US Airways to File for Delay of PHL-Beijing
May 22, 2008
Dear US Airways Employee,
In our continuing effort to cope with the serious impact of skyrocketing oil prices, we are today asking the U.S. Department of Transportation for a one-year extension to launch our planned Philadelphia-Beijing service. That is, we’re asking for permission to start that service in spring of 2010, rather than spring of 2009.
The extension request is a response to record-high fuel prices and fuel’s impact on the economic feasibility of this route. We’re not alone in our concern: DOT approved a similar request from United just last week, and Northwest also has asked for permission to suspend some existing cargo service to China. Both cited sky-high fuel prices in their petitions.
In our case, at today’s prices, the fuel cost alone of running this single flight would be more than $90 million a year, about $40 million higher than the estimates we made when we filed for the route.
When we received approval for the route last year, oil sold for about $60 per barrel. Today, as you know, oil prices are topping $130 a barrel. Jet fuel prices have leapt from about $2.15 a gallon when we applied for the route, to more than $4.00 per gallon just today. This extra fuel cost will make this flight uneconomic in 2009, especially if the economy and travel demand softens.
I want to assure you, however, that we remain committed to international growth from Philadelphia. We’ve already done a lot of preparatory work for the China route – meeting with high-level Chinese government officials for facilities and licenses, creating codeshares for inter-China service with Air China, and marketing planning.
We will also continue our plans to grow other international routes. We’ll begin taking delivery of new long-haul A330-200 class airplanes from Airbus to grow to new international destinations through 2011.
We’ve communicated these intentions to the PHL Division of Aviation and Mayor Nutter, who are very supportive of our plans to build the world-class international gateway that the city and our customers deserve.
We’re optimistic that economic conditions will be on the upswing in 2010, giving us a better chance of success with our first route to China. We will keep you posted on the DOT proceedings.
In the meantime, keep up the great work and customer service that we are seeing across our airline.
Sincerely,
Scott Kirby
President
