In a message to employees on May 30th, United Airlines CEO Glenn Tilton said the airline would not pursue a merger at this time, according to several published reports.

Tilton and US Airways CEO Doug Parker met in Chicago and according to a report in the Arizona Republic, Tilton, who has been vocally pro-consolidation, had reservations about a merger.

Tilton cited several risks to a tie-up, including labor opposition, antitrust issues and record-high fuel prices, according to the Arizona Republic report.

UAL Pursues Continental Alliance
Source: wsj.com

UAL Corp. walked away from a merger with US Airways Group Inc., to pursue an alliance in which it would share some routes and marketing with Continental Airlines Inc. But contractual and regulatory obstacles could delay the potential UAL-Continental linkup until late 2009, and it isn't clear the tie-up would cut costs or boost revenue enough to overcome the surge in fuel prices choking the two airlines.

The United Airlines parent and Continental are in advanced talks about creating a close bilateral marketing alliance and bringing Continental into the Star Alliance, a global marketing group involving 20 major airlines.

United Airlines To Cut Jobs, Ground Planes
Source: msnbc.com

United Airlines said Wednesday, June 4th, that it’s cutting up to 1,100 more jobs, removing 100 fuel-guzzling airplanes from its fleet and slashing domestic capacity as it tries to cope with spiraling fuel prices.

The nation’s No. 2 carrier said it plans to cut an additional 900 to 1,100 salaried, contract and management employees by the end of the year, in addition to 500 previously announced job reductions.

Officials said the “aggressive” moves are designed to the help the subsidiary of UAL Corp. weather an “unprecedented fuel environment.” Crude oil futures prices peaked at a record above $135 a barrel nearly two weeks ago and airline fuel prices have been rocketing higher as well.

“This environment demands that we and the industry act decisively and responsibly,” Glenn Tilton, United’s chairman, president and CEO, said in a statement. “At United, we continue to do the right work to reduce costs and increase revenue to respond to record fuel costs and the challenging economic environment.”

United said it plans to ground its entire fleet of 94 Boeing B737s as well as six of the company’s 747s — its oldest and least fuel-efficient planes. It is also scrapping it’s coach-only “Ted” service and reconfiguring those planes to include first-class seats.

And the Chicago-based carrier will cut mainline domestic capacity by 17 to 18 percent in 2009, while also scaling back international capacity by 4 to 5 percent.

“The decision to dramatically reduce our capacity profile, particularly in the domestic marketplace, while over time eliminating a fleet type, is a significant step leading to a more effective and efficient operating fleet for United in the years ahead, while improving our customer experience and reliability,” Chief Operating Officer John Tague said in a statement.

The nation’s airlines are struggling amid the record-high fuel prices and slashing capacity and jobs while charging customers extra fees.

American Airlines said it plans a drastic fourth-quarter capacity slash and a new fee for some coach customers to check their first piece of luggage among several initiatives to cope with the growing burden of fuel expenses.

The last of the legacy carriers this year to deploy a fee for checking a second bag, American is building on that initiative by introducing a $15 fee for customers to check their first bag. American said it would assess a fee on tickets for domestic travel purchased beginning June 15.

Passageways is pleased to note that no other carrier has yet matched this move.

The carrier said it would shield AAdvantage program members who have achieved Gold level and higher, as well as passengers in business and first class and those traveling on international itineraries, except to Canada and U.S. territories.

American expects to achieve "several hundred million dollars in incremental annual revenue" from that and other fees announced on traveling with pets, oversized baggage and reservation services, including a $20 fee for AA call center reservations and $30 for airport ticket counter reservations.

American also said it would cut mainline domestic capacity by up to 12 percent in the fourth quarter this year, as it plans to retire "at least 75 mainline and regional aircraft." The revised capacity reductions build upon the carrier's previous outlook, detailed last month, that forecast a fourth-quarter decline in available seat miles of 4.6 percent, compared with the same period last year. American now expects domestic mainline capacity to drop by 6 percent for the full year, compared with 2007.

"The capacity changes will result in workforce reductions at both American Airlines and American Eagle Airlines and could result in facility closures or facility consolidation," the carrier said in a statement.

Six Skyteam Carriers Get Antitrust Immunity
Source: copyright 2008, Travel Weekly

The U.S. Department of Transportation will grant antitrust immunity to Delta, Northwest and four of their international partners in the SkyTeam airline alliance.

The two U.S. carriers, Air France, Alitalia, Czech Airlines and KLM will be allowed to coordinate their transatlantic fares, services and capacity as if they were a single carrier in these markets. Northwest already had an alliance with KLM, while Delta had an alliance with Air France, Alitalia and Czech Airlines.

The DOT apparently disregarded ASTA's objection to the expanded alliance. ASTA argued that granting the six airlines antitrust immunity would give the carriers an unfair advantage when negotiating with travel agencies and undermine the Department of Justice's competitive analysis of the proposed Delta-Northwest merger.

The DOT concluded that the proposed alliance is in the public interest because it "will likely produce efficiencies and provide consumers with additional price and service options." The DOT added that the U.S.-European Union open-skies agreement will promote competition in the transatlantic market.

Delta and Northwest will still be subject to antitrust laws for domestic service.

Hertz Joins Northwest Airlines WorldPerks Program

Northwest Airlines is pleased to announce that Hertz is the newest WorldPerks car partner. WorldPerks members can now earn miles for Hertz rentals. To celebrate this new partnership, Hertz is offering WorldPerks members special discounts, Bonus Miles, promotional offers and more!

Northwest Airlink Carry-on Policy Update

Effective May 5, 2008, Northwest Airlink flights operated by Pinnacle and Mesaba aligned their carry-on luggage policy and will permit each customer to bring onboard two personal carry-on items such as a purse, briefcase, laptop computer, or small backpack provided the items fit in the overhead compartment or under the seat in front of the customer.

Silverjet, an all-business-class airline that flew from London’s Luton Airport to Newark and Dubai, ceased operations on Friday.

In late April, the cash-strapped airline announced that a United Arab Emirates investor was investing $25 million in Silverjet, but the deal fell through.

Silverjet is next in succession of airlines that have shut down operations in recent months.

Customer satisfaction with airlines has dropped to its lowest point since 2001, according to the University of Michigan’s quarterly American Customer Satisfaction Index (ACSI). On a 100-point scale, the airlines scored a 62.

The researchers said that if it weren’t for Southwest, a record low would have been set for the airline category. Southwest led the way with a score of 79 in the first quarter.

Customer satisfaction decreased the most for Continental and US Airways. Continental’s ACSI score fell 10% to 62, while US Airways’ plummeted 12% to 54.

United scored a 56 for the second straight year. Northwest’s score fell 7% to 57, Delta’s rose 2% to 60 and American’s increased 3% to 62, matching the industry average.

The researchers suggested that the combination of higher ticket prices and extra fees for services that were previously free had something to do with the airlines’ poor performance.

The International Air Transport Association projects that the airline industry will lose $2.3 billion worldwide in 2008, a drastic downgrade from what IATA forecasted two months ago.

In March, IATA predicted an industry profit of $4.5 billion based on an average crude oil price of $86 per barrel. The revised forecast assumes an oil price of $106.50 per barrel.

"For every dollar that the price of fuel increases, our costs go up by $1.6 billion," said Giovanni Bisignani, IATA's director general and CEO. "The industry's total fuel bill in 2008 is expected to be $176 billion, accounting for 34% of operating costs. This is $40 billion more than the 2006 bill, which was $136 billion (29% of operating costs). In 2002, the bill was $40 billion, equal to 13% of costs.