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Fee Hikes, Service Cutbacks Continue Through Fall in Airline Industry

Plane at gateAs the recession continues to hammer the airline industry, carriers are still attempting to stem financial losses by adding fees and implementing additional layoffs through the autumn.

Southwest Airlines, which experienced its first unprofitable year since the early 1970s, announced Wednesday that it will allow passengers to get priority seating if they pay an extra $10. Airline officials believe this early check-in charge will help Southwest earn an extra $75 million per year.

But that’s just the beginning…

Under the new plan, dubbed “EarlyBird Check-In,” those who pay the fee will be allowed to board before the general public, but after Business Select ticket holders and Elite frequent fliers. Southwest also recently added fees for the first time for a third checked bag, for unaccompanied minors, and for bringing a small pet on board.

Check out more of the latest air travel news in our Airlines & Airports section.

American Airlines said Tuesday that it will lay off 921 flight attendants as of October 1, a move that is part of its previously stated plan to eliminate 1,200 positions by the end of 2009.

American airlines The airline ended up reducing the original number of layoffs after convincing 279 employees to accept voluntary leaves of absence. American made the cuts to better align staff with its reduced flight capacity, which has gone down by 7 percent over the last few months. The company posted a $390 million loss in the second quarter of 2009 as passenger traffic dropped 8.2 percent.

American’s layoffs parallel those that have been made by almost every other major airline this year, including United, Virgin Atlantic, Delta, US Airways, and Continental.

Just this week Midwest Airlines announced 59 layoffs from among the ranks of pilots and flight attendants, a move necessitated by the merging of its fleet with new parent company Republic Airlines.

Republic Airlines has been expanding rapidly–check out Pilot Issues Scuttle Southwest’s Bid for Frontier; Republic Airlines Wins Out.

Republic AirwaysIn the U.S., air traffic is predicted to decline by at least 6.6 percent by the end of 2009, compared to 2008. Worldwide air traffic has fallen at least 3 percent, causing financial losses of more than $2.5 billion

Layoffs and fee hikes are the two primary tactics airlines are using to cut costs and boost revenue. Over much of this year dozens of airlines instituted “à la carte” pricing systems aimed at squeezing more money out of customers by charging for items such as baggage and blankets, which previously were free.

According to the U.S. Bureau of Transportation Statistics, employment at all US airlines was down by 6.8 percent in June 2009 compared to June 2008, the latest month for which statistics were available.

Airlines carried 7 percent fewer passengers in the period June 2008 – May 2009 compared to the same period last year. This represents the 14th straight year-over-year decrease and has led to sixth consecutive quarters of financial losses overall.

By Karen Elowitt for PeterGreenberg.com.

Related links: MSNBC, Star-Telegram, BizJournals.com, Examiner.com

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