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Quick Hits: All's Fare In Unbundling Airline Fees


Brief scrutiny of today's headlines.

You may get exactly what you pay for -- and nothing more -- when flying major airlines.

American Airlines (AMR) plans to break down the cost of a flight into basic airfare and may charge additional fees for beverages, blankets, seat selection or even changing planes.

The airline industry calls it "unbundling." The new pricing will give travelers lower base fares with the option to buy only the extra services they want.

American Airlines led US carriers in charging for checking baggage and some travelers may see the new fares as just another way to suck more money out of their wallet.

But unbundling isn't new. Cable companies have used this tactic for years to offer premium movie, sports and pay-per-view events for an additional fee. Airlines believe unbundling will allow them to increase revenue and offset higher fuel prices.

United (UAUA) says planned fees will generate about $700 million a year. Northwest (NWA) says baggage charges will increase revenue $150 million to $200 million a year. Continental (CAL) looks for an additional $100 million from a new fee for checking the first bag – and that doesn't include fees for additional baggage.

However, Southwest Airlines (LUV), a consistently profitable carrier, avoids most of the fees charged by competitors and uses this fact in its advertising. But the airline will soon ask customers about special fees and the carrier doesn't rule them out in the future.

The new pricing structure for US carriers will allow passengers to save money, but it will also require more homework and additional clicks when booking a flight online. Here's betting most passengers will put up with a little inconvenience to save money.

But one thing is almost certain: Fees for service, including mundane things that were once included in the price of the ticket, are here to stay - even if fuel prices fall.
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