US Airways has retreated from a new pricing policy that charged passengers $2 for sodas and juices and $1 for coffee. The airline implemented an a la carte pricing strategy to charge customers fees for refreshments, services like checking baggage, and choice seat locations. The visions of dollar signs danced in the heads of US Airways management as it was projected that $500 million could be realized from implementing the additional charges.
It seems US Airways overlooked two important matters. First and foremost, it did not seem to think through what customer reaction to the perception of being nickeled and dimed (or in this case dollared) for drinks that were complimentary previously. Management saw revenues; what it should have seen was customer resentment. Second, US Airways should have realized it would stand out for all the wrong reasons if competitors did not follow suit. Years of fare wars should have been enough for US Airways to know that competitors that do not match price increases leave the one airline that did in a unfavorable position.
So, if you are on a US Airways flight soon, be sure to enjoy your complimentary beverage. You can take comfort in knowing that US Airways really wanted to charge you for your drink, but at least for the time being it does not have the competitive leverage to do it.
Link: Bloomberg.com - "US Airways to Stop Charging for Onboard Sodas, Coffee"target="blank"
Labels: Pricing, US Airways