Airlines Make Killing on Fees; Government Wants Us to See the Bill First
Thursday, July 21, 2011
What’s the difference between the price of an airline ticket and the cost of fees an airline charges to fly?
You can easily look up the price of a ticket. But it’s not so simple to calculate fees for regular baggage, oversized baggage, meals, drinks, pillows, blankets, ticket changes, early boarding, phone reservations, more leg room and whatever the airlines can come up with next.
It makes comparison shopping nearly impossible, but that is scheduled to change soon.
Baggage fees have become the difference between the airline industry making a profit and losing money, by taking in $3.4 billion last year for charging for passenger luggage. Checked-baggage costs have soared since 2008, when these fees totaled $1.14 billion. Nowadays, a single piece of luggage can cost a passenger $50, and a second suitcase $70.
Airline officials contend they have no choice but to charge baggage fees, what with rising fuel costs eating up a significant share of companies’ revenues and customers demanding low air fares.
“If it weren’t for the fees, the airlines would most likely be losing money,” Jim Corridore, airline analyst with Standard & Poor’s, told the Associated Press.
Airlines generating the highest revenues in 2010 from bag fees were Delta ($952 million), United/Continental ($655 million), American ($580 million) and US Airways ($513 million).
Regulators with the U.S. Department of Transportation want airline fees, including those for luggage, to be made more transparent to consumers. The department plans to force companies to list fees that are not related to baggage or airline reservations so passengers are better equipped to comparison shop before buying air fare.
New rules are scheduled to take affect August 23, requiring airlines to "prominently disclose all potential fees" on their websites prior to a ticket purchase.
-Noel Brinkerhoff, Ken Broder
Airlines Collected $3.4B in Bag Fees in 2010 (by Scott Mayerowitz, Associated Press)
US Airlines Earned $3.4 Billion in Baggage Fees for 2010 (by Siva Vayali, Flyers Chat)
Agency to Make Major Airlines Specify Fees (by Tish Kraft, Courthouse News Service)
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