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New US airline ticket rules may backfire-analysts[/P]
By Meredith Grossman Dubner[/P]
CHICAGO, Sept 13 (Reuters) - With dwindling demand and revenues exacerbating problems caused by high overhead and pricey labor contracts, stricter ticketing rules now in force seemed like a simple way for the biggest U.S. airlines to bring in more cash.[/P]
But analysts say the tougher ticketing policies alienate travelers, who they say will not easily forgive the industry for dumping its financial woes on its customers.[/P]
In the last month, most of the top U.S. airlines have decided that less expensive, nonrefundable tickets not used on their scheduled travel date will be worthless after that date. Previously, passengers could apply credit for unused tickets toward other trips.[/P]
Thos included the top three carriers, UAL Corp.'s [UAL.N] United Airlines, AMR Corp.'s [AMR.N] American and Delta Air Lines Inc. [DAL.N].[/P]
In addition, travelers who opt to fly stand-by on flights other than the ones they have ticketed will now have to pay a $100 fee on many airlines. And passengers who choose paper tickets over electronic tickets will pay a $20 fee on many major carriers.[/P]
What they're trying to do now is indiscriminately cut expenses, and they've destroyed service, said Richard Copland, president and chief executive of the American Society of Travel Agents. They're making a major mistake, and that's why they're drowning in red ink.[/P]
The airline industry has lost about $10 billion since the Sept. 11 attacks, and Wall Street analysts predict it will lose another $6 billion this year.[/P]
Carriers are struggling to find creative ways to boost their bottom lines and weather an industry downturn that has forced one of the top U.S. airlines, sixth-largest US Airways Group [UAWGQ.PK], into Chapter 11 bankruptcy.[/P]
No. 2. United Airlines said last month it may also have to file for bankruptcy protection if it cannot negotiate less costly labor agreements with its workers.[/P]
They're going to look in every single corner. They're going to leave no stone unturned when it comes to finding pockets of revenue, Merrill Lynch airline analyst Michael Linenberg said.[/P]
JUST LIKE THEATER TICKETS[/P]
Passengers will still be able to change travel plans prior to their departure date by paying certain fees, the airlines said.[/P]
I don't think it's uncommon for nonrefundable things like this to be treated in this way, said David Swierenga, chief economist of the Air Transport Association, the airline's main trade organization. Think about a hotel room: If you don't show up for that first night, you'll still get a charge on your credit card. If you have theater tickets and you don't show up, your tickets aren't good the next night.[/P]
Why should the airlines bear the cost of you not showing up for a
flight?[/P]
But some industry analysts disputed that logic, given that a theater patron can resell his tickets for a show to someone else while an airline passenger cannot sell his ticket to another person once the ticket has been issued in his name.[/P]
Swierenga noted that airline ticket prices are at bargain levels not seen since 1988, but air traffic is still off about 10 percent from a year ago. He said only a few people will be affected by the policy changes.[/P]
But Kevin Mitchell, chairman of the advocacy group Business Travel Coalition, said many of his clients -- which include Black & Decker [BDK.N], Procter & Gamble [PG.N] and DaimlerChrysler AG [DCXGn.DE] -- estimate their travel expenses will be about 20 percent higher next year as a result of the new fare rules.[/P]
Instead of spending more money, Mitchell said, his clients are reevaluating their 2003 budgets to cut back on travel, make use of low-fare carriers or even plan more teleconferences.[/P]
I cannot imagine how this is going to be revenue-positive for the airlines. It's not customer-friendly at a time when you need your very best customers to support you, Mitchell said. It's going to be the final nail in the coffin for a couple of these carriers.
[/P]
By Meredith Grossman Dubner[/P]
CHICAGO, Sept 13 (Reuters) - With dwindling demand and revenues exacerbating problems caused by high overhead and pricey labor contracts, stricter ticketing rules now in force seemed like a simple way for the biggest U.S. airlines to bring in more cash.[/P]
But analysts say the tougher ticketing policies alienate travelers, who they say will not easily forgive the industry for dumping its financial woes on its customers.[/P]
In the last month, most of the top U.S. airlines have decided that less expensive, nonrefundable tickets not used on their scheduled travel date will be worthless after that date. Previously, passengers could apply credit for unused tickets toward other trips.[/P]
Thos included the top three carriers, UAL Corp.'s [UAL.N] United Airlines, AMR Corp.'s [AMR.N] American and Delta Air Lines Inc. [DAL.N].[/P]
In addition, travelers who opt to fly stand-by on flights other than the ones they have ticketed will now have to pay a $100 fee on many airlines. And passengers who choose paper tickets over electronic tickets will pay a $20 fee on many major carriers.[/P]
What they're trying to do now is indiscriminately cut expenses, and they've destroyed service, said Richard Copland, president and chief executive of the American Society of Travel Agents. They're making a major mistake, and that's why they're drowning in red ink.[/P]
The airline industry has lost about $10 billion since the Sept. 11 attacks, and Wall Street analysts predict it will lose another $6 billion this year.[/P]
Carriers are struggling to find creative ways to boost their bottom lines and weather an industry downturn that has forced one of the top U.S. airlines, sixth-largest US Airways Group [UAWGQ.PK], into Chapter 11 bankruptcy.[/P]
No. 2. United Airlines said last month it may also have to file for bankruptcy protection if it cannot negotiate less costly labor agreements with its workers.[/P]
They're going to look in every single corner. They're going to leave no stone unturned when it comes to finding pockets of revenue, Merrill Lynch airline analyst Michael Linenberg said.[/P]
JUST LIKE THEATER TICKETS[/P]
Passengers will still be able to change travel plans prior to their departure date by paying certain fees, the airlines said.[/P]
I don't think it's uncommon for nonrefundable things like this to be treated in this way, said David Swierenga, chief economist of the Air Transport Association, the airline's main trade organization. Think about a hotel room: If you don't show up for that first night, you'll still get a charge on your credit card. If you have theater tickets and you don't show up, your tickets aren't good the next night.[/P]
Why should the airlines bear the cost of you not showing up for a
flight?[/P]
But some industry analysts disputed that logic, given that a theater patron can resell his tickets for a show to someone else while an airline passenger cannot sell his ticket to another person once the ticket has been issued in his name.[/P]
Swierenga noted that airline ticket prices are at bargain levels not seen since 1988, but air traffic is still off about 10 percent from a year ago. He said only a few people will be affected by the policy changes.[/P]
But Kevin Mitchell, chairman of the advocacy group Business Travel Coalition, said many of his clients -- which include Black & Decker [BDK.N], Procter & Gamble [PG.N] and DaimlerChrysler AG [DCXGn.DE] -- estimate their travel expenses will be about 20 percent higher next year as a result of the new fare rules.[/P]
Instead of spending more money, Mitchell said, his clients are reevaluating their 2003 budgets to cut back on travel, make use of low-fare carriers or even plan more teleconferences.[/P]
I cannot imagine how this is going to be revenue-positive for the airlines. It's not customer-friendly at a time when you need your very best customers to support you, Mitchell said. It's going to be the final nail in the coffin for a couple of these carriers.
[/P]