US Airways plans to announce tomorrow that it will bring complimentary sodas, juices, tea, water and coffee to its flights starting next month. Charging for soft drinks — particularly bottled water — was highly unpopular with many of its passengers.
Drinks haven’t been free in economy class since Aug. 1, when US Airways announced what it called a Business Model Transformation.
Here’s the letter US Airways’ Doug Parker has sent to employees:
Tomorrow morning we will make an announcement returning complimentary sodas, juices, tea, water and coffee to US Airways. The free beverage service will resume on March 1. This change reverses part of the a la carte business model we believe is right for our business and I’d like to explain why we made this decision.
When we launched the beverage purchase program in 2008 we knew it would generate additional revenue. From this perspective the program was very successful. What we didn’t know at the time, but later experienced, was that the cabin atmosphere would also improve with fewer carts in the aisles and shorter lines to the lavatories.
Today, while we remain firmly committed to the a la carte strategy – we also know it is a work in progress. We know customers don’t buy an airline ticket based on whether or not they will get a free soda onboard, but with US Airways being the only large network carrier to charge for drinks, we are at a disadvantage. More importantly, this difference in our service has become a focal point that detracts from all of the outstanding improvements in on-time performance and baggage handling that all of us have worked so hard to achieve over the past year.
We are not making this decision because the airline industry is now healthy. To the contrary, while oil prices have dropped, a global recession is having a material negative impact on industry revenues and our industry still needs business model changes as much as ever. Moving to an a la carte model has helped us build an airline that can withstand the uncontrollable factors that influence our industry and we need to keep trying new programs, like a la carte pricing. Frankly, it would have been a bigger risk for us not to have tried charging for drinks because innovation and a new business model are desperately needed.
In fact, we still expect to generate $400 to $500 million in 2009 from a la carte items like checked baggage fees, Choice Seats, and our new blanket and pillow offering – the US Airways Power-Nap Sack ™.
Aggressively managing our business by anticipating what our world may look like in the future is the cornerstone of our culture. In other words, we are always thinking differently about how we operate and are not afraid to take a chance on new ideas designed to provide career certainty and stability, great customer service and positive returns for our shareholders. It is also part of the reason we received a vote of confidence from our investors and business partners last fall when we raised close to $1 billion to help keep the airline strong.
We will be issuing a press release announcing this news early tomorrow morning, as well as posting it on Wings and theHub. Thank you for continuing to take care of our customers.
US Airways has done right by its customers today.