Wednesday, June 08, 2005

Those wacky airlines!

More news from the crazy dysfunctional US airline industry...

Senator Charles Grassley (R-Iowa), chair of the Senate Finance Committee, said yesterday that he was willing to let airlines stretch out pension payments, but airlines should freeze plans so no more benefits are promised that they cannot pay. Delta and Northwest (the third and fourth largest domestic carriers) are lobbying for legislation that would give airlines up to 25 years to repair pension underfunding, while American Airlines and its unions said in a letter to the committee that it is working hard to maintain its defined benefit pension plans and needs legislation that does not require it to freeze the plans. Will the Senate offer the same consideration to struggling US automakers?

Meanwhile, airlines are desperately seeking cost cuts and new revenue streams. Starting tommorrow Northwest will no longer offer passengers a free half-ounce bag of pretzels during flights. Passengers who want a snack will have to pay $1 for a three-ounce bag of almonds, cashews and raisins. According to spokesman Kurt Ebenhoch, the move will save Northwest about $2 million a year. Northwest is also pulling its 30 free magazines from its planes. The airline isn't eliminating its own Northwest in-flight magazine, but its complimentary copies of Business Week, Glamour and Harvard Business Review are history.

On the revenue side, Alaska Airlines and US Airways flight attendants are pushing VISA cards from Bank of America. America West now put advertisements on seat trays. And United Airlines has recieved FAA approval to offer Wi-Fi service on flights, a service for which Lufthansa charges $30 per flight or $10 per half hour.

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