American Airlines is introducing a new fee.  This time, a fee from $19 to $39 can you get you a seat up front in coach including bulkhead seats and it will allow you “group 1″ boarding. 

Personally, I’m all for offering more varied product on aircraft.  That’s the one development among “debundling” that I am in favor of.  However, please offer me something of real value.  Frontier gets it.  United gets it.  Airtran gets it.  Even Southwest Airlines gets it. 

AA doesn’t get it.  A seat that has no more pitch or other benefits except that it is “up front” and I can potentially board earlier (and sit in an uncomfortable seat longer before take-off) isn’t more value.  If the seat comfort isn’t going to change, do I really care if it’s up front or in the back?  Well, maybe I do if I’m on a cranky old MD-80.  Does it afford me more opportunity for overhead space?  No, not really.  Despite reports to the contrary, it’s just not that hard to find overhead space.  Sure, the bins are more crowded but you can still access them. 

If anything, it’s the jokers who put their luggage up front and then take their seat in back that annoy me.

But I’ll gladly pay for more seat pitch and a generally more comfortable seat.  I’d gladly pay $20 / segment to gain 2 more inches of pitch alone.  And I can already get that on an airline of my choice in most cases.  For the prices AA is offering for this “service” you can more often than not get an Airtran business class upgrade.  You can get more seat pitch and more service on Frontier.  You can get more seat space on jetBlue.  Southwest Airlines’ fee for priority boarding affords me a real opportunity to choose one of the best seats in a 737 for a cheaper price and you can bet I’ll have bin space on the SWA flight no matter what since they aren’t fools and charge exorbitant fees for baggage checking.

Perhaps this might have some appeal to a business traveler but I don’t think such a fee is going to be reimbursed as an expense.  That certainly wouldn’t fly at my company, a major aerospace and defense firm. 

How about a $25 fee that A) gets you a exit aisle seat and B) *guarantees* your checked luggage arrives with you?  That might be particularly attractive to AA flyers.

At the end of the day, for any traveler except the most extravagant, it’s money that can be better spent elsewhere.  And if you are that extravagant, you’re probably getting an upgrade to first class anyway.

Filed under: Airline Fees, Airline News, Airline Seating by ajax
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I know that these days it seems as if I’m at war with American Airlines but the truth is, they just keep running into walls.

ABC News has THIS story about a woman named Danielle Covarrubias who became pretty angry at American Airlines losing her bag.  However, when they also refused to refund her bag fee, she decided to sue American Airlines for $5 million.  The class action lawsuit was filed in Washington state, where Ms. Covarrubias lives.

But after a few days, it’s come to light that, according to American, Ms. Covarrubias wasn’t on the AA flight.  It was cancelled and she was re-booked onto another airline which lost her bag.  That was from Grand Rapids to Chicago.  No one disputes the bag was lost but it appears it was returned to her the following day.

AA says that they do allow a refund claim in these events as a part of a lost bag claim and it is unclear if Ms. Covarrubias filed such a claim.  Regardless, it points up what I’ve been saying for more than a year.  If you’re going to charge a bag fee, be prepared to deliver or refund that fee when you don’t deliver it on time or at all. 

Travelers are enraged and there is enough traction for a class action lawsuit such as this.  Even if this one doesn’t end up in court, I do believe there will be another that does.  When it does, the issue will be over whether or not an airline is entering into a contract to carry that bag with guarantees and I don’t think their fine print will save them.  There is plenty of law to show that there is an implied contract and that breaking the contract means you owe a refund of some sort.

Revenue from ancillary fees such as this looks great to airlines but they haven’t yet really felt the pain of what those fees imply.  To be honest, I’m a bit surprised that it has taken this long to see something like this. 

More important, it’s another case of airlines shooting themselves in the foot.  This problem was easy to solve and even easier to avoid.  Give a refund instantly when you lose or misplace a bag for which a customer has paid a fee. 

That much is a no-brainer.  It isn’t hard to empower an employee to do so.  You only have to ask 2 questions to arrive at an appropriate action:  1) Did the customer pay a checked bag fee and actually check a bag?  2) Did the bag arrive with the customer?   If the answers are Yes and No respectively, make that refund immediately.  Credit it back in exactly the same manner for which it was paid and do it instantly and with sincere regrets over the trouble caused. 

Denying that refund automatically is not only a bad PR strategy, it’s just simply wrong.  In this country, we do not expect people to pay for things they didn’t get.  Airlines are styling these fees as “services” and, in this case, service is exactly what the customer didn’t receive.

Filed under: Airline Fees, Airline News, Airline Service by ajax
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One thing coming out of the 2nd Quarter financials from several airlines is, once again, just how much baggage fees are adding to revenues and, more importantly, profit.  United President John Tague is expecting that this kind of ancillary fee could soon be adding a billion dollars more to revenue and that is from its current levels of $350 to $400 million.

Like them or not, those numbers are hard to ignore. 

It does make me wonder how Southwest Airlines will continue to defend its no baggage fees approach going forward.  Load factors on airlines are at astonishingly high levels and that means that Southwest isn’t necessarily siphoning off customers from airlines with those fees.

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I like to watch the fare prices on various routes that I fly from time to time but none more so than the Dallas to Milwaukee run.  To me, it’s an example of what real competition can do and I’ve written about it before.  You can read my earlier post HERE.

Well, I took some time to see what was going on with that route now by sample fares and flights for mid-week departures between the two cities in August.  First, the good news:  Fares are holding steady at or about $170 for advance purchase tickets. 

Second, the better news:  Airtran is using the Boeing 717 on that route already.  No SkyWest CRJ-200 regional jets, we get the real Airtran on a real aircraft that is really pretty comfortable.  I figured Airtran would move in with the larger aircraft if only to put pressure on Midwest Express.

Now some bad news:  Airtran is only flying an early morning and late afternoon flight on the DFW to MKE run.  It’s worse on the MKE to DFW segment with a plain morning departure and late evening departure.  I’m guessing it’s the best they can do for now but they’re going to need at least one more flight to make that really work.  Their current offering via Atlanta is *not* what I meant by needing another flight either.

Midwest  aka Frontier aka Republic is hanging in there.  They have 3 flights using the E-170 Embraer jets and that’s really not a bad aircraft for that route.  With 2×2 seating and a bit bigger cabin, it works for what is essentially a long and thin domestic route.  Well, long-ish anyway.  The bad news is that Midwest  aka Frontier aka Republic has its first flight on the DFW-MKE run after 10am in the morning.  That’s about 2 hours later than necessary.

American Eagle is hanging in there.  This is a route that used to often cost as much as $300 round trip just 3 years ago and that was the best fare you could get.  Often the only tickets to be had were in excess of $500 and the only choice you had was to fly to Chicago and take the bus if you wanted to save money.   But here is the interesting part:  American Eagle has its 5 flights a day and I will say they’re well laid out in terms of departure and arrival times.  However, American Eagle is now using the CRJ700 on 3 of those five flights (the remaining two use the clapped out ERJ-140)  and their fares are as competive as anyone’s. 

And then there is Southwest.  Southwest’s cheapest fares are competitive with everyone else’s and continue to be one-stop flights with no plane changes.   Those flights are now running about 3 hours, 25 minutes however and that’s a bit longer than they were taking earlier this year.   The non-stop flights of the other airlines are doing it in 2 hours, 20 minutes.   Still, they are the bargain choice for 2 reasons.  First, Love Field is cheaper to fly from for more people in the DFW area in that its taxes and fees are slightly cheaper and the travel to Love Field and parking at Love Field is cheaper too.  Second, Southwest still isn’t charging for baggage.  That means for someone checking a bag, the savings could range from $35 to nearly $80 and that’s real savings. 

In practical terms, for me as a passenger to that destination, I probably could save as much as $50 each way in “real” savings by using Southwest.  And I’d do it in the aircraft that had the *most* seat pitch of those serving the routes.  That’s worth the extra hour of transit time on a leisure flight and might just be worth it on a business flight too. Why?  Because my door to door time in the Dallas area is likely to be about the same using Love Field or DFW.  I don’t have to drive as far to Love Field airport, take as long to park and/or transit into the terminal, check in quite as early or frenetically and that amounts to probably as much as an hour gained making the trip from the door of my house to the door of my family’s homes in the MKE area about the same no matter which airport and airline I take. 

But I can save about $100 round trip if I’m flying with checked baggage and that’s a deal. 

If Airtran wants to win Miwaukee, this is an important route for them to succeed on.  They’ve got the right equipment for the route now but they’re going to have to work on their frequencies and departure times a bit to really win.  Right now, their schedule looks like a compromise.

Midwest is probably continuing to do well but let’s see how they do when the brand changes to Frontier.  I’m not saying they’re out of the game.  To the contrary, this whole competition thing on this route could end up being Midwest/Frontier and American Eagle again in a year or two.  Midwest has good frequencies, good flight times (mostly) and good service.   However, Southwest will win this route, I think, when they can start flying it non-stop But that opportunity is still 3 1/2 years away.

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It’s rare for me to comment on in flight entertainment and internet access on aircraft because A) it doesn’t interest me that much and B) these developments seem fractured at best. 

There isn’t much harmony between IFE offerings between various airlines.  Everyone has their own system and their own content and controls it in their own way.  The differences range from portable media players to LiveTV to offerings that approach what you might be able to get on cable TV.   Some airlines charge a lot for it, some charge a little and some don’t charge for it depending the fare you’re traveling on.  It’s terribly mixed up and in the United States, you never know what you might be able to access from one flight to another.  Who wants to make plans for that?

Internet access is a bit different in that most airlines are adopting the GoGo system (although Southwest has adopted Row44’s offering) but even though the system is (mostly) consistent, you still don’t know what aircraft it will be on in many cases and it certainly isn’t something one plans on having available. 

The recent conversation about JetStar offering iPad units for rental and IFE got me to thinking about what’s wrong with IFE and internet access on aircraft in the US. 

Value.

The pricing for many of these options doesn’t really strike me as being of real value.  Most often, content is priced on a per flight basis and while that seems like value, it really isn’t.  I wonder if more revenue could be generated if airlines would get over their fears of earning money and change the value proposition.  Charge by the show instead. 

In other words, follow an iTunes model instead of an “all in model”.  Allow people to buy a movie for viewing for $2.99 or a TV show for $0.99.  Give them a rational a la carte option and I suspect on shorter duration flights, you’ll earn more revenue from people wanting a diversion for a price that is appropriate for the time they are on the aircraft.  Those a la carte pricings will also make “all in” package seem like more of a value the longer the flight is.  In other words, concentrate on the “take” per flight and less on recovering fixed “costs” per flight.  The truth is, the more people use it, the more they will use it in the future. 

Internet access seems like a “value” at first glance on most aircraft.   Originally priced from $10 to $12 per flight, GoGo InFlight is now offering packages that range from $4.95 per 1.5 hour flight to $12.95 for flights over 3 hours in duration.  That’s a step in the right direction but what I want (and what I suspect people want) is the option to just buy “time” no matter what the length of the flight is.  Few people plan to use their “service” for 3 or more hours on aircraft.  Offer them the ability to do “business” for 1.5 hours for $5.00 and I think you’ll see the use rates skyrocket.

The thing is, anytime someone doesn’t use these services on a  flight, you’ve lost a revenue opportunity you’ll never get back.  More flexibility in both access and price means a more attractive set of options for what is a widely varied group of people traveling any one day. 

When iTunes began as a store for music, music labels were horrified at sellings songs for just $0.99 a song.  Until they saw the revenue streams that developed.  Once they saw the use rate go up, they actually argued with Apple to offer more diverse pricing opportunities.  Bargain rates for slow selling items and premium rates for hits.  This is a model that I think will work better on aircraft because it fits more needs and because it is a model people have become comfortable with.

Filed under: Airline Fees, Airline Service by ajax
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The DoT has proposed new consumer protections on Wednesday and most aren’t unreasonable.  First, they’re proposing to require airlines to post complete information on baggage fees and offer refunds and/or reimbursement(s) for delayed baggage.  I couldn’t agree more.  When airlines began charging these fees, their attitude was the fee was for “transporting” the luggage and I believed that no matter what their stance, if you charge a fee for it, then you should also be prepared to offer minimum guarantees for that fee.  Alaska Airlines sort of did this.  No one else has and that’s wrong.  In fact, the stories of people trying to get refunds of their baggage fees when their baggage went missing or became delayed are just horrid. 

If you charge a fee for it, be prepared to be held to a standard.  The argument that it is a free market out there isn’t true anyway. 

Second, the Feds want better and more fair fare advertising.  Again, I couldn’t agree more.  One of the best things that happened for airlines in the past 3 years was a la carte pricing.  Except those a la carte prices never showed you your “all in” price until you were inputting your credit card for payment.  Customers should be able to see what they’re buying up front and they should know their options *before* their purchase is complete. 

Third, they want to ban price increases after a ticket is purchased.  Now, I’m not sure what they mean about this.  If they mean once you buy a ticket, it should cost more to change that ticket to another date, I’m not sure I agree.  I’ll be working to learn more about the intent here before I pass final judgement. 

Fourth, they want to require timely notice of flight status.  Mmmm, I’m not sure what their standard is but in my experience, this isn’t an area that airlines are doing a bad job in.  Yes, sometimes status is a bit tardy but I wouldn’t say it is impossible to get information on flight status or even see it updated regularly.  Again, I want to learn more about the intent here but I suspect this isn’t an area where we need much protection.

Fifth, they want to require special notice of bag fee increases and notification of baggage fees when a consumer purchases a ticket.  Again, I agree.  If the airlines want to charge these fees, then there should be prominent disclosure of these fees and they should be disclosed well in advance of the final purchase. 

Sixth, they want to increase the limits to be paid for being bumped.  Again, I agree with this.  The existing limits were created in an era when a hundred dollars was real money.  Bumping is at an all time high with the increased load factors on various airlines.  The consequences for overbooking and then inconveniencing a traveler should rise with the times. 

Finally, it’s my understanding that they want to tighten up and/or close loop-holes in the 3 hour rule.  Personally, I would wait 12 months before going any further down this road.  I’m in agreement with the 3 hour rule but I also think that it’s wise to make sure there are no severe unintended consequences as a result of the current rule.  One area I do think could be improved is preventing airlines from acting punitively towards passengers who do want to disembark from an aircraft.  The Feds should have required re-booking on another flight with no additional fees in the original rule or, at the least, set a maximum change fee for re-booking. 

All in all, airlines asked for this, in my opinion.  They’ve often abused customers in ways that we don’t see in virtually any other industry.  In fact, their ability to abuse customers points out that the airline industry is not a free market place.  It really is more of an oligopoly and one that even many LCC airlines happily participate in.  I look forward to reading more comments from others on these proposals and when I have more firm information on the exact nature of these changes, I’ll be commenting again.

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Apparently the nation’s airlines have decided that their best strategy is to add yet another fee for this summer.  This time it’s a peak travel surcharge.  See the CNN story HERE.  The question is, will it work?  Would you pay from $10 to $30 more over the published fare for a ticket this summer?

I wouldn’t.  Quick research on my favorite routes show the fares are already climbing rapidly and in two cases have nearly doubled for the least expensive ticket.  The economy hasn’t recovered, people are not earning more and unemployment is still exceptionally high.   I think air fares are very inelastic in price for consumers this summer if only for the leisure travelers. 

Capacity is still way down and clearly the airlines think they can earn more and not lose traffic.  Maybe they’re right too.  But I like to do a bit of content analysis on for sale ads from time to time to gauge where we might be when it comes to disposable income.  If you take a look at the ads online someplace such as Craigslist and see what’s being sold and at what price, you can often get a reasonably good feel for whether or not people feel they have enough income for luxuries.

Right now, I see a lot of firesales on goods.  Nearly new televisions, computers, appliances, etc. tell me that people are still trying to make do or survive.  I suspect a lot of people will defer travel for their vacations this summer in the end.  Advance bookings were strong in March and April, yes.  Prices were also exceptionally low in March and April.  A round trip flight from DFW to MKE in late July has climbed more than 20% in price already and that is on a hyper-competitive route. 

Will the airlines “stick together” on these surcharges?  I think someone might break in a week or two.  Unlike most fees, these surcharges are showing up in booking engines and it is quite possible one or more airlines might “break” from the pack as soon as sales soften.   In addition, while the legacies are doing this, the LCC’s aren’t showing many signs of adopting it yet except Airtran who did choose to add a  “flate rate” surcharge of $10 for 25 days in the period marked from June 10 to August 22.  Once again, Airtran acts a bit smarter.

Time will tell but I don’t see us enjoying a summer where all economic signs point to consumer confidence.  As I write this, the stock markets have had a big sell off over fears of volatility in Europe with respect to weak economies and a weakening Euro.   Unemployment rates haven’t made a real reversal in direction.  Gasoline prices are a bit up and food prices are too.  It’s doesn’t take much to reduce the disposable income of an average household and uncertainty means most will play it safe rather than just “accepting” yet another fare hike.

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The Dallas Morning News Aviation Blog has THIS story about Delta possibly deferring or cancelling its (inherited from Northwest) 787 orders for 18 aircraft (and 50 additional options.)  And this kind of makes sense to me. 

Northwest probably did need those 787 aircraft for its trans-pacific routes.  Its 747 fleet was adequate for some routes but others just couldn’t stand a 747 and Northwest doesn’t have any 777 aircraft.  The combined fleet of Delta and Northwest is a different matter, however. 

If anything, I think Delta might have one long haul aircraft type too many.  That said, they have 767 (Delta) and A330 (Northwest) aircraft for medium haul routes and configured so that each is nearly ideal for passenger density.  They have the 777 (Delta) and the 747 (Northwest) for long haul, high density routes as well.  Frankly, I think Delta might be better off adding the 777-300 to its fleet and retiring the 747 but that isn’t their plan.  They are refurbishing the 747 aircraft and extending leases on them.  Clearly Delta sees a profitable use for them at this time. 

The 787 isn’t going to be a trans-Atlantic aircraft.  Certainly not on the first routes for any airline.  A new(ish) build 767-300 or A330-300 can do those routes just as economically.  The 787 is better suited to routes like NYC to Tokyo or LA to Sydney or Atlanta to Rio de Janeiro or even the US to India.  Delta has the right sized aircraft for those routes.  

Delta can probably sell those orders profitably at this point.  There are a number of airlines who don’t have new(ish) 767s or A330s and there are several more who need to downsize from a 747 or 777 on long haul routes.  Airlines such as Continental and AA come to mind.  

Mind you, the enthusiast in me wishes all US airlines flew the latest and great aircraft.  The practical side of me says we’ll probably only see Continental take up its orders on schedule and even AA will likely take its time adding the 787.

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I read THIS about Transportation Secretary Ray LaHood being outraged at Spirit Airlines’ newly announced carry-on bag fees.  It would appear that he thinks this should be stopped or mitigated by the government and says the FAA is looking into what it can do.

Well, those who know me know I am *not* a fan of bag fees in general and I’m certainly not anti-government either.  In this case, Secretary LaHood is way off base.  It is not the job of the FAA or the government in general to prevent these kinds of fees from being implemented.  If these fees are as bad as some think (and I don’t think they are for this particular airline), the market should respond accordingly. 

What is the government’s job is making sure that these de-bundled fee based services on various airlines is transparent and currently it is not.  When a consumer is attempting to shop various options on traveling to a destination whether by most airlines’ websites or by an online agency (Orbitz, Travelocity, etc), they really only get to see the base fare plus taxes and fees.  This is a lack of transparency in pricing because the various fees are being implemented in conjunction with other desired services and some, although not all, are not advertised in the price.  

For instance, one does not see the convenience charge for using a credit card or the online booking fee that some charge.  Others don’t see how much it costs to transport a checked bag or, now, a carry-on bag.  If we’re going to have de-bundled fees for various “services” on airlines, I think it’s time we also be able to see the “all in” price of making that trip.  In other words:

• How much is that base airline fare?
• How much are the taxes?
• How much are the airport fees?
• How much is the fuel surcharge (if any)?
• How much does it cost to pay a checked bag fee at the time of ticket purchase?
• How much does it cost to pay a checked bag fee at the gate?
• What limits does this airline impose on both carry-on and checked baggage?
• Can one pre-purchase a meal and, if so, how much is that?

There are many more questions that should be answered in advertising those fares so that there is transparency instead of “gotchas”.  That is what should be imposed by the government.  Mind you, when the government does begin to impose such rules, the airlines will scream, holler and stamp their feet that they can’t afford the infrastructure to do this.   Sorry but if you’re going to have fees, you need to have the infrastructure to support a fair and transparent communication of what those fees are.  That’s the job of the government. 

Airlines would abhor such a thing because the very next development in online airline shopping will be websites that present the “all in” price for making a trip and that will make things hypercompetitive among airlines at present.  All I can say is that life is hard in the big city. 

There are other areas where transparency could and shood be better.  Codeshares are one area of that.  I don’t object to codeshares at all but I do object to the lack of transparency in how those codeshares are presented currently.   What is presently being done is the equivalent of offering one brand of flavored rice at a price and then giving the consumer another brand of flavored rice after the purchase.  Both brands may be great brands but what if you *really* wanted Rice-A-Roni instead of Lipton’s?   An airline isn’t going to let you change your ticket upon discovering that you really aren’t flying on their airline for particular flight.

There has been a lot of laxness in allowing airlines to operate for 2 decades or  more with this lack of transparency.  The argument that it would take time and money to present this in a fashion much like we expect virtually every other retailer or service provider to do is cost prohibitive just doesn’t fly.  Shame of the government for ignoring this for so long but shame on the airlines for doing it too.  The FAA has long been under the influence of exceptionally airline friendly forces for an very long time and they, more than anyone else, permitted this to happen.  I’m glad that Secretary LaHood wants to stop some of this abuse but I would suggest that he needs to be a little less media friendly in his words and a little more active in promoting fair for both airlines and consumers.  This is one part of the house that is long overdue to be put back into order. 

I”m a very experienced shopper for air fares and I’m exceptionally well acquainted with strategies to find a good fare and even I am finding it exceptionally difficult to do this in a manner that allows me to compare the cost of a trip in an apples to apples manner.  It takes an exceptional amount of time to make an informed purchase for air travel and if it is that hard for me, how hard is it for just the average consumer? 

I never want to let an airline have its cake and eat it too.

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I’ve come to accept that we’re going to see lots of fees and a “de-bundling” of services in the travel world and, most particularly, the airline world.  I’m even willing to accept it with good humour at this point.  Indeed, I see advantages to a more “a la carte” system of pricing in the airline world.

I still have an objection, however.  These increased fees for checking bags, changing flights, food and drink and even booking online should also come with some new guarantees.  A checked bag should come with an arrival guarantee that is money back if your luggage doesn’t arrive with you.  A fee for changing flights should come with a money back guarantee if, say, you’re bumped from a flight you changed to.  If you’re going to charge a fee for booking online or accepting a credit card, then you should also make a “prompt refund” guarantee if the flight gets cancelled and unable to travel on a different flight.

The thing is, passengers haven’t really shown much interest in trying to hold an airline’s feet to the fire and I think I know why.  Frequent flier programs.  You see, the airlines *know* that you’ll stick with them in order to earn points that, by any account are worth at most about a penny a point. 

Let’s say you are taking a 2 hour flight to someplace.  Just to be generous, let’s say the mileage is 900 miles earned (and on a 2 hour flight, I would say that is way generous) for each way.  1800 miles or point are earned for completing the trip.  You just earned yourself a reward that at most is worth about $18.00. 

Let me ask you something.  Is that $18.00 worth the abuse?  I’d wager that on any one flight where you had trouble with a lost bag, bad food, a changed flight or anything else that we’re now seeing fees charged on, you would happily pay $18 to see that go away.   Would you change airlines for a flight if another airline made a value promise to handle your luggage responsibly or get your money refunded if they don’t if you weren’t earning $18.00 of credit for that flight?  I’ll bet you would change in no time flat. 

Indeed, I would argue that legacy airlines are punishing fliers dramatically for trying to earn those points.  This is why Southwest Airlines is getting traction with its “no fees” policies for changing flights or checking luggage.  People are starting to figure out it isn’t worth $0.01 / point to earn “free” trips or “free” upgrades particularly in light of the new fee based systems being implemented. 

Sure, an elite frequent flier program participant doesn’t pay many of those fees.  Only, they do.  They pay it in the form of exorbitant prices for fully refundable tickets purchased with a short lead time.  It’s just not necessarily coming directly from their pocket.  It comes from their employer’s pocket.  But there is still a price.

Until passengers start choosing airlines based on the real value being provided, airlines aren’t going to change their behaviours particularly with these fees.

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According to the Wall Street Journal Middle Seat blog, American Airlines has decided to match the bag fees recently implemented by Delta and Continental.  You can read more HERE.

So, at present, Delta (including Northwest), American Airlines, Continental, United and US Airways are now all charging $25 for the first bag and $35 for the second bag with some of the airlines offering “discounts” if you perform your “bag fee purchase” online.   That would imply that they each see this price for checked bags being a bit more elastic than one would have thought.    Or, at the least, they see it as elastic as long as they all go for the same increases much as the case is with air fare increases. 

So far, no low cost carrier has adopted this pricing model or even raised their checked bag fees.  I suspect they won’t either as it gives them an opportunity to show themselves as the good guy while gaining some incremental revenue. 

If this rise in fees sticks for the next 1 or 2 quarters, I do think it will put tremendous pressure on Southwest Airlines to institute their own version of bag fees, at least by institutional investors and analysts.  So far, Southwest and its CEO Gary Kelly have resisted these calls to add checked bag fees and, so far, they believe it is resulting in incremental revenue from passengers switching to Southwest to avoid fees.  Since CEO Kelly (and Southwest as a whole) is not one to shade the truth, I’ll continue to believe these claims. 

However, with other LCC carriers such as Airtran and Virgin America and even jetBlue (on the 2nd bag) have added fees and do report significantly improved revenues from that, I would imagine that the call for Southwest to add these fees will be defeaning particularly when Southwest could implement a jetBlue or Airtran style program and see improvements to their quarterly results which haven’t been too impressive in the last year. 

It is sad but I don’t believe we’ve seen the last of these increases.  I do think that some airline will probe the upper limits of these fees just a bit more yet.  I do think that Southwest will resist the call to add these fees for at least another 6 months but if there hasn’t been some kind of collapse in the price of these fees by then, I would not be surprised to learn that Southwest has begun to make changes to their infrastucture to implement them.   I think the first sign will be the withdrawal of their “no fees for checked bags” advertising.

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Delta Airlines chose to announce they are increasing their checked baggage fees.  If you pay online, your fee goes from $15 for the first bag to $23 for the first bag.  The second bag checked rises from $25 to $32 (paid online).   Continental matched those fees almost immediately.  While it seems exorbitant to me, I wonder if anyone will really notice right now.

I suspect Delta did this simply because they have pricing power at most of their hubs (ATL, MSP, DTW, SLC, CVG, MEM) and because they don’t think it is going to affect the consumer’s decision about which airline to fly in most cases.  Delta doesn’t get a lot of LCC competition at its hubs except for ATL and there seems to be a unspoken agreement with Airtran not to get too ugly there.  Besides, Airtran has checked baggage fees too. 

The thing is, most online sites that offer booking for airlines in the US do not mention baggage fees when displaying prices for routes.  Delta will continue to appear to be very competitive on routes while likely adding additional incremental revenue through the “gotcha” approach.   Quite honestly, I suspect they’ll get away with it.  At least until there is a healthy recovery in the airline industry and that is likely 18 to 24 months away still.  Maybe more.

Will others match it?  I suspect that American Airlines might.   There is no precise harmony among airlines on these fees, not yet anyway.  Continental already had pretty high fees at $18 and $27 for online checked fees (with a $2 and $3 surcharge at the airport).  AA is at $20 and $30 respectively whether you check online or at the airport.  US Airways is at $20 / $30 for online (with a $5 surcharge for checking at the airport.)  United is $15 and $25 for online checking.

By contrast, Southwest Airlines has no fees up to the 3rd bag, jetBlue offers the first bag free and $30 fee for the second while Airtran charges $15 for the first and $25 for the second.  In other words, these fees are all over the place.  The truth is, as competitive as airfares are on many routes, these fees can change the equation pretty dramatically in some cases since those fees are for each way on a round trip flight. 

These fees have added dramatic amounts of revenue to airlines’ bottom line and I don’t see them going away at all.   I don’t think the fees among legacy airlines will harmonize much at all until and if online travel sites begin showing an “all in” pricing when comparing fares.  Even with such comparisons, I don’t think the fees go away so much as they just begin to merge together among the airlines. 

Will anyone else raise their fees?  Well, maybe.  I’m sure it will be tempting to do so among all the legacy airlines.  One or two may even try to raise the ante some.  I kind of  think both United and American Airlines will try some kind of new mix in the future.   I don’t see the LCC carriers playing around with their fees much if at all.  They have the revenue and now this may be their chance to follow Southwest’s strategy in a modified form by advertising lower checked baggage fees. 

I don’t think Southwest will change its attitude on these fees based on this new development.  Their strategy appears to be working for them and they don’t have a history of following the pack when something works.   That said, I’m sure it is something they’ll re-examine from time to time and it doesn’t mean they won’t add fees at some point in the future.  Right now, they appear to be capturing customers with their ‘no fees” approach and their aggressive advertising seems to have caught some attention. 

As much as I hate these fees for the 1st bag checked, I hate that airlines and travel websites  have done really little to truly show the “all in” price for these trips.  It makes things just that much more murky for the consumer and that is a bad thing.   However, the best thing you can do is learn the fees for the airlines you may be shopping for a trip and do the math yourself.  You’ll be frustrated by it and no doubt resent it but there isn’t a ready made solution at this time. 

Frankly, these developments are just one more reason why I wonder about Southwest re-joining the travel agency world.   The world has changed since they left it and, quite honestly, I think they could re-structure their IT infrastructure and re-join those agencies with little incremental costs involved.  At that point, they become the no brainer for many consumers from my view.  Even as aware as I am of airline options and even being located in the DFW area, even I tend to forget about Southwest as an option sometimes. 

One strategy for learning these fees is to visit LuggageLimits.Com (also linked in my sidebar).

Filed under: Airline Fees, Airline News, Travel Hints by ajax
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Several airlines are implementing surcharges for peak travel days such as American Airlines and Continental Airlines but others too.

This strikes me a bit like the fees for checking the first bag.  In this case, airlines are advertising fares but charging surcharges for those peak days most attractive to the traveler.  It makes me wonder a bit on whether or not taxes are being collected on the surcharges and it makes me wonder if the surcharges aren’t a bit deceptive when it comes to advertising.   

If those surcharges are needed, why not just raise the fare $10 (or whatever the surcharge fee is) for those particular days.   Because then they would have higher fares when being shopped against airlines without surcharges.

Filed under: Airline Fees, Airline News by ajax
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