Free

Airlines feeding frenzy on fees…

Earlier this week, I bought an airline ticket to Washington for a meeting next week. In the past, I’ve taken Amtrak or my new favorite, Bolt Bus, but flying — even booking just a week in advance — was actually $100 cheaper than the train and a lot quicker than the bus. Unfortunately this morning, the meeting date was changed and the cheapo airfare is suddenly a lot more expensive once those change fees are factored in.

This isn’t news to anyone who flies regularly — meetings get moved around all the time at the last minute. But yesterday’s WSJ put some of the fees into perspective. The article, citing a new Department of Transportation report, shows that these fees are costing people $2 billion a year. AMR Corp. (AMR), parent company for American Airlines (which I still haven’t been back on after last year’s Dallas fiasco) raked in $116 million in cancellation fees during the first quarter and another $108 million in baggage fees.

In the current crop of airline Qs, there’s not nearly as many details on the fees. But AMR, which filed its 10-Q on July 15, disclosed that “other revenues” which include cancellation and baggage fees, were up 7% to $565 million. Just to put that into perspective, that’s higher than revenues for AMR’s regional airlines. In its 10-Q, Delta (DAL) said its other revenues climbed by $81 million during the quarter “due to new or increased administrative service charges and baggage handling fees and higher SkyMiles program revenue.” USAirways (LCC) also disclosed a hefty amount of fee income during the quarter for what it described as “ancillary items”. Even footnoted favorite JetBlue (JBLU) said in its 10-Q that other revenue was up 7% “due to higher change fee and excess baggage revenue resulting from increased change fee rates and the introduction of the second checked bag fee”.

Of course, the question to ask is how much longer the airlines can continue to rely on these fees to help goose revenues. There’s a fee for pretty much everything and other than charging to use the bathroom on the flight, it’s hard to see how this pattern can continue. Indeed, some customers are already fighting back. As Delta noted in its Q, several lawsuits in different jurisdictions have been filed against Delta and Airtran challenging the baggage fees for violating the Sherman Anittrust Act.