Baggage fees likely to get worse

Wednesday, May 2nd, 2012 By

Plane cabin

Airline fees, such as for putting bags in overhead bins, are here to stay. Photo Credit: FRED/Wikimedia Commons/CC-BY-SA

Airline baggage and other fees at this point are not merely an inconvenience, but rather a fact of life. Air carriers are likely to only continue to charge fees in coming years as it gets harder for some carriers to stay in the sky.

Fees getting sky high

Unfortunately for anyone who travels by air these days, most airlines charge a fee to check bags. In some cases, passengers get charged to stow bags in the overhead compartment. For instance, according to Fox Business, Allegiant Airlines charges $35 to stow a carry-on bag in the overhead compartment. Spirit Airlines charges $45.

Spirit has also, according to the Washington Post, instituted a new fee for not paying for an overhead bin bag ahead of boarding. If Spirit Airline passengers pay for using an overhead bin at an airport kiosk or at the ticket counter, the fee stays at $45. However, if they neglect to do so until they are at the boarding gate, the fee rises to $100.

However, some airlines refuse to engage in it. Southwest Airlines, according to the Seattle Times, is the only carrier that refuses to charge baggage fees or rebooking fees.

There for a reason

The reason for airline fees is that air travel is not a very profitable business. Fuel costs and continually fluctuating levels of travel make it difficult to consistently make enough to cover the bottom line.

Also, airlines undercharge on tickets. According to the Herald Times Reporter, a newspaper in Manitowoc, Wisc., air travel industry trade group Airlines for America estimates the typical round trip fare cost carriers $523.98 per passenger in 2010, using data from the Bureau of Transportation Statistics. However, the typical passenger paid only $422.50, a $100 discrepancy. However, baggage fees, check-in fees and other ancillary charges brought the average revenue on a round trip fare to $561.60, a profit of less than 10 percent.

All told, the airline industry has lost roughly $36.7 billion in the past decade, according to the Cleveland Plain Dealer. The average profit margin for airlines in 2011, according to the Herald Times Reporter, was 0.3 percent.

Here to stay

The airline industry is not in great shape. The fees reflect that; the Bureau of Transportation Statistics estimates that airline fees for baggage and re-booking alone brought in more than $8 billion for the fiscal year ending Sept. 30, 2011, according to Bloomberg.

In calendar 2011, according to CBS, all ancillary fees brought in more than $30 billion to the air industry. The core service, flying people to places, doesn’t make enough money. The fees are here to stay and are likely to get worse as airlines continue to struggle.

Sources

Fox Business

Washington Post

Seattle Times

Herald Times Reporter: http://www.htrnews.com/article/20120425/MAN0101/304260017/Airlines-raise-fees-stay-competitive?odyssey=mod|newswell|text|FRONTPAGE|s

Cleveland Plain Dealer: http://www.cleveland.com/business/index.ssf/2012/05/airlines_charging_extra_for_ev.html

Bloomberg: http://www.bloomberg.com/news/2012-04-12/airlines-resist-u-s-role-in-feud-with-travel-firms-on-fee-data.html

CBS: http://www.cbsnews.com/8301-500395_162-57417402/what-would-a-us-air-american-merger-mean-for-you/

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