United cuts jobs, planes

Jill Barshay Jun 4, 2008

United cuts jobs, planes

Jill Barshay Jun 4, 2008


Kai Ryssdal: I do hope, for your sake, that you’re not flying anywhere any time soon, because today United became the second big carrier to decide it makes more economic sense to keep planes on the ground than up in the air.

The company’s been trying to merge with the competition to keep its fuel costs under control, but that hasn’t really worked out, so United is doing what American did just a couple of weeks ago: Cutting people and grounding planes.

For United, 1,500 jobs and 100 planes.

Our New York bureau chief Jill Barshay has the story.

Jill Barshay: United Airlines is grounding all of its kerosene-guzzling 737s and a few older 747s too.

Richard Gritta is a professor of economics and transportation at the University of Portland. He says airlines can’t cover their costs now that jet fuel is more than $3.70 a gallon.

Richard Gritta: The only thing they can do is get rid of the inefficient routes, which means a lot of small communities are going to lose service and get rid of the older jets, which are not as fuel efficient.

Wave goodbye to United’s low-fare airline Ted. It’s coming off the beach and casino routes and joining the rest of the airline. Its coach-only planes will now fly to business destinations and United’s going to fit them out with new pricey, first-class cabins.

Gritta says passengers can expect more extra charges, like United’s new $25 fee for a second bag.

Gritta: So now they’ve discovered, you know, just fragmenting all the costs and I was joking the other day about what’s next. You want to use the lavatory? Well, that’s $10 please. You want toilet paper? Well, that’s an extra $5.

Hopefully not, but airline consultant Darryl Jenkins says we certainly can kiss low fares goodbye.

Darryl Jenkins: You’ll see the bottom 20 percent of fares eliminated. So if you were a traveler who always went to some place like Priceline, Travelocity or Orbitz to buy your tickets, you’re going to be very disappointed this year.

There is one silver lining: Fewer flights could mean shorter delays at big urban airports. Good news for those of us based in New York.

I’m Jill Barshay for Marketplace.

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