Airline Fees on the Rise: What You Need to Know

Posted May 10th 2010 01:07 PMUpdated May 10th 2010 02:16 PM

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bigbirdz, flickr

There seems to be a domino effect with airline fees. Virgin America and JetBlue started charging for blankets, so American Airlines followed suit. Continental was a little late to the party when it announced it will discontinue free meals (a dinosaur among legacy carriers). And 2010 started with an across-the-board bag fee hike at most major airlines, including all legacy carriers and even Virgin America. "These are prime examples of the industry's bandwagon mentality," says Anne Banas, executive editor of SmarterTravel.com. "Once one airline starts the parade and adds or raises a fee, the rest eventually join in. They figure, if everyone else is doing it, why shouldn't we?"

What Should Airlines Do to Make More Money?

We've heard from the experts, but what do you think airlines should do to make more money? Suggestions ranged from last minute shopping on TV screens to an airline coffee club with a plastic card for a wallet or keychain enabling you to drink free beverages at any airport vendor without fumbling for change or your wallet. Here are two of our favorites.

• Paula Laurita: "I've long thought that airlines have it backwards. Charge $10 for check-in bags, but charge $25 for carry-on." This would improve security and on-time departures, instead of waiting "15 minutes while a passenger literally stomped on his duffle bag to make it fit into the overhead bin."

• "Stop these little add-on fees and perhaps place ads on the overhead bins and in the rest rooms. And charge BIG bucks," says Mary Lock Albrecht. "Maybe the pilot could say: 'This flight is brought to you in part by Coca-Cola and Mrs. Fields cookies' which would encourage people to buy snacks."
We covered the new world of baggage fees and surcharges back in December, but the add-ons haven't stopped and airlines are getting more and more creative, charging for as many "perks" as they can: "preferred" seat selection, non-website ticket purchase, itinerary changes, confirmed same-day standby, booking fees for frequent flier redemptions, and more. And now, budget carrier Spirit Airlines announced they would begin charging up to $45 for any bags placed in overhead bins, making them the first of the major U.S. airlines to charge for carry-ons. Unfortunately airlines' à la carte "convenience fees" may just be the tip of the iceberg for a drowning industry trying to stay afloat amid increasing shortfalls, including an 18-percent drop in 2009 passenger revenue alone.

"The airline industry hasn't made money since the Wright Brothers," jokes George Hobica, creator and president of airfarewatchdog.com. Hobica thinks "passengers already accept that if they carry on their own bags because they packed light they shouldn't pay the fuel and labor costs for the guy bringing home a new TV as a Christmas gift." What they do hate is paying for things that really don't cost the airlines what the airlines are charging. "Passengers have a tough time justifying the extra cost for a seat assignment," says Uri Argov, President and CEO of LastMinuteTravel.com. "It demonstrates greed as it really does not cost the airline any additional expenditures, whereas a meal or another tangible service does." On the other hand, Hobica admits, "More passengers are getting used to paying for what they, not other people, use -- just as you wouldn't pay for a drink at the table next to you in a restaurant." He likens it to people having no problem paying for a better seat at a Broadway musical, so why should they complain about paying for an exit row seat on a plane with extra legroom?

A recent survey from Consumer Reports found that fees were the top two biggest complaints Americans had about air travel. The magazine asked 2,000 travelers to rate their gripes about flying on a 10-point scale, with 10 being the most annoying. Luggage charges topped the list at 8.4, while the catch-all phrase "added fees" weighed in second with a ranking of 8.1.

What it comes down to is that the fare passengers originally see can turn out to be not such a great deal after all. "Baggage fees also add up quickly and can be very detrimental to a family traveling on vacation," says Uri Argov, president and CEO of LastMinuteTravel.com, "which ultimately triggers the comparison of driving versus flying." Airlines seem to be following the cruise ship model of luring passengers with low fares then tempting them with extras like spa treatments, shopping, and the casino. "Airlines will likely roll out options in the future like selling DVDs in-flight, having concierge service in first class, and pre-selling in-flight food and beverage vouchers," says Harvey Alpert, founder of Brand in the Hand, a company that sells third-party advertising to several airlines on in-flight snack bags (the latest: Hilton Garden Inn's new "Cooked-to-Order" meals on Delta).

The bottom line is, no one is happy about all those fees. A recent TripAdvisor poll found that 36 percent of flyers brought only carry-on bags, 39 percent now fly only airlines that don't charge baggage fees, and 91 percent said they would not pay $8 for a pillow on a flight. Department of Transportation statistics showed U.S. air travel numbers plunged to new lows in 2009. The truth is, the airlines feel your pain. The industry is in freefall dealing with its own set of new fees and surcharges, including sky-high labor and fuel costs, CO2 emission taxes, airport passenger facility and improvement fees, security taxes, and other expenses.

On the plus side, the FAA Reauthorization Act of 2009 currently before Congress provides more than $70 billion for the FAA's programs, including $16.2 billion for the Airport Improvement Program, nearly $13.4 billion for facilities and equipment, $1.35 billion for research, engineering and development, and $38.9 billion for FAA operations through 2012. But that money has to come from somewhere. There are also TSA-imposed security taxes that will probably more than double by 2014 and FAA segment taxes, part of which aim to lower the $2 trillion national deficit.

The bleak picture for consumers is a 10- to 12-percent fare increase in 2011 just to offset these government-imposed surcharges. But for airlines to become at all profitable, a 17 percent figure is likelier, according to Vaughn Cordle, chief analyst for AirlineForecasts.com. He estimates that the industry loses almost $9 per enplaned passenger when it needs to earn $18. That $27 shortfall on average over the past decade, especially given that airlines are struggling under massive debt post-restructuring and must compete in fare wars (which may result in survival-mode consolidation, perhaps bankruptcies), helped trigger the "desperate necessity to nickel-and-dime passengers with as many extra surcharges as possible, as well as seek out more creative means of increasing income," according to Cordle. He also notes that 70 percent of labor contracts are up for renegotiation this summer and unions want to reverse the post-9/11 rollbacks, which could lead to a $3 billion to $6 billion increase in labor costs. Yet significant cost hikes (or a lengthy strike) may bankrupt airlines like American with more senior staffers, unwieldy under-funded pension plans, and huge benefit/healthcare minimum annual payments. Cordle's outlook on fuel costs isn't any sunnier. He estimates fuel costs "will average $80 a barrel this year and $84 in 2011 with a potential spike to $100 or more." That would increase industry expenses by $6.4 billion. Proposed cap-and-trade carbon taxes could cost airlines another $4 billion.

So what's the other option besides raising fares and tacking on fees (see our chart below to find out what you can expect to pay on some major carriers if you want to check a bag or grab a pillow)? Check out our sidebar, where we asked real travelers to weigh in with their suggestions.


American
Continental
Delta
JetBlue
Southwest
United
US Airways
Virgin America
Booking Fees
(on phone/in person)

$20/$30
$20
$20/$35
$15
$0
$25/$30
$25-$35
/
$35-$45
$15/$10
Seat Selection
(one-way)

N/A
Prices vary
N/A
$10 for extra legroom
$10 for priority boarding
$9 and up for Economy Plus
$5 and up for aisle or window towards front
$35 and up for Main Cabin Select
Ticket Change
$150
$150
$150
$100
$0
$150
$150
$75 ($50 online)
First Bag
(online/at airport)

$25
$23/$25
$23/$25
$0
$0
$23/$25
$20/$25
$25
Second Bag
(online/at airport)
$35
$32/$35
$32/$35
$30
$0
$32/$35
$30/$35
$25
Blanket and Pillow
$8
$0
$0
$7
N/A
$0
$7 (includes mask and earplugs)
$12 (includes mask and earplugs)
Note: All prices are based on domestic economy flights and are subject to change.
Filed Under: Air Travel, News

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499 Comments

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RALPH

I USED TO ALWAYES CKECK MY BAGS UNTIL THEY STARED CHARGEING THAN I STARED CARRY ON.THEY WOULD HAVE BEEN SMARTER TO GIVE FREE CHECKED IN BAGS AND GHARGED FOR CARRY ON EVERYTHING WOULD GO SMOTHER

June 01 2010 at 7:04 AM Report abuse rate up rate down Reply
patty ramirez

I love to fly southwest, their people are helpful and friendly.

May 17 2010 at 2:26 AM Report abuse rate up rate down Reply
Mary

Ohh sure I am a single woman in mid sixtys I going to drive alone to the west coast or some other location. Have you seen how much the train costs and how many trains are late. They do not have the right away on any rail road tracks. they must pull off to let a frieght trail pass. If I went on trail to LA from east coast look how much it will cost and even If I want a room that is more than a thousand dollars
oh ch my carry on there is no way I will trust any airline to watch my camera and other impotant stuff. So you folks who do travel and bring camera gear compain about them men who bring all thier luggage on board

May 17 2010 at 1:37 AM Report abuse rate up rate down Reply
Mary

I would LOVE to check my carry on. But I am sure my camera equipment and other valubles will not make it to my travel site. It would be smashed to pieces or stolen. So let the airlines price the people out of flying. I bring my own blanet and pillow. Pillow is about the same size as they offered and I got it for less than a dollar at a discount store, plus I know its clean. I agree I see lots of people wiiiith 3 or more bags as carry on. You have to be one of the first on board because people who are way down in back of plane put there stuff over the seat I am sitting in

May 16 2010 at 11:56 PM Report abuse rate up rate down Reply
SimonSucks

The listing is lagging a little, with the recent merger of United and Continental. So what will those fees be, combined between the two airlines?

Southwest is nicest for not charging the extra fees (except for the optional early-boarding privilege of $10 each way, which they don't seem to let passengers buy for only one leg of the trip--cost me $20 RT). Unfortunately, they dump less-than-completely-full flights and passengers have to scramble to different gates miles away in large terminals, claiming that the change is due to mechanical problems. I've never had that happen on American or the former United.

May 15 2010 at 10:46 PM Report abuse rate up rate down Reply
Ken

Just raise the fares to reflect all the fees! Instead of tacking on 10 bucks on for prefered seat, or one with leg room. AND, 2 bags max! Make it like it was, seems like the airlines want to shoot themselves in the foot coming up with all these extra fees......raise the prices to reflect them all and be done with it.

May 15 2010 at 2:34 AM Report abuse rate up rate down Reply
uacrack

I am an attorney and MBA grad and can not for the life of me figure out why the airlines keep trying to rob passengers with these fees. South West has cheap no thrills and no fees for 2 pieces! All but Southwest needed bailout money! I am soo happy NoBama is a 1 term president

May 13 2010 at 9:24 AM Report abuse rate up rate down Reply
SPBM

it was at one time when going on vacations, flying in a plane, and all the preparations was exciting and fun for everyone - whether it was a trip abroad or a domestic flight to see relatives or friends.

now the airlines have taken all the fun out of traveling. The security rules, the body screenings, the fees for everything from seats to baggage, etc.

traveling is a right for anyone - and a great way to see the US as well as the rest of the world - it should NOT be a chore.

the airlines need to get their act together.

May 10 2010 at 8:06 PM Report abuse rate up rate down Reply
Steve

It always strikes me that the people that complain the most do not fly very much. I fly 250,000 miles domestically each year and am immune to all of the excess fees (I also get 1st class upgrades, priority check in, special TSA security lines, free airport lounge membership, etc). It was Southworst that poisoned the system and flying coach will never be pleasant again until people accept that airfares have to be high enough for the airlines to make a profit. People seem to have an aversion to paying the true cost of their fare and the airlines have no choice but to add revenue producing "extras". In short, pay up or suck it up.

If you are flying 250,000 miles a year, you are not doing it for pleasure. You've got a company paying for those tickets. I bet if you had to take the kiddies on vacvation and you couldn't cash in your frequent flyer miles, we'd be hearing you loud and clear.

I have a friend who travels that much and more and he doesn't understand why I can't go many place with him. His law firm pays for his business travel and he uses frequent flyer miles for his personal travel. But he sure bitches about the price to get into Disneyworld!

May 10 2010 at 8:02 PM Report abuse rate up rate down Reply
angel

All of you pro-southwest people should take a look at their safety violations for 2009. They were fined millions more than all the other dometic airlines put together.

May 10 2010 at 7:55 PM Report abuse rate up rate down Reply

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