US Airways to Bring Back Free Drinks

Our friend, Chris Elliott announced the news, to be reported by press release tomorrow, that it will bring back complimentary sodas, juices, tea, water and coffee to its flights starting next month. Charging for water especially, considering the dry atmosphere onboard airplanes and the liquid restrictions, seemed especially unfair. We could understand no more free soft drinks, even if we like having them.

The interesting thing is the rationale. Here are a few excerpts from CEO Doug Parker‘s letter to his employees.

When we launched the beverage purchase program in 2008 we knew it would generate additional revenue. From this perspective the program was very successful. What we didn’t know at the time, but later experienced, was that the cabin atmosphere would also improve with fewer carts in the aisles and shorter lines to the lavatories.

…We know customers don’t buy an airline ticket based on whether or not they will get a free soda onboard, but with US Airways being the only large network carrier to charge for drinks, we are at a disadvantage. More importantly, this difference in our service has become a focal point that detracts from all of the outstanding improvements in on-time performance and baggage handling that all of us have worked so hard to achieve over the past year.

We are not making this decision because the airline industry is now healthy. To the contrary, while oil prices have dropped, a global recession is having a material negative impact on industry revenues and our industry still needs business model changes as much as ever. Moving to an a la carte model has helped us build an airline that can withstand the uncontrollable factors that influence our industry and we need to keep trying new programs, like a la carte pricing. Frankly, it would have been a bigger risk for us not to have tried charging for drinks because innovation and a new business model are desperately needed.

In fact, we still expect to generate $400 to $500 million in 2009 from a la carte items like checked baggage fees, Choice Seats, and our new blanket and pillow offering – the US Airways Power-Nap Sack ™.

So, Parker is not backing down exactly. We wouldn’t expect him to, even if the company did cave in when no equivalent carrier would match the move. Someone has to be the trendsetter. We’re happy though that this trend didn’t take off.

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