Passenger baggage fees now feed bellyhold profit

AIRLINES' new practice of charging for passenger baggage has resulted in big bellyhold profit, a decrease in the amount travellers carry and a corresponding increase in cargo space, reports the New York Times.

Soon, even the first bag will not be free, said the report, adding that Florida-based budget carrier Spirit Airlines is leading the way, saying it will charge as much as US$30 for carry-on bags too big to fit under the seat, said the report.

"Nobody brings their package to FedEx or UPS and expects them to ship it free," said Spirit CEO Ben Baldanza.

Passengers paying to check bags has had an impact on airlines' bottom lines, said the report. The US Transportation Department said fees rose from $464 million in 2007 to nearly $2 billion in just the first nine months of last year.

At the same time, passengers now check fewer, and lighter, bags to avoid the extra fees for heavy suitcases. As a result, airlines have not been losing as many bags, and there is more space for cargo, said the report.

"Freight makes a significant contribution to the bottom line of passenger airlines," said Ulrich Ogiermann, chairman of The International Air Cargo Association (TIACA). The revenue potential "cannot be ignored," he added.

A baggage report released last month from Societe Internationale de Telecommunications Aeronautiques, now known simply as SITA, said one in four passengers did not to check bags last year, compared with one in six in 2008 - the first year major carriers imposed fees.

The steady decline in bag numbers last year resulted in a 24 per cent decrease in the number of bags mishandled and that saved the US airline industry $94 million, said SITA.

Asked about it, United, Delta and American simply only said they are not making tallies of this nature.

But Hudson Securities analyst Daniel McKenzie said: "They talk about the benefits of reduced baggage handling and reduced workers' compensation claims, and that helps free up cash."

Then Mr McKenzie explained that airlines are reticent because "they get beat up constantly - by Congress, the DOT [Department of Transportation] and passenger rights' advocates."

Ireland's budget carrier Ryanair is considering the elimination of checked bags altogether at certain times on selected routes.

"Bringing a big bag and expecting it to travel for free, it's too much to ask," said Ryanair spokesman Stephen McNamara. "It's expensive to ship something heavy in an airplane when fuel prices are very high. People are packing way too much; women bringing four pairs of shoes, hair dryers, that sort of thing."

 

(Source: Schednet)