Airline Fees are Big Money; a Whopping 345% Jump

is this good or bad?

And they are still losing money?

It's unlikely these fees will end unless a carrier becomes profitable enough to drop them for competitive advantage. The real issue for the traveler is predictability. Knowing what to expect in advance allows travelers to budget more effectively. Until then, we'll just have to pack more effectively, live out of our carry-on luggage, plan for minimum food and drink consumption while airborne, and carry more contingency cash for the unexpected.

I have just returned from my annual trip to Europe and discovered that the airlines are happily cashing in if you have a bike case you want to bring along on a transatlantic flight. USAir is not too bad at $100 each way but Lufthansa, also a Star Alliance member, charges 150 Euros. A third Star Alliance member, United, is the cheapest US airline and makes you pay $50, whereas Air France does not charge at all. Since it is hard to rent a racing bike in Europe, you have to swallow these fees or stay home.

Are the reader comments usually as inane as these?

In the long term customers will become more and more frustrated having to pay $20+ to check a single bag and will ultimately lead to the loss of customers and mucho revenues for the companies who choose to nickel and dime their customers to death. In the meantime airlines like Southwest and Virgin will pick up these customers. It's not complicated stuff, unfortunately the crappy airlines will continue to fail and the gov't will keep lending them money and we'll all pay. Any business that loses $9 billion a year for any reason will eventually die and we should let it happen. The death of a large, poorly run company will open up the flood gates for new small companies and the ones that are well run will succeed. Circle of life anyone.

I agree Ben

This is ridiculous. People can barely afford to travel and airlines continue to find ways to make people less inclined to do so via plane. I had no idea that they were making so much money off of this. I wonder where it all goes!

http://www.soelsewhere.com

"is this good or bad?"......bad

Ben:

as an employee (pilot) of one of these "poorly run companies" I have to ask, why do you think we are charging you these ancillary fees? Could it be that before deregulation in 1978 you overpaid for a ticket because the industry was protected and fares where set by government? In those days only the well-to-do flew. Since deregulation there has been many, many new entrant airlines to the market. The result has been a massive lowering of fares, allowing everyone to fly. Another result has been a flood of seats available due to expansion of the "legacy" carriers and addition of the new "low cost" carriers, resulting in a dilution of yield per seat. In the old days you paid a high fare whether or not you drank a "free" drink or ate a "free" meal or not. All we are asking you to do is pay for what you get. The fares are based on the "bare bones" cost of transporting you, plus a reasonable profit margin. Believe me, we are not wallowing in cash. We live and die by the price of oil - ticket prices are based on this, and this is a cash intensive industry. My aircraft costs $40-50 million dollars to purchase, my electric seat on the flight deck costs $40,000 to replace. If all you want is just a seat, then that is all you pay for. If you want a drink or meal, then we ask that you pay for it. Keep in mind that prior to deregulation you paid for all these "free" services in the price of the ticket whether you used them or not. Even though it may be a hassle to get out your credit card in flight, believe me you are only paying for what you get. Even though ticket prices fluctuate due to the price of oil, you are still getting a good deal compared to pre-deregulation fares... all the best,

Captain Ric

Believe it or not, there is more to running an airline than buying a few planes and getting a few pilots to fly them. The costs are high and the profit slim to none. As Robert Crandall (former CEO of American Airlines) once said... the quickest way of becoming a millionaire is to start with a billion dollars and then start an airline.

Most of the airlines are not poorly run. That is not the reason that they lose money. They lose money because they have to protect their customer base and stay large enough to support the huge infrastructure that is needed to run it. They can not afford to raise fares to get profitable because some other carrier does not go along and then they take your flier. This is one of the most competitive industries so the poorly run ones are long gone. They could not afford the costs of their mistakes.

What carriers are trying to do by charging only for what customers use is to align price with costs. If you want only a coke or a mixed drink, or a full meal, why wouldn't the price change?

But... remember when Exxon had their discount for paying cash 15 years ago? Shell, Gulf, Texaco etc... spent tons of money to tell customers that Exxon was really just charging "extra" to use credit cards. This program floundered and now the price of gas includes the blended cost of processing a credit sale whether you pay cash or not. This is the very same thing. There is no free lunch. I would rather just get what I pay for and not just an average cost of what everyone wants.

We talk about supply and demand in all industries except airlines. In the airline industry, supply and demand only applies to the initial ticket purchase. We act as if the airline ticket buying public doesn't understand anything about these fees, and acts as if they don't exist. But we do know about these fees, and we add them up when we compare ticket prices, and when we decide to fly or drive. If a car company sold a car for $1, but would only sell it to you with the $30k "extra" seatbelts, consumers would understand the cost is $30,001, and would plan accordingly. And we would all think the scheme is pretty silly. But somehow when airlines play these games, and we pretend they are management geniuses.

All I know is that my 1992 Honda Accord cost me $16,800, and my 2009 Honda Accord cost me $26,700. In 1985 my round trip to Paris was $840 and now I can go for $400. Why does everything else go up and tickets go down?

John:

please review mine and Mike's Sept 9 posts. As I said, air carriers of today are basing their fares on the cost of moving you from point A to B. Additional services are being charged at a fair rate. Your scenario of charging $1 for a car (a ticket) and $30k for a seatbelt (a Coke) is misleading. We charge an appropriate rate for the ticket and a minimal fee for extras. We are not gouging you for the extras, we are charging you what it costs us to transport the weight of that Coke, plus a reasonable profit. Every pound that we fly costs 5% per hour to transport. You are, I believe, incorrect about "supply and demand" applying to all industries except airlines. In my experience as an airline employee, "supply and demand" is ALL IMPORTANT to the airlines in this deregulated and highly monitored industry. Every time an airline tries to lower fares or raises or lower the amount of seats in a market, the other carriers immediately have access to this information through the Internet, and react accordingly. After 30 years of deregulation, the airlines have finally figured out how to price their product properly. While you still overpay for medical coverage, insurance etc., you are finally paying for what is costs us to transport you, plus a REASONABLE profit margin. Believe me, what you are paying for a ticket is fair. Do you really want to pay 50% more to have a "free" meal, whether or not you actually eat it, or would you prefer to pay 50% less for your ticket and have the inconvenience of paying 5-10 bucks for a meal because you are actually hungry? This way, you can see the basic fare for all carriers, evaluate their charges for "extras", and choose accordingly. Thanks for reading this post. Capt. Ric