Wed, May 23, 2012
Decrease Comes In Spite Of Higher Passenger Loads
According to the Department of Transportation, U.S. airlines earned less in baggage fees last year despite the increase in passenger traffic. The 17 largest U.S. airlines earned $3.36 billion in baggage fees in 2011, down slightly from $3.4 billion the previous year. This was the first annual decrease since the extra fees became standard with most carriers in 2008. The same year U.S. airlines saw a 1.3% increase in passengers from the year before totaling 730 million.
MSNBC.com reports that individually, the statistics are more dramatic. Delta Air Lines’ baggage fee total for 2011 was almost $864 million, down 9.2% from $952 million the previous year with a 2.3% increase in passengers. United Airlines saw an 11.8% decrease in fees from $313 to $276 million, although in that instance there was a corresponding 6.7% drop in passengers.
Rick Seaney, CEO of FareCompare.com says “The airlines are doing a better job of selling branded credit cards, which often waive bag fees; they’re giving out more elite perks; and people have finally figured out how to pack a little lighter.” Apparently, they’re also carrying more and bigger bags on board. Seaney adds “There’s no doubt that if you’re not in the first half of the boarding process, you’re not going to find bin space,” said Seaney. “People who try to cheat the system are carrying on their entire lives.”
For cash-strapped airlines, millions of dollars in baggage fees must seem like manna from heaven, especially as airlines struggle to maintain profitability in tough times. Without the $864 million that Delta earned in baggage fees last year, the airline’s net operating income of $854 million would instead have been a $10 million loss.
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