Things in the Sky

I think most travelers would agree that the extra fees that many airlines added in 2008, like additional luggage fees, won’t be going away any time soon. When adding these fees, the airlines said the high price of oil was the reason, and I asked around to see what the reasoning was for keeping them. As an example, here’s part of the e-mail I sent to US Airways:

In a June 12 press release, CEO Doug Parker said that “our industry is profoundly challenged by the dramatic increase in fuel prices, and we must write a new playbook for running a profitable airline in this new and challenging environment.” One of the changes announced in this press release as a $15 fee for the first piece of checked luggage. This was in addition to a $25 fee for the second bag, among other increased fees.

Now that oil prices have dropped significantly (and are below levels from a few years ago), I was wondering why US Airways has yet to reduce or eliminate these additional fees for all travelers.

While I wasn’t expecting to change anything, I half did this to see what the airlines would say what their reasoning was. Surprisingly, I got very different responses. All of the airlines I contacted replied, except Midwest.

The first airline to respond was AirTran, whose representative said that “even though fuel prices have gone down considerably, the airline industry is still recovering from the staggering fuel prices from earlier in the year making our fees still a necessity.” She also mentioned hedging my mentioning that “our fuel is also hedged at a higher price and when fuel goes down far below that price we suffer losses as well.”

US Airways was the next airline to get in touch with me. A spokesman wrote to me that the airline “has to recover from when record fuel prices were at $150/barrel…while the cost of fuel has come down, other economic uncertainties are still a factor. The a la carte (pay for the service you require) structure US Airways instituted this year positions us for future economic conditions, whether or not they relate to fuel.”

A Virgin America spokeswoman said that the second bag fee was “not entirely predicated on the snapshot of oil prices at the time…oil rose at an unprecedented rate over the summer — after these changes were made and have just recently dropped again….Our decision helped adjust for the volatility in the oil market, kept us competitive with the majority of the industry in terms of fees within a challenging economic climate for all airlines, and were in line with our guest expectations and preferences.” She also made a point of differentiating Virgin’s policy from other airlines by saying that “we also do not have a first bag fee and we retained our generous 70 pound weight limit on the first bag.”

A Delta representative reported that the airline “eliminated several fees directly tied to fuel including the Fuel Surcharge on SkyMiles Award Ticket Travel and various fuel surcharges on tickets for travel worldwide,” and noted that other fees are being maintained to remain “competitive with the rest of the industry.”

The next airline representative to reply was from Frontier’s Corporate Communications Department. His response was exactly what I expected, as he focused on the airline’s new AirFairs program, and he attached a media kit about it. He said that the new program is “letting our customers choose what they pay for and what they don’t, including checked bags.”

An American Airlines spokeswoman told me said that due to government regulations, she could not “discuss anything in the future that we may, or may not, do on the pricing, fees and fares front” but she also wrote that “there are no immediate plans in place for any changes.” Some of the other information she provided was interesting, such as American’s choice to roll its domestic fuel surcharge into base fares, which supposedly helps “address other types of cost increases facing our company beyond the price of fuel.” In addition, her e-mail also said that “the bag fee was put into place to help recover some of the fuel costs, but we never said that bag fees were tied only to higher fuel costs.”

The response from Continental was very interesting: “While we initially tried to avoid baggage fees, the fact is that the consumer gave no preference to airlines not charging them. In order to maintain an even footing with other airlines from a revenue standpoint, the baggage fee became a necessary competitive response.” The representative did, however, follow a strategy similar to Virgin America and chose to differentiate Continental from the rest of the industry by noting that the airline still provides free meals and pillows. (I’ll get to Continental’s assertion that consumers don’t give preference to airlines that don’t have bag fees later.)

Hawaiian spokesman Keoni Wagner said that costs other than fuel have been rising, and that “fees might be reconsidered if we were covering those higher costs with fares, but we’re not.”

A JetBlue representative had a similar response when I talked with him on the phone, and told me that the cost of transporting a traveler is still higher than the average fares paid by consumers. He also noted that the airline is not planning to change its fee structure anytime soon.

Unfortunately, a United spokeswoman only provided me with a one-sentence reply: “We keep our fees competitive with the industry and the price of jet fuel has been higher for a longer period of time than it [h]as been lower and is purchased months in advance.” I inquired further about her point that fuel is purchased in advance by asking if United would reconsider its fees if oil remained in this lower price range, but she replied that “the Dept. of Justice does not allow us to signal future pricing plans.”

Last but not least, I received an e-mail from Marianne Lindsey, the Manager of Corporate Communications for Alaska Airlines. She wrote that the “the charge for the second bag, and the overweight fee, is directly related to fuel burn,” though she did note that Alaska has not followed other airlines by adding a fee for the first bag. She also mentioned that “travelers in the state of Alaska, they may check three bags for free,” which was a policy that I was unaware of.

Anyway, I’ve chosen to only include the responses in this post as it is already getting quite long. I will share my thoughts and opinions in a later post.