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News Article - March 23, 2008

US Airways seeks delay of Phila.-Beijing service  
  US Airways Group Inc. has asked the U.S. Department of Transportation for a one-year extension for the launch of its planned Philadelphia-Beijing service. The Tempe, Ariz.-based airline (NYSE:LCC) wants permission to start service in spring 2010, rather than spring 2009. The airline, the dominant carrier at Philadelphia International Airport, cites skyrocketing oil prices as the reason for the delay.

   "We're optimistic that economic conditions will be on the upswing in 2010, giving us a better chance of success with our first route to China," US Airways President Scott Kirby wrote in a letter to employees. When the airline received approval for the route last year, oil sold for about $60 per barrel. Now oil prices are topping $130 per barrel. The fuel cost alone of running the flights would be more than $90 million per year, the airline said, about $40 million higher than the estimates it made when it filed for the route.

   In another nod to high fuel prices, the airline is also pondering whether to join American Airlines in charging passengers $15 for their first checked bag, Bloomberg News reported Thursday. Southwest Airlines (NYSE:LUV), the No. 2 airline at Philadelphia, said Thursday that it would not institute a fee for the first checked bag. The Dallas-based discount carrier has strong hedges on many of its fuel positions, which has helped it weather the current storm better than most competitors.

Source - Philadelphia Business Journal



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