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TheStreet Open House

US Airways to Stop Charging for Drinks

Stocks in this article: LCC

CHARLOTTE, N.C. -- US Airways (LCC) says it will abandon its policy of charging passengers for drinks, seven months after adopting it and despite repeated assertions that the strategy was working.

Distribution of free soda, juice, tea, water and coffee to coach passengers will resume March 1, CEO Doug Parker said Sunday night in a letter to employees.

"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," Parker wrote. "This difference in our service has been 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."

US Airways began testing its "buy on board" policy for drinks -- $2 for soda and bottled water and $1 for coffee or tea -- on Aug. 1. While nearly every carrier now charges for some amenities, particularly checked baggage, not a single major carrier matched US Airways' drink charge.

While US Airways hasn't broken out revenue from drink charges, Parker said "the program was very successful" in generating revenue. However, he said the carrier still expects to generate $400 million to $500 million in new fee revenue this year, the same amount it has regularly cited as likely fee revenue before rescinding the drink charge.

The announcement Sunday comes as a surprise, because US Airways executives have frequently touted the advantage of charging for drinks.

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