Virgin Goes For a Bag Fee

Posted by: Justin Bachman on March 19

Virgin America is joining the list of carriers with a fee to check a bag. Previously, there was no charge for one, but as of May 5, it will cost $15. The change is part of a revamped fee structure Virgin announced March 19, including a $25 reduction, to $50, for itinerary changes or cancellations made on its Web site. The cost for a second checked bag will drop from $25 to $15. (You’ll also be able to check up to ten bags for $15, although to me that much luggage sounds more like office relocation than a business trip.)

Granted, this first-bag fee aligns Virgin America with the three transcontinental legacy carriers with whom it fights for premium business travel in the LA-NY-Boston-DC tangle. Virgin was likely not seeing any sort of competitive benefit from giving customers a free bag, so why not charge the fee? That was the point Continental (CAL) CEO Larry Kellner made in September when that company joined the bag fee party. One possible reason – and I concede that in this sort of recession the notion may be truly laughable – is brand distinction. JetBlue (JBLU) and Southwest (LUV) clearly exploit the ‘No Fees’ mantra for their marketing. Yet coddling the brand may have no place right now. Oil surged 7%, above $52 per barrel, on Thursday and the International Air Transport Association is planning to revise its 2009 loss forecast next week. Odds are it’ll be quite a large number.

So back to one of the airlines’ revenue fixes, bag fees. Is this something that affects one’s choice of carrier? The airlines have, nearly across the board, reported consumer acceptance and have told Wall Street about the millions in new revenue the fees are providing. Do you pay the bag fee personally, or does your company reimburse it?