Airline bag fees remain after oil price drop
By HARRY R. WEBER
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Published: December 28, 2008
A sign displays checked baggage fees in September at a Northwest Airlines ticket counter at MBS International Airport in Freeland, Mich.AP PHOTO
ATLANTA — When airlines started charging some passengers $15 or more earlier this year to check their bags, they blamed soaring fuel costs. Since then, the oil price has plummeted. Yet the industry hasn’t stowed away the bag fees.
Many of us still are paying to fly with a suitcase that doesn’t squeeze into the overhead bin or under the seat.
The reason is simple: Airlines still are losing money, though now largely because of the ecomomic recession instead of oil prices.
And don’t expect the fee to disappear even when the economy rebounds. Airlines are finding the fees to be a reliable source of revenue and say that such charges allow passengers to choose only the services they want.
Passengers, meanwhile, are paying up and grumbling. Many are being socked, on average, $15 for the first bag and $25 for the second.
"I think it’s unfair, and I think it’s highway robbery,” said
Benjamin Johnson, 38, a government employee, as he headed from Atlanta to
Orlando, Fla.
For the airlines, the bag fees, on top of charges for other once-free amenities, add up to much-needed revenue. The industry is expected to lose $4 billion for 2008, excluding one-time items, despite the plunge in the price of a barrel of oil from $147 in July to about $40 this week, said
Calyon Securities airline analyst
Ray Neidl.
Airlines say they are being hurt by the recession, which has caused demand for seats to drop. The
International Air Transport Association said global passenger traffic declined 1.3 percent in October from a year earlier.
Airlines also have been weighed down by bad bets they made on the price of fuel when it was skyrocketing. After locking in at prices that looked reasonable earlier this year, some are paying substantially more than market price for a portion of their fuel.
Airlines do not break out the revenue brought in by baggage fees.
"While fuel prices have fallen, the economy has created a new uncertainty for us, and the industry’s going to lose billions of dollars this year,” said
Doug Parker, chief of
US Airways Group Inc. "Indeed, it was fuel-driven economic concerns, but now we have different economic concerns. And having said that, I, for one at least, believe it’s the right model for the business, irrespective of what environment we’re in.”
Airlines say the fees are a new way of doing business in which services that once were bundled into the price of a ticket are offered a la carte.
An October poll of frequent travelers found that half prefer a lower ticket price in exchange for a la carte pricing for food, beverages, headphones and blankets. But the same survey, conducted for
IBM, found that 82 percent described the baggage fees as a rip-off. By comparison, only 45 percent viewed food and nonalcoholic drinks that way.
After getting off a recent flight to Atlanta, insurance representative
Cecilia Kolstad said it was crazy she had to fork over extra money to check a bag.
But "if it’s between that and seeing an airline go out of business, I guess I’ll pay the $15, because I like to fly,” said Kolstad, 55, of
Pembroke Pines, Fla.
Some travelers bypass the fees by packing lighter. Airlines typically waive the fees for passengers who have elite status in their frequent flier clubs, first-class passengers and travelers on international flights.
Passengers also can get around the fees for the first two bags by booking on
Southwest Airlines, though it doesn’t fly to some major cities such as
Boston, Atlanta and
Miami,
Fla. But how long Southwest can go without charging the fees is anyone’s guess.
Dave Ridley, a Southwest marketing executive, said in October his airline would be surveying people about charges, and he would not rule out fees in the future.
AP airlines writer Joshua Freed in
Chicago and Associated Press writer
Johnny Clark in Atlanta contributed to this report.
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