US Airways makes soda free again
Feb 23rd 2009 9:30AM
Updated Feb 27th 2009 4:15PM
"With US Airways being the only large network carrier to charge for drinks, we are at a disadvantage," CEO Doug Parker wrote in a memo explaining the decision to employees. "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."
Consumers and the media love to get workedup about stuff like this, and that's why US Airways opted to discontinue it. But long-term, I actually think a la carte pricing on everything from pillows to soft drinks is good for consumers because it generates revenue that can serve in lieu of increases in fares: And if you want a pillow or soft drink, you're still free to buy it! The more overpriced they are, the more cash they contribute to "buying down" rates on plane tickets.
US Airways decision to stop charging for beverages will be appreciated by consumers because it won't cause enough of a drop in revenue for their to be a noticeable increase in ticket prices. But rest assured: US Airways will have to make up the revenue somewhere.