In a bid to curry favor with the financial community, United today unveiled a plan to cut costs by $2 billion annually, and increase ancillary revenue by $700 million.
The plan may bring smiles to the faces of United’s stockholders and others with a stake in the airline’s profitability. But United’s customers should be worried.
Although the plan makes only vague references to actual tactics—”reducing fuel consumption, increasing productivity, reducing sourcing costs, improving maintenance processes and inventory procedures, and optimizing distribution methods”—it’s hard to imagine making such significant cuts in costs without cutting back on services to its customers.
And while the news release justifies the increase in ancillary revenues as “giving customers new options, optimizing pricing on existing products and expanding availability of ancillary products through additional distribution channels,” there’s near unanimity among the traveling public that the surcharges currently in vogue industry wide are rightly called nuisance fees.
Earlier this month United announced significant increases in award prices on partner airlines to take effect next year. That’s a clear case of United reducing its costs, at the expense of its customers’ best interests. It’s likely to be just one among many downgrades as the airline puts profitability ahead of passengers.
And United won’t be the only one. With the increased industry consolidation resulting from the pending American-US Airways merger, the squeeze on travelers—more fees, fewer services, less value—is sure to become the new normal.
Reader Reality Check
What’s your expectation for travel in 2014: better, worse, or no change?
This article originally appeared on FrequentFlier.com.
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