From QUINTESSENTIAL JETS

Continental Airlines plans to sell premium seat assignments that offer more leg room for passengers as of March 17.

The seat seat assignments involve unreserved economy-class seats, which can offer at least seven inches of more leg room. The airline’s OnePass Elite frequent flyers will be able to obtain seats with extra legroom in economy class for free.

Passengers will be able to buy the seats at continental.com or at an airport kiosk during check-in 24 hours prior to departure. Pricing for the seats will vary, the airline said. Continental is the largest carrier at Newark Liberty International Airport.

Continental is one of several U.S. and foreign airlines that allow customers to purchase premium seats as a way to improve the travel experience while also providing additional revenue for the carriers.

“Our customers want more choices,” said Jim Compton, Continental’s executive vice
president and chief marketing officer. “Seats with additional legroom are higher-value seats, and we want to offer them to customers who recognize that value.”

By Joseph R. Perone/The Star-Ledger

US Airways Group Inc.’s high-profile captain who guided Flight 1549 to an emergency water landing in January 2009 with no loss of life is retiring, the company said.

Capt. Chesley “Sully” Sullenberger, 59 years old, is retiring Wednesday after 30 years with US Airways and a predecessor company. Doreen Welsh, 59, one of the flight attendants on board who helped the 150 passengers evacuate the sinking plane, also is retiring Wednesday after 39 years with the airline, US Airways said.

Capt. Sullenberger by law doesn’t have to retire until he is 65, thanks to a recent change in the law that lifted the pilot retirement age from 60. After the water landing early last year, he took time off to write a book, give speeches about pilot professionalism and pay, and to be honored at a number of high-profile events including President Obama’s inauguration, the Super Bowl and the Rose Parade.

He returned to flying duties last September and become a member of US Airways’ flight-operations safety-management team. The US Airline Pilots Association union, which represents US Airways aviators, said Capt. Sullenberger will retire at a private ceremony Wednesday at the Charlotte, N.C., airport, where he was based, accompanied by fellow pilots and other airline employees. But first, he will fly his last trip Wednesday with First Officer Jeff Skiles, his co-pilot in the Hudson ditching, the union said.

Capt. Sullenberger, in a statement, said he would continue to serve as an advocate for aviation safety and the piloting profession. “I will work to remind the entire industry—and those who manage and regulate it—that we have a sacred duty to our passengers to do the very best that we know how to do,” he said.

Doug Parker, US Airways’ chief executive officer, in a statement thanked the pilot and flight attendant “for their quick thinking and courageous actions” after Canada geese took out both engines of the Airbus jetliner minutes after takeoff from New York’s La Guardia Airport.

“We will miss them and thank them for all they have given to our customers during their years of service with our airline,” he said.

By SUSAN CAREY, The Wall Street Journal

NEW YORK – An air traffic controller at one of the nation’s busiest airport was suspended after his young son was permitted to give radio instructions to pilots. NBC News has learned the controller at Kennedy Airport brought his daughter into the tower the next night.

The man’s daughter communicated with pilots twice, NBC News’ Tom Costello reports.

His young son had several quick exchanges with pilots. The recorded clips were played repeatedly across a variety of news outlets on Wednesday.

Some of the exchanges appeared to delight pilots at the time.

“I wish I could bring my kid to work,” one said, wistfully.

But the Federal Aviation Administration suspended the controller and a supervisor Wednesday after recordings of the calls were posted on the Internet, then reported on by a Boston television station.

“This lapse in judgment not only violated FAA’s own policies, but common sense standards for professional conduct. These kinds of distractions are totally unacceptable,” FAA Administrator Randy Babbitt said in a statement. “This kind of behavior does not reflect the true caliber of our work force.”

On the recording, which lasts about a minute, the boy appears to repeat instructions fed to him by his father. At no time does the child tell aircraft how to maneuver or where they should go.

The FAA said it has also barred unofficial visits by friends or relatives to FAA air traffic operational areas while it reviews its policies.

Radio chatter between air traffic controllers and pilots is routinely streamed live on the Internet. A user of one popular Web site devoted to controller talk, LiveATC.net, posted a recording of the child’s radio calls not long after they happened on Feb. 16 — a date when many New York schoolchildren were on a midwinter break.

The boy made five transmissions to pilots preparing for departure, according to the recording.

“JetBlue 171 cleared for takeoff,” the boy says in his first call. His father follows that up with a more detailed instruction for the aircraft, which was headed to Sacramento, Calif. He then offers an explanation to pilots on the air: “This is what you get, guys, when the kids are out of school.”

In a second exchange, the boy instructs the same JetBlue flight to contact departure controllers. The pilot responds: “Over to departure JetBlue 171, awesome job!”

There are a few more similar exchanges. A pilot laughs. The boy can be overheard giggling.

In his last call, the youngster signs off, “Adios, amigo.” The pilot responds in kind.

Based on the flight numbers called out during the exchange, the episode appears to have happened in the early evening, when JFK is often bustling with international flights.

The controller’s 8-year-old daughter was in the tower on Feb. 17 between 4 and 4:30 p.m.

“JetBlue 57 contact New York departure,” the girl said. The pilot responded, saying “JetBlue 57 thank you, good day.” The controller then adds, “That’s the next generation of air traffic controller going here.”

The FAA offered scant detail on its investigation and wouldn’t reveal the name of the controller or supervisor. Control towers are highly secure areas, although the agency does sometimes give employees permission to bring their children for a tour.

The union representing air traffic controllers condemned the worker’s behavior.

“It is not indicative of the highest professional standards that controllers set for themselves and exceed each and everyday in the advancement of aviation safety,” the National Air Traffic Controllers Association said in a statement.

LiveATC founder Dave Pascoe, a pilot and radio enthusiast, said he was sickened at the thought that the controller could be disciplined.

“I absolutely believe that this is being blown out of proportion,” he said. “This is just a completely controlled situation. A child was being told exactly what to say.”

He added: “I think it’s just fantastic that this guy cared enough to take his kid to work. How many parents take their kids to work these days?”

The episode comes less than seven months after a controller at an airport in nearby Teterboro, N.J., was placed on leave for his actions in the moments leading up to a deadly crash between a helicopter and small plane over the Hudson River. The controller was recorded joking on the phone with his girlfriend as he dispatched instructions to the doomed plane. He ended the call when he realized the plane had dropped out of radio contact, just seconds before the crash.

By NBC News

Continental Airlines reported robust unit revenue growth for February on the back of higher international-airfare demand, but a $25 million hit to its revenue from pounding Northeast snowstorms sent its shares spiraling on Tuesday.

Major snowstorms shut down the Houston-based carrier’s operations at its New York hub on Feb. 10 and Feb. 26, resulting in hundreds of flight cancellations.

But on the upside, the cancellations lowered Continental’s capacity for the month, providing a 100 basis points bump to its consolidated unit revenue.

Continental (CAL 20.54, +0.03, +0.15%) said its mainline unit revenue in February rose an estimated 5.5% to 6.5%, or by 7.5% to 8.5% if regional carriers such as Continental Express and Continental Connection are included.

For January, mainline unit revenue fell 2.8% from the same month in 2009, or by 1.3% on a consolidated basis.

Even without the one-time benefit of the snowstorms, unit revenue still exceeded expectations. At Standard & Poor Equity Research, the firm upgraded its rating for Continental to strong buy from buy, citing the improved business trends.

“We think Continental is likely to benefit this year from improving business and premium travel demand and a rebound in overall passenger demand,” said S&P analyst Jim Corridore.

Investors, however, were focused on the weather-related hit to revenue. Meteorologists said February saw the most snowfall on record for the Northeast, and that March is shaping up to be just as stormy. Read more about March weather and airlines.

Shares fell 2.6% to $20.65 in recent trading after trading as low as $20.40 earlier in the day. The stock hit a 52-week high of $21.58 in prior-day trading.

The snow-related damage also pressured other airline stocks with significant Northeast presences, including American Airlines parent AMR Corp. (AMR 9.37, +0.20, +2.18%) , Delta Air Lines (DAL 13.03, +0.25, +1.96%) and JetBlue Airways  (JBLU 5.19, 0.00, 0.00%) .
International drives growth

After more than a year of falling demand and steep capacity cuts, the big network carriers look poised for a return to profitability later this year. The improving economy is driving global trade, and in turn that will drive higher demand for international travel.

For Continental, the carrier reported an estimated 0.5% decline in its consolidated domestic traffic for February, while international demand raised traffic by 7.2%.

Transpacific traffic jumped 14.5%, reflecting more travel between North America and Asia, the world’s manufacturing center.

Particularly strong was transatlantic traffic, according to Mike Derchin, an analyst with CRT Capital Group LLC. Atlantic capacity was down nearly 10% form a year ago in February, but traffic rose 4.9%, resulting in the strongest load factor increase among international routes: up 10.3 points to 72.7%.

Higher loads, which reflect the percentage of sold seats, probably helped to lift yields by an estimated 1%, said Derchin. Continental may have also reeled in the number of seats it puts on sale to attract leisure travelers.

On the domestic front, consolidated loads jumped nearly 3 points to 80.6%.

Last year the airline reduced the price for many of its seats to attract leisure travelers when the economy shrank and premium-paying business people stayed home.

“We would expect the other airlines with Atlantic exposure to show better-than-expected load factor increases as well,” Derchin said. Namely AMR, Delta, United parent UAL Corp. (UAUA 18.39, +0.52, +2.91%) , and to a lesser extent, US Airways   (LCC 7.51, -0.17, -2.22%) .

Continental’s typically the first airline to release its monthly traffic numbers and one of the few to provide insight into revenue trends.

Continental said its mainline traffic in February grew 3.3% while capacity fell 3.7%. Load factor, or the proportion of a plane filled with passengers, was up 5.2 percentage points to stand at 77.7%.

Also on Tuesday, a trade group said international passenger demand for January — the latest numbers available — rose 6.4% from a year earlier. A stark improvement to the 1.6% year-ago increase seen in December.

But despite the growing demand, international ticket prices remain severely depressed, with passenger yields still off by 15% from their peak, the International Air Transport Association said.

By Christopher Hinton is a reporter for MarketWatch based in New York.

WASHINGTON – U.S. airline regulators will seek data on how many pilots skip sleep the night before a flight, after a crash near Buffalo, New York, raised fatigue concerns.

The Federal Aviation Administration will ask carriers to examine voluntary safety reports by crews to see how often the subject of missed sleep surfaces, said Peggy Gilligan, the agency’s safety chief. She was pressed by senators for data on the issue at a hearing last week on the crash.

“We’re flying in the dark here,” said SE n. James DeMint, R-S.C.. “We don’t know much more today about how widespread it is than we did a year ago.”

The data may aid a push by advocates such as the National Transportation Safety Board for more federal action to combat fatigue. The Feb. 12, 2009, crash by Pinnacle Airlines Corp.’s Colgan unit near Buffalo killed 50 after the captain’s faulty response to a cockpit warning put the aircraft into an aerodynamic stall, the NTSB found this month.

Rebecca Shaw, 24, the co-pilot, traveled all night from Seattle to Newark, New Jersey, before reporting to work for the accident flight, the NTSB found. The captain, Marvin Renslow, 47, commuted from Tampa, Florida, to Newark Feb. 9 and spent two of three nights in a crew lounge with no beds, the NTSB said.

Renslow “had experienced chronic sleep loss, and both he and the first officer had experienced interrupted and poor- quality sleep during the 24 hours before the accident,” the NTSB’s final report found. The board decided the pilots were likely impaired by fatigue, without determining the extent.

“We don’t think that Colgan is unique,” NTSB Chairman Debbie Hersman said. “We think this goes on in the industry.”

The FAA will request data through its twice-annual meetings with airlines on the Aviation Safety Action Program, in which workers voluntarily report safety flaws without fear of reprisal, Gilligan said. The next meeting, in Houston, will be in March, FAA spokeswoman Alison Duquette said.

Regulators have already asked the industry through a rulemaking process about the possibility of restricting pilot commutes. The FAA also plans in the first half of this year to overhaul rules governing how much rest pilots must get before flying.

Sen. Byron Dorgan, D-N.D and chairman of the aviation subcommittee that held the hearing, said the industry may be boosting the risk of fatigue through its increasing use of regional jets with low-paid pilots who can’t afford motel rooms.

“Shouldn’t we just assume there is a larger problem here?” Dorgan said. “Maybe it has become a practice. If it is, it has to stop.”

Most experienced crews get hotels or rental space when they’re commuting to ensure sufficient rest, so the solution lies in mandating an increase in minimum flight hours, said Paul Onorato, president of the Coalition of Airline Pilots Associations. Pay is generally raised for pilots as they gain more experience.

Shaw, the Colgan co-pilot, earned $16,000 in 2008 and 11 days before the crash got a raise to $23,400, Pinnacle has said.

“How many hotels can you afford in Newark, N.J., if you’re making that kind of money?” Onorato said in an interview.

While there is “growing consensus” 250 hours is too low, a 1,500-hour requirement won’t ensure pilots receive quality training, said Roger Cohen, president of the Regional Airline Association. The Washington group’s members include SkyWest Inc. and Republic Airways Holdings Inc.

“Competence training, paying attention to detail and operating safely, those are the priorities,” Cohen said in an interview. “They’re not dependent exclusively on the number of hours you have or the pay.”

By John Hughes,  Bloomberg News

Each airline has its own guidelines on whether overweight passengers should buy more than one seat and how much it costs.

With that angry Twitter post and a slew of unprintable other tweets and blog posts, indie film director Kevin Smith earlier this month renewed a big, fat controversy over how airlines should handle passengers who can’t squeeze into a coach seat.

Smith unleashed his cyber-invectives after Southwest Airlines removed him from an Oakland-Burbank flight he had boarded on standby. Southwest said it acted because the sizable Smith required two seats and there wasn’t an extra seat. Smith said he fit into a single seat.

Regardless of who was right in Smith’s case, two things are clear: Southwest isn’t unusual in requiring two seats for some larger passengers. And as debt-ridden airlines pack more people onto planes, spare seats are getting scarce, leading to conflicts. Last year, the average domestic flight filled 81% of its seats, a record for the decade.

“As flights began to be fuller, there was an uptick in complaints…from folks who had to share their seat with somebody else,” said Robin Urbanski, spokeswoman for United Airlines. By spring 2009, United had fielded 700 such complaints within a year, she added.

United and several other carriers responded by updating their policies on “customers of size” and “passengers requiring extra space.” Here’s what to ask if you think you might be affected:

How big is too big? That depends on the airline, and it’s open to interpretation.

Southwest says you should book a second seat if you are unable to lower both armrests or if you “compromise any portion of adjacent seating.” American and United use three tests: inability to fit into a single seat, put the armrests down or properly buckle the seatbelt with a seatbelt extender.

Delta Air Lines doesn’t list its criteria. Instead, “we allow our employees some latitude in making decisions based on the safety of a flight and the best interests of the passenger,” spokeswoman Susan Elliott said.

What does a second seat cost? Maybe a lot or maybe nothing.

At Southwest, if you book two seats at the same time under its discounted “advance purchase” fares, both cost the same. But if you book a “Business Select” or “Anytime” fare for the first seat, you get the second seat at a cheaper child’s fare. In either case, if the flight is not oversold, you can later apply for a refund of the second fare. Alaska Airlines also offers refunds.

American and United don’t generally offer refunds or discounts for second seats in this case. But if you show up for a flight ticketed for a single seat and a second seat is needed, both airlines say they will give it to you for free if there’s room. If not, your options include trying to get on the next flight or paying for an upgrade to a cabin that may have an extra seat.

At Continental, like American and United, your first and second seats cost the same if bought in advance. But if you show up for your flight with a ticket for a single seat and the staff determines you need a second one, you’ll be charged “the lowest fare available for purchase at that time,” spokeswoman Mary Clark said. Depending on the flight, that fare could cost hundreds more than what you paid for the first seat.

Can I take more bags? Not necessarily. Your carry-on allowance, which is set per passenger by the government, doesn’t change.

As for checked bags, United, which charges $25 each way for the first bag and $35 for the second, applies its allowance to each seat. So if you book two seats and check two bags, your fees will total $50 instead of $60. Delta Air Lines has a similar policy. But Southwest, which doesn’t charge for the first two bags, says that whether you occupy one or two seats, you can take only two bags for free.

What about change fees? Continental, Delta and United charge them per seat, so with two seats you’ll pay twice as much to change your flight plans. Alaska Airlines also charges only one fee in this situation. (Southwest generally doesn’t charge change fees.)

Will I get double frequent-flier miles? Not on Southwest. But on Alaska, Continental, Delta and United, you’ll earn miles for each seat ticketed in your name.

After all, shouldn’t that second seat pull its own weight?

By The Los Angeles Times

Kevin Smith has a big mouth, and he knows it. When he got bounced off a Southwest Airlines flight for allegedly being too fat earlier this month, he quickly spread the news, via Twitter, complaining about the unfair treatment he felt that he’d received from the airline. And when the media treated the story as something of a lighthearted farce, the beefy 39-year-old filmmaker was soon loudly assailing the media for its snarky take on the whole event.

Smith’s propensity to shoot from the hip has also gotten him in hot water in Hollywood. Years before Warner Brothers Pictures Group President Jeff Robinov hired Smith to direct “Cop Out,” the new Bruce Willis and Tracy Morgan buddy comedy, Smith had gone out of his way to insult the studio chief after a disastrous pitch meeting.

“I don’t even remember why things went so horribly — it was just like a bad first date,” Smith says, punctuating virtually every anecdote in an hourlong conversation with bursts of colorfully profane language. “Afterward, I wrote somewhere that he was a balding studio clock puncher, which kind of cooled our relationship for a while.”

It turns out that Robinov managed to get over the insult. When Smith was at Comic-Con a couple of years ago, promoting his film ” Zack and Miri Make a Porno,” Robinov happened to see the filmmaker when he was on a panel with hotshot directors such as Judd Apatow and Zack Snyder. “They’d all made movies that had made tons more money than any of mine, but Comic-Con was my home ice,” Smith recalls. “When I came on, everyone went crazy. They were my peeps. I guess Robinov was impressed, ’cause afterward he called to set up a meeting.”

Not long afterward, Robinov sent Smith the “Cop Out” script, then known by its original title, “A Couple of Dicks.” Smith loved the script, written by the brothers Robb and Mark Cullen, which felt like a throwback to the kind of buddy pictures Smith’s dad had taken him to see as a kid in New Jersey.

He realized the raucous, R-rated buddy comedy was right in his wheelhouse. “It finally clicked — this is ‘Clerks’ with cops. Just two dudes hanging around, talking to each other, with the tent-pole action sequences thrown in to make some more money. It really reminded me of ‘Fletch,’ one of my favorite Michael Ritchie movies, where it was just a funny guy talking, along with the car chases. I finally went, ‘Hey, if there’s one thing I am trained to do, it’s shoot people talking a lot.’”

How did Smith get along with the notoriously prickly Bruce Willis? And what really bugs him about the media coverage of his dust-up with Southwest?

Smith insists that he didn’t have any problems communicating with Willis, at least once he realized that Willis wasn’t going to do anything that he felt was out of his comfort zone. Smith illustrates the issue with an unbelievably raunchy metaphor involving a detailed description of oral sex, then teasingly said, “Try and get that into your old-media story.” I asked him if he could offer a PG-13 version.

“Put it this way,” he said. “On the first day of shooting, I started to mess with Bruce, trying to get him to do something crazy, and he took out his gun and went bang — and shot me in the head. His point was pretty obvious. He’s done this part so many times that he knows what works and what doesn’t. He’s the caretaker of the Bruce Willis persona. He’s been a star for 25 years while most of his peers have fallen by the wayside, so he knows what works for his image.”

It would probably be fair to say that, judging from the rough, sometimes insulting treatment Smith got in the media after the Southwest Airlines debacle, that the filmmaker has a lot to learn about the care and feeding of his own image.

Smith basically makes two points about the whole Southwest imbroglio: He was treated unfairly, and he had every right to shout about it from the rooftops. “Look at the pictures of me at the ‘Cop Out’ premiere last night, and tell me — is that dude really too fat to fly?” he says.

What really ticked Smith off was the media reaction, which he thought was snarky, self-righteous and lazy, in the sense that nearly every story simply went for the jokes and the outrage, but only offered the most cursory examination of the airline’s policies.

“They’re really pathetic,” he says, punctuating his rant with even more expletives. “It really sickened me that after all the years I’ve been so open with the press that they didn’t bother to dig at all. I was unfairly bounced and discriminated against, but they never bothered to tell that story. They just went with the easy fat jokes.”

Smith paused for a rare moment of reflection amid his rants. “I grew up fat, so I know that you have to stick up for yourself because I know that you’re going to get called a fat guy whether you like it or not. So when you’ve been wronged, you have to speak out.

“It’s like asking someone who’s been assaulted or raped, ‘Why did you say something about it?’ It’s basically self-defense.”

Fortunately, he has had a happy experience making his first studio movie. “I’d do another one in a heartbeat,” he says. “It’s just a popcorner. I mean, no one’s going to ask, ‘What’s the message of ‘”Cop Out”?’… But we had a lot of fun. The studio gave us the box and all the dimensions, and we found a way to fit all the good stuff in the box without breaking it. Who could ask for more?”

‘Cop Out’s’ complicated history
The script originally was set up at another company with Robin Williams and James Gandolfini attached to star. When that combination fell apart, Warners picked up the script, hoping to team Will Ferrell and Mark Wahlberg, with “Wedding Crashers” director David Dobkin at the helm. But salary disputes and debates over the R rating caused a split, with the actors heading off to make an entirely different buddy picture called “The Other Guys,” scheduled to come out this summer from Sony.
When Kevin Smith came onboard, he inherited a movie budgeted at $75 million without any stars. One day the film’s producer, Mark Platt, called to ask what he thought of Bruce Willis. Smith responded with a string of unprintable expletives that he says represented great joy. Soon afterward, Tracy Morgan hopped onboard.
Once Smith persuaded the studio to let him make what he calls his parents’ kind of R-rated movie, which he describes as “one with some bad language, but not a lot of tasteless (oral sex) jokes,” the project had a new life.

“We all took pay cuts to keep it R-rated, which with me meant I gave up 80 percent of my salary, but it was worth it,” he says.
— P.G.
Kevin Smith’s filmography
As director
“Clerks”
(1994)
“Mallrats”
(1995)
“Chasing Amy”
(1997)
“Dogma”
(1999)
“Jay and Silent Bob Strike Back”
(2001)
“Jersey Girl”
(2004)
“Clerks II”
(2006)
“Zack and Miri Make a Porno”

By Patrick Goldstein, Tribune Newspapers

To the Editor

Re “Will Airlines and Passengers Call a Truce?” (Feb. 21), about the possible effects of airline fees on the future of travel:

I, for one, do not mind the charges but resent that airlines don’t fully consider the implications. On a recent flight, for example, I paid $75 for checking in three bags for my family. But because other passengers had brought huge bags onboard to avoid such fees, I couldn’t find space for our coats in the overhead compartment.

When I complained, I was told that the overhead compartment was for bags, not coats. Why was I penalized for trying to create more space inside the cabin?

Ritha Khemani

Washington, Feb. 21

To the Editor:

What, exactly, is wrong with an airline charging for optional goodies? Every business does it. Restaurants charge extra for the à la mode on the pie. Otherwise, those who don’t want ice cream subsidize those who do.

In first class, the cost of alcoholic drinks is bundled into the ticket price, and the abstainers subsidize the drinkers. In the economy section, passengers can decide for themselves whether those amenities are worth $5 a pop. Charging for checking baggage is no different.

Arthur O. Armstrong

Manhattan Beach, Calif., Feb. 22

If you are flying in a private jet perhaps you are beyond the offerings of the SkyMall. Private Shoppes has created a new in-flight and online catalog to be distributed by jet charter operators, in-flight caterers and private air terminals. With the economy beginning to recover, private jet travel is starting to become popular once again, it is estimated that 2.5-3.5 million passengers fly privately each year. In a press release, Gillian Christie, CEO of Christie Communications said that Private Shoppes “makes Sharper Image look like a Sears Catalog.” The catalog includes brands like Tumi, Mulholland, Steuben Glass, Shafer Vineyards, Bissinger’s Chocolatier and more.

by Deidre Woollard

Sit down with the top U.S. airline bosses as I was able to do this week, and you’ll hear a group of executives preaching the same sermon: Control capacity and add new fees.

If you fly a lot, you’re not going to like this.

This is a fraternity of born-again penny pinchers, determined to raise fares, cut every unnecessary cost and collect any extra fees their customers are willing to pay. But they’re also primed for a bigger overhaul that could take the form of takeovers if the right opportunities arise.

Such a unified view, very apparent from interviews with the chief financial officers of four top airlines at this week’s Reuters Travel and Leisure Summit in New York, results from the collective battering the airlines have suffered this decade.

If it hasn’t been oil prices, terrorism, or the economic crisis that has hit them, it has been fare wars, government restrictions and the airlines’ own mismanagement.

So airlines have shown they can take a beating. Now what? And what will this industry look like in five or 10 years?

Kathryn Mikells of United Airlines parent UAL Corp (UAUA.O) said the key to survival is capacity discipline. United and its rivals slashed the number of seats for sale by canceling services in 2008 to offset record high fuel costs.

Fuel prices later retreated, and the capacity cuts left the industry better positioned to combat a recession that severely eroded travel demand.

Lesson learned, Mikells said on Tuesday.

“The trends are very positive in terms of the industry being more disciplined,” she said. “That’s exactly what we need in order to take this recovery period and start to translate it into price power and ultimately sustained profitability.”

WISHING FOR A MERGER

Mikells repeated UAL’s long-held view that the U.S. airline industry is too fragmented. UAL has in recent years been in advanced merger talks with Continental Airlines (CAL.N) and US Airways Group (LCC.N). Those deals didn’t pan out, but Mikells said UAL remains open to merging with the right partner.

Perhaps that partner is US Airways Group (LCC.N), whose CFO Derek Kerr, visited Reuters’ Time Square offices later the same morning.

US Airways, formed from a 2005 merger with America West Airlines, loudly advocates consolidation despite the high regulatory barriers and tight credit markets.

“We believe it’s going to happen over time, I just don’t know whether it’s this year or next year or when,” Kerr said. “Overtime, you will see this industry consolidate.”

Both Mikells and Kerr said they were pleased to see the success of the merger of Delta Air Lines (DAL.N) and Northwest, which might seem strange given it created a more formidable competitor until you remember that anything that leads to a cut in capacity is seen as positive for the industry.

Even, Capt. John Prater, president of the Air Line Pilots Association, agrees that consolidation is “inevitable.” He told Reuters on Wednesday that the union would support a merger that stabilizes the industry. He said a UAL/Continental tie-up makes sense because they have little overlap on their routes.

FARES AND FEES

The CFOs were reluctant to speak candidly about the scope for fare hikes in 2010. Some reported a rebound in pricing power. Others weren’t so sure, noting the failure of some attempted fare hikes so far in 2010.

“It’s been a mixed bag. Some fare increases have been successful and others have not. And I think that is reflective of the economy, which I would describe as a mixed bag with mixed signals right now,” said Tom Horton CFO at American Airlines parent AMR Corp (AMR.N) on Wednesday.

But if the fare outlook is murky, the outlook for new fees for travel services likes bag checks, meals and entertainment is painfully clear for passengers. Some of those fees may be unpopular, but they are here to stay. Their will be more of them. And they’re probably going up.

“We’re testing a number of different things right now. We’ll continue to test the mix to determine what customers really want,” said UAL’s Mikells.

“They clearly have a willingness to pay for things they value and that they want,” she said.

FUEL: ALWAYS THE WILD CARD

Almost the only area of disagreement among the airlines is how to cope with volatile fuel prices.

In 2008, U.S. airlines were clobbered as fuel costs soared to new heights. So they hedged aggressively, only to see fuel fall and money wasted on out-of-the money hedges.

Carriers may have found their footing a little since then, but they have diverging views on how best to offset that cost.

Kerr said US Airways, which is currently unhedged because the costs outweigh the benefits. That compares with UAL, which is 70 percent hedged in the first quarter of 2010.

AMR’s Horton said his carrier sticks to its strategy of layering hedges simply to smooth out price volatility. And Southwest Airlines (LUV.N), whose tradition of aggressive fuel hedging has long been the envy of the industry, lessened its hedge in 2008 when prices came down.

By Kyle Peterson, Reuters