Flight fees and why airlines charge extra for baggage, seats, and more

Flight fees and why airlines charge extra for baggage, seats, and more

Frontier Airlines Reservation More than $900 million in revenue in the second quarter of 2022, about half of which came from fees. In her earnings report, she bragged that she was able to squeeze an extra $75 per passenger “minor” fees, an increase of 33 percent from the same quarter prior to the epidemic. Her net income is $13 million. Sit down for a second on what this math means.

“They would be pretty unprofitable without the fees,” said George Ferguson, senior aviation, defense and airline analyst at Bloomberg Intelligence. On average, it is estimated that budget airlines Front and Spirit double the base fare with baggage fees, service, and more. “But even Delta is trying to do that with people,” he added.

If you’ve had to book a flight recently, or indeed in the past 15 years, you’ve noticed quite the prevalence of fees.

When you start shopping for flights on a website like Expedia or Kayak, you’ll see one price at first, and by the time you get your credit card, you’re paying tens and even hundreds of dollars more than that initial number. Or you go straight to an airline’s homepage to purchase and are instantly presented with multiple levels of tickets that you can’t quite decipher. Sure, you’ll get what basic economics means (you’re cheap and you’ll be treated like that) and what’s first class (you’re a big spender and you’ll also be treated like that), but there are options in the middle that are completely unclear. Maybe you pick one, trying to ensure you get a better experience, and you’re still coughing $40 to pick your seat and $50 to check out a bag.

“Often, people aren’t sure what’s in their cart, they’re often unsure what they bought, they aren’t sure what they didn’t buy, and many consumers are confused by it all,” Jay Sorensen, president of travel consultancy IdeaWorks. .

Being an airline traveler today means feeling as if an extra dollar is being snatched from you at every turn. Things that were free or just luck in the draw – whether you get a window seat, if there’s some extra legroom – have been stripped from ticket prices and are now sold separately instead. The airline deals have been dismantled, and it cost a pretty penny to put the package back together again.

“It’s a behavioral economics question – airlines are trying to figure out how people are going to behave, and they have policies and prices that respond to that,” said Bob Mann, an aviation analyst. “it’s a game.” And annoying at that. Not only do fees add to the final price; They can also get around traveling in other ways, which makes the experience even more miserable, no matter how much money the passengers spend.

Frontier did not respond to a request for comment, and Spirit declined to register. In July, Jet Blue Announce plans To buy Spirit, though it still not clear Whether regulators will allow the deal to be executed.

The story of airline fees begins with baggage

For decades, at least one bag check was free on the major airlines (some discount airlines got precedence when charging). But in 2008, amid rising fuel prices and economic turmoil, that started to pick up. Airlines like American And the united He started paying a $15 fee to have your bag checked at your destination.

John Tague, then Chief Operations Officer United, said at a statement in time.

It has proven to be a profitable endeavor: the aviation industry is over $1 billion in excess baggage fees that year.

It all kind of snowballed from there. Airlines have figured out how to strip their offerings of getting passengers from A to B (the basic economy fare, or budget airline fare) and then overcharging for many things afterward. It is a profitable deal for them – today, Airlines make tens of billions of extra fees.

“Airlines charge these fees because the revenue they make from charging fees or selling optional products is really where the airlines make their money,” said Henry Hartfeldt, president of Atmosphere Research, a travel industry research firm. “Not only are these cartoons present, but they seem to breed like rabbits.”

More choices are good for passengers in theory, not always in practice

To some extent, Sorenson said, customers have rewarded airlines — including low-cost carriers — for their practices. Consumers in theory love choice, and are price sensitive, so it’s not a good idea to let people decide what they do and don’t want to pay for. For people who are really concerned about traveling, being able to choose their seat in advance and sit next to the people they’re traveling with can feel infinitely worthwhile. For others, not so much.

The problem is that the graphic system is often confusing to navigate and at least a modest predator (see: Fee for printing a boarding pass). Airlines can lure people in for one price, then stack fees on the back end to raise costs. And much of what they charge isn’t entirely optional.

“In some industries, you segment things so that customers can go in and choose what matters to them and use it,” Ferguson said. “In the airline, it’s a little unconventional, because you usually need most of these things.”

If you’re one of those people who can put everything you need for a three-day trip in your pockets, then bless you, but most people aren’t you, and they need checked baggage or carried on the plane. Sometimes you don’t know what you’ll need – say, to change the flight – until the moment arrives. It is also worth noting that Most people don’t fly More than once or twice a year, which makes laying out fees even more stressful.

“The pressure is on travelers to anticipate their needs up front, and that’s part of the challenge at the moment,” said Melanie Lieberman, senior editor for global features at The Points Guy. “Travelers need to plan ahead more than ever.”

This means trying hard to think ahead, read the fine print, and question the initial price that appears to you. Mann noted that some co-branded credit cards offer free gifts such as checked bags, seat selection and club admissions at the airport. “It’s basically about looking at the relationships with the airline that have the desired benefits, and seeing if those relationships are less expensive (some of which are ‘free’) than paying the fees,” he said. On some search sites, you can also filter to see options where only hand luggage is allowed.

Other than the actual cost, the fees have skewed travel in other ways – again, really, this starts with baggage. Mann remembered speaking to the CEO of a major airline in 2008 about baggage fees and warned him that they could cause a host of flight delays. People were trying to bring the bags they had previously checked on the plane, the planes were supposed to run out of storage space, and it would take more time to load and unload the plane. Mann said, “He said, ‘Well, yeah, that might be true.'” Actually, it was.

Airlines may soon have to be more upfront about money

In September, the White House and the Department of Transportation announce A proposed new rule would have airlines and travel sites disclose fees in advance. The moment the flight ticket is shown, they will have to detail the extra charges for things like sitting with your child, canceling the flight, or checking the bag. In a statement issued at the time, Transportation Secretary Pete Buttigieg said the rule’s goal is to “help travelers make informed decisions and save money.”

If the new requirements are implemented, it will be a big deal. “This would be huge in terms of forcing airlines and third-party travel sites to disclose fees,” Lieberman said. The airlines seem to know this. American Airlines, the pressure group representing the major airlines in North America, He said at that time Its member airlines are “fierce competition” already providing transparency to consumers from the first search to the arrival of the aircraft.

Department of Transport currently Comments collection On fee basis. It also tightens other guidelines about when consumers are refunded for delayed and canceled flights and consumers get refunded when they pay for a service that was not provided to them (such as in the case of broken in-flight wifi).

Sorensen, who generally deals with airlines, doesn’t like the fee rule – he doesn’t think it’s “practical or feasible” to implement. But given what the fees have done to the customer experience, he is well aware of why airlines are calling for “government wrath” on them. “The industry deserves scrutiny from the government at this point,” he said.

Not to mention only taxpayers Billions of dollars spent Rescue of airlines due to Covid. It’s good that the entire industry hasn’t gone bankrupt during the pandemic, but it’s also hard not to wonder if the industry needs to continue like this.

“The government has given the US airline industry $54 billion in wage grants and subsidies, and what do we get?” Harteveldt said. “The ability to complain that airlines still exist to charge these fees.”

We live in a world that is constantly trying to piss us off and deceive us, always surrounded by frauds big and small. It can feel impossible to move around. Every two weeks, join Emily Stewart to consider all the little ways our economies control and manipulate the average person. you welcome in big pressure.

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