From bags to riches for US airlines
NEW YORK – On the day American Airlines announced higher checked baggage fees, new research has uncovered just how much of a windfall these fees are for US carriers.
For domestic flight tickets purchased on or after February 1, American’s checked bag charges will change to US$25 for the first checked bag and US$35 for the second checked bag, payable at the airport on day of travel.
The carrier currently charges US$20 for the first bag and US$30 for the second, each way on domestic travel.
Research by IdeaWorks, shows that baggage fees present a very strange alchemy for airlines. Higher baggage charges deliver more revenue – even when fewer passengers check bags as a result of the fee hikes.
Recognizing this, the group of big five airlines (American, Continental, Delta, United, and US Airways) all boosted baggage fees this month.
IdeaWorks estimates these carriers will realise annual baggage fee revenue of US$1.76 billion.
The “new money†portion of this amount for the group of carriers exceeds $117 million.
Southwest Airlines, which has positioned itself above the fray by promising, “bags fly free,†is a large and vocal holdout.
The carrier’s current advertising campaign virtually assures it will remain on the sidelines for some time.
But if Southwest achieved Delta’s per passenger result of $7.32 from baggage fees, its 100 million annual passengers would contribute $732 million to the bottom line, IdeaWorks said.
The full report, US Airlines Will Generate Millions from Higher Baggage Fees is available at the IdeaWorks web site: www.IdeaworksCompany.com/news.
Ian Jarrett
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