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United clips wings to fly better

Nancy Marshall-Genzer Jun 4, 2008
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United clips wings to fly better

Nancy Marshall-Genzer Jun 4, 2008
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TEXT OF STORY

Scott Jagow: Simply raising ticket prices just isn’t going to cut it for the airlines. Oh, don’t worry, they’ll be doing plenty more of that, but this morning we have an indication of what else is coming because of fuel prices. United says it’s going to fire another 1,500 people or so — some of them management, some of them contractors.
And United will park about a hundred planes. More now from Nancy Marshall Genzer.


Nancy Marshall Genzer: United says it’s going to ground its entire fleet of Boeing B737’s. Six jumbo 747’s will also have their wings clipped. With fewer planes to fly, United will be cutting routes.

Airline consultant Darryl Jenkins says vacation spots like Hawaii and Vegas will be hit especially hard by the airlines’ cuts.

Darryl Jenkins: They’re taking so much capacity out of the leisure destinations, which have been building hotels at record rates recently.

Jenkins says cut-rate leisure fares will disappear. So will United’s low-cost unit, Ted.

Aviation analyst Richard Aboulafia says that’s a very smart move.

Richard Aboulafia: The classic joke, “What is Ted? Ted is United without you and I.”

Aboulafia says the concept of having a low-cost unit within a traditional, higher-cost carrier was never practical.

In Washington, I’m Nancy Marshall Genzer for Marketplace.

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