Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Airlines to Passengers: Get Used to Paying More to Check in Your Baggage

By

Airlines collected a record sum in baggage fees from January to June.

PrintPRINT
MINYANVILLE ORIGINAL If you are a frequent traveler, you might have noticed that you've been paying more for checking in suitcases these days.

With fuel prices up dramatically in the past few years, airlines have struggled to maintain profit margins without raising ticket prices so high that passengers are scared away. The solution? Keep the basic ticket price relatively low, and charge flyers heavily for checking bags.

Indeed, according to report released by the Bureau of Transport Statistics, or BTS, US airlines a set record pace in baggage fees collection for the first half of 2012, adding more than $1.7 billion to their coffers, which is the most ever received in the first six months of a year.

In the first quarter of 2012, America's 15 largest airlines collected a total of $816 million in bag fees. The number grew to $932 million in the second quarter.

Leading the way is Delta Air Lines (NYSE:DAL), with some $231 million in the second quarter, while United Airlines (NYSE:UAL) was second with $195 million. American, US Airways (NYSE:LCC) and Southwest (NYSE:LUV) rounded out the top 5. (Southwest does not charge for the first checked bag, but its subsidiary AirTran Airways does.)

Baggage fees were introduced in 2008 and have gone up since, as as Scott Mayerowitz of AP points out.
Many of these fees were first introduced to allow airlines to offset rising fuel costs. In 2007, the airlines paid an average of $2.09 a gallon for jet fuel. The next year, prices spiked 46% to $3.06. During the first seven months of this year, airlines have paid an average of $2.96 a gallon.

Airfares have climbed in recent years but not as fast as the cost of fuel. Passengers have shown reluctance to book tickets if the base fare is too high, hence the introduction of the fees.

< Previous
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
PrintPRINT

Busy? Subscribe to our free newsletter!

Submit
 

WHAT'S POPULAR IN THE VILLE