Wed, Mar 09, 2011 - Page 10 News List

United scrapping expansion plans

AP and Reuters, CHICAGO and ATLANTA, GEORGIA

United Continental Holdings Inc is scrapping plans to add flights this year, and says it will drop unprofitable routes because of rising fuel prices.

The announcement on Monday is the latest example of airlines shifting plans because of the run-up in oil prices. Southwest Airlines matched an industry-wide fare hike, and the smaller Frontier Airlines said it would reduce growth plans.

United Continental now plans to do about the same amount of flying this year as it did last year. Domestic flying is expected to fall as much as 2.5 percent, with international flying up as much as 3.5 percent.

United said it will remove less fuel-efficient planes from its fleet and plans other cost cuts.

The oil price uncertainty has led carriers to scale back plans to boost seat capacity. Frontier Airlines, a unit of Republic Airways Holdings, announced on Monday that capacity will be flat in the second quarter, against previous plans for growth of as much as 2.5 percent.

AMR Corp’s American Airlines said last week it would cut capacity growth for this year by 1 percent to 3.3 percent, and Delta last month outlined a capacity cut and plans to retire older, less fuel-efficient aircraft such as DC9s.

US airlines are also raising fares and rolling out surcharges as runaway fuel prices threaten to eat into profits. JetBlue Airways Corp said on Monday it recently implemented a US$45 one-way surcharge in select Caribbean markets. Delta Air Lines Inc said its surcharges vary by market.

Fees are also rising for passengers checking more than two pieces of luggage, and more carriers are ditching free snacks to save money, said Tom Parsons, chief executive of travel site Bestfares.com.

“The airlines are jacking up rates wherever they think they can get away with it,” Parsons said. “From the airfares to the fuel surcharges to the peak travel day surcharges, there’s not much you can get from an airline these days other than a seat assignment.”

Discount carrier Southwest Airlines Co has made “modest” fare increases but has not imposed fuel surcharges and doesn’t plan to add incremental fees to offset fuel costs, spokeswoman Ashley Dillon said.

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