Airlines pocket $899.5M in checked-bag fees
Airline passengers who say they are increasingly feeling the squeeze now have a new number to quantify their pain: $899.5 million. That's how much the major U.S. airlines collected in checked-bag fees in the second quarter this year, a 3 percent increase from a year earlier, the Bureau of Transportation Statistics said Monday.
Airlines also collected 4.7 percent more in fees for reservation changes and cancellations during that same period, for a second-quarter total of $753 million. Still, those numbers each account for a small piece of airlines' revenues for the period, in which they racked up a combined net profit of $3.6 billion. Ticket fares were up 8.18 percent for the quarter.
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"Bag fees seem to be the biggest headache," said George Hobica, president and founder of Airfarewatchdog.com, which maintains a list of airline fees. Consumers can keep their fees low by flying one of the few airlines that doesn't charge for checked bags, or by getting an affiliated credit card on United (UAL), Delta (DAL) or American (AAL) to get checked-bag fees waived, Hobica said. Another option is to ship bags ahead of time with UPS (UPS), "especially on shorter routes since charges are by the mile whereas airlines charge the same on a short flight versus a long one."
Although Delta and United take in the most bag and reservation change fees overall, Spirit (SAVE) is the leader based on per-passenger ancillary revenue, according to a report issued earlier this month by airline consulting group IdeaWorksCompany.
Based on 2013 disclosures, Spirit collected $51.22 per passenger in fees, compared with $40.97 at United, $32.61 at Alaska (ALK) and $21.99 at JetBlue (JBLU). The IdeaWorks calculations include additional revenues such as fees collected for sales of preferred seating, early check-in, on-board cafe sales and revenue from the sale of frequent flier miles to partners. Those fees are a big reason the airlines are now profitable, according to the IdeaWorks report, which notes those ancillary fees are up 1,200 percent since 2007.
JetBlue's ranking on the list may change next year after company President Robin Hayes moves into the CEO role on Feb. 16, a transition that was announced Thursday. Analysts expect Hayes will get on board with checked bag fees, leaving Southwest as the last of the big U.S. carriers without them. Currently, JetBlue allows one free checked bag and Southwest allows two, both subject to weight restrictions.
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"Bag fees are not in the equation," Southwest spokesman Dan Landson said Monday, reiterating sentiment stated Friday at the North Dallas Chamber of Commerce Aviation Breakfast.
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