February 23, 2009 / 4:12 PM / 10 years ago

UPDATE 1-US Airways to reinstate complimentary beverages

(Adds details, background, CEO and analyst comments, share price)

CHICAGO, Feb 23 (Reuters) - US Airways Group LCC.N on Monday said it would stop charging for nonalcoholic drinks in its coach cabin, a practice that drew the ire of customers and put the airline at a competitive disadvantage.

US Airways’ retreat from the fee also may show that there is a limit to how far cash-strapped carriers can push travelers who have suffered fee after fee for items and services that once were complimentary.

Starting March 1, US Airways will no longer charge for in-flight soda, juice, tea, water and coffee. But the airline said it remains committed to its so-called “a la carte” model, which is now common throughout the industry.

“US Airways was the only large network carrier to charge for drinks, and that put us at a disadvantage,” Chief Executive Doug Parker said in a statement.

The airline industry, hard-hit last year by soaring fuel costs, became more aggressive in charging fees for items that previously had been included in the fare.

The fee that got the most publicity was for bag checks. Despite customer outrage, major carriers broadly matched each others bag-check fees and raised them. Carriers also charge for snacks and — in some cases — even pillows.

Some experts said US Airways has been more aggressive than most in finding new fees. It was the lack of a matching fee for drinks by rivals that put a stop to the practice.

“Ultimately, when no one else went along with it, charging for soda was an outlier, and thus easy to criticize,” according to airline consultant Robert Mann.

“As for unbundling and ancillary charges generally, they are here to stay,” he said.

US Airways said it still expects to generate $400 million to $500 million in 2009 from a la carte items like bag checks and its new blanket and pillow offering.

US Airways’ shares were up 5.77 percent at $3.30 on the New York Stock Exchange. (Reporting by Kyle Peterson, editing by Maureen Bavdek)

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