of fuel on the short-hop BWI guy? In fairness, the long-haul passenger from IAD should pay more for her ticket.

Of course, supply and demand being what they are, fairness isn't really the issue. But I'm with the OP that it's getting annoying to see everything justified by higher fuel costs, because it's a very self-centered statement (we're losing money, so we're going to take a benefit away from you) to put in a customer relations communication.

youreadyfreddie

I don't mind paying a fair price for a ticket. They need to make a profit to stay in business. I don't like being nickle and dimed to death though. I'm anticipating that the lavs will soon be outfitted with coin-operated toilet paper dispensers.

hobo13

Well, that's 12 ounces of additional weight on the plane.....

grayland

So if you are based out of one of the cities that are closing...and you have paid for a RCC membership...you just got hosed. Your membership has just been cut unless you fly into and then out of a city with a RCC...and then you still won't be able to use it when you fly out of your home base.

I can see many members with nearly worthless memberships.

TA

well, maybe it will be more understandable if you ask this question --

In your own life, have you modified *anything* that you usually do, because the cost of gas has gotten so high? I'm guessing you have (just as I have or have thought about doing), and you probably don't ask why your employer isn't increasing your salary to cover the cost?

Is it not similar with the airlines?

I know this doesn't exactly address the RCCs closing -- but you can see it's all part of the belt tightening, right?

VA1379

Airlines are fully justified in saying that rising fuel costs are driving service cuts. People are unable or unwilling to pay the amount necessary to maintain service. The biggest cost at UAL is fuel. It is higher than management salaries and employee wages combined. Until the recent few years, labor costs exceeded fuel costs at US based carriers.

The cost of fuel has gone up more than 50 % in the past year. Even with oil closing under $130 today, it is still about $60 higher than where it was last year at this time. United has few fuel hedges (about 10-15 % of used fuel) and was projecting in mid-June that total fuel costs would grow by $3.5 billion this year over the $6 billion spent last year. (Source: AP article on MSNBC here) This projection was made when spot oil was around $133-135.

WN's fuel hedges will not disappear. They will use periods of price drops in oil to establish additional hedges. WN has more financial resources to do this than any other American carrier. United may get a chance to raise airfares if a carrier disappears, or if capacity cutbacks grow large enough to increase fares significantly. Carriers outside the United States have been more aggressive in raising fares and increasing fuel surcharges. They can do this because they have less excess capacity.

aisleorwindow

At least they didn't say they were closing the RCCs for "security policy".

ORD2World

My advice is we better get used to it. For whatever reasons, passengers seem very sensitive to ticket prices. United needs to come up with around $2,000,000,000 ($2B), as in 2,000 million dollars a year to keep running as a business, due to increase in fuel cost. That money has to come from somewhere.

Reductions in airplane FA staffing; headquarters personnel let go, fees for bags, closure or RCCs. And it's not over by a long shot. I am certain we'll be paying for Award tickets soon (believe Delta is now $25 for a domestic award, $50 for international).

If its any consolation, air travel is still fairly reasonable compared to the old regulated days. I read an article recently, that said a Pan Am B-707 economy ticket for a JFK - CDG flight in 1962, corrected for inflation, would cost $6,200 in 2006 currency.

Stanford_1K

You know, I thought about putting that caveat in there. But then I figured it would be better to let someone make the joke

Daze

I too have a problem with the semantics, but if they were honest and said what you put in parenthesis above, would you be any happier?

They have to get more money in because more is going out....and simply raising fares alone just doesn't seem to be anybody's solution.