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CNN Live Saturday

Airlines Struggling to Cut Costs

Aired August 24, 2002 - 18:10   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

CATHERINE CALLAWAY, CNN ANCHOR: One major side effect of the September 11th attacks has been an economic downturn for the airline industry. Now air carriers are struggling to grab every dollar they can. And CNN's Kathleen Koch says that the penny pinching is alienating the very people the airlines are trying to attract.
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KATHLEEN KOCH, CNN CORRESPONDENT (voice over): So you thought you got a cheap airfare. A paper ticket will cost an extra $10 to $25, a third suitcase to check, another $40 to $80. Many senior citizen discounts have been eliminated and Continental Airlines hopes to save more than $1 million a year by giving passengers half beverages and plastic knives only on request.

CAROL HALLET, AIR TRANSPORT ASSOCIATION: The economic condition of the airline industry is as dire as it has ever been, and as a result, they're looking at every way possible at how they're going to be able to make cuts or changes that will improve the bottom line.

KOCH: The nation's airlines did lose $7.7 billion last year, more than 4 billion through June of this year. But passengers already weary of security delays say this nickel and diming is just too much.

UNIDENTIFIED FEMALE: If I got here and you know suddenly they said, oh, it's another $40 to $80 bucks, I'd be really upset.

UNIDENTIFIED FEMALE: I think plastic knives and things of that order, a half of soda as opposed to a full soda, it's really relatively silly.

UNIDENTIFIED MALE: A lot of the airlines, it seems, are you know really balancing their books on the back of their passengers.

KOCH: To further cut costs, airlines are trimming schedules and talking consolidation. Some powerful frequent flyers, members of Congress, are calling for the government to regulate the airlines again. Travelers' organizations point out the no-frills trend is driven in part by the success of budget carriers.

DAVID STEMPLER, AIRLINE TRAVELERS ASSN: And everyone's been flocking to the discount carriers, which don't provide much of these amenities, such as you know meals and movies and other kinds of things, and so the big carriers are trying to cut these services out because passengers aren't willing to pay for them. KOCH (on camera): With passenger totals already down 10 percent, perhaps, the biggest risk is that cuts and charges to bring airline revenues up could instead end up driving passengers away.

Kathleen Koch, CNN, Reagan National Airport.

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