Airlines Collected $3.4 Billion in Bag Fees in 2010

Baggage feesU.S. airlines collected $3.4 billion in bag fees last year. The 24 percent increase from 2009 shows how the airlines are increasingly reliant on charging for once-free services to make money.

The fees - typically $50 round-trip for the first piece of checked luggage - are one of the few bright spots for an industry that is caught between rising fuel costs and customers who expect rock-bottom airfares.

"If it weren't for the fees, the airlines would most likely be losing money," said Jim Corridore, airline analyst with Standard & Poor's.

That's little comfort to fliers who've felt nickel-and-dimed by the airlines over the past three years as fees have proliferated. And as they face higher airfares and packed planes for travel this summer.

"I feel like I am constantly being hit by little things by the airlines," said Lauren DiMarco, a stay-at-home mother from Wenham, Mass. "We're already paying so much money."

Delta generated the most revenue from bag fees - $952 million - followed by the combined United and Continental at nearly $655 million. American collected $580 million and US Airways $513 million.

Airlines aggressively raised ticket prices early in the year. But those increases couldn't keep up with the price of jet fuel, now 37 percent costlier than last year. Some more recent attempts at fare increases have failed because passengers have shown resistance to higher fares.

So instead, the airlines focus on fees.

"Unfortunately, for the airlines when they try to roll $50 into the ticket prices, people stop buying tickets," said Rick Seaney CEO of FareCompare.com.

Earlier this month, Delta and United raised fees to check a second bag to Europe. Delta also added a fee for second bags checked to Latin America and ended its $2 discount for paying fees in advance online.

American Airlines introduced fees for the first checked bag in 2008 as the price of oil skyrocketed. The other airlines, except JetBlue and Southwest, have since followed and progressively increased those charges.

Many fliers are still unaware of the fees or understand how much they have to pay until they arrive at the airport ticket counter.

"They find out very quickly when they are asked to pull out their credit card," Seaney said.

The airlines aren't alone in charging fees that irk customers. For instance, banks charge customers to use out-of-network ATMs and levy fees for insufficient balances. But there is something especially irritating about paying a fee just before you board a plane for your long-awaited vacation. For something that used to be free.

Buoyed by the success with bag fees, the airlines are charging for all sorts of extras.

They are now selling passengers the option to board early, get more leg room and to earn extra frequent flier miles. There are also fees for oversized bags, changing tickets, making a reservation over the phone and - on some airlines - reserving a seat in advance.

Fees for changing reservations or placing them via phone alone generated $2.3 billion for the airlines in 2010, down 3 percent from the year before. The Department of Transportation expects to release more information about fees at a later date.

For families looking to book a vacation, the fees can add up. That $98 round-trip fare on a discount airline like Spirit isn't such a deal when you tack on $45 each way for a carry-on plus $20 to get an assigned seat and $3 for a bottle of water.

"It makes it very difficult for comparison shopping" said Anne Banas, executive editor of travel advice site SmarterTravel.com.

New rules from the Department of Transportation will require airlines, starting Aug. 23, to "prominently disclose all potential fees" on their website prior to a ticket purchase. In the meantime, fliers just need to do their research before heading to the airport.

Henry Harteveldt, an airline analyst with Forrester Research, said airlines have done a poor job of explaining the fees to customers. Despite the bad publicity, if given the chance to do it all over again, Harteveldt said the airlines certainly would. He expects more charges in the future. A checked-bag fee based on distance flown is one possibility. Or fees could be cheaper if a ticket is purchased months in advance but much more expensive if paid on the day of travel.



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7 Comments

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Wayne

Why are there no more mortgage fraud articles on AOL's Daily Finance Articles? I miss Abigail Fields.

June 16 2011 at 4:04 PM Report abuse rate up rate down Reply
Frank

I get tired of being nickled and dimes. When I research fares I want to know the real total and not have sticker shock at the end of the booking process. I'm not sure if there are any "non fee" items on a plane anymore...maybe the exeption is middles seats of course that still leaves aisle seats, window seats, "preferred" seats, bulk head seats etc.. for them to be fee happy. We cruise more often than fly these days (luckily we live in Florida - an easy drive to any of the 5 ports). Cruising gives us good value for our hard earned dollars and the fare covers cabin, food and entertainment. Flying to a destination still requires lodging and food costs

June 14 2011 at 8:17 AM Report abuse rate up rate down Reply
kalelreg

Used to fly at least four or five times a year from the East coast to the West coast. Only go once every two years now
due to rise in airfares and baggage fee. Seems kind of stupid to charge a baggage fee when your traveling 3000 miles
away from home.

June 14 2011 at 2:21 AM Report abuse +1 rate up rate down Reply
rdins4

Southwest is by far the best airline, always check their price before checking others.

June 13 2011 at 11:02 PM Report abuse rate up rate down Reply
rdins4

I avoid flying all the time now, even if its a 7 hour drive I drive it, but unfortunately sometimes you HAVE to fly to get somewhere.

June 13 2011 at 11:02 PM Report abuse +1 rate up rate down Reply
Dana

The airlines are forgetting that they are a SERVICE.

They SHOULD charge the idiots who carry huge bags onto the plane that don't fit in the overheads. If they insist upon charging for checked bags, they should at least let those people off the plane first!

June 13 2011 at 9:53 PM Report abuse +2 rate up rate down Reply
BRUCE

I remember when the airlines were deregulated they said it would create more competition resulting in lower fees and better customer service! They made promises like the politicians do and never deliver. However, the cash keeps coming in despite the poor performance.

June 13 2011 at 5:53 PM Report abuse +4 rate up rate down Reply