US Airways CEO: Airlines Must 'Change the Rules'

Airlines must "change the rules" in order to survive high oil prices and the other challenges the industry faces, said Doug Parker, chairman and CEO of US Airways Group.

“All airlines are raising fares and you’ll see that continue,” he said, in an interview on CNBC. “We’re trying to cover the cost of transportation. So the first thing we do is increase ticket prices to cover the cost and reduce the number of flights that are available.” (See video to the left for the full interview with Doug Parker.)

But when fare increases and cost cuts aren't enough, airlines have to resort to other steps such as charging fees for once-complimentary drinks, baggage, and pillows, Parker said.

US Airways now charges for drinks and baggage, and plans to cut about 10 percent of its available flights in 2009, Parker said.

According to Parker, these extra fees are a fair method because airlines only “charge the customers who want to use the services, like a checked bag, and not charge customers who do not want to use them.”

Airlines have to boost profits in every way possible, said Terry Trippler, aviation analyst at TripplerTravel.com.

“I sometimes wonder if airplanes will start looking like NASCARs with advertisements all over the outside –- whatever it takes to increase revenue,” he said.

According to Parker, customers have grown accustomed to the complimentary services provided by airlines, which is why they are now complaining over being charged for beverages -something they would not normally grumble about if they were at a hotel or a baseball game.

Michael Boyd, president of Boyd Group, said he agreed with the airline industry’s need to raise prices for individual services, but airlines ought to implement the new rules strategically. (See video above for more on what the airline experts have to say.)

“Airlines have a right to charge for meals and other things they give away, but that’s not the issue. It’s how they do it,” he said. “For example, I believe $15 bag check for the first bag is onerous, because people will at least want to travel with a change of underwear!”

However, despite charging passengers for additional service and raising ticket prices, Parker assured viewers that he is not cutting corners in terms of safety and maintenance of the airlines, and is doing his best to ensure that passengers arrive at their destinations on time with their bags.

“We’re the number-one airline in on-time performance in 2008 and we’re proud of it,” he said.

© 2009 CNBC.com